<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ---------------
                                    FORM 10-K
         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

For the fiscal year ended October 31, 2000      Commission file number 0-22011

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


              Nevada                                      86-0760991
              ------                                      ----------
  (State or other jurisdiction of                      (I.R.S. employer
  incorporation or organization)                      identification no.)


            2425 E. Camelback Road, Suite 650, Phoenix, Arizona 85016
            ---------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

               Registrant's telephone number, including area code:
                                 (602) 508-0112
                                 --------------

           Securities registered pursuant to Section 12(b) of the Act:

                                      None
                                      ----
                              (Title of each Class)

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.001 per share
                     ---------------------------------------
                                (Title of class)

      Indicate by check mark whether 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 [X] No [ ]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

      As of January 11, 2001, the aggregate market value of the voting common
stock held by non-affiliates of the registrant, computed by reference to the
closing sales price of such stock as of such date on the Nasdaq SmallCap Market,
was $5,533,792. Shares of Common Stock held by each officer and director and by
each person who owned 10% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily conclusive and may not apply for other
purposes.

      As of January 11, 2001, there were 22,421,252 shares of the registrant's
Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Portions of registrant's definitive Proxy Statement for its 2001 Annual
Meeting of Stockholders are incorporated by reference in Part III, Items 10 and
11, hereof.
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<TABLE>
<S>                                                                           <C>
PART I      ................................................................     1

      ITEM 1.     BUSINESS..................................................     1
      ITEM 2.     PROPERTIES................................................    19
      ITEM 3.     LEGAL PROCEEDINGS.........................................    19
      ITEM 4.     SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.........    19

PART II     ................................................................    20

      ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS.......................................    20
      ITEM 6.     SELECTED CONSOLIDATED FINANCIAL DATA......................    22
      ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.......................    23
      ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............    27

PART III    ................................................................    28

      ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT............    28
      ITEM 11.    EXECUTIVE COMPENSATION....................................    31
      ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT................................................    33
      ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............    35

PART IV     ................................................................    37

      ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
                  ON FORM 8-K...............................................    37

SIGNATURES  ................................................................    40

FINANCIAL STATEMENTS........................................................   F-1
</TABLE>
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                                     PART I

ITEM 1. BUSINESS

INTRODUCTION

       Bionutrics, Inc. ("Bionutrics" or the "Company") is a biopharmaceutical
company founded to discover, develop and apply novel biologically active
compounds from natural sources. The Company's goal is to be a leader in the
newly emerging field of functional nutrition, the marriage of drugs and food, by
providing food ingredients that can prevent and even cure diagnosed diseases.
Bionutrics' business model is to source biologically active compounds from food
commodity processing by-product streams and develop these compounds as
proprietary functional nutrition and/or ethical drug products. The disciplines
and efforts comprising a discovery and development program for functional
nutrition and ethical drugs are fundamentally the same. Products derived from
the Company's research program will be directed initially towards functional
nutrition to generate early revenue and reduce the need for capital while it
pursues the development and regulatory approval of drug candidates.

       The Company's building efforts of the previous decade have positioned it
with proprietary technology, compounds, processing methods and products having
application to worldwide markets of potential significance. Bionutrics has
sources of raw material by-products streams available to it in large quantities
and it has developed specific capabilities in engineering and processing
technologies for the separation of these streams into both high-value
biologically active products and bulk food ingredients. This technology provides
the Company the potential advantage of access to proprietary active ingredients
at relatively low cost. Initial products are tocotrienol concentrates derived
from rice bran. The Company also has patent rights to a composition of niacin
and dietary fiber that have application to dietary supplements, medical foods or
OTC products.

       Bionutrics' operating strategy has changed from prior years where it
manufactured and marketed its products to its current strategy, which is to
leverage its core competency of new product development by partnering the
manufacturing and marketing. The Company's goal is to discover, define and
protect its products and technology and to partner manufacturing and marketing.
Bionutrics believes this strategy will allow it to exploit its strengths while
recognizing its resource limitations, and at the same time accessing the
unfolding global opportunity.

      The Company's three primary subsidiaries are LipoGenics, Inc.
("LipoGenics"), Bionutrics Health Products, Inc. ("Health Products"), and InCon
Technologies Inc. ("InCon"). LipoGenics serves as the product research arm of
the Company with a focus on the discovery and development of active compounds
for both drugs and functional nutrition. Health Products is the market research
and product positioning company charged to deliver new functional nutrition
products to marketing partners. InCon saw its operation merged in June 1999 into
a new limited liability company, InCon Processing, LLC ("InCon Processing") in
which the Company has a 50% ownership together with ACH Food Companies, Inc.
("ACH", formerly known as AC HUMKO CORP), a subsidiary of ABF North America
Corp. ("ABF"). InCon Processing provides engineering and design for the
Bionutrics' compound recovery systems and ingredient processing. In addition,
the Company has three inactive subsidiaries, Nutrition Technology Corporation,
InCon International Ltd. and Cosmedics, Inc

      Bionutrics was incorporated in Nevada in 1990. All its subsidiaries are
organized in Delaware except Nutrition Technology Corporation, which is
organized in Nevada, and InCon International Ltd., which is organized in the
British Virgin Islands. References herein to Bionutrics or the Company are to
the parent corporation and its subsidiaries except where otherwise indicated.
The Company maintains its principal offices at 2425 East Camelback Road, Suite
650, Phoenix; its telephone number is (602) 508-0112.


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INDUSTRY OVERVIEW

Functional Nutrition

      The Company competes within the Functional Nutrition category that
includes functional foods, medical foods and dietary supplements, including
vitamins, minerals and supplements. Each of these sub-categories has a
definition, legal and competitive, which distinguishes it from the others.

      Functional foods began with a National Cancer Institute initiative to find
ways of supplementing foods to enhance their cancer fighting potential. The
functional food category may be defined as conventional foods or foods for
special dietary use that are regulated under the Nutritional Labeling and
Education Act (NLEA 1990) that have enhanced health benefits. Such product may
require FDA pre-approval of a health claim or of a food additive petition. From
a marketing perspective, it may be difficult to distinguish between certain
non-modified products such as vegetables and those that have been specially
prepared to enhance health. However, the majority of new entries in this
category are specially-fortified versions of conventional foods. The market for
these products is purported to have surpassed $18 billion last year in the U.S.
Products that exemplify the category are ones such as stanol fortified
margarines and salad dressings as well as certain fortified bars and meal
replacements. As these products take hold in the mainstream, newer products such
as enriched eggs and fully prepared and packaged foods continue to proliferate.
The backbone for these products is the bioactive ingredients used to deliver on
health or function claims. From soy protein, oat bran and psyllium as macro
ingredients, to stanols, isoflavones and tocotrienols as micro ingredients,
these bioactives are beginning to fuel growth and product development momentum
in the food industry.

      The medical food category is unique in that it is separate from NLEA.
These products are different from NLEA regulated foods for special dietary use
in that they must meet certain requirements. Products that meet the strict
statutory definition of medical foods, which include the requirement that such
products be used under the direction and care of a physician, are a small
segment of the group represented as such. However, many marketing companies are
adding medical foods to their product lines. In using this special category,
many new dietary ingredients may be conveniently delivered to consumers and more
specific information may be provided on labels to help consumers identify
products that may help their specific health concerns. The market for these
products is being driven by the consumers increasing willingness to
self-medicate. Examples of current medical foods are arginine enriched bars for
heart health and specially formulated bars and other foods for diabetics.

      Dietary supplements are part of the health and natural food market in the
United States. This market increased from an estimated $16.4 billion in sales in
1998 to $17.3 billion in 1999, a growth rate of 6%. The expansion of this market
is largely the result of the rapidly growing portion of the population over 40
years old, who are concerned with aging and disease, combined with favorable
consumer attitude shifts toward natural health care. Within the health and
natural food market, dietary supplement sales were $10.6 billion in 1999. Recent
estimates indicate that 54% of the U.S. population uses nutritional supplements
at least occasionally in some form. By 2001, retail sales in this category alone
are expected to exceed $12 billion annually. Nutritional awareness and market
size are also growing in other parts of the world. Bionutrics intends to access
these global opportunities for product sales of both dietary supplements and
functional foods, in each case through strategic partners.

      The growth of sales of dietary supplements has resulted largely from
recent studies indicating a correlation between the regular consumption of
selected vitamins and nutritional supplements and reduced incidences of
conditions such as cancer, heart disease and osteoporosis. Within the dietary
supplement category, antioxidants remain the growth leader. One antioxidant,
vitamin E, has shown particularly strong growth, resulting in estimated retail
sales in excess of $700 million in mass-market sales alone in 1998. Dietary
supplements, including both vitamins and nutritional supplements, are consumed
specifically to enhance bodily structure or functions, such as thinking or
athletic performance or cholesterol maintenance. Under current law a dietary
supplement may not claim to prevent, treat or cure a disease (see below under
"Government Regulation"), which restricts the manner in which it may be marketed
and the claims that can lawfully be made.


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       Ethical Drugs

      Bionutrics has technology with potential application to cardiovascular
health, cancer, anti-inflammation, anti-oxidation and diabetes. These
applications reflect proprietary claim positions for compositions that may have
use in more than one disease indication. The market for successful and fully
exploited ethical drug or medical device candidates can be measured in the
hundreds of millions of dollars or more. There is significant risk in
development and obtaining regulatory approval for any new candidate with no
assurance of success. It is the Company's intent to define the initial
opportunity with its research for its most promising candidates and if the
results warrant, to partner their full development.

PRODUCT DEVELOPMENT

      The Company intends to develop proprietary compositions potentially as
both ethical drugs and functional nutrition products. The functional nutrition
products will be created and developed as novel medical food, functional food
and dietary supplement formulations for use by specific target populations.
These ingredients and formulations may include tocotrienols or other compounds
that can be marketed with statements of nutritional support authorized per the
1990 NLEA and 1994 DSHEA legislation (see below under "Government Regulation").
The intent of the ingredients development program will be to generate future
proprietary products with a point-of-difference and wide marketability. Such
products would reflect the Company's business model of focusing on new
ingredients that exploit its core competency.

      Cardiovascular

      Clearesterol(TM): Bionutrics' first cardiovascular ingredient,
Clearesterol(TM), is a tocotrienol vitamin E based composition. Vitamin E is the
general term used for eight naturally-occurring, essential fat-soluble
nutrients. The series is composed of four compounds ((alpha)-, (beta)-,
(gamma)-, (delta)-tocopherol) with a tocopherol structure bearing a saturated
phytyl C(16) side chain and four compounds (alpha)-, (beta)-, (gamma)-,
(delta)-tocotrienol) with a tocotrienol structure having an unsaturated phytyl
C(16) side chain bearing three double bonds. All tocols, to varying degrees, are
antioxidants. Tocotrienol vitamin E - - as opposed to the standard tocopherol
vitamin E - - is a cornerstone of the Company's proprietary technology and
patent protection.

      Tocol antioxidants in blood appear to reduce damage to blood vessel wall
cells caused by oxidizing or "free radical" agents. Research indicates that the
Clearesterol(TM) constituents are a more effective antioxidant than standard
vitamin-E (alpha)-tocopherol) and, unlike the antioxidants found in standard
vitamin E or beta-carotene, the Clearesterol(TM) ingredient helps to reduce
blood cholesterol levels. The significance of Clearesterol(TM) with respect to
cardiovascular health has been demonstrated in clinical trials that show
tocotrienols may promote normal cardiovascular health three ways by helping to
lower cholesterol levels, providing cardiovascular antioxidant protection and
promoting normal circulation in some individuals. The Company is limited by the
laws applicable to dietary supplements as to the claims which may currently be
made for this ingredient. Additionally, claims would require FDA pre-approval as
a health claim or drug claim. Clearesterol(TM) is an all-natural complex
extracted from rice bran oil through a patented processing method. The
proprietary process involves stabilization of the rice bran and selective
extraction and concentration of the rice bran oil.

       Clearesterol(TM) is the dietary ingredient in evolvE(R), the Company's
first dietary supplement. evolvE(R) was launched in 1997 in a national campaign
targeting mass-market retail distribution.

      Vitenol E(R). The Company has also produced a more concentrated form of
rice bran-derived tocotrienols, Vitenol E(R), which it plans to use as an
ingredient in its own novel formulations and to sell to other companies as a
"value-added" vitamin E complex. Bionutrics is obtaining this material from
InCon Processing, which employs molecular distillation and other separation
technologies.

      Niacin-Fiber. Bionutrics has acquired the rights to patented technology
for the use of a timed-released composition of niacin and dietary fiber (see
"Patents and Trademarks" below), which has demonstrated in preliminary on-going
research a 22-24% reduction in LDL-cholesterol, 13-18% increase in
HDL-cholesterol and


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a 21-29% drop in triglycerides following four weeks of treatment with 1.2 gms of
niacin daily. This particular composition may have application as a medical food
to diabetics and other populations with dyslipidemia.

      Cancer

      Bionutrics received a broad patent this past year covering the use of
tocotrienols to treat cancer (see "Patents and Trademarks" below). Third-party
research published in peer-reviewed journals supports the Company's position
that tocotrienols may be effective in the treatment of certain cancer types. The
Company is in the process of evaluating possible approaches for further research
through the use of a multi cancer cell-line screening program with the National
Cancer Institute. Bionutrics has also discovered other compounds isolated from
natural sources that appear to be effective against certain cancer cell-lines
and intends to extend its current research on those compounds to determine their
potential efficacy and commercial feasibility. Any such commercial application
would be dependent on obtaining the prior approval of the FDA.

      Inflammation

      The Company has filed a patent application on compounds that treat
inflammation. These compounds potentially have a wide use with autoimmune and
autoimmune-like diseases and their possible prevention. Bionutrics expects to
continue research on these compounds and may develop products for both the
functional nutrition and ethical drug markets based on the results of the
trials.

      Oxidative Stress

      Bionutrics has filed a patent application on a novel composition, which
has unique anti-oxidative activity and may be used to reduce oxidative stress.
The Company has also acquired technology that has application as a means of
measuring oxidative stress in both blood and urine (see "Patents and Trademarks"
below). The urine based assay can be employed as a self-administered take home
kit for the determination of an individuals level of oxidative stress, potential
contribution of a disease state to the oxidative stress and the benefit derived
by the administration of the Company's potential proprietary antioxidant
products.

      Diabetes

      Diabetes is a disease closely associated with obesity and age. The Company
has acquired certain rights to proprietary technology and is conducting research
on compounds and formulations that may have application to obesity and the
progression of diabetes. The Company may also file future patents on technology
relating to obesity and diabetes and is considering a line of new products based
on this technology. In September of 1999, the Company received a SBIR (Federal
Small Business Innovation Research) grant, titled A Novel Tocotrienol for
treating diabetic Dyslipidemia. That effort has been completed and no further
work will be undertaken in this direction at this time.

MARKETING

      The Company intends to market its ingredients for functional nutrition
worldwide via marketing agreements with strategic partners. Because of the high
cost of product entry today, the companies with the commitment and capacity to
provide consumer advertising and support with the retail trade will be best
positioned for success. Bionutrics has stated its intent to market its products
through partnerships with such companies. This design is intended to allow the
Company to invest its resources in product development and rely on its partners
to address the advertising, public relations and other promotional costs for
their respective markets.

      The Company expects to launch its first proprietary ingredients for
functional nutrition during the first quarter of 2001. These products will be
initially positioned as dietary supplement ingredients and will be directed
towards cardiovascular health. As part of the Company's strategy for functional
nutrition product development, antioxidation and blood lipid management will be
targeted and the technology used in these products will be covered by one or
more of its patents. Bionutrics will focus on multi-level companies as primary
channels of distribution for its first round of products, with mass-market
retail and Internet distribution channels to follow.


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      As part of Bionutrics' strategy to partner marketing and manufacturing,
the previously launched retail brand, evolvE(R), is not being supported with
consumer advertising or product promotion funds. However, the product does still
have a presence in the mass market, primarily retail drug stores. The Company is
also serving consumers through its Internet address and 800-phone line. The
Company is planning to consider distributors for evolvE(R) outside the United
States.

MANUFACTURING

      Bionutrics' operating strategy is to leverage its core competency of new
product development by partnering manufacturing and marketing. The Company, in
particular, desires to expand its manufacturing base and to take advantage of
value-added commodity by-product processing technology without operational
responsibility or capital risk. To accomplish this, Bionutrics is looking to
form partnerships with global food manufacturing firms who will assume the
logistic, transportation, distribution, regulatory, environmental, labor,
administration and other operational elements associated with processing
by-product streams necessary to manufacture the Company's products.

      ABF Alliance

      In 1998, Bionutrics and ABF North America Corp. ("ABF"), the U.S.
subsidiary of Associated British Foods Plc, a company headquartered in London,
England entered into an alliance for the manufacturing of certain rice bran
based food and other functional nutrition products. The intent of the alliance
was for ABF to partner in the manufacturing of Bionutrics' products, when
feasible, and in the process to unburden the Company of related operational and
capital issues.

      As part of the 1998 transaction, ACH Food Companies, Inc. ("ACH", formerly
AC HUMKO CORP.), a subsidiary of ABF, acquired for $2 million Bionutrics' rice
bran-processing technology for use in North America. The technology acquisition
was part of a contemporaneous $4 million stock investment in Bionutrics and a
subsequent purchase for approximately $2.5 million of certain oil processing
assets from the plant owned by Bionutrics' subsidiary, Nutrition Technology
Corp., in West Monroe, Louisiana, which plant was closed on October 1, 1998. As
part of the divestiture, Bionutrics retained the right to participate in rice
bran processing profits by ACH without operational responsibility or capital
risk.

      InCon Processing

      In June 1999, the Company further reduced its manufacturing exposure by
merging its molecular separation operation, InCon Technologies, with ACH to
create a new joint venture company, InCon Processing, LLC, a limited liability
company. InCon transferred substantially all of its assets to the newly formed
LLC for which it received a payment of $3,000,000 and a 50% interest in the new
company. As part of this transaction, Bionutrics restructured a profit sharing
provision of the 1998 transaction relating to the calculation of profit and
minimums. In the future, the Company will receive 15% of all EBIT (earnings
before interest and taxes) derived by ACH from the sale of rice bran derivative
products (verses a graduated percentage of EBITDA [earnings before interest,
taxes, depreciation and amortization]) without an offset against a floor or
minimum earnings deduction (verses a graduated minimum earnings deducted prior
to a percentage participation calculation). In October 2000, the Company agreed
to issue 300,000 shares of common stock to ACH as consideration for the release
of certain obligations under the Master Formation Agreement and Members
Agreement related to the formation of this venture.

      The formation of this venture allowed the Company to more ably avail
itself of the research and development capacity of InCon for specialty
processing without being encumbered by capital requirements of the operation or
for new facilities. As new functional nutrition products are developed within
Bionutrics, and InCon Processing designs and engineers systems necessary for
their processing, the Company will look initially to ACH for manufacturing. ACH
will provide the manufacturing of these products where feasible and when such
manufacturing is taken on by ACH, capital expenditures and operational
responsibilities will also be theirs. It is management's view that the InCon
Processing venture with ACH, in a practical sense, enhances Bionutrics'
manufacturing base, broadens the valued partnership between Bionutrics and ABF,
and gives the Company greater strength to deal with its future marketing
partners.


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      A critical aspect of the core competency of the Company is the ability to
engineer and design equipment necessary to convert raw material sources into
value-added active compounds and nutritional products. This is important because
the nature of active compounds renders them difficult to process, isolate, and
recover. Producers of raw material by-product streams generally do not have this
requisite equipment. Bionutrics believes its compound discovery, clinical
research and product market capabilities in combination with InCon Processing's
technology and ACH's manufacturing abilities give the Company competitive and
operational advantages.

      InCon Processing operates a specialized development and chemical
manufacturing facility located in Batavia, Illinois, approximately 45 miles due
west of Chicago. The 30,000 square foot facility contains uniquely fabricated
molecular distillation and other molecular separation equipment. InCon
Processing has developed significant skill in applying molecular distillation
technology to engineering and designing molecular separation equipment. Other
methods of separation including dry fractionation, chromatographic isolation,
solvent extraction, membrane separation and enzymatic fermentation are
potentially employed in its designed systems.

      InCon Processing provides toll molecular separation services for Eastman
Chemical and other independent companies requiring chemical separation services
for the manufacturing of their products. InCon Processing markets its
engineering and design skills independently of the Company's raw material
sourcing and sells equipment to unrelated third parties as part of oil
processing plant design and construction oversight.

      InCon Processing faces competition for its services from a number of
companies as well as from expanding in-house capabilities of several of its
customers and potential customers. However, the Company believes that InCon
Processing's management enjoys an excellent reputation in the field, has
long-standing relationships with its customers and, particularly with the
advantage of its state-of-the-art equipment, believes it is well-positioned to
retain and expand its customer base.

PATENTS AND TRADEMARKS

      As of December 2000, Bionutrics has seven issued U.S. patents and eleven
pending U.S. patent applications (with numerous foreign counterparts) covering
novel tocotrienols and tocotrienol-like compounds, methods for their use,
compositions containing those compounds and production processes in the area of
tocotrienols. Four of the pending U.S. patent applications have recently been
allowed, with patent grants anticipated in early 2001. Furthermore, Bionutrics
has acquired one U.S. patent with four corresponding foreign patent applications
claiming methods for promoting weight and fat loss. In addition, Bionutrics has
exclusive licenses under eleven additional U.S. patents and two additional
pending U.S. patent applications relating to other therapeutic and diagnostic
areas of commercial interest to the Company.

      Bionutrics' first U.S. patent, obtained through its R&D subsidiary
LipoGenics (U.S. patent 5,591,772) issued in January 1997. This patent, through
composition of matter claims, secures protection for several novel vitamin-E
like compounds discovered by Bionutrics and through method and process claims,
protects methods for using and processes for producing those compounds. The
patent may also serve to protect the Clearesterol(TM) ingredient contained in
Bionutrics' evolvE(R) brand dietary supplement. A second U.S. patent was issued
in October 1998 (U.S. patent 5,821,264) with claims that parallel those of the
January 1997 patent but refer to a broader and more generic class of compounds.

      The Company has also been successful in obtaining patent protection for
its unique tocotrienol processing technology. In June 1999, Bionutrics received
another U.S. patent directed to specific tocotrienol/tocopherol production
processes (U.S. patent 5,908,940). In March 2000, Bionutrics was informed by the
United States Patent and Trademark Office that it had allowed Bionutrics' U.S.
patent application for tocotrienol-rich fractions produced using the Company's
proprietary tocotrienol/tocopherol production process. The Company expects this
U.S. patent to issue during the first quarter of 2001.

      Bionutrics continues to enhance its estate of patents covering the use
tocotrienols to treat and prevent a wide range of disorders and conditions. In
July 1999, a broad U.S. patent was issued to Bionutrics for methods to treat and
prevent cancer using tocotrienols (U.S. patent 5,919,818). This patent contains
method claims directed to the known, naturally occurring tocotrienols (such as
(alpha)-tocotrienol and (gamma)-tocotrienol), as well as Bionutrics'


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novel proprietary tocotrienols and other vitamin-E like compounds. In November
2000, the Company received another patent (U.S. patent 6,143,770) for a
composition comprising tocotrienol, or a mixture thereof, and nicotonic acid.
This technology has application to cardiovascular health and diabetes.
Additional U.S. and foreign patent applications that focus on other diseases and
conditions are pending.

      Bionutrics continues to protect its trademarks by seeking registration in
the U.S. and abroad. Bionutrics obtained U.S. trademark protection for the
evolvE(R) brand name and associated logo in fiscal year 1997 and has obtained
additional registrations in certain foreign countries. In January 1999,
Bionutrics obtained registration of the mark P25 for one of its proprietary
tocotrienols. In September and October 1999, the Company was granted
registration of the marks Vitenol and Vitenol E. In November 1999 and March
2000, the Company obtained registration of two separate marks for Clearesterol
and the related logo. U.S. and foreign trademark applications are currently
pending for other marks that the Company uses or intends to use on its products.

      Bionutrics has also continued its activities directed towards acquiring
additional patents and other intellectual property to augment its holdings. In
late 1995, Bionutrics acquired a U.S. patent from the Wisconsin Alumni Research
Foundation (U.S. patent 4,603,142) covering the use of (alpha)tocotrienol for
lowering cholesterol. This patent serves to protect Bionutrics' dietary
supplement, evolvE(R), which contains a significant amount of
(alpha)-tocotrienol. In 1997, Bionutrics acquired a U.S. patent from Dr.
Tung-Ching Lee (U.S. patent 5,047,254) covering a process for recovering edible
oil from rice bran. This patent has since been assigned to ABF/ACH as part of a
strategic alliance formed in August 1998. In 1999, Bionutrics licensed the
exclusive rights to certain proprietary technology owned by Eric Kuhrts,
Lipoprotein Diagnostics, Inc., and Hauser-Kuhrts, Inc., located in California.
This technology relates to three main areas: (1) sustained release arginine
formulations and therapeutic applications, (2) niacin/fiber compositions having
cardiovascular applications and (3) oxidative stress diagnostic test kits to
measure the positive effects of dietary antioxidants, as well as the negative
impact of environmental factors (such as smoking) and disease states. In
February 2000, Bionutrics acquired the rights to certain patents and patent
applications owned by John Gustin and Mark F. McCarty claiming methods for
promoting weight and fat loss. Bionutrics intends to pursue commercializing
these technologies independently, as well as possibly integrating them with
Bionutrics' existing proprietary technology. Negotiations are ongoing for
acquisition of rights in several additional patents relating to technology of
interest to the Company.

      As a part of the August 1998 Bionutrics/ABF agreement, Bionutrics
transferred certain rights in Bionutrics' rice bran processing technology to
ACH. Most notably, Bionutrics assigned to ACH its rights in U.S. patent
5,047,254 and in the process claims of future Bionutrics patents in North
America as they pertain to rice bran. In the June 1999 InCon Processing
transaction (see "InCon Processing" above), Bionutrics' wholly owned subsidiary,
InCon, has assigned certain of its current and future intellectual property
rights to InCon Processing relating to processing of natural source materials.
InCon retained, however, all current and future rights relating to proprietary
compounds and compositions of matter having biological activity and/or utility
and products incorporating such compositions of matter.

COMPETITION

      The market for functional nutrition is presently developing with many
companies just beginning to determine how and if they will compete in this new
segment. Candidate companies for mass-market retail competition include
virtually all firms currently engaged in retail mass-market consumer marketing
of food and OTC products. While these same companies are potential customer
targets for Bionutrics, they also are potential competitors because of their own
product development programs or programs they sponsor. Notably, these companies
include American Home Products, Bayer, Warner-Lambert, Pharmaton Boehringer
Ingleheim, Bristol-Myers&Squibb, Novartis and Smith Kline Beecham with OTC and
dietary supplements, and Kraft, Nabisco, Nestle, Danone, Kellogg, General Mills,
Proctor&Gamble and Hunt-Wesson/ConAgra with food. Ingredient manufacturing
companies such as BASF, ADM, Hoffmann LaRoche, Heckle, Cargill, and Eastman
Chemical are all involved in both food and pharmaceutical/pharmaceutical
intermediate processing and sales, and have begun to promote products with
functional food applications. These companies represent some of the largest
companies in the world and most formidable competition for any firm considering
entering the functional nutrition business, including Bionutrics. These firms,
to one degree or another, represent potential strategic partners for firms
entering the field depending upon the significance and value of the technology
they bring.


                                       7
<PAGE>   10
      Because the ethical drug and functional food markets are highly
competitive and require extensive resources to develop new products, the Company
intends to pursue strategic partnerships for this purpose. No arrangements have
yet been entered into and no assurance can be given that partners can be found
or that terms acceptable to the Company can be negotiated. The Company does not
have any products that have been submitted for regulatory approval. Its research
in the near term is expected to focus on compounds and devices in the
preclinical stage of development.

GOVERNMENT REGULATION

      Dietary Supplements

      The Federal Food and Drug Administration ("FDA") is the most active
regulatory authority exercising jurisdiction over vitamins, minerals and other
dietary supplements. It regulates the Company's products under the Food, Drug
and Cosmetic Act ("FDCA") and regulations promulgated by FDA to implement this
statute. In 1976, FDA's ability to regulate the composition of dietary
supplements was restricted in several material respects by the Proxmire
Amendment to the FDCA. Under this amendment, FDA is precluded from establishing
maximum limits on the potency of vitamins, minerals and other dietary
supplements, from limiting the combination or number of any vitamins, minerals
or other food ingredients in dietary supplements and from classifying a vitamin,
mineral or combination of vitamins and minerals as a drug solely because of its
potency. However, the Proxmire Amendment did not affect FDA's authority to
determine that a vitamin, mineral or other dietary supplement is a new drug on
the basis of disease or drug claims made in the product's labeling. Such a
determination would require deletion of such claims, or the Company's submission
and FDA's approval of a new drug application, which entails costly and
time-consuming clinical studies over successive phases.

      In 1990, FDA's authority over dietary supplement labeling was expanded in
several respects by the Nutrition Labeling and Education Act ("NLEA"). This
statute amended the FDCA by establishing a requirement for the nutrition
labeling of most foods including dietary supplements. In addition, the NLEA
prohibits the use of any health claim (as opposed to a statement of nutritional
support; see below) in dietary supplement labeling unless the claim is supported
by significant scientific agreement and is pre-approved by the FDA. Interested
companies may petition the FDA for the approval of health claims. To date, the
FDA has approved health claims for dietary supplements seldomly, including in
connection with the use of calcium for prevention of osteoporosis and the use of
folic acid for prevention of neural tube defects and, it is understood,
applications therefor have been few. NLEA also allows nutrient content claims
characterizing the level of a particular nutrient in a dietary supplement (e.g.,
"high in," "low in," "source of") if they are in compliance with definitions
issued by FDA. Significantly, NLEA precludes any state from mandating
nutritional labeling, nutrient content claim or health claim requirements that
differ from those established under NLEA, thereby eliminating the risk that the
Company's products might be subject to inconsistent labeling requirements.

      In October 1994, the FDCA was amended by enactment of the Dietary
Supplement and Health Education Act ("DSHEA"), which introduced a new statutory
framework governing the composition and labeling of dietary supplements. In the
Company's judgment, DSHEA is in some parts favorable to the dietary supplement
industry while imposing additional burdens in other parts. With respect to
composition, DSHEA creates a new class of "dietary supplements," dietary
ingredients consisting of vitamins, minerals, herbs, amino acids and other
dietary substances for human use to supplement the diet, as well as
concentrates, metabolites, extracts or combinations of such dietary ingredients.

      As for labeling, DSHEA permits "statements of nutritional support", also
known as structure/function claims, for dietary supplements without FDA
pre-approval. Such statements may describe how particular dietary ingredients
affect the structure, function or general well-being of the body, or the
mechanism of action by which a dietary ingredient may affect body structure,
function or well-being, but may not state that a dietary supplement will
diagnose, mitigate, treat, cure or prevent a disease. Nor can a claim be made
that would be interpreted as a health claim under NLEA, that is, generally a
claim that the dietary supplement will lower the risk of a disease or correct an
existing health condition. A company making a statement of nutritional support
must possess adequate substantiating scientific evidence for the statement,
disclose on the label that FDA has not reviewed the statement and that the
product is not intended to mitigate, treat, cure or prevent disease, and notify
FDA of the statement


                                       8
<PAGE>   11
within 30 days after its initial use. There can be no assurance that FDA will,
if it makes a demand therefor, accept as adequate in support of the Company's
product structure/function claims substantiating scientific evidence possessed
by the Company. There can be no assurance that FDA will not determine that a
given statement of nutritional support the Company decides to make is a disease
claim rather than an acceptable nutritional support statement relating to body
function or structure. Such a determination would require (a) deletion of the
disease claim or (b) if it is to be used at all, submission by the Company and
the approval by FDA of a new drug application (which would entail costly and
time-consuming clinical studies) or (c) revision from a disease claim to a
health claim, which would, as noted above, require demonstration of significant
scientific agreement and prior FDA approval or (d) revision to a
structure/function claim. There can be no assurance that FDA will accept as
adequate for a health claim such substantiation as has been amassed by the
Company for nutritional support (structure/function) claims and thus, the
Company, if the health claim is to be used at all, may be required to document
or await significant scientific agreement on the claim's basis.

      DSHEA allows dissemination of "third party literature," such as reprints
of scientific articles that link particular dietary ingredients with health
benefits. Third party literature may be used in connection with the sale of
dietary supplements to consumers under certain conditions. Such a publication
may be so distributed if it is not false or misleading, if no particular
manufacturer or brand of dietary supplement is mentioned, if the publication is
presented in such manner so as to offer a balanced view of available scientific
information on the subject matter, if it is physically separated from products
when used in a retail establishment and if it does not have any other
information appended to it. There can no assurance, however, that all pieces of
third party literature that may be disseminated in connection with the Company's
products will be determined by FDA to satisfy each of these requirements, and
any such failure to comply could subject the product involved to regulation as a
new drug.

      On December 24, 1996, the Company filed its notification letter for the
evolvE(R) dietary supplement with FDA with respect to the product's statements
of nutritional support. Although DSHEA only requires companies to notify FDA,
the agency has adopted an unofficial policy of responding with a letter, which
has become known as a "courtesy letter," when it believes that there may be a
question with respect to any statement of nutritional support. On January 29,
1997, FDA responded with a courtesy letter raising questions concerning one of
Bionutrics' statements of nutritional support. In its March 10, 1998,
notification to FDA, the Company announced labeling changes -- to add a
statement on the importance to cholesterol-lowering of a low-fat diet and
exercise -- in deference to FDA's courtesy letter. At present, the Company's
chief structure/function claims for evolvE(R) are that it works to help lower
cholesterol when taken as part of an overall program including a low-fat,
low-cholesterol diet and exercise, acts as a powerful antioxidant and promotes
normal circulation.

      On April 29, 1998, FDA proposed regulations to limit statements that may
be placed on product labels and labeling concerning the effect that a dietary
supplement has on the structure or function of the human body. FDA sought to
prohibit as disease claims requiring agency pre-approval all cholesterol
lowering statements such as those that currently appear on the evolvE(R) label
and in labeling. The Company, as did numerous other affected parties and
organizations, wrote to oppose such FDA rules. On January 6, 2000, the FDA
issued its final regulation concerning structure and function claims for dietary
supplements. In the preamble to the regulation, FDA states, with regard to
cholesterol claims for dietary supplements, that the agency has concluded that
an appropriate structure/function claim for maintaining cholesterol would be,
"helps to maintain cholesterol levels that are already within the normal range."
The agency also stated its position that a "lowers cholesterol" claim, however
qualified, is an implied disease claim.

      As such, the Company must revise its claims for its evolvE(R) product to
comply with the new regulation prior to the effective compliance date for a
company our size, which is July 7, 2001, or face FDA regulatory enforcement
action.

      In September 1997, FDA published final regulations to implement certain
DSHEA labeling provisions, which became effective in March 1999. These
regulations necessitate material changes in the labeling of all dietary
supplement products, including products sold by the Company. DSHEA also requires
that dietary supplements be prepared, packed and held under conditions that meet
the good manufacturing practice ("GMP") regulations to be promulgated but not
yet proposed by FDA with respect to dietary supplements. Therefore, there


                                       9
<PAGE>   12
can be no assurance that the Company's manufacturing partner ABF's production
facilities will meet all GMP regulations when issued by FDA with respect to
dietary supplements, and the Company may be required to expend resources to take
appropriate action to ensure compliance with such regulations.

      FTC, which exercises jurisdiction over the advertising of dietary
supplements, has in the past several years instituted enforcement actions
against several dietary supplement companies for false and misleading
advertising of certain products. These enforcement actions have resulted in
consent decrees, agency cease and desist orders, injunctions and the payment of
fines by the companies involved. In addition, FTC has increased its scrutiny of
infomercials and Internet websites. There can be no assurance that FTC will not
question the Company's advertising in the future. FTC has been very active in
enforcing its requirements that companies possess adequate substantiation in
their files for claims in product advertising.

      The Company intends to market certain products pursuant to contracts with
customers who will distribute the products under their own or other trademarks.
In addition to Bionutrics' responsibilities, such customers are subject to the
governmental regulations discussed in this section in connection with their
marketing, distribution and sale of such products, and the Company will be
subject to such regulations in connection with the manufacture of such products.
However, the Company's manufacturing contractors are independent companies, and
their labeling, marketing and distribution of such products are beyond the
Company's control except by contract. Failure of these customers to comply with
applicable laws or regulations could have a material adverse effect on the
Company. Governmental regulations in foreign countries where the Company or a
strategic partner may determine to sell products may prevent or delay entry into
the market or prevent or delay the introduction, or require the reformulation,
of certain of the Company's products. Compliance with such foreign governmental
regulations generally will be the responsibility of the Company's customers in
those countries. Those customers are expected to be independent companies over
which the Company will have no control except by contract.

      FDA has broad authority to enforce the provisions of the laws and
regulations applicable to dietary supplements, including the power to seize
adulterated or misbranded products or unapproved new drugs, to request their
recall from the market, to enjoin their further manufacture or sale, to
publicize information about a hazardous product, to issue warning letters and to
institute criminal proceedings. The Company may be subject to additional laws or
regulations administered by FDA, FTC or other regulatory authorities, such as
the individual state attorneys general who have authority under individual state
consumer protection acts to impose injunctions within their states and fines.
The Company is unable to predict the nature of such future laws, regulations,
interpretations or applications, nor can it predict what effect additional
governmental regulations or administrative orders, when and if promulgated, may
have on its business. They could require the reformulation of certain products
to meet new standards, the recall or discontinuance of certain products not able
to be reformulated, imposition of additional record keeping requirements,
expanded documentation of the properties of certain products, expanded or
different labeling and additional scientific substantiation. Any of or all such
requirements could have a material adverse effect on the Company's results of
operations and financial condition.

      Food Additive/New Dietary Ingredient

      If the Company decides to market any new ingredient for use in
conventional foods or for a technical effect (e.g., as a colorant, preservative,
etc.) in dietary supplements, the ingredient may be subject to the FDA food
additive provisions. Such an ingredient must be shown to be generally
recognized, among experts qualified by scientific training and experience to
evaluate its safety, as having been adequately shown through scientific
procedures to be safe under the conditions of its intended use. This is known as
generally recognized as safe or "GRAS" status and can be accomplished by
submitting what is known as a GRAS affirmation to FDA.

      In the alternative, if the ingredient is not generally known among
scientists as set forth above, the Company may submit a food additive petition
to FDA setting forth how the ingredient is to be used in food additive petition
to FDA setting forth how the ingredient is to be used in food and all scientific
data that establishes safety for such use. This can include costly and time
consuming clinical studies over successive phases.


                                       10
<PAGE>   13
      FDA can accept or reject the Company's GRAS affirmation or food additives
petition. There can be no assurance that FDA will accept as adequate the
scientific data presented with either the GRAS affirmation or as part of the
food additive petition. The Company can seek judicial review if it disagrees
with the FDA determination.

      For dietary ingredient in dietary supplements, under DSHEA, a "new dietary
ingredient" is a dietary ingredient that was not marketed in the United States
before October 15, 1994 and does not include any dietary ingredient marketed in
the United States before that date.

      DSHEA requires notification to be submitted to the FDA at least 75 days
before a company introduce or deliver for introduction into interstate commerce
a dietary supplement that contains a new dietary ingredient that has not been
present in the food supply as an article used for food in a form in which the
food has not been chemically altered. Information that provides the basis for
concluding the ingredient is safe is also required by the statute to be included
in the notification.

      The FDA may not disclose the existence of, or the information contained
in, the new dietary ingredient notification for 90 days after the filing date of
the notification. After the 90th day, all information that is not trade secret
or otherwise confidential commercial information will be placed on public
display.

      Failure of the FDA to respond does not constitute a finding that the new
dietary ingredient (or the dietary supplement containing the new dietary
ingredient) is safe or is not adulterated. FDA has stated that the process is
intended to identify those new dietary ingredients that present a concern. With
respect to dietary supplements that contain a new dietary ingredient, if FDA
determines that there is inadequate information to provide reasonable assurance
that such new dietary ingredient does not present a significant or unreasonable
risk of harm, the FDA could initiate civil or criminal proceedings.

      With respect to its mission to promote newly discovered active compounds
for functional nutrition as ingredients in dietary supplements and functional
foods, the Company or its strategic partners will be subject to the foregoing
regulatory schemes.

      Drugs

      Products that are intended for use in the diagnosis, cure, mitigation,
treatment or prevention of disease in humans are subject to extensive
governmental regulation. All such products must undergo extensive
characterization, and are subject to regulation for quality assurance,
toxicology and safety. Products containing such agents must undergo thorough
preclinical and clinical evaluations of performance as to safety and efficacy
under approved protocols.

      The Company intends to pursue regulatory approval for the pharmaceutical
and related uses of drug products. Such pharmaceutical products will be subject
to the regulatory approval processes for new drugs. To take a pharmaceutical
product from the discovery stage through research and preclinical development to
the point where the Company and its partners can make the necessary filings (to
FDA and governmental agencies outside the U.S.) to conduct human clinical trials
may take several years. Regulatory requirements for human clinical trials are
substantial, depend upon a variety of factors, vary by country and will further
add to the time necessary to determine whether a product candidate can be
approved for human use. The Company does not have any pharmaceutical products
that have commenced this trial process. There can be no assurance that the
Company will be able to demonstrate that its proposed drug products are safe and
will be efficacious under these regulatory procedures.

EMPLOYEES

      The Company currently employs 9 people. Of the current employees, two are
involved in marketing and sales at Bionutrics Health Products, five in corporate
and general administration, and two in research and development at LipoGenics.


                                       11
<PAGE>   14
SPECIAL CONSIDERATIONS

The Company has a limited operating history upon which an investor can evaluate
its potential for future success.

       The Company commenced sales of its first product late in the second
quarter of fiscal 1997. Additional revenue sources have only recently been
acquired or developed. Accordingly, there is limited historical financial
information about the Company upon which to base an evaluation of the Company's
performance or to make a decision regarding an investment in shares of the
Company's Common Stock. The Company has generated an accumulated deficit of
approximately $34.9 million through its fiscal year ended October 31, 2000. The
Company's operations to date have progressed from research and development
activities to the marketing and sale of its first product evolvE(R). There can
be no assurance that sales of evolvE(R) or such other products if any it may
introduce will achieve significant levels of market acceptance. As a result, the
Company's business will be subject to all the problems, expenses, delays and
risks inherent in the establishment of a new business enterprise including
limited capital, delays in product development, possible cost overruns due to
price increases in raw product and unforeseen difficulties in its manufacturing
processes, uncertain market acceptance and the absence of an operating history.
Therefore, there can be no assurance that the Company will be able to achieve or
maintain profitable operations. No assurance can be given that the Company will
not encounter unforeseen difficulties that may deplete its capital resources
more rapidly than anticipated.

The Company will require additional capital to support its growth.

       To become and remain competitive, the Company will be required to make
significant investments in research and development on an ongoing basis. The
Company from time to time, including in the near term, will be required to seek
additional equity or debt financing to provide the capital required to maintain
or expand the Company's marketing and production capabilities. This may require
the Company to sell additional common stock or preferred stock or issue warrants
for common stock to obtain the capital. The timing and amount of any such
capital requirements cannot be predicted at this time except that the Company
will require additional financing in the third quarter of fiscal 2001. There can
be no assurance that any such financing will be available on acceptable terms.
If such financing is not available on satisfactory terms, the Company may be
unable to operate at its present level or develop and expand its business,
develop new products or develop new markets at the rate desired and its
operating results may be adversely affected. Debt financing increases expenses
and must be repaid regardless of operating results. Equity financing could
result in additional dilution to existing shareholders. The losses incurred to
date, the uncertainty regarding the ability to raise additional capital and the
Company's inability to generate gross profits and positive cash flows from
operations may indicate that the Company will be unable to continue as a going
concern for a reasonable period of time.

The Company may need additional capital in the future and additional financing
may not be available.

       The Company anticipates that it's available cash resources combined with
the maximum drawdown under the stock purchase agreement with Justicia Holdings
Limited will be sufficient to meet its anticipated working capital and capital
expenditure requirements for at least the next 12 months. However, if the
Company's stock price and trading volume stay at current levels, it will only be
able to draw down the minimum amount of $100,000 during each of the draw down
periods under the common stock purchase agreement. Should this occur, the
Company's available cash resources will meet its requirements for only the next
6 months. In addition, business and economic conditions may not make it feasible
to draw down under the common stock purchase agreement at every opportunity, and
drawdowns are available every 29 trading days. The Company may need to raise
additional capital to fund more rapid expansion, to develop and enhance new and
existing services, to respond to competitive pressures, and to acquire
complementary businesses or technologies.

       The common stock purchase agreement with Justicia Holdings Limited 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 4,000,000 shares have been purchased. If the Company needs
capital but is unable to drawdown under the common stock purchase agreement for
any reason, the Company may need to separately negotiate with Justicia Holdings
Limited to lift such restrictions.


                                       12
<PAGE>   15
       The Company may not be able to obtain additional financing with favorable
terms, if at all. If adequate funds are not available or are not available on
favorable terms, the Company may not be able to effectively execute its business
plan.

The Company faces market risks associated with its business plan assumptions.

       The Company has formulated its business plans and strategies based on
certain assumptions regarding opportunities in the ethical drug market based on
the Company's technology, the depth and nature of edible oil and derivative
products markets, the size of the dietary supplement market, the Company's
anticipated share of these markets and the estimated price and acceptance of the
Company's projected products. There can be no assurance that the Company's
assessments regarding these or a variety of other factors will prove to be
correct. Any future success that the Company might enjoy will depend upon many
factors including factors that may be beyond the control of the Company or that
cannot be predicted at this time. Factors beyond the Company's control may
include changes in the pharmaceutical, edible oil (and processing derivatives)
and dietary supplement industry, governmental regulation, increased levels of
competition including the entry of additional competitors and increased success
by existing competitors, changes in general economic conditions, increases in
operating costs including costs of production, supplies, personnel, equipment
and reduced margins caused by competitive pressures and other factors.

The Company faces intense competition.

       Competition in the health food industry is vigorous with a large number
of businesses present. In addition, many companies are just beginning to
determine how and if they will compete in the functional nutrition market
presently developing. Candidate companies for mass-market retail competition
include virtually all firms currently engaged in retail mass-market consumer
marketing of food and OTC products. While these same companies are potential
customer targets for Bionutrics, they also are potential competitors because of
their own product development programs or programs they sponsor. Notably, these
companies include American Home Products, Bayer, Warner-Lambert, Pharmaton
Boehringer Ingleheim, Bristol-Myers&Squibb, Novartis, and Smith Kline Beecham
with OTC and dietary supplements, and Kraft, Nabisco, Nestle, Danone, Kellogg,
General Mills, Proctor&Gamble and Hunt-Wesson/ConAgra with food. Ingredient
manufacturing companies such as BASF, ADM, Hoffmann LaRoche, Heckle, Cargill,
and Eastman Chemical are all involved in both food and pharmaceutical/
pharmaceutical intermediate processing and sales, and have begun to promote
products with functional food applications. These companies represent some of
the largest companies in the world and most formidable competition for any firm
considering entering the functional nutrition business. Other companies have
recently announced tocotrienol supplement products, including Eastman Chemical
Company, whose new product is also derived from rice bran oil and claims
antioxidant properties. Many of the competitors have established reputations for
successfully developing and marketing dietary supplement products. Many of such
companies have greater financial, managerial and technical resources than the
Company, which may put it at a competitive disadvantage. Even though the Company
intends to license its dietary supplement to marketing partners and this would
eliminate certain elements of risk, there is no assurance that the Company will
be successful in its licensing efforts or that its potential marketing partners
will be successful in marketing and selling the Company's products. If the
Company is not successful in competing in the dietary supplement market, it may
not be able to recognize its business objectives.

      Competition in the pharmaceutical area is intense and competitors have
substantially greater resources than the Company. The Company will be required
to obtain development and/or marketing partners to effectively enter the drug
market.

      InCon Processing's current competition is primarily from specialized local
and regional processing facilities. However, many of its toll processing
customers have the capacity to perform toll processing and molecular separation
in-house. No assurance can be given that its customers will continue to
outsource toll processing to InCon Processing, or that they will continue to
utilize InCon Processing's facility over that of a local processor.


                                       13
<PAGE>   16
The Company may fail to establish or cultivate strategic partnerships.

      The Company has stated its intent to develop its business model and build
its business through strategic partnerships. There is no assurance the Company
will be able to successfully form or manage such partnerships, and if not, the
Company's ability to execute its business plan will be at risk. If these
partnerships do not succeed and therefore no further capital is provided to the
Company from these sources, there is no assurance that the Company will be able
to identify other sources of capital sufficient for its needs in the time
required to execute its business plan.

      The Company has formed an alliance with Novartis Nutrition to evaluate its
Clearesterol(TM) as a functional food ingredient. Bionutrics and Novartis
Nutrition have elected not to pursue the initial course as anticipated, but are
continuing to explore product and market opportunities. No assurance can be
given that Novartis will determine that any of the potential functional
nutrition products being developed by Bionutrics will meet its criteria for a
food ingredient or, even if it does, that Novartis will decide to continue the
partnership. Any future funding of capital by Novartis Nutrition to the Company
will depend upon this ongoing evaluation.

      The Company has formed an alliance with ABF to pursue the exploitation of
certain food processing by-product streams. As part of this alliance ACH is
considering the exploitation of rice bran derivative products. The rice bran,
rice bran oil and other derivative products business is highly competitive and
no assurance can be given that ACH will succeed or produce profits, of which the
Company participates at 15% EBIT, or that ACH will determine to stay in the
business even if profitable.

The Company may become subject to increased governmental regulation.

       The processing, formulation, packaging, labeling and advertising of the
Company's products are primarily subject to regulation by FDA and FTC. In
addition, individual state attorneys general have authority to enforce
individual state consumer protection acts within their own states. Although
Congress has recently recognized by enacting DSHEA the potential impact of
dietary supplements in promoting the health of U.S. citizens, there are a number
of new provisions not yet subject to judicial interpretation with respect to
FDA's regulation of dietary supplements and the ultimate effect of DSHEA cannot
be predicted. Further, because of the technical requirements imposed by DSHEA,
it may be difficult for any company manufacturing or marketing dietary
supplements to remain in strict compliance. FDA has recently promulgated
regulations effective in March 1999 in part to implement DSHEA. Proposals have
also been made to modify or change the provisions of DSHEA. It is impossible to
predict whether those proposed changes will become law or the full effect that
such regulations will have on the business and operations of the Company.
Various aspects of the new regulations are still being reviewed by the Company.
Material changes in the labeling of all dietary supplement products, including
products sold by the Company, are and will be required. In addition, due to the
finalization of the FDA's structure/function regulations on January 6, 2000, the
Company is required to significantly modify cholesterol claims presently being
made for the Company's evolvE(R) product.

The Company relies on a limited number of products and customers.

       To date the Company's only product is the evolvE(R) dietary supplement,
containing a patented tocotrienol vitamin E ingredient, Clearesterol(TM),
derived from rice bran. The dependence on one product increases risk since a
decline in the market demand for the Company's product or the products of other
companies that may utilize Clearesterol(TM) could have a significant adverse
impact on the Company.

      Three customers accounted for approximately 63% of InCon Processing's
revenues related to its core business of toll processing and molecular
distillation for the 12 months ended October 31, 2000. The Company's
participation in ACH's efforts to market derivative products is just beginning
and no assurance can be given that ACH can capture a share of the market for
such products. A limited number of customers could adversely affect the
Company's operations.


                                       14
<PAGE>   17
The Company may become subject to product liability claims.

       As a marketer of dietary supplements that are ingested by consumers, the
Company may be subject to various product liability claims, including, among
others, that its products contain contaminants or include inadequate
instructions as to use or inadequate warnings concerning side effects and
interactions with other substances. While no such claims have been made to date
and the Company maintains product liability insurance, there can be no assurance
that product liability claims and the resulting adverse publicity will not have
a material adverse effect on the Company.

The Company depends on its marketing partners to market its products.

       The Company is dependent on its ability to market through marketing
partners its products to large mass merchandise and health food retailers and to
other companies for use in their products. The Company does not anticipate that
long-term contractual relationships will be entered into with any of its
customers. The Company has stated its intent to rely in the future on strategic
partnerships with marketing companies to market and sell its current and
to-be-developed functional nutrition products. There can be no assurance that
the Company will be successful in finalizing such strategic partnerships, nor if
finalized that the selected strategic partner(s) will successfully market and
sell the Company's products.

The Company's technology may be questioned or refuted.

       The Company has invested a decade in research and development to
demonstrate the value of its technology and secure patents and make patent
applications. The Company has chosen to apply for and secure and acquire by
acquisition patent protection of strategic elements of this technology. There is
no assurance that the science upon which the technology is based will not be
refuted or otherwise drawn into question by further research conducted by the
Company or independent laboratories or its strategic partners.

The Company may receive unfavorable publicity.

       The Company believes the dietary supplement market is affected by
national media attention regarding the consumption of dietary supplements. There
can be no assurance that future scientific research or publicity will not be
unfavorable to the dietary supplement market or any particular product, or
inconsistent with earlier favorable research or publicity. Future reports of
research that are perceived as less favorable or that question such earlier
research could have a material adverse effect on the Company. Because of the
Company's dependence upon consumer perceptions, adverse publicity associated
with adverse effects resulting from the consumption of the Company's products or
any similar products distributed by other companies could have a material
adverse impact on the Company. Such adverse publicity could arise even if the
adverse effects associated with such products resulted from consumers' failure
to consume such products as directed. In addition, the Company may not be able
to counter the effects of negative publicity concerning the efficacy of its
products. Further, because the Company's products are derived from natural
sources, the Company must contend with variations in composition that may impact
a product's functionality and which may require the Company to modify its
processing methodology or the product formulations. These changes may impact
consumer perceptions.

The Company depends on its key management personnel.

       The Company is dependent on its management, particularly Dr. Ronald Lane,
a founder and the chief executive officer, for all its business activities. The
Company is dependent on its ability to attract, retain and motivate additional
qualified personnel. There are no long-term employment or other agreements with
any executive officer except for Mr. Palmer. The loss of the services of Dr.
Lane or other executive officers and key employees could have a material adverse
effect on the business of the Company.


                                       15
<PAGE>   18
The Company depends on its suppliers and manufacturers for its ingredients.

       The Company has agreed to acquire the Clearesterol(TM) ingredient from
ACH. If ACH encounters difficulties in obtaining on commercially reasonable
terms quality rice bran for use in its manufacturing process, the Company could
experience production delays or the inability to fulfill orders on a timely
basis. Since the Company has agreed to purchase Clearesterol(TM) from ACH on a
cost-plus basis, any material increase in projected costs of manufacture could
materially affect the Company's or any strategic marketing partner's ability to
compete with evolvE(R) or any other dietary supplement or functional food
containing such ingredient. The Company also relies on outside sources for
evolvE(R) encapsulation. In the event its contract manufacturers cannot meet the
Company's manufacturing and delivery requirements, the Company may suffer
interruptions of delivery while it arranges for alternative manufacturing
sources. Access to replacement sources could be delayed if the Company must
first complete a review of the manufacturer's quality control and capabilities.

The Company may experience difficulty entering into international markets.

       The Company may experience difficulty entering international markets due
to greater regulatory barriers, the necessity of adapting to new regulatory
systems and problems related to entering new markets with different cultural
bases and political systems. Operating in international markets exposes the
Company to certain risks, including, among other things: (i) changes in or
interpretations of foreign regulations that may limit the Company's ability to
sell certain products or repatriate profits to the United States; (ii) exposure
to currency fluctuations; (iii) the potential imposition of trade or foreign
exchange restrictions or increased tariffs; and (iv) political instability. If
the Company expands into international operations, these and other risks
associated with international operations are likely to be encountered.

The Company relies on patents, licenses and intellectual property rights to
protect its proprietary interests.

       The Company's success depends in part on its ability to obtain patents,
licenses and other intellectual property rights covering its products. The
Company's patent rights are held by its subsidiary LipoGenics. There can be no
assurance that the Company's patents and patent applications are sufficiently
comprehensive to protect evolvE(R) or other Company products intended. The
process of seeking further patent protection can be long and expensive, and
there can be no assurance that all patents will issue from the 11 currently
pending or future patent applications or that any of the patents when issued
will be of sufficient scope or strength to provide meaningful protection or any
commercial advantage to the Company. While the Company believes the basis on
which it has made further patent applications correspond to the patents that
have been issued for composition and method of production and use and is
reasonable given the issuance of the latter patents, there can be no assurance
that the patents for which it has applied will be issued. The Company may be
subject to or may be required to initiate interference proceedings in the U.S.
Patent and Trademark Office. Such proceedings could demand significant financial
and management resources. The Company may receive communications alleging
possible infringement of patents or other intellectual property rights of
others. The Company believes that in most cases it could obtain necessary
licenses or other rights on commercially reasonable terms, but no assurance can
be given on this point or that litigation would not ensue or that damages for
any past infringements would not be assessed. Litigation, which could result in
substantial cost to and diversion of effort by the Company, may be necessary to
enforce patents or other intellectual property rights of the Company or to
defend the Company against claimed infringement of the rights of others. The
failure to obtain necessary licenses or other rights or litigation arising out
of infringement claims could have a material adverse effect on the Company.

The Company's stock is thinly traded and may experience price volatility.

       There has been and may continue to be, at least for the immediate future,
a limited public market for the Common Stock of the Company. Despite its listing
on Nasdaq SmallCap in November 1997 there can be no assurance that an active
public market will be developed or sustained for the Company's Common Stock. In
addition, if the Company's stock price does not meet minimum requirements of
Nasdaq SmallCap, the Company could be delisted. The stock markets have
experienced extreme price and volume fluctuations during certain periods. These
broad market fluctuations and other factors may adversely affect the market
price of the Common


                                       16
<PAGE>   19
Stock and the Company's ability to raise necessary capital and finance possible
acquisitions including of technology.

Rights to acquire shares of the Company's common stock will result in dilution
to other holders of its common stock.

       As of October 31, 2000, options to acquire a total of 2,301,667 shares
were outstanding under the Company's 1996 Stock Option Plan. An additional
499,100 shares of Common Stock are reserved for issuance pursuant to the
exercise of options that may be granted in the future under the Company's 1996
Stock Option Plan. The Company also has outstanding options and warrants not
issued under the 1996 Plan to purchase up to 3,690,144 shares of Common Stock.
During the terms of such options and warrants, the holders thereof will have the
opportunity to profit from an increase in the market price of the Common Stock
with resulting dilution in the interests of holders of Common Stock. The
existence of such stock options and warrants could adversely affect the terms on
which the Company can obtain additional financing, and the holders of such
options and warrants can be expected to exercise such options and warrants at a
time when the Company, in all likelihood, would be able to obtain additional
capital by offering shares of its Common Stock on terms more favorable to the
Company than those provided by the exercise of such options and warrants. The
Company also has the authority to issue additional shares of Common Stock and
shares of one or more series of convertible preferred stock. The issuance of
such shares could result in the dilution of the voting power of outstanding
shares of Common Stock and could have a dilutive effect on earnings per share.

Sales of large numbers of shares could adversely affect the price of the
Companys' common stock.

      Of the 21,471,252 shares outstanding as of October 31, 2000, 19,609,888
are eligible for resale in the public markets. Of these eligible shares,
8,818,054 shares are eligible for resale in the public markets subject to
compliance with the volume and manner of sale rules of Rule 144 under the
Securities Act of 1933, as amended, and 10,791,834 are eligible for resale in
the public markets either as unrestricted shares or pursuant to Rule 144(k). In
general, under Rule 144 as currently in effect, any person (or persons whose
shares are aggregated for purposes of Rule 144) who beneficially owns restricted
securities with respect to which at least one year has elapsed since the later
of the date the shares were acquired from the Company, or from an affiliate of
the Company, is entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the then outstanding shares of
Common Stock of the Company and the average weekly trading volume in Common
Stock during the four calendar weeks preceding such sale. Sales under Rule 144
also are subject to certain manner-of-sale provisions and notice requirements
and to the availability of current public information about the Company. A
person who is not an affiliate, who has not been an affiliate within three
months prior to sale and who beneficially owns restricted securities with
respect to which at least two years have elapsed since the later of the date the
shares were acquired from the Company, or from an affiliate of the Company, is
entitled to sell such shares under Rule 144(k) without regard to any of the
volume limitations or other requirements described above. Sales of substantial
amounts of Common Stock in the public market could adversely affect prevailing
market prices.

      The Company has registered for offer and sale up to 2,850,000 shares of
Common Stock that are reserved for issuance pursuant to the Company's 1996 Stock
Option Plan. Shares issued after the effective date of such registration
statement upon the exercise of stock options generally will be eligible for sale
in the public market, except that affiliates will continue to be subject to
volume limitations and other requirements of Rule 144. The issuance of such
shares could depress the market price of the Company's Common Stock.

      On March 22, 2000, the Company registered for the sale of up to 330,000
shares of Common Stock issuable upon the exercise of warrants and options held
by certain selling stockholders.

      On September 7, 2000, the Company executed a Registration Rights Agreement
under which the Company agreed that it would file an S-1 registration statement
with the SEC for the resale of 4,000,000 shares of the Company's Common Stock
issuable in connection with a Common Stock Purchase Agreement dated September 7,
2000. The Common Stock Purchase Agreement permits the Company, in its discretion
and subject to certain restrictions, to sell up to an aggregate of 4,000,000
shares. The period during which the Company can


                                       17
<PAGE>   20
make such sales is two years beginning upon the effective date of a registration
statement for the resale of the shares.

      On December 28, 2000, the Company filed to register for resale up to
560,000 shares of Common Stock and Common Stock issuable upon the exercise of
warrants held by certain selling stockholders.

      The sales of shares under these registration statements could depress the
market price of the Company's common stock.

It may be difficult for a third party to acquire the Company, even if the
acquisition would be in the best interests of its stockholders.

      The Company's Restated Articles of Incorporation and the Nevada General
Corporation Law contain provisions that may have the effect of making more
difficult or delaying attempts by others to obtain control of the Company, even
when those attempts may be in the best interest of stockholders. The Nevada Law
also imposes conditions on certain business combination transactions with
"interested stockholders" (as defined therein). The Restated Articles provides
for a staggered board and also authorizes the Board of Directors, without
stockholder approval, to issue one or more series of preferred stock, which
could have voting and conversion rights that adversely affect the voting power
of the holders of the Company's Common Stock.

The Company's operating results could differ materially from the forward-looking
statements contained in this 10-K.

      Certain statements and information contained in this 10-K regarding
matters that are not historical facts are forward-looking statements, as that
term is defined under applicable securities laws. These include statements
concerning the Company's future, proposed, and anticipated activities; certain
trends with respect to its revenue, operating results, capital resources, and
liquidity, and certain trends with respect to the markets in which the Company
competes or its industry in general. Forward-looking statements, by their very
nature, include risks and uncertainties, many of which are beyond the Company's
control. Accordingly, actual results may differ, perhaps materially, from those
expressed in or implied by such forward-looking statements. Factors that could
cause actual results to differ materially include those discussed under "Special
Considerations."


                                       18
<PAGE>   21
ITEM 2. PROPERTIES

FACILITIES AND EQUIPMENT

      The total rental expense for fiscal 2000 for the Company and its
subsidiaries was $207,000.

      The Company currently leases its principal executive offices in Phoenix,
Arizona. The office contains approximately 6,155 square feet. The term of the
lease is for 60 months commencing January 27, 1998 and monthly lease payments
are approximately $13,600.

ITEM 3. LEGAL PROCEEDINGS

      The Company is not party to any legal proceedings that management believes
would have a material adverse effect on the business of the Company.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

      None.


                                       19
<PAGE>   22
                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company began trading on the Nasdaq SmallCap Market on November 19,
1997.

<TABLE>
<CAPTION>
                                                                High    Low
<S>                                                            <C>     <C>
Year Ended October 31, 1999
   First Quarter............................................    2.00    1.25
   Second Quarter...........................................    2.25    1.19
   Third Quarter............................................    4.13     .66
   Fourth Quarter...........................................    2.22    1.31

Year Ended October 31, 2000
   First Quarter............................................    3.125   1.50
   Second Quarter...........................................    9.50     .938
   Third Quarter............................................    2.188   1.125
   Fourth Quarter...........................................    1.625    .813

Year Ended October 31, 2001
   First Quarter (through January 11, 2001).................    1.188    .406
</TABLE>

      Such quotations reflect inter-dealer bids, without retail mark-up,
mark-down or commissions, and may not reflect actual transactions.

       On January 11, 2001, the closing price of the Common Stock on the Nasdaq
SmallCap Market was $.69. As of January 11, 2001, there were 144 holders of
record of the Company's Common Stock.

DIVIDEND POLICY

      The Company has not declared or paid any cash dividends on its Common
Stock and does not intend to declare or pay any cash dividend in the foreseeable
future. The payment of dividends, if any, is within the discretion of the Board
of Directors and will depend on the Company's earnings, if any, its capital
requirements, and financial condition and such other factors as the Board of
Directors may consider.

RECENT SALES OF UNREGISTERED SECURITIES

      On September 20, 2000, the Company issued 500,000 shares of common stock
at a price of $1.00 per share, for a total of $500,000. In conjunction with this
issuance, 50,000 warrants were issued with an exercise price of $1.10. These
warrants expire on September 20, 2003. Additionally, in connection with this
transaction the Company issued 10,000 shares of common stock to the investors as
payment for their legal fees, expenses and related disbursements. The agreement
allows for a two percent penalty to be charged to the Company if such shares are
not registered for resale with the SEC on a timely basis.

      On October 25, 2000, the Company entered into an agreement to issue
500,000 shares of common stock at a price of $1.00 per share, for a total of
$500,000. In conjunction with this issuance, 50,000 warrants were issued with an
exercise price of $1.00. These warrants expire on October 24, 2002. These shares
were issued on November 28, 2000.


                                       20
<PAGE>   23
      On October 27, 2000, the Company agreed to issue 591,850 shares of its
Series A Convertible Preferred Stock as consideration for the cancellation of
$798,998 of debt owed under certain promissory notes dated December 22, 1999 and
June 19, 2000 to a director. The preferred shares have an annual cumulative
dividend of $0.108 per share, a liquidation rate of $1.35 per share and each
share is convertible to one share of Common Stock on or after October 27, 2001.
The preferred shares are also redeemable by the Company at any time at $1.35 per
share. These preferred shares were issued on December 6, 2000.

      On October 28, 2000, the Company agreed to issue 150,000 shares of its
Common Stock as consideration for the release of its obligation to repay a
$150,000 Bridge Loan the Company received on April 7, 2000. Under the agreement,
the Company has the right to repurchase the shares at fair market value, between
$1.00 and $3.00, for three years. These shares were issued on December 13, 2000.

      On October 30, 2000, the Company agreed to issue 300,000 shares of its
Common Stock to ACH as consideration for the release of certain contingent
obligations under the Master Formation Agreement and Members Agreement related
to the formation of their 50/50 joint venture, InCon Processing. These shares
where issued on December 14, 2000.

      On October 30, 2000, the Company issued 2,000,000, one year warrants with
an exercise price of $2.00 to ACH. These warrants were issued to effectively
extend the exercise period for the original warrants issued to ACH that expired
August 14, 2000, as the Company wishes to extend the period during which ACH may
obtain an additional equity interest in the Company.

      Effective December 20, 2000, the Company entered into a Common Stock
Purchase Agreement (the "Agreement") for the future issuance and purchase of
shares of the Company's Common Stock. This new Agreement is with Ropart
Investments LLC, of which Robert B. Goergen, a director of Bionutrics, is also a
managing member. The Agreement establishes what is sometimes termed as an equity
line of credit or an equity draw down facility. The Agreement permits the
Company to sell up to an aggregate of 500,000 shares at $1.00 per share, based
on a minimum investment amount of $100,000 and a maximum investment amount of
$500,000. The period during which the Company can make such sales begins
December 20, 2000 and terminates December 31, 2001. In lieu of a minimum draw
down commitment by the Company, the Company has issued a three-year warrant for
the purchase of 70,000 shares of Common Stock at an exercise price of $1.00 per
share. In addition, three-year warrants will be issued in connection with each
draw down for the purchase of a number of shares equal to 10 percent of the
shares purchased at such draw down. In the event the Company does not exercise
its right to fully draw down under this Agreement, then on the Termination date,
Investor shall have the right to purchase up to 100,000 shares of Common Stock
at $1.00 per share, such number of shares together with shares purchased
pursuant to draw downs not to exceed 500,000 shares of Common Stock. In
connection with the Agreement, the Company amended the January 28, 1999 warrant
agreement for the purchase of 250,000 shares of the Company's Common Stock at
$2.00 per share. The original expiration date of December 31, 2000 was extended
one year to December 31, 2001.

       The sales and issuances of the securities in the transactions above were
deemed to be exempt from registration under the 1933 Act by virtue of Section
4(2). Appropriate legends have been placed on the documents evidencing the
securities and investment representations were obtained from the purchasers. All
purchasers of securities either received adequate information about the Company
or had access, through employment or other relationships, to such information
and were sophisticated investors. Except as noted, each of the offerings was
made to institutional investors. All such securities issued pursuant to such
exemption are restricted securities as defined in Rule 144(a)(3) promulgated
under the 1933 Act.


                                       21
<PAGE>   24
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

      The following selected financial data should be read in conjunction with
the Company's consolidated financial statements and the related notes and with
the Company's management's discussion and analysis of financial condition and
results of operations, provided elsewhere herein. See Item 14, "Exhibits,
Financial Schedules and Reports on Form 8-K," for the historical financial
statements of, and other financial information regarding, the Company.

<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                       October 31,
                                 ----------------------------------------------------------------------------------------
                                     2000               1999               1998               1997               1996
                                 ------------       ------------       ------------       ------------       ------------
<S>                              <C>                <C>                <C>                <C>                <C>
STATEMENT OF EARNINGS DATA:
Gross Revenues ............      $    355,624       $  3,689,747       $  6,653,904       $  2,862,843       $     20,000
Operating Expenses ........         2,689,162          6,307,426         10,760,959         10,022,163          2,996,880
Other Income (Expense) ....           153,394           (112,364)         2,426,291            266,929            (30,667)
Net Loss ..................        (2,566,731)        (5,623,144)        (9,242,405)       (12,341,866)        (3,007,547)
Basic Loss Per Share(1) ...      $       (.12)      $       (.27)      $       (.49)      $       (.77)      $       (.26)

Weighted Average Shares
   Outstanding(1) .........        20,948,968         20,714,652         18,716,757         16,042,785         11,564,327
BALANCE SHEET DATA:
Working capital ...........      $   (366,240)      $    364,627       $  1,328,931       $  1,237,642       $  4,739,882
Total Assets ..............         4,106,368          5,186,031         10,894,259         14,155,335          6,217,348
Total Liabilities .........         1,257,432          2,042,095          3,318,530          5,119,016            936,478
Stockholders equity .......         2,848,936          3,143,936          7,575,729          9,036,319          5,280,870
</TABLE>


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

(1) These shares do not include 5,991,811, 5,360,145, 4,957,978, 2,749,577 or
2,128,144 shares of Common Stock as of October 31, 2000, 1999, 1998, 1997 and
1996, respectively, that may be issued upon exercise of outstanding stock
options and warrants as they are antidilutive.


                                       22
<PAGE>   25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      The following discussion of the Company's financial condition and results
of operations as well as certain statements and information under Item 1
"Business" include 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 includes, but is not limited to,
those discussed under "Business - Special Considerations."

INTRODUCTION

    Results of operations for fiscal 2000 reflect Bionutrics, Inc., continuing
its efforts to reposition the Company as a product development company. Prior to
1997, management's efforts had been primarily directed toward conducting
research and development, applying for patent approvals, developing
manufacturing and distribution arrangements for its dietary supplement product
and obtaining initial capital and financing to fund these activities.

    Bionutrics (formerly NutraGenics, Inc. until December 26, 1996) completed a
merger with LipoGenics, Inc., a Delaware corporation ("LipoGenics") on October
31, 1996, and LipoGenics became a wholly owned subsidiary of the Company. The
merger with LipoGenics was accounted for in a manner similar to a
pooling-of-interest and as such Bionutrics's accounts reflect the historic
operations of LipoGenics. Bionutrics issued 2,092,743 shares in connection with
the merger. Pursuant to the merger, Bionutrics obtained ownership of certain
proprietary rights related to dietary supplements previously licensed to it by
LipoGenics and acquired ethical drug, functional food and other dietary
supplement rights owned by LipoGenics.

    On October 31, 1997, Nutrition Technology Corporation ("Nutrition
Technology"), a subsidiary of Bionutrics, completed a forward triangular merger
of a subsidiary of Nutrition Technology with InCon Technologies Inc. ("InCon"),
and InCon became a wholly owned subsidiary of Nutrition Technology. The merger
with InCon was accounted for as a purchase and Bionutrics issued 1,400,000
shares in connection with the merger. In fiscal 2000, a receivable, acquired
from InCon in connection with this merger, was reclassified. In connection with
the merger, the edible oil plant sales and consulting business formerly
conducted by an InCon affiliate was transferred to InCon International Ltd., a
wholly-owned subsidiary of Bionutrics, and specialty vitamin E technology
relating to soluble and powder vitamin E owned by another affiliate was
transferred to InCon.

    In June 1999, the Company entered into a new 50/50 venture with ACH, wherein
InCon transferred substantially all of its assets to a newly formed limited
liability company, InCon Processing, LLC ("InCon Processing") for which it
received a payment of $3,000,000 and a 50% interest in the venture. InCon
Processing took over substantially all of the business previously engaged in by
InCon related to toll processing, molecular separation, and the design and sale
of molecular separation facilities. InCon Processing expects to utilize the
InCon expertise to expand its existing business and to expand its business into
processing micronutrients that would be available for food grade products. In
connection with this transaction, the remaining amount of goodwill recorded at
the date of acquisition of InCon was written off at the date of the transaction.

RESULTS OF OPERATIONS

YEAR ENDED OCTOBER 31, 2000, COMPARED TO YEAR ENDED OCTOBER 31, 1999

    Consolidated gross revenues for the 12 months ended October 31, 2000 were
$356,000 versus $3,690,000 for the same 12 months in 1999, summarized by
subsidiary as follows (intercompany sales excluded):


                                       23
<PAGE>   26
<TABLE>
<CAPTION>
             Subsidiary                    2000             1999
         --------------------            --------        ----------
<S>                                      <C>             <C>
InCon Technologies .................     $      0        $2,729,000

Bionutrics Health Products .........      247,000           835,000

Nutrition Technology ...............            0           105,000

LipoGenics .........................      109,000            21,000
                                         --------        ----------

Total Consolidated Gross Revenues...     $356,000        $3,690,000
                                         ========        ==========
</TABLE>

    In June 1999, InCon transferred substantially all of its assets to InCon
Processing. Therefore, revenues for the 12 months ended October 31, 2000 are
zero as compared to the same period in 1999. As a result of its investment in
InCon Processing, the Company will be entitled to 50% of the future profits. It
is anticipated that InCon Processing will retain the cash generated from
operations for at least the next 12 months to expand and develop its business.

    Bionutrics Health Products revenues reflect the sales of its first product,
evolvE(R), as well as revenues related to product development activities during
fiscal year 2000. As of the 12 months ended October 31, 2000, evolvE(R)
maintained distribution in over 10,000 stores including many leading drug and
food chains throughout the United States. The Company also sells the product
directly to the consumer via the Internet. Nonetheless, sales of evolvE(R) have
been less than anticipated and declining because the Company was forced to cut
back on budgeted advertising and promotions for the product due to delays in
raising capital during this and prior periods. In addition, some accounts have
returned the product due to low volume activity. The Company recognizes that a
substantial advertising program is necessary to achieve growth in the evolvE(R)
product line, and that failure to show positive sales results will have a
negative impact on obtaining and maintaining distribution store accounts. The
Company is seeking a marketing partner to provide the resources needed to
properly market and promote the evolvE(R) brand and other anticipated dietary
supplements and functional food products. The Company is engaged in discussions
with several potential marketing partners involving the present and future brand
products.

    Nutrition Technology is substantially inactive. Gross revenues reflected in
fiscal 1999 represent remaining byproducts sold out of inventory. In August of
1998, the Company entered into a contract with ACH which provided: (i) for the
sale of certain rice bran oil and processing assets to ACH; (ii) for the
development of rice bran oil and other derivative products whereby Bionutrics
will receive a perpetual profit sharing interest; and (iii) for a supply
agreement where ACH will provide rice bran-derived Clearesterol(TM) ingredient
used in evolveE(R). All elements of the alliance with ACH were executed on or
before October 31, 1998.

    LipoGenics revenues are attributable to a Phase I Small Business Innovation
Research (SBIR) grant from the National Heart, Blood and Lung Institute. This
grant was received during the fourth quarter of fiscal 1999 and was concluded
during fiscal 2000. Revenues shown for both periods relate to this grant.


      Cost of revenues for the 12 months ended October 31, 2000, was $165,000
versus $2,335,000 for the same 12 months in 1999. This reduction is primarily
due to the new 50/50 joint venture entered into with ACH, which substantially
took over all of the business engaged in by InCon. Due to this transaction which
occurred during fiscal 1999, cost of revenues decreased $2,170,000 for fiscal
2000 as compared to fiscal 1999.

      Operating expenses for the 12 months ended October 31, 2000 of $2,689,000
were $3,618,000 lower than that recognized for the same 12 months in 1999 of
$6,307,000. This reduction is primarily due to the 50/50 joint venture entered
into during the third quarter of 1999 with ACH as well as significantly reduced
advertising, salaries and cost containment programs.


                                       24
<PAGE>   27
      Other income for the 12 months ended October 31, 2000 was $153,000
compared to the prior years' expense of $112,000. The current year includes
certain non-recurring income items. Both years reflect a write-down of the
investment in InCon Processing.

      Net loss decreased to $2,567,000, or $.12 per share for the 12 months
ended October 31, 2000 from $5,623,000, or $.27 per share for the 12 months
ended October 31, 1999 due primarily to lower cost of revenues and operating
expenses as outlined above.

YEAR ENDED OCTOBER 31, 1999, COMPARED TO YEAR ENDED OCTOBER 31, 1998

    Consolidated gross revenues for the 12 months ended October 31, 1999 were
$3,690,000 versus $6,654,000 for the same 12 months in 1998, summarized by
subsidiary as follows (intercompany sales excluded):

<TABLE>
<CAPTION>
             Subsidiary                     1999          1998
         --------------------             ---------     ---------
<S>                                      <C>           <C>
InCon Technologies..................     $2,729,000    $4,104,000

Bionutrics Health Products..........        835,000     2,190,000

Nutrition Technology................        105,000       360,000

LipoGenics..........................         21,000             0
                                          ---------     ---------

Total Consolidated Gross Revenues...     $3,690,000    $6,654,000
                                          =========     =========
</TABLE>

    InCon Technologies' gross revenues are primarily attributed to molecular
distillation toll processing of materials from a variety of customers. In June
1999, InCon transferred substantially all of its assets to InCon Processing.
InCon Processing took over substantially all of the business currently engaged
in by InCon related to toll processing, molecular separation, and the design and
sale of molecular separation facilities. As a result of its investment in InCon
Processing, the Company will be entitled to 50% of the future profits. However,
it is anticipated that InCon Processing will retain the cash generated from
operations for at least the next 12 months to expand and develop its business.
Therefore, revenues for the 12 months ended 1999 are substantially reduced
compared to the same period 1998.

    Bionutrics Health Products revenues reflect the sales of its first product,
evolvE(R). As of the 12 months ended October 31, 1999, evolvE(R), offered in
three packages, was distributed by over 25,000 stores including many leading
drug and food chains throughout the United States. Nonetheless, sales of
evolvE(R) have been less than anticipated and declining because the Company was
forced to cut back on budgeted advertising and promotions for the product due to
delays in raising capital during this and prior periods. In addition, some
accounts have returned the product due to low volume activity. The Company
recognizes that a substantial advertising program is necessary to achieve growth
in the evolvE(R) product line, and that failure to show positive sales results
will have a negative impact on obtaining and maintaining distribution store
accounts. The Company is seeking a marketing partner to provide the resources
needed to properly market and promote the evolvE(R) brand and other anticipated
dietary supplements and functional food products. The Company is engaged in
discussions with several potential marketing partners involving the present and
future brand products.

    Nutrition Technology is substantially inactive. Gross revenues reflected in
both periods represent remaining byproducts sold out of inventory. In August of
1998, the Company entered into a contract with ACH which provided: (i) for the
sale of certain rice bran oil and processing assets to ACH; (ii) for the
development of rice bran oil and other derivative products whereby Bionutrics
will receive a perpetual profit sharing interest; and (iii) for a supply
agreement where ACH will provide rice bran-derived Clearesterol(TM) ingredient
used in EvolvE(R). All elements of the alliance with ACH were executed on or
before October 31, 1998.


                                       25
<PAGE>   28
    LipoGenics revenues are attributable to a Phase I Small Business Innovation
Research (SBIR) grant from the National Heart, Blood and Lung Institute. As this
is the first such grant received by LipoGenics, there are no revenues shown for
the same 12 months of the prior years.

      Cost of revenues for the 12 months ended October 31, 1999, was $2,335,000
versus $7,259,000 for the same 12 months in 1998. This reduction is due to lower
sales volume, reduced manufacturing costs from discontinuance of operations at
the West Monroe, Louisiana production facility, as well as the new 50/50 joint
venture entered into with ACH, which substantially took over all of the business
engaged in by InCon. Due to the aforementioned events, the reduction in
production costs resulted in the Company's first year of positive gross margin
for the 12 months ended October 31, 1999.

      Operating expenses for the 12 months ended October 31, 1999 of $6,307,000
were $4,454,000 lower than that recognized for the same 12 months in 1998 of
$10,761,000. This reduction is due to significantly reduced advertising and
salaries, cost containment programs, as well as the 50/50 joint venture entered
into during the third quarter of 1999 with ACH.

      Other expense for the 12 months ended October 31, 1999 was $112,000
compared to the prior years' income of $2,426,000. The prior years' income is
essentially attributable to the gain recognized on the sale of processing assets
to ACH from the West Monroe, Louisiana plant.

      Net loss decreased to $5,623,000, or $.27 per share for the 12 months
ended October 31, 1999 from $9,242,000, or $.49 per share for the 12 months
ended October 31, 1998 due primarily to lower cost of revenues and operating
expenses as outlined above.

LIQUIDITY AND CAPITAL RESOURCES

      Net cash used in operating activities during the 12 month period ended
October 31, 2000, was $1,857,000 as compared to $3,325,000 during the same
period in 1999. This decrease is due primarily to lower cost of revenues and
operating expenses.

      Net cash used in investing activities during the 12 months ended October
31, 2000, was $3,000 as compared to net cash provided of $2,583,000 during the
same period in 1999. Of the net $2,583,000 provided in 1999, $3,000,000
pertained to the new 50/50 joint venture with ACH wherein InCon transferred
substantially all of its assets to InCon Processing. The balance represents the
investment in the new joint venture as well as capital expenditures.

      Net cash provided by financing activities totaled $1,891,000 for the
12-month period ended October 31, 2000, versus net cash used of $282,000 for the
same period in 1999. The cash provided was from the sale of common stock and
short term loans for both years. The cash provided during 2000 reflects
$1,000,000 from the sale of common stock, $750,000 from a short-term loan from a
director and $150,000 from a bridge loan from an unrelated third party. In
October 2000, both of these loans totaling $900,000 were converted to equity.
The cash provided during 1999 reflects $500,000 from the sale of common stock
and $200,000 from a short-term loan from a director. The net cash used during
1999 reflects the complete repayment of notes payable to directors of $982,000.

      The Company's 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 cumulative operating losses of $34,914,137 through October 31, 2000,
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 gross profits and positive cash
flows from operations may indicate that the Company will be unable to continue
as a going concern for a reasonable period of time.

      The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
the amounts and classification of liabilities that might be necessary


                                       26
<PAGE>   29
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, maintaining
adequate financing, and ultimately to attain successful operations.

      Since the Company's current cash resources and expected cash flow from
operations will not be sufficient to fund its operational needs for the next 12
months it continues to seek additional capital through private equity and bank
lines of credit. There can be no assurance that such additional financing will
be attainable, or attainable on terms acceptable to the Company. Access by the
Company to additional capital will depend substantially upon prevailing market
conditions, and the financial condition of and prospects for the Company at the
time. Management is continuing its efforts to obtain additional funds and is
also continuing its efforts to reposition the Company as a product development
company and, as such, is engaged in discussions with several potential marketing
partners involving evolvE(R) and future branded products, including dietary
supplements and functional food ingredients.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      Reference is made to the Consolidated Financial Statements, the Notes
thereto and Report of Independent Public Accountants thereon commencing at Page
F-1 of this Report, which Consolidated Financial Statements, Notes and Report
are included herein by reference.


                                       27
<PAGE>   30
                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

      The following table sets forth certain information regarding our directors
and executive officers:

<TABLE>
<CAPTION>
  NAME                                  AGE    POSITION
  ----                                  ---    --------

<S>                                     <C>    <C>
  Ronald H. Lane, Ph.D.(2).........     56     Chairman of the Board,
                                               Chief Executive Officer,
                                               President, Secretary and
                                               Treasurer
  John Palmer......................     58     Chief Executive Officer,
                                               InCon Processing, LLC,
                                               Chairman and Chief
                                               Executive Officer, InCon
                                               Technologies Inc. and
                                               InCon International Ltd.
  Howard Schneider, Ph.D...........     62     President, LipoGenics, Inc.
  Richard M. Mott..................     68     VP and Director of Sales,
                                               Bionutrics Health Products, Inc.
  Daniel S. Antonelli(2)  .........     48     Director
  Richard M. Feldheim(2)(3) .......     60     Director
  Robert B. Goergen(1) ............     62     Director
  Y. Steve Henig, Ph.D.(1) ........     58     Director
  William M. McCormick(2) .........     60     Director
  Milton Okin......................     85     Director
  Frederick B. Rentschler(1) ......     61     Director
  Winston A. Salser, Ph.D..........     61     Director
  Donald Winkler(3) ...............     52     Director
</TABLE>


----------------------
(1)   Member of the Compensation Committee
(2)   Member of the Executive Committee
(3)   Member of the Audit Committee

      RONALD HOWARD LANE, PH.D., has served as Chairman of the Board, Chief
Executive Officer and President of the Company since December 1994 and its
predecessor, NutraGenics (Delaware), since April 1994 and served as Chief
Executive Officer and President of LipoGenics from July 1992 to October 1997.
Dr. Lane is responsible for directing Bionutrics's corporate development and
growth.  He received a Ph.D. and post-doctorate NIH fellowship from the
University of Wisconsin (Madison) in Neurophysiology.  Dr. Lane spearheaded
development of the technology at LipoGenics. He was employed previously with
Norcap Financial Corporation, The National Western Group, Inc. (an investment
company), and Taylor Pearson Corporation.

      JOHN R. PALMER has served as Chief Executive Officer of InCon Processing,
LLC since June 1999. He also serves as Chairman and Chief Executive Officer of
InCon Technologies, Inc. since March 1998 and as Chief Executive Officer and
President from its acquisition by Bionutrics in October 1997 until February
1998. Mr. Palmer was Chief Executive Officer and an owner of InCon Technologies
at the time of the acquisition. Prior to organizing InCon Technologies in 1990
he was employed at E.I. DuPont for 22 years in various technical and management
jobs. Mr. Palmer was graduated from Cornell University in 1966 with a masters
degree in chemical engineering and marketing.


                                       28
<PAGE>   31
      HOWARD SCHNEIDER, PH.D., has served as President of LipoGenics since
November 1997. Before joining LipoGenics, Dr. Schneider served from 1991 to 1997
as Senior Vice President, Technology at DynaGen, Inc., a Cambridge,
Massachusetts, firm that develops proprietary therapeutic and medical device
products. Prior experience includes positions as Senior Vice President,
Technology (and partner) at McCann Healthcare-Bogart Delafield Ferrier,
co-founder and President of Bioassay Systems Research Corporation and research
chemist at Merck Sharp and Dohme. Dr. Schneider has authored over 60 scientific
articles and holds several patents relating to therapeutic uses of natural
products. He earned his Ph.D. from the Department of Pharmacology at Yale
University School of Medicine and served as a National Science Foundation
Postdoctoral Fellow at Oxford University, Department of Pharmacology.

      RICHARD M. MOTT, has served as Vice President and Director of Sales at
Bionutrics Health Products since November 1997.  Mr. Mott is a graduate of
Michigan State University.  He served as Vice President of Sales for Morgan &
Sampson, Inc. a consumer product broker headquartered in Southern California.
Prior to joining Bionutrics he headed a sales and marketing firm from 1994 to
1997.

      DANIEL S. ANTONELLI has been a member of the Board of Directors since
September 1998. He has served as President and Chief Executive Officer of ACH
Food Companies, Inc. since August 1995. From 1974 to 1995 he held a number of
senior positions in finance, operations and general management at Kraft, Inc. He
received a Bachelor of Business at the University of Michigan, an MBA from
DePaul University Graduate School of Business, and attended the PMD (General
Management) program at Harvard.

      RICHARD M. FELDHEIM has been a director of the Company since October 1995.
He served as a director, Secretary and Chief Financial Officer of LipoGenics
from July 1992 until October 1996. Mr. Feldheim has served as Chairman and
Co-Chief Executive Officer of Abby's, a restaurant chain in Oregon since 1991.
He was in private practice as a lawyer prior thereto, has previously been
employed with Goldman Sachs & Co.; Donaldson, Lufkin & Jenrette; J. Aron
Company; and Price Waterhouse, and was President of Norcap Financial
Corporation. Mr. Feldheim received a B.S., B.A., a Master's Degree in
Accounting, and a J.D. from the University of Arizona, as well as an LL.M. in
Taxation from New York University. He is a Certified Public Accountant.

      ROBERT B. GOERGEN has been a member of the Board of Directors since March
1999. Mr. Goergen has been the Chairman since 1977 and the Chief Executive
Officer since 1978, of Blyth Industries, Inc., a public company that
manufactures and imports candles, home decorating accessories and home fragrance
products. Mr. Goergen has served as President of Blyth Industries, Inc. since
1994. From 1990 to the present, Mr. Goergen has served as Chairman of XTRA
Corporation, a public company in the trailer leasing industry. From 1979 to the
present, he has been Chairman of The Ropart Group, a private company, whose
business is investing in securities for its own account. Mr. Goergen currently
serves as the Chairman of Blyth Industries, Inc., and as a director of XTRA
Corporation and serves on the compensation committee of XTRA Corporation. Mr.
Goergen received a B.A. from the University of Rochester and an M.B.A. from the
Wharton Graduate School at the University of Pennsylvania.

      Y. STEVE HENIG, PH.D. has been a member of the Board of Directors since
October 1995 and served as a director of LipoGenics from August 1992 until
October 1996.  He has served as Senior Vice President of Technology and
Innovation for Ocean Spray Cranberries, Inc. since January 1999.  He served as
Senior Vice President of Technology and Marketing Services for Hunt-Wesson, Inc.
from 1992 until December 1998. He joined Hunt-Wesson in 1983 as Vice President
of Research and Development. His previous position was Vice President of
Corporate Research & Development and Corporate Engineering for Land O'Lakes,
Inc. in Minneapolis, Minnesota. Prior to that he held positions with Pillsbury
Company and General Foods Corporation. Dr. Henig received his Bachelor of
Science Degree in Chemical Engineering and a Master of Science Degree in Food
and Biotechnology from the Technion-Israel Institute of Technology. He earned
his Ph.D. Degree in Food Science from Rutgers University, New Brunswick, New
Jersey.

      WILLIAM M. MCCORMICK has been a member of the Board of Directors since May
1996, and  he currently serves as Chairman of the Executive Advisory Board,
Inverness Management, LLC.  Mr. McCormick was President and Chief Executive
Officer of PennCorp Financial Group, Inc., a NYSE company, from 1990 to


                                       29
<PAGE>   32
1995 and was a director from 1990 until 1997. Prior thereto, Mr. McCormick was
employed by the American Express Company. His titles ranged from Senior Vice
President Finance, Systems & Operations of the American Express International
Banking Corporation to President of American Express' Travel Related Services
Company. Mr. McCormick then spent five years as Chairman and CEO of Fireman's
Fund Insurance. After graduating from Yale, Mr. McCormick spent his early years
in investment banking and management consulting with Donaldson, Lufkin &
Jenrette and McKinsey & Company, Inc., respectively.

      MILTON OKIN has been a member of the Board of Directors since October
1995. Mr. Okin has many years of diet and health food development experience,
having created Weight Watchers low calorie foods that he subsequently sold to
Weight Watchers International. Mr. Okin developed a unique all natural Vitamin C
from acerola berry grown in plantations in Puerto Rico and Florida. The acerola
operation was sold to Booker McConnell Ltd. of England in 1978. Mr. Okin has
owned and operated a chain of health food related retail stores including
outlets in Sears Roebuck and Company, and presently owns a mail order vitamin
and health products business in Hastings, N.Y. Mr. Okin is a biochemist graduate
of New York City College with graduate research at Mount Sinai Hospital in
lipids, cholesterol and vitamins.

      FREDERICK B. RENTSCHLER has been a member of the Board of Directors since
October 1995 and served as a director of LipoGenics from January 1993 until
October 1996. He is Chairman of the Board of the Salk Institute in La Jolla,
California. He serves on the board of directors and compensation committee of
International Game Technology, a NYSE company. He served as President and Chief
Executive Officer of Beatrice Companies from 1987 to 1990, having completed a
leveraged buyout of Beatrice Companies in 1986 with the firm of Kohlberg,
Kravis, Roberts & Company. Prior to Beatrice, Mr. Rentschler was employed as
President/Chief Executive Officer of Armour-Dial and subsequently had the same
responsibility at Hunt-Wesson. Following his retirement from Beatrice, he served
as President/Chief Executive Officer of Northwest Airlines. Mr. Rentschler's
current affiliations in addition to the Salk Institute include the Board of
Directors of Scottsdale Healthcare and the Advisory Board of Grocery Outlet Inc.
Mr. Rentschler received his B.A. in Economics and History from Vanderbilt
University and MBA from Harvard Business School. He was awarded a Doctor of Laws
degree from The University of Wyoming in 1999.

      WINSTON A. SALSER, PH.D. has served as a member of the Board of Directors
since October 1995, served as a director of LipoGenics from August 1992 until
October 1996 and is Chairman of Bionutrics' Scientific Advisory Board.  Dr.
Salser has been a Professor of Molecular Biology at the University of
California, Los Angeles since 1968. Dr. Salser was the founding President of
Amgen, Inc. and formed its Scientific Advisory Board. He received a B.S. from
the University of Chicago in physics, a Ph.D. from the Massachusetts Institute
of Technology in molecular biology, and was a Helen Hay Whitney Foundation
Postdoctoral Fellow.

      DONALD A. WINKLER has served as a member of the Board of Directors since
March 1999. Mr. Winkler has served as the Chairman and Chief Executive Officer
of Ford Motor Credit Co. since November 1999. He served as Chairman and Chief
Executive Officer of Finance One Corporation from 1993 to 1999. Finance One
Corporation is a $41 billion non-bank finance subsidiary of Bank One Corporation
with a national line of business encompassing consumer, indirect and commercial
finance. Prior to this, Mr. Winkler spent 1976 through 1993 with Citibank in
various positions which included managing consumer business in Southern Europe,
the Middle East and Africa. Mr. Winkler is a graduate of Northrop University and
attended the Wharton School, University of Pennsylvania, Executive MBA program.

SCIENTIFIC ADVISOR

      Dr. Winston A. Salser, a member of the Company's Board of Directors and a
Professor of Molecular Biology at the University of California, serves as
scientific advisor to the Company.

      The information required by this item relating to "COMPLIANCE WITH SECTION
16(a) OF THE SECURITIES EXCHANGE ACT OF 1934" is incorporated herein by
reference to the information to be contained under such heading to be set forth
in the Company's definitive Proxy Statement for its 2001 Annual Meeting of
Stockholders.


                                       30
<PAGE>   33
ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY OF CASH AND OTHER COMPENSATION

      The following table sets forth the total compensation received for
services rendered in all capacities to the Company for the fiscal years ended
October 31, 1998, 1999, and 2000 by the Company's Chief Executive Officer, and
its three most highly compensated executive officers whose aggregate cash
compensation exceeded $100,000, (together the "Named Executive Officers").

                           SUMMARY COMPENSATION TABLE



<TABLE>
<CAPTION>
                                                                                          LONG-TERM COMPENSATION
                                                                                         ------------------------
                                              ANNUAL COMPENSATION                                AWARDS
                                ------------------------------------------------------   ------------------------
                                                                                         RESTRICTED
                                                                          OTHER ANNUAL     STOCK       SECURITIES       ALL OTHER
NAME AND                                                                  COMPENSATION    AWARD(S)     UNDERLYING      COMPENSATION
PRINCIPAL POSITION              YEAR       SALARY($)       BONUS($)          ($)(1)         ($)        OPTIONS(#)           ($)
------------------              ----       ---------       --------       -------------  ----------    ----------      ------------
<S>                             <C>         <C>           <C>             <C>            <C>           <C>             <C>
Ronald H. Lane, Ph.D            2000        $202,947            --             --             --           4,000          $2,500(5)
Chief Executive Officer and     1999        $202,947       $100,000 (3)        --             --              --          $7,308(5)
President...................... 1999        $202,947            --             --             --              --          $6,942(2)

John R. Palmer                  2000        $200,000            --             --             --              --          $3,942(5)
Chief Executive Officer and     1999        $200,000(4)         --             --             --              --          $4,631(5)
President of InCon
Technologies Inc. ............. 1998        $196,924            --             --             --         100,000(6)       $4,984(5)

Howard Schneider                2000        $150,000            --             --             --         100,000          $4,500(5)
President, LipoGenics, Inc. ... 1999        $150,000            --             --             --              --          $4,500(5)
                                1998        $144,808            --             --             --         100,000(6)       $1,558(5)

Richard M. Mott(7)              2000        $104,000            --             --             --          75,000          $3,120(5)
VP and Director of Sales        1999        $104,000            --             --             --              --          $3,120(5)
Bionutrics Health Products..... 1998        $102,308       $12,830             --             --              --          $5,064(5)
</TABLE>


-------------------
(1)   Other annual compensation did not exceed the lesser of $50,000 or 10% of
      the total salary and bonus for any of the Named Executive Officers except
      as noted.

(2)   Represents directors' fees and contributions to a 401K plan.

(3)   Represents a bonus, which is payable one-half in cash in fiscal 2000
      contingent upon receipt of $5,000,000 of new financing and the balance
      through the issuance of 28,571 shares of Common Stock, which was issued
      during fiscal 2000.

(4)   Represents compensation paid by InCon Technologies, Inc. of $130,769,
      which represents payments through June 1999, after which Mr. Palmer's
      compensation was paid by InCon Processing, LLC.

(5)   Represents contributions to a 401K plan.

(6)   Such options to acquire Common Stock were cancelled and reissued in
      September 1998.

(7)   Mr. Mott became an executive officer in January 2001.


                                       31
<PAGE>   34
OPTION GRANTS

      The following table represents the options granted to the Named Executive
Officers in the last fiscal year and the value of such options.

                        OPTION GRANTS IN LAST FISCAL YEAR


<TABLE>
<CAPTION>
                                           INDIVIDUAL GRANTS
                        ---------------------------------------------------------
                                                                                          POTENTIAL REALIZABLE
                                        % OF TOTAL                                           VALUE AT ASSUMED
                        NUMBER OF         OPTIONS                                         ANNUAL RATES OF STOCK
                        SECURITIES      GRANTED TO                                       PRICE APPRECIATION FOR
                        UNDERLYING      EMPLOYEES      EXERCISE OR                           OPTION TERM(4)
                         OPTIONS        IN FISCAL      BASE PRICE      EXPIRATION       ------------------------
                        GRANTED(#)        YEAR           ($/SH)           DATE            5% ($)         10% ($)
                        ----------     -----------     -----------    -----------       --------        --------
<S>                     <C>            <C>             <C>            <C>               <C>             <C>
Ronald H. Lane.........   4,000(1)         .004%         $  3.63        3/22/2005        $ 4,000        $  8,840
John R. Palmer......... 100,000(2)        10.93%         $  2.00       11/01/2002        $56,000        $122,000
Howard Schneider....... 100,000(3)        10.93%         $  1.75       12/01/2004        $49,000        $107,000
Richard M. Mott........  75,000(3)         8.20%         $  1.75       12/01/2004        $36,750        $ 80,250
</TABLE>

-------------------
(1)   The options were fully vested upon grant.

(2)   The options granted represent regrants of options previously granted that
      were cancelled.

(3)   Options vest one-third after the first year, one-third after the second
      year, and one-third after the third year.

(4)   Calculated from a base price equal to the exercise price of each option,
      which was the fair market value of the Common Stock on the date of grant.
      Potential gains are net of the exercise price. The amounts represent only
      certain assumed rates of appreciation. Actual gains, if any, on stock
      option exercises and Common Stock holdings cannot be predicted, and there
      can be no assurance that the gains set forth on the table will be
      achieved.


                                       32
<PAGE>   35
OPTION HOLDINGS

      The following table represents certain information respecting the options
held by the Named Executive Officers.

                          FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                         NUMBER OF SECURITIES
                                                        UNDERLYING UNEXERCISED
                                                       OPTIONS AT FISCAL YEAR-END                       VALUE OF UNEXERCISED
                                                       --------------------------                      IN-THE-MONEY OPTIONS
                                                                (#)                                   AT FISCAL YEAR-END ($)(1)
                                                                ---                                   -------------------------
NAME                                             EXERCISABLE           UNEXERCISABLE            EXERCISABLE            UNEXERCISABLE
----                                             -----------           -------------            -----------            -------------
<S>                                              <C>                   <C>                      <C>                    <C>
Ronald H. Lane, Ph.D.........                      764,000                     0                   $0                      $0
John R. Palmer...............                      100,000                     0                    0                       0
Howard Schneider.............                      133,334                66,666                    0                       0
Richard M. Mott..............                       50,000                50,000                    0                       0
</TABLE>


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

(1)   There are no in-the-money options calculated based on $1.00, which was the
      closing sales price of the Common Stock as quoted on the Nasdaq SmallCap
      Market on October 31, 2000.

      Additional information required by Item 11 is incorporated by reference to
the information to be contained under the headings "EXECUTIVE COMPENSATION,"
"REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS," and "COMPANY
PERFORMANCE GRAPH" to be set forth in the Company's definitive Proxy Statement
for its 2001 Annual Meeting of Stockholders.

DIRECTOR COMPENSATION AND OTHER INFORMATION

      The Company pays all of its Board members reimbursement for expenses for
each Board meeting attended. Options for 4,000 shares of Common Stock
exercisable at $3.63 were granted to each existing member of the Board of
Directors during the fiscal year ended October 31, 2000.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information with respect to
beneficial ownership of the Common Stock on January 11, 2001 by: (i) each
director and each nominee for director; (ii) the Named Executive Officers (as
defined herein) set forth in the Summary Compensation Table under Item 11
"EXECUTIVE COMPENSATION;" (iii) all directors, nominees and executive officers
of the Company as a group; and (iv) each person known by the Company to be the
beneficial owner of more than five percent of the Common Stock.


                                       33
<PAGE>   36
<TABLE>
<CAPTION>
                                                       AMOUNT
                                                     BENEFICIALLY
NAME OF BENEFICIAL OWNER                              OWNED(1)(2)          PERCENT
---------------------------------------------------------------------------------------
<S>                                                  <C>                  <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS:

Ronald H. Lane, Ph.D.(3) ..................             4,068,163            17.6%
John R. Palmer (4) ........................               310,375             1.4
Howard Schneider (5) ......................               133,334               *
Richard Mott (6) ..........................                50,000               *
Richard M. Feldheim (7) ...................               793,636             3.5
Daniel S. Antonelli (8) ...................             4,312,667            17.6
Y. Steve Henig, Ph.D.(9) ..................                16,000               *
William M. McCormick (10) .................             1,190,167             5.1
Milton Okin (11) ..........................               560,250             2.5
Frederick B. Rentschler (12) ..............               202,092               *
Winston A. Salser, Ph.D.(13) ..............               913,027             4.1
Donald A. Winkler (14) ....................                24,333               *
Robert B. Goergen (15) ....................               624,333             2.7

Executive officers and directors as a group
     (13 persons) .........................            13,198,377            49.4%

OTHER 5% STOCKHOLDERS:

Lipogenics, Inc.(16) ......................             1,202,886             5.4%
Bali Holdings LLC(17) .....................             1,400,000             6.2
ACH Food Companies, Inc.(18) ..............             4,300,000            17.6
</TABLE>

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

*Denotes less than a 1% interest in the Company

(1)   Except as indicated, and subject to community property laws when
      applicable, the persons named in the table above have sole voting and
      investment power and with respect to all shares of Common Stock shown as
      beneficially owned by them.

(2)   Includes shares of Common Stock issuable to the identified person pursuant
      to stock options or warrants that may be exercised within 60 days after
      January 10, 2000. In calculating the percentage of ownership, such shares
      are deemed to be outstanding for the purpose of computing the percentage
      of shares of Common Stock owned by such person, but are not deemed to be
      outstanding for the purpose of computing the percentage of shares of
      Common Stock owned by any other stockholders.

(3)   Represents shares held of record by R.H. Lane Limited Partnership of which
      Dr. Lane is a general partner. He shares voting power over these shares
      with Richard M. Feldheim, a general partner. Dr. Lane disclaims beneficial
      ownership of 300,000 shares held by such partnership for the benefit of
      other partners and 900,000 shares held by the partnership for the benefit
      of his wife. Includes 764,000 shares of Common Stock issuable upon
      exercise of stock options.

(4)   Includes 180,000 shares held of record by Bali Holdings LLC, a company of
      which Mr. Palmer is one of three members. Also includes 100,000 shares of
      Common Stock issuable upon exercise of stock options.

(5)   Represents 133,334 shares of Common Stock issuable upon exercise of stock
      options.

(6)   Represents 50,000 shares of Common Stock issuable upon exercise of stock
      options.

(7)   Includes 19,826 shares held of record by Abby's, Inc., a corporation
      controlled by Mr. Feldheim, 757,810 shares held of record by the R. M.
      Feldheim Limited Partnership of which Mr. Feldheim is the general partner.
      Does not include 3,268,185 shares held by R.H. Lane Limited Partnership
      for the benefit of other partners. He shares voting power over the shares
      held by Abby's, Inc. and R.H. Lane Limited Partnership. Includes 16,000
      shares of Common Stock issuable upon exercise of stock options.

(8)   Represents 2,300,000 shares of Common Stock and warrants for the purchase
      of 2,000,000 shares held by ACH Food Companies, Inc. of which Mr.
      Antonelli disclaims beneficial ownership. Mr. Antonelli is


                                       34
<PAGE>   37
      the President and CEO of ACH Food Companies, Inc. Includes 12,667 shares
      of Common Stock issuable upon exercise of stock options.

(9)   Represents 16,000 shares of Common Stock issuable upon exercise of stock
      options.

(10)  Includes 700,000 shares issuable upon exercise of warrants. Also includes
      50,000 shares held by Mr. McCormick's wife and 25,000 shares held by Mr.
      McCormick's minor children, of which shares he disclaims beneficial
      ownership. Also includes 116,000 shares of Common Stock issuable upon
      exercise of stock options.

(11)  Includes 16,000 shares of Common Stock issuable upon exercise of stock
      options.

(12)  The shares are held of record by the Frederick B. Rentschler Trust.
      Includes 16,000 shares of Common Stock issuable upon exercise of stock
      options.

(13)  Includes 114,300 shares held by the Salser Partnerships Nos. 1, 2, and 3.
      Mr. Salser shares voting power with respect to these shares with other
      family members.  Also includes 16,000 shares of Common Stock issuable upon
      exercise of stock options.

(14)  Includes 9,333 shares of Common Stock issuable upon exercise of stock
      options.

(15)  Includes 5,000 shares held by The Goergen Foundation, of which Mr. Goergen
      is President, and 40,000 shares held by the Robert B. Goergen Living
      Trust, Robert B. Goergen, Trustee. Also includes 250,000 shares held by
      Ropart Investments, LLC, of which Mr. Goergen is managing member, and as
      to which he disclaims beneficial ownership except to the extent that his
      individual interest in such shares arises from his interest in such
      entity. Includes 320,000 shares issuable upon exercise of warrants held by
      Ropart Investments, LLC. Also includes 9,333 shares of Common Stock
      issuable upon exercise of stock options .

(16)  The address of Lipogenics is 2425 E. Camelback Road, Suite 650, Phoenix,
      Arizona 85016. Lipogenics is a wholly owned subsidiary of the Company, and
      as such for consolidation purposes these shares are classified as treasury
      shares.

(17)  The address of Bali Holdings LLC is 970 Douglas Road, Batavia, Illinois
      60510. The members of the management committee are three U.S. citizens
      residing in Illinois and Connecticut. A member of the limited liability
      company includes John R. Palmer, an executive officer of the Company.

(18)  Includes 2,300,000 shares of common stock and warrants for the purchase of
      2,000,000 shares of common stock.  The address of ACH Food Companies, Inc.
      is 7171 Goodlett Farms Parkway, Memphis, Tennessee 38018.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In connection with the merger of a subsidiary of Nutrition Technology with
InCon, the Company acquired certain business opportunities and by license
agreement certain technology of entities related to InCon. Under such license
agreement, an affiliate of Mr. Palmer is entitled to royalties for the greater
of five years or four years after the start of commercial production of the
initial product. Pursuant to his employment agreement, he is entitled to
incentive compensation keyed to excess profits of InCon Processing. Mr. Palmer
has a controlling interest in a partnership from which the Company leased its
Batavia, Illinois facility until June 25, 1999, which was subsequently assigned
to InCon Processing. InCon Processings' payments under the lease were $151,496
for fiscal 2000.

      On December 1, 1999 the Company issued 100,000 options to purchase Common
Stock at an exercise price of $1.75 to William McCormick, a director, as
consideration for services rendered and to be rendered to the Company. These
five-year options became fully vested on December 1, 2000.

      On December 29, 1999 the Company issued 7,407 shares of common stock to
Ronald H. Lane which represented the balance due of the accrued bonus for fiscal
1997.

      On March 10, 2000, the Company issued 28,571 shares of common stock valued
at $1.75 per share to Ronald H. Lane which represented one-half of the bonus
payable to him for fiscal 1999.

      On December 29, 1999, and June 19, 2000, Mr. Milt Okin extended unsecured
loans to the Company in the amounts of $500,000, and $250,000, respectively,
with interest at 9.5% per annum. On October 27, 2000,


                                       35
<PAGE>   38
the Company agreed to issue 591,850 shares of its Series A Convertible Preferred
Stock as consideration for the cancellation of the loans, including $48,998 of
accrued interest. The preferred shares have an annual cumulative dividend of
$0.108 per share, a liquidation rate of $1.35 per share and each share is
convertible to one share of Common Stock on or after October 27, 2001. The
preferred shares are also redeemable by the Company at any time at $1.35 per
share. These preferred shares were issued on December 6, 2000.

      On October 30, 2000, the Company agreed to issue 300,000 shares of its
Common Stock to ACH as consideration for the release of certain contingent
obligations under the Master Formation Agreement and Members Agreement related
to the formation of their 50/50 joint venture, InCon Processing.

      On October 30, 2000, the Company issued 2,000,000, one year warrants with
an exercise price of $2.00 to ACH. These warrants were issued to effectively
extend the exercise period for the original warrants issued to ACH that expired
August 14, 2000, as the Company wishes to extend the period during which ACH may
obtain an additional equity interest in the Company.

      Effective December 20, 2000, the Company entered into a Common Stock
Purchase Agreement (the "Agreement") for the future issuance and purchase of
shares of the Company's Common Stock. This new Agreement is with Ropart
Investments LLC, of which Robert B. Goergen, a director of Bionutrics, is also a
managing member. The Agreement establishes what is sometimes termed as an equity
line of credit or an equity draw down facility. The Agreement permits the
Company to sell up to an aggregate of 500,000 shares at $1.00 per share, based
on a minimum investment amount of $100,000 and a maximum investment amount of
$500,000. The period during which the Company can make such sales begins
December 20, 2000 and terminates December 31, 2001. In lieu of a minimum draw
down commitment by the Company, the Company has issued a three-year warrant for
the purchase of 70,000 shares of Common Stock at an exercise price of $1.00 per
share. In addition, three-year warrants will be issued in connection with each
draw down for the purchase of a number of shares equal to 10 percent of the
shares purchased at such draw down. In the event the Company does not exercise
its right to fully draw down under this Agreement, then on the Termination date,
Investor shall have the right to purchase up to 100,000 shares of Common Stock
at $1.00 per share, such number of shares together with shares purchased
pursuant to draw downs not to exceed 500,000 shares of Common Stock. In
connection with the Agreement, the Company amended the January 28, 1999 warrant
agreement for the purchase of 250,000 shares of the Company's Common Stock at
$2.00 per share. The original expiration date of December 31, 2000 was extended
one year to December 31, 2001.

      All future transactions, including any loans from the Company to its
officers or directors, will be approved by a majority of the Board of Directors,
including a majority of the disinterested members of the Board of Directors, and
will be on terms no less favorable to the Company than can be obtained from
unaffiliated third parties.


                                       36
<PAGE>   39
                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

  (a)     Exhibits:

<TABLE>
<S>                <C>
          3.1      Restated Articles of Incorporation (1)

          3.2      Articles of Amendment to the Articles of Incorporation (1)

          3.3      Bylaws (1)

          4.1      Form of Certificate evidencing shares of Common Stock (1)

          10.1     Option granted to Hunt-Wesson, Inc. by LipoGenics, Inc., dated
                   July 1992 (1)

          10.2     Agreement dated October 1995 between the Company and Milton Okin,
                   Kenneth Okin, Robert Okin and Nicki Closset and Amendment to
                   Agreement dated October 1995 (1)

          10.3     Agreement between the Company and C. Everett Koop for the purchase
                   of 20,000 shares of Common Stock and the issuance of 180,000
                   options dated October 1995 (1)

          10.4     Additional Secured Loan Agreement dated March 1996 between the
                   Company and Milton Okin (1)

          10.6     Stock Purchase Agreements dated September 16, 1996 and October
                   31, 1996 between the Company and Spanswick Limited(1)

          10.7     1996 Stock Option Plan, as amended through March 26, 1998 (7)

          10.8     Form of Stock Purchase Agreement and Subscription Application
                   entered into between the Company and certain European investors
                   in January and March 1997 pursuant to Regulation S (3)

          10.9     Form of Stock Purchase Agreement entered into between the Company
                   and an institutional investor in September 1997 (3)

          10.10    Form of Stock Purchase Agreement and Note between the Company and
                   two overseas investors in October 1997 (3)

          10.11    Employment Agreement between the Registrant and John R. Palmer (3)

          10.13    Agreement and Plan of Merger by and among InCon Technologies,
                   Inc., InCon Holdings, LLC, Bionutrics, Inc. and BNRX, Inc.(2)

          10.14    Stock Purchase Agreement dated as of August 14, 1998, between the
                   Registrant and AC HUMKO CORP.(4)

          10.15    Warrant Agreement dated as of August 14, 1998, between the
                   Registrant and AC HUMKO CORP.(4)

          10.16    Technology Agreement dated as of August 14, 1998, between AC HUMKO
                   CORP. and Bionutrics Entities (filed in redacted format pursuant
                   to a confidential treatment request) (5)

          10.17    Exclusive Supply Agreement dated as of August 14, 1998, between AC
                   HUMKO CORP. and Bionutrics Entities (filed in redacted format
                   pursuant to a confidential treatment request) (5)

          10.19    Form of Asset Purchase Agreement dated as of October 1998 between
                   AC HUMKO CORP. and Bionutrics Entities (6)

          10.20    Warrant Agreement for the purchase of 100,000 shares of Common
                   Stock between the Company and William M. McCormick dated August 7,
                   1998 (7)

          10.21    Warrant Agreement for the purchase of 600,000 shares of Common
                   Stock between the Company and William M. McCormick dated August 7,
                   1998 (7)

          10.22    Stock Purchase Agreement and Common Stock Purchase Warrants dated January
                   28, 1999 between Ropart Investments, LLC and the Company (8)

          10.23    Warrant Certificates dated April 27, 1999 issued to Gary J.
                   Shemano, Mart Bailey and Michael Jacks for an aggregate of
                   100,000 shares of Common Stock and Warrant Agreement effective
                   April 9, 1998 between The Shemano Group and the Company (8)

          10.24    Master Formation Agreement for InCon Processing, LLC among AC HUMKO CORP.,
                   InCon Technologies, Inc., InCon International, Inc., Nutrition
                   Technology Corp., and

</TABLE>


                                       37
<PAGE>   40
<TABLE>
<S>                <C>
                   Bionutrics, Inc., dated June 25, 1999 (filed in redacted
                   format pursuant to a confidential treatment request) (9)

          10.25    Members Agreement for InCon Processing, LLC, between AC HUMKO CORP. and
                   InCon Technologies, Inc., dated June 5, 1999 (filed in redacted
                   format pursuant to a confidential treatment request) (9)

          10.26    First Amendment to Agreement for Purchase and Sale of Assets (9)

          10.27    Warrant Agreement for the purchase of 30,000 shares of Common Stock between
                   the Company and IK Biotech, Inc. dated as of March 19, 1998.

          10.28    Warrant Agreement for the purchase of 100,000 shares of Common Stock
                   between the Company and Cameron Associates Inc. dated as of
                   November 23, 1998.

          10.29    Promissory note for $500,000 dated December 22, 1999 between Milton Okin
                   and the Company (10)

          10.30    Common Stock Purchase Agreement dated September 7, 2000 between the Company
                   and Justicia Holdings Limited (11)

          10.31    Registration Rights Agreement dated September 7, 2000 between
                   the Company and Justicia Holdings Limited (11)

          10.32    Escrow Agreement dated September 7, 2000 among the Company, Justicia
                   Holdings Limited and Epstein, Becker & Green P.C. (11)

          10.33    Form of Stock Purchase Warrant pursuant to Common Stock Purchase Agreement
                   dated September 7, 2000 (11)

          10.34    Promissory note for $250,000 dated June 19, 2000 between Milton Okin and
                   the Company

          10.35    Common Stock Purchase Agreement dated September 20, 2000 between
                   the Company and AMRO International, S.A.

          10.36    Registration Rights Agreement dated September 20, 2000 between
                   the Company and AMRO International, S.A.

          10.37    Escrow Agreement dated September 20, 2000 among the Company, AMRO
                   International, S.A. and Epstein, Becker & Green P.C.

          10.38    Warrant Agreement for the purchase of 50,000 shares of Common
                   Stock dated September 20, 2000 between the Company and AMRO
                   International, S.A.

          10.39    Common Stock Purchase Agreement dated October 25, 2000 between the Company
                   and Tamarack International Limited

          10.40    Warrant Agreement for the purchase of 50,000 shares of Common
                   Stock dated October 25, 2000 between the Company and Tamarack
                   International Limited

          10.41    Series A Convertible Preferred Stock Acquisition Agreement dated October
                   27, 2000 between the Company and Milton Okin

          10.42    Common Stock Acquisition Agreement dated October 28, 2000 between the
                   Company and Macropower Development Limited

          10.43    First Modification to the Master Formation Agreement for InCon Processing,
                   LLC, entered into October 30, 2000 among ACH Food Companies, Inc.
                   (formerly AC HUMKO CORP.), InCon Technologies, Inc., InCon
                   International, Inc., Nutrition Technology Corp. and Bionutrics,
                   Inc.

          10.44    First Modification to the Members Agreement for InCon Processing, LLC,
                   entered into October 30, 2000 among ACH Food Companies, Inc.
                   (formerly AC HUMKO CORP.), InCon Technologies, Inc. and
                   Bionutrics, Inc.

          10.45    Common Stock Acquisition Agreement dated October 30, 2000 between the
                   Company and ACH Food Companies, Inc. (formerly AC HUMKO CORP.)

          10.46    Warrant Agreement for the purchase of 2,000,000 shares of Common Stock
                   dated October 30, 2000 between the Company and ACH Food Companies,
                   Inc. (formerly AC HUMKO CORP.)

          10.47    Common Stock Purchase Agreement dated December 20, 2000 by and
                   between the Company and Ropart Investments, LLC

          10.48    Warrant Agreement for the purchase of 70,000 shares of Common
                   Stock dated December 20, 2000 between the Company and Ropart
                   Investments, LLC

          21       Subsidiaries of the Company
</TABLE>


                                       38
<PAGE>   41
<TABLE>
<S>                <C>
          23.1     Consent of Deloitte & Touche

</TABLE>

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

      (1) Incorporated by reference to Registrant's Form 10 filed with the
          Commission on or about January 21, 1997.

      (2) Incorporated by reference to Registrant's Form 8-K filed with the
          Commission on or about November 7, 1997, as amended by Registrant's
          Form 8-K/A filed with the Commission on or about January 30, 1998.

      (3) Incorporated by reference to Registrant's Form 10-K filed with the
          Commission on or about January 15, 1998, as amended by Registrant's
          Form 10-K/A filed with the Commission on or about January 30, 1998.

      (4) Incorporated by reference to Registrant's Form 8-K filed with the
          Commission on or about August 31, 1998.

      (5) Incorporated by reference to Registrant's Form 8-K/A filed with the
          Commission on or about October 13, 1998.

      (6) Incorporated by reference to Registrant's Form 8-K filed with the
          Commission on or about October 21, 1998.

      (7) Incorporated by reference to Registrant's Form 10-K filed with the
          Commission on or about January 29, 1999.

      (8) Incorporated by reference to Registrant's Second Quarter Form 10-Q
          filed with the Commission on or about June 10, 1999

      (9) Incorporated by reference to Registrant's form 8-K filed with the
          Commission on or about July 12, 1999.

      (10) Incorporated by reference to Registrant's First Quarter Form 10-Q
           filed with the Commission on or about March 15, 2000

      (11) Incorporated by reference to Registrant's Third Quarter Form 10-Q
           filed with the Commission on or about September 13, 2000

(b)   Financial Statements filed as part of this Report:

           Consolidated Financial Statements and Supplemental Schedules as
      listed in the Index to Consolidated Financial Statements on Page F-1 of
      this Report.

(c)   Reports on Form 8-K:

           None

(d)   Financial Statement Schedules:

           Valuation and Qualifying Accounts


                                       39
<PAGE>   42
                                   SIGNATURES

      Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          BIONUTRICS, INC.

Date:  January 16, 2001                   By: /s/ Ronald H. Lane
                                              -------------------
                                              Ronald H. Lane
                                              President and Chief Executive
                                              Officer

Pursuant to the requirements of the Securities Act of 1934, this Report has been
signed below by the following persons on behalf of Registrant and in the
capacities and on the dates indicated.


<TABLE>
<CAPTION>
            SIGNATURE                      TITLE                   DATE
            ---------                      -----                   ----
<S>                               <C>                       <C>
  By /s/ Ronald H. Lane           Chairman of the           January 16, 2001
     -----------------------      Board, Chief
      Ronald H. Lane              Executive Officer and
                                  President (Principal
                                  Executive Officer)


  By /s/ Karen J. Harwell         Controller                January 16, 2001
     -----------------------      (Principal Financial
      Karen J. Harwell            and Accounting
                                  Officer)


  By                              Director                  January __, 2001
     -----------------------
      Daniel Antonelli

  By /s/ Richard M. Feldheim      Director                  January 16, 2001
     -----------------------
      Richard M. Feldheim

  By /s/ Robert B. Goergen        Director                  January 17, 2001
    -----------------------
      Robert B. Goergen

  By /s/ Steve Henig              Director                  January 16, 2001
     -----------------------
      Steve Henig

  By /s/ William M. McCormick
     -----------------------
      William M. McCormick        Director                  January 16, 2001
</TABLE>


                                       40
<PAGE>   43
<TABLE>
<CAPTION>
            SIGNATURE                      TITLE                   DATE
            ---------                      -----                   ----
<S>                               <C>                       <C>
  By /s/ Milton Okin              Director                  January 16, 2001
     -----------------------
      Milton Okin


  By /s/ Frederick Rentschler     Director                  January 16, 2001
     -----------------------
      Frederick Rentschler


  By /s/ Winston A. Salser        Director                  January 16, 2001
     -----------------------
      Winston A. Salser

  By /s/ Donald A. Winkler        Director                  January 16, 2001
     -----------------------
      Donald A. Winkler
</TABLE>


                                       41
<PAGE>   44
BIONUTRICS, INC. AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT


Board of Directors
Bionutrics, Inc.
Phoenix, Arizona

We have audited the accompanying consolidated balance sheets of Bionutrics, Inc.
and subsidiaries (the "Company") as of October 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended October 31, 2000. Our
audits also included the financial statement schedule listed in the Index at
Item 14. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedule based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at October 31, 2000 and
1999, and the results of its operations and its cash flows for each of the three
years in the period ended October 31, 2000, in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company's operating losses since
inception, the uncertainty regarding the Company's ability to raise additional
capital and the Company's inability to generate income and positive cash flow
from operations raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are also described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

DELOITTE & TOUCHE LLP
PHOENIX, ARIZONA

December 8, 2000, except for Note 14, as to which the date is December 30, 2000



CONSOLIDATED FINANCIAL STATEMENTS
As of October 31, 2000 and 1999,
and for Each of the Three Years in the
Period Ended October 31, 2000




                                      F-1
<PAGE>   45
BIONUTRICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
ASSETS                                                                                    2000                   1999
<S>                                                                                    <C>                  <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                            $    711,563         $    680,190
  Trade receivables - net of allowance for bad debts of $48,239
    and $48,925, respectively                                                                16,845            1,364,823
  Inventory (Note 3)                                                                        100,401              259,489
  Prepaids and other current assets                                                          62,383               99,942
                                                                                       ------------         ------------
          Total current assets                                                              891,192            2,404,444
                                                                                       ------------         ------------
PROPERTY - Net of accumulated depreciation of $342,573
  and $264,354, respectively (Notes 4 and 9)                                                 15,474               90,659
                                                                                       ------------         ------------
LONG-TERM RECEIVABLE (Note 5)                                                               263,071
                                                                                       ------------         ------------
OTHER ASSETS:
  Patents - net of accumulated amortization of $177,328
    and $149,664, respectively                                                              392,137              419,801
  Investment in InCon Processing, L.L.C. (Note 11)                                        2,544,494            2,271,127
                                                                                       ------------         ------------
          Total other assets                                                              2,936,631            2,690,928
                                                                                       ------------         ------------
TOTAL                                                                                  $  4,106,368         $  5,186,031
                                                                                       ============         ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                                                                     $    664,375         $    533,013
  Accrued liabilities                                                                       590,779            1,175,275
  Current portion of notes payable and capital leases (Notes 6 and 9)                         2,278              331,529
                                                                                       ------------         ------------
          Total current liabilities                                                       1,257,432            2,039,817
NOTES PAYABLE AND CAPITAL LEASES - Net of
  current portion (Notes 6 and 9)                                                                                  2,278
                                                                                       ------------         ------------
          Total liabilities                                                               1,257,432            2,042,095
                                                                                       ------------         ------------
COMMITMENTS AND CONTINGENCIES (Notes 1, 6 and 9)
STOCKHOLDERS' EQUITY (Note 7):
  Common stock, $.001 par value - authorized, 45,000,000 shares;
    21,471,252 and 20,812,774 issued and outstanding, respectively                           21,468               20,809
  Preferred stock, $.001 par value - authorized, 5,000,000 shares;
    no issued and outstanding shares
  Additional paid-in capital                                                             37,545,322           32,166,750
  Receivable collectible in cash or common stock                                           (677,117)
  Warrants                                                                                  874,603            3,304,986
  Accumulated deficit                                                                   (34,914,137)         (32,347,406)
  Common stock in treasury, at cost                                                          (1,203)              (1,203)
                                                                                       ------------         ------------
          Total stockholders' equity                                                      2,848,936            3,143,936
                                                                                       ------------         ------------
TOTAL                                                                                  $  4,106,368         $  5,186,031
                                                                                       ============         ============
</TABLE>

See notes to consolidated financial statements.

                                      F-2
<PAGE>   46
BIONUTRICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED OCTOBER 31, 2000, 1999 AND 1998


<TABLE>
<CAPTION>
                                                                2000                1999                 1998
<S>                                                        <C>                  <C>                  <C>
REVENUES (Note 1):
  Revenue from services                                    $    209,098         $  2,516,554         $  3,999,408
  Revenue from product sales                                    146,526            1,173,193            2,654,496
                                                           ------------         ------------         ------------
          Total gross revenues                                  355,624            3,689,747            6,653,904
DISCOUNTS AND ALLOWANCES                                        221,545              558,262              302,626
                                                           ------------         ------------         ------------
          Net revenues                                          134,079            3,131,485            6,351,278
COST OF REVENUES                                                165,042            2,334,839            7,259,015
                                                           ------------         ------------         ------------
          Gross (loss) profit                                   (30,963)             796,646             (907,737)
                                                           ------------         ------------         ------------
OPERATING EXPENSES:
  Selling, general and administrative (Note 10)               2,573,762            5,939,356           10,328,653
  Research and development                                      115,400              368,070              432,306
                                                           ------------         ------------         ------------
          Total operating expenses                            2,689,162            6,307,426           10,760,959
                                                           ------------         ------------         ------------
OPERATING LOSS                                               (2,720,125)          (5,510,780)         (11,668,696)
                                                           ------------         ------------         ------------
OTHER (EXPENSE) INCOME:
  Net interest expense (Notes 6, 9 and 10)                      (31,657)             (25,313)            (127,225)
  Other income (expense)                                        211,685              (30,237)
  Net loss on investment in joint venture (Note 11)             (26,634)             (56,814)
  Net gain on disposal of assets (Note 7)                                                               2,553,516
                                                           ------------         ------------         ------------
           Net other income (expense)                           153,394             (112,364)           2,426,291
                                                           ------------         ------------         ------------
NET LOSS                                                   $ (2,566,731)        $ (5,623,144)        $ (9,242,405)
                                                           ============         ============         ============

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                                  20,948,968           20,714,652           18,716,757
                                                           ============         ============         ============
BASIC AND DILUTED NET LOSS PER
  COMMON SHARE                                             $      (0.12)        $      (0.27)        $      (0.49)
                                                           ============         ============         ============
</TABLE>


See notes to consolidated financial statements.


                                      F-3
<PAGE>   47
BIONUTRICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED OCTOBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                                                ADDITIONAL
                                                                                          COMMON STOCK           PAID-IN
                                                                                       SHARES      AMOUNT        CAPITAL

<S>                                                                                  <C>           <C>         <C>
BALANCE, NOVEMBER 1, 1997                                                            17,814,205    $17,812     $26,501,567
  Issuance of common shares for cash at $5 per share (converted rate) under
    option agreement, December 1997                                                       8,333          8          41,647
  Issuance of common  shares for cash at $8 per share, December 1997                     83,050         82         664,318
  Issuance of common shares for cash at $7.25 per share, February 1998                  413,793        414       2,999,586
  Cash paid for stock related expenses                                                                           (284,135)
  Issuance of common shares for services at $6.375 per share, April 1998                 10,000         10          63,740
  Issuance of common shares for incentive compensation at $6.75 per share, June
    1998                                                                                  4,922          5          33,218
  Issuance of common stock warrants for cash
  Issuance of common shares and warrants for cash at $2 per share, August 1998        2,000,000      2,000       1,200,864
  Issuance of common shares for incentive compensation at $1.75 per share,
    October 1998                                                                         21,429         21          37,479
  Amortization of non-employee stock-based compensation, November 1997 -
    October 1998 (Note 7)                                                                                          175,422
  Net loss - year ended October 31, 1998
                                                                                     ----------     ------      ----------
BALANCE, OCTOBER 31, 1998                                                            20,355,732     20,352      31,433,706
  Issuance of common shares and warrants for cash at $2 per share, January 1999         250,000        250         215,404
  Issuance of common shares for services at $1.25 per share, February 1999              100,000        100         124,900
  Issuance of common shares for services at $1.375 per share, February 1999             100,000        100         137,400
  Issuance of common stock warrants for services at $4 per share, April 1999
  Issuance of common stock warrants for services at $2 per share, August 1999
  Issuance of common stock warrants for services at $7 per share, August 1999
  Issuance of common shares as consideration for rights granted under an Option
    agreement at $1.42 per share, October 1999                                            7,042          7           9,993
  Issuance of common stock options as partial consideration for rights granted
    under a license and sublicense agreement at $2 per share, October 1999                                          51,574
  Amortization of non-employee stock-based compensation, November 1998 -
    October 1999 (Note 7)                                                                                          193,773
  Net loss - year ended October 31, 1999
                                                                                     ----------     ------      ----------
BALANCE, OCTOBER 31, 1999                                                            20,812,774     20,809      32,166,750
</TABLE>

                                                                     (Continued)


<TABLE>
<CAPTION>
                                                                                       RECEIVABLE
                                                                                     COLLECTIBLE IN           WARRANTS
                                                                                        CASH OR          SHARES      AMOUNT
                                                                                      COMMON STOCK
<S>                                                                                  <C>              <C>          <C>
BALANCE, NOVEMBER 1, 1997
  Issuance of common shares for cash at $5 per share (converted rate) under
    option agreement, December 1997
  Issuance of common  shares for cash at $8 per share, December 1997
  Issuance of common shares for cash at $7.25 per share, February 1998
  Cash paid for stock related expenses
  Issuance of common shares for services at $6.375 per share, April 1998
  Issuance of common shares for incentive compensation at $6.75 per share, June
    1998
  Issuance of common stock warrants for cash                                                             700,000      $50,000
  Issuance of common shares and warrants for cash at $2 per share, August 1998                         2,000,000    2,797,136
  Issuance of common shares for incentive compensation at $1.75 per share,
    October 1998
  Amortization of non-employee stock-based compensation, November 1997 -
    October 1998 (Note 7)
  Net loss - year ended October 31, 1998
                                                                                                       ---------    ---------
BALANCE, OCTOBER 31, 1998                                                                              2,700,000    2,847,136
  Issuance of common shares and warrants for cash at $2 per share, January 1999                          500,000      284,346
  Issuance of common shares for services at $1.25 per share, February 1999
  Issuance of common shares for services at $1.375 per share, February 1999
  Issuance of common stock warrants for services at $4 per share, April 1999                             100,000       11,603
  Issuance of common stock warrants for services at $2 per share, August 1999                            100,000       86,907
  Issuance of common stock warrants for services at $7 per share, August 1999                             30,000       74,994
  Issuance of common shares as consideration for rights granted under an Option
    agreement at $1.42 per share, October 1999
  Issuance of common stock options as partial consideration for rights granted
    under a license and sublicense agreement at $2 per share, October 1999
  Amortization of non-employee stock-based compensation, November 1998 -
    October 1999 (Note 7)
  Net loss - year ended October 31, 1999
                                                                                                       ---------    ---------
BALANCE, OCTOBER 31, 1999                                                                              3,430,000    3,304,986
</TABLE>

                                                                     (Continued)




<TABLE>
<CAPTION>
                                                                                                            COMMON STOCK
                                                                                       ACCUMULATED          IN TREASURY
                                                                                         DEFICIT        SHARES       AMOUNT

<S>                                                                                  <C>             <C>           <C>
BALANCE, NOVEMBER 1, 1997                                                            $(17,481,857)   (1,202,886)   $(1,203)
  Issuance of common shares for cash at $5 per share (converted rate) under
    option agreement, December 1997
  Issuance of common  shares for cash at $8 per share, December 1997
  Issuance of common shares for cash at $7.25 per share, February 1998
  Cash paid for stock related expenses
  Issuance of common shares for services at $6.375 per share, April 1998
  Issuance of common shares for incentive compensation at $6.75 per share, June
    1998
  Issuance of common stock warrants for cash
  Issuance of common shares and warrants for cash at $2 per share, August 1998
  Issuance of common shares for incentive compensation at $1.75 per share,
    October 1998
  Amortization of non-employee stock-based compensation, November 1997 -
    October 1998 (Note 7)
  Net loss - year ended October 31, 1998                                               (9,242,405)
                                                                                      -----------    ----------     ------
BALANCE, OCTOBER 31, 1998                                                             (26,724,262)   (1,202,886)    (1,203)
  Issuance of common shares and warrants for cash at $2 per share, January 1999
  Issuance of common shares for services at $1.25 per share, February 1999
  Issuance of common shares for services at $1.375 per share, February 1999
  Issuance of common stock warrants for services at $4 per share, April 1999
  Issuance of common stock warrants for services at $2 per share, August 1999
  Issuance of common stock warrants for services at $7 per share, August 1999
  Issuance of common shares as consideration for rights granted under an Option
    agreement at $1.42 per share, October 1999
  Issuance of common stock options as partial consideration for rights granted
    under a license and sublicense agreement at $2 per share, October 1999
  Amortization of non-employee stock-based compensation, November 1998 -
    October 1999 (Note 7)
  Net loss - year ended October 31, 1999                                               (5,623,144)
                                                                                      -----------    ----------     ------
BALANCE, OCTOBER 31, 1999                                                             (32,347,406)   (1,202,886)    (1,203)
</TABLE>

                                                                     (Continued)


<TABLE>
<CAPTION>
                                                                                       TOTAL
                                                                                    STOCKHOLDERS'
                                                                                       EQUITY

<S>                                                                                 <C>
BALANCE, NOVEMBER 1, 1997                                                           $9,036,319
  Issuance of common shares for cash at $5 per share (converted rate) under
    option agreement, December 1997                                                     41,655
  Issuance of common  shares for cash at $8 per share, December 1997                   664,400
  Issuance of common shares for cash at $7.25 per share, February 1998               3,000,000
  Cash paid for stock related expenses                                               (284,135)
  Issuance of common shares for services at $6.375 per share, April 1998                63,750
  Issuance of common shares for incentive compensation at $6.75 per share, June
    1998                                                                                33,223
  Issuance of common stock warrants for cash                                            50,000
  Issuance of common shares and warrants for cash at $2 per share, August 1998       4,000,000
  Issuance of common shares for incentive compensation at $1.75 per share,
    October 1998                                                                        37,500
  Amortization of non-employee stock-based compensation, November 1997 -
    October 1998 (Note 7)                                                              175,422
  Net loss - year ended October 31, 1998                                            (9,242,405)
                                                                                     ---------
BALANCE, OCTOBER 31, 1998                                                            7,575,729
  Issuance of common shares and warrants for cash at $2 per share, January 1999        500,000
  Issuance of common shares for services at $1.25 per share, February 1999             125,000
  Issuance of common shares for services at $1.375 per share, February 1999            137,500
  Issuance of common stock warrants for services at $4 per share, April 1999            11,603
  Issuance of common stock warrants for services at $2 per share, August 1999           86,907
  Issuance of common stock warrants for services at $7 per share, August 1999           74,994
  Issuance of common shares as consideration for rights granted under an Option
    agreement at $1.42 per share, October 1999                                          10,000
  Issuance of common stock options as partial consideration for rights granted
    under a license and sublicense agreement at $2 per share, October 1999              51,574
  Amortization of non-employee stock-based compensation, November 1998 -
    October 1999 (Note 7)                                                              193,773
  Net loss - year ended October 31, 1999                                            (5,623,144)
                                                                                     ---------
BALANCE, OCTOBER 31, 1999                                                            3,143,936
</TABLE>

                                                                     (Continued)

                                      F-4
<PAGE>   48
BIONUTRICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED OCTOBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                                                ADDITIONAL
                                                                                          COMMON STOCK           PAID-IN
                                                                                       SHARES      AMOUNT        CAPITAL

<S>                                                                                  <C>           <C>         <C>
BALANCE, OCTOBER 31, 1999                                                            20,812,774    20,809      32,166,750
  Issuance of common shares for incentive compensation at $2 per share,
    December 1999                                                                         7,407         7          14,807
  Expiration of warrants to purchase common shares, January 2000                                                  111,800
  Issuance of common shares for incentive compensation at $1.75 per share,
    March 2000                                                                           28,571        29          49,971
  Issuance of common shares for services at $4 per share, April 2000                     87,500        88         349,912
  Expiration of warrants to purchase common shares, August 2000                                                 2,797,136
  Receivable collateralized by common stock, reclassified as contra-equity,
    August 2000 (Note 7)
  Issuance of common shares for fees and expenses of investor at $1 per share,
    September 2000 (Note 1)                                                              25,000        25          24,975
  Issuance of common stock warrants in connection with equity line,
    September 2000 (Note 1)                                                                                      (95,037)
  Issuance of common shares and warrants for cash at $1 per share,
    September 2000                                                                      500,000       500         475,497
  Issuance of common shares for stock-related expenses, September 2000                   10,000        10             (10)
  Payment for 500,000 shares at $1 per share and stock warrants, October 2000
    (Note 1)                                                                                                      471,926
  Issuance of common stock warrants to replace expired warrants at $2
    per share, October 2000                                                                                      (278,602)
  Amended warrant exercise price for the purchase of 100,000 shares of
    common stock from $2 to $1 per share as consideration for a liability,
      October 2000
  Agreement to issue 300,000 shares to ACH for release of certain contingent
    obligations under the Master Formation Agreement relating to InCon
    Processing LLC, October 2000 (Note 1)                                                                         300,000
  Agreement to issue 591,850 shares of Preferred Stock to a director in
    exchange for extinguishment of notes payable, including accrued interest,
    of $798,998, October 2000 (Note 1)                                                                            798,998
  Agreement to issue 150,000 shares in satisfaction of a $150,000 debt,
    October 2000 (Note 1)                                                                                         150,000
  Amortization of non-employee stock-based compensation, November 1999 to
    October 2000 (Note 7)                                                                                         207,199
  Net loss - year ended October 31, 2000
                                                                                     ----------   -------     -----------
BALANCE, OCTOBER 31, 2000                                                            21,471,252   $21,468     $37,545,322
                                                                                     ==========   =======     ===========
</TABLE>

                 See notes to consolidated financial statements.     (Concluded)




<TABLE>
<CAPTION>
                                                                                      RECEIVABLE
                                                                                    COLLECTIBLE IN           WARRANTS
                                                                                       CASH OR          SHARES      AMOUNT
                                                                                     COMMON STOCK
<S>                                                                                 <C>               <C>          <C>
BALANCE, OCTOBER 31, 1999                                                                              3,430,000     3,304,986
  Issuance of common shares for incentive compensation at $2 per share,
    December 1999
  Expiration of warrants to purchase common shares, January 2000                                       (250,000)     (111,800)
  Issuance of common shares for incentive compensation at $1.75 per share,
    March 2000
  Issuance of common shares for services at $4 per share, April 2000
  Expiration of warrants to purchase common shares, August 2000                                      (2,000,000)   (2,797,136)
  Receivable collateralized by common stock, reclassified as contra-equity,
    August 2000 (Note 7)                                                            $(677,117)
  Issuance of common shares for fees and expenses of investor at $1 per share,
    September 2000 (Note 1)
  Issuance of common stock warrants in connection with equity line,
    September 2000 (Note 1)                                                                              200,000        95,037
  Issuance of common shares and warrants for cash at $1 per share,
    September 2000                                                                                        50,000        24,003
  Issuance of common shares for stock-related expenses, September 2000
  Payment for 500,000 shares at $1 per share and stock warrants, October 2000
    (Note 1)                                                                                              50,000        28,074
  Issuance of common stock warrants to replace expired warrants at $2
    per share, October 2000                                                                            2,000,000       278,602
  Amended warrant exercise price for the purchase of 100,000 shares of
    common stock from $2 to $1 per share as consideration for a liability,
      October 2000                                                                                                      52,837
  Agreement to issue 300,000 shares to ACH for release of certain contingent
    obligations under the Master Formation Agreement relating to InCon
    Processing LLC, October 2000 (Note 1)
  Agreement to issue 591,850 shares of Preferred Stock to a director in
    exchange for extinguishment of notes payable, including accrued interest,
    of $798,998, October 2000 (Note 1)
  Agreement to issue 150,000 shares in satisfaction of a $150,000 debt,
    October 2000 (Note 1)
  Amortization of non-employee stock-based compensation, November 1999 to
    October 2000 (Note 7)
  Net loss - year ended October 31, 2000
                                                                                    ---------           ---------     --------
BALANCE, OCTOBER 31, 2000                                                           $(677,117)          3,480,000     $874,603
                                                                                    ==========          =========     ========
</TABLE>

                 See notes to consolidated financial statements.     (Concluded)




<TABLE>
<CAPTION>
                                                                                                           COMMON STOCK
                                                                                      ACCUMULATED          IN TREASURY
                                                                                        DEFICIT        SHARES       AMOUNT

<S>                                                                                  <C>             <C>           <C>
BALANCE, OCTOBER 31, 1999                                                             (32,347,406)    (1,202,886)   (1,203)
  Issuance of common shares for incentive compensation at $2 per share,
    December 1999
  Expiration of warrants to purchase common shares, January 2000
  Issuance of common shares for incentive compensation at $1.75 per share,
    March 2000
  Issuance of common shares for services at $4 per share, April 2000
  Expiration of warrants to purchase common shares, August 2000
  Receivable collateralized by common stock, reclassified as contra-equity,
    August 2000 (Note 7)
  Issuance of common shares for fees and expenses of investor at $1 per share,
    September 2000 (Note 1)
  Issuance of common stock warrants in connection with equity line,
    September 2000 (Note 1)
  Issuance of common shares and warrants for cash at $1 per share,
    September 2000
  Issuance of common shares for stock-related expenses, September 2000
  Payment for 500,000 shares at $1 per share and stock warrants, October 2000
    (Note 1)
  Issuance of common stock warrants to replace expired warrants at $2
    per share, October 2000
  Amended warrant exercise price for the purchase of 100,000 shares of
    common stock from $2 to $1 per share as consideration for a liability,
      October 2000
  Agreement to issue 300,000 shares to ACH for release of certain contingent
    obligations under the Master Formation Agreement relating to InCon
    Processing LLC, October 2000 (Note 1)
  Agreement to issue 591,850 shares of Preferred Stock to a director in
    exchange for extinguishment of notes payable, including accrued interest,
    of $798,998, October 2000 (Note 1)
  Agreement to issue 150,000 shares in satisfaction of a $150,000 debt,
    October 2000 (Note 1)
  Amortization of non-employee stock-based compensation, November 1999 to
    October 2000 (Note 7)
  Net loss - year ended October 31, 2000                                               (2,566,731)
                                                                                     ------------     ----------   -------
BALANCE, OCTOBER 31, 2000                                                            $(34,914,137)    (1,202,886)  $(1,203)
                                                                                     =============    ===========  ========
</TABLE>

                 See notes to consolidated financial statements.     (Concluded)




<TABLE>
<CAPTION>
                                                                                        TOTAL
                                                                                     STOCKHOLDERS'
                                                                                        EQUITY

<S>                                                                                  <C>
BALANCE, OCTOBER 31, 1999                                                              3,143,936
  Issuance of common shares for incentive compensation at $2 per share,
    December 1999                                                                         14,814
  Expiration of warrants to purchase common shares, January 2000
  Issuance of common shares for incentive compensation at $1.75 per share,
    March 2000                                                                            50,000
  Issuance of common shares for services at $4 per share, April 2000                     350,000
  Expiration of warrants to purchase common shares, August 2000
  Receivable collateralized by common stock, reclassified as contra-equity,
    August 2000 (Note 7)                                                                (677,117)
  Issuance of common shares for fees and expenses of investor at $1 per share,
    September 2000 (Note 1)                                                               25,000
  Issuance of common stock warrants in connection with equity line,
    September 2000 (Note 1)
  Issuance of common shares and warrants for cash at $1 per share,
    September 2000                                                                       500,000
  Issuance of common shares for stock-related expenses, September 2000
  Payment for 500,000 shares at $1 per share and stock warrants, October 2000
    (Note 1)                                                                             500,000
  Issuance of common stock warrants to replace expired warrants at $2
    per share, October 2000
  Amended warrant exercise price for the purchase of 100,000 shares of
    common stock from $2 to $1 per share as consideration for a liability,
      October 2000                                                                        52,837
  Agreement to issue 300,000 shares to ACH for release of certain contingent
    obligations under the Master Formation Agreement relating to InCon
    Processing LLC, October 2000 (Note 1)                                                300,000
  Agreement to issue 591,850 shares of Preferred Stock to a director in
    exchange for extinguishment of notes payable, including accrued interest,
    of $798,998, October 2000 (Note 1)                                                   798,998
  Agreement to issue 150,000 shares in satisfaction of a $150,000 debt,
    October 2000 (Note 1)                                                                150,000
  Amortization of non-employee stock-based compensation, November 1999 to
    October 2000 (Note 7)                                                                207,199
  Net loss - year ended October 31, 2000                                              (2,566,731)
                                                                                      ----------
BALANCE, OCTOBER 31, 2000                                                             $2,848,936
                                                                                      ==========
</TABLE>

                 See notes to consolidated financial statements.     (Concluded)

                                      F-5
<PAGE>   49
BIONUTRICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                          2000                 1999                 1998
<S>                                                                  <C>                  <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                           $ (2,566,731)        $ (5,623,144)        $ (9,242,405)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
      Depreciation and amortization                                       105,883            1,120,358            1,318,360
      (Gain) on disposal of assets                                                                               (2,553,516)
      Loss on investment in joint venture                                  26,633               56,814
      Amortization of non-employee stock-based compensation               207,199              193,773              175,422
      Expenses satisfied with issuance of common stock
        and warrants                                                      541,649              436,004              134,473
      Changes in operating assets and liabilities:
        Trade receivables                                                  84,907               33,086              315,960
        Inventory                                                         159,088              504,165              536,404
        Prepaids and other current assets                                  37,559               47,380              384,230
        Accounts payable                                                  131,362             (166,437)          (1,678,595)
        Accrued liabilities                                              (584,496)              73,205             (904,798)
                                                                     ------------         ------------         ------------
          Net cash used in operating activities                        (1,856,947)          (3,324,796)         (11,514,465)
                                                                     ------------         ------------         ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                     (3,034)            (133,950)          (1,462,129)
  Patents and rights to technology acquired                                                    (15,000)            (125,000)
  Proceeds from disposal of fixed assets and patents                                         3,004,000            4,543,855
  Investment in joint venture                                                                 (272,244)
                                                                     ------------         ------------         ------------
          Net cash (used in) provided by investing activities              (3,034)           2,582,806            2,956,726
                                                                     ------------         ------------         ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from debt                                                      900,000              200,000            3,225,000
  Proceeds from issuance of stock and warrants                          1,000,000              500,000            7,756,055
  Expenses for capital raising                                                                                     (284,135)
  Repayments of debt and capital leases                                    (8,646)            (982,220)          (2,615,902)
                                                                     ------------         ------------         ------------
          Net cash provided (used in) by financing activities           1,891,354             (282,220)           8,081,018
                                                                     ------------         ------------         ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                       31,373           (1,024,210)            (476,721)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                              680,190            1,704,400            2,181,121
                                                                     ------------         ------------         ------------
CASH AND CASH EQUIVALENTS, END OF YEAR                               $    711,563         $    680,190         $  1,704,400
                                                                     ============         ============         ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION - Cash paid during the period for interest             $        614         $     65,344         $    149,253
                                                                     ============         ============         ============
SUPPLEMENTAL DISCLOSURES OF NONCASH
  INVESTING AND FINANCING ACTIVITIES:
    Conversion of debt to equity                                     $    900,000
                                                                     ============
    Conversion of a contingent liability to equity                   $    300,000
                                                                     ============
    Net receivable reclassified to equity                            $    677,117
                                                                     ============
    Contribution of assets to L.L.C                                                       $    399,815
                                                                                          ============
    Acquisition of equipment under capital leases                                                              $    173,808
                                                                                                               ============
</TABLE>

See notes to consolidated financial statements.

                                      F-6
<PAGE>   50
BIONUTRICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 31, 2000, 1999 AND 1998


1.     ORGANIZATION AND BASIS OF PRESENTATION

       BIONUTRICS, INC. - Bionutrics, Inc. ("Bionutrics) consists of Bionutrics
       and its wholly-owned subsidiaries, LipoGenics, Inc. ("LipoGenics"),
       Bionutrics Health Products, Inc. ("BHP"), Nutrition Technologies
       Corporation ("Nutrition Technologies"), InCon International Ltd. ("IIN")
       and InCon Technologies, Inc. ("InCon") (collectively referred to as the
       "Company").

       Bionutrics' operating strategy has changed from prior years where it
       manufactured and marketed its products to its current strategy, which is
       to leverage its core competency of new product development by partnering
       the manufacturing and marketing of such new products. The Company's goal
       is to discover, define and protect its products and technology and to
       partner manufacturing and marketing. Revenues for the years ended October
       31, 2000, 1999 and 1998 are derived primarily from two sources: services
       and product sales. For the year ended October 31, 2000, revenues from
       services were primarily attributed to product development and grant
       research activities. For the years ended October 31, 1999 and 1998,
       revenues from services were primarily attributed to molecular
       distillation toll processing of materials for a variety of customers.
       Revenues from product sales during the year ended October 31, 2000 were
       entirely from the sales of evolvE(R), the Company's dietary supplement
       product. Revenues from product sales during the years ended October 31,
       1999 and 1998 were primarily attributed to equipment sales as well as the
       sale of evolvE(R).

       The accompanying consolidated financial statements have been prepared on
       a going concern basis, which contemplates the realization of assets and
       the satisfaction of liabilities in the normal course of business. The
       Company has incurred cumulative operating losses of $34,914,137 through
       October 31, 2000, which have been funded through the issuance of stock
       and debt. The losses incurred to date, the uncertainty regarding the
       Company's ability to raise additional capital and the Company's inability
       to generate income and positive cash flows from operations may indicate
       that the Company will be unable to continue as a going concern for a
       reasonable period of time.

       The consolidated financial statements do not include any adjustments
       relating to the recoverability and classification of recorded asset
       amounts or the amounts and classification of liabilities that might be
       necessary should the Company be unable to continue as a going concern.
       The Company's continuation as a going concern is dependent upon its
       ability to generate sufficient cash flow to meet its obligations on a
       timely basis, maintaining adequate financing, and ultimately to attain
       successful operations.

       Since the Company's current cash resources and expected cash flow from
       operations will not be sufficient to fund its operational needs for the
       next 12 months, it continues to seek additional capital through private
       equity and bank lines of credit. There can be no assurance that such
       additional financing will be attainable, or attainable on terms
       acceptable to the Company. Access by the Company to additional capital
       will depend substantially upon prevailing market conditions and the
       financial condition of and prospects for the Company at the time.

       Management is continuing its efforts to obtain additional funds through
       the issuance of common stock in private transactions and management is
       also continuing its efforts to reposition the Company as a product
       development company and, as such, is engaged in discussions with several
       potential marketing partners involving evolvE(R) and future branded
       products, including dietary supplements and functional food ingredients.
       The Company plans to develop, patent, and trademark novel products while
       its marketing partners will provide the distribution, marketing and sales
       support. New products are expected to be based on new technology
       extending beyond a tocotrienol platform.

                                      F-7
<PAGE>   51
       In June 1999, the Company entered into a 50/50 joint venture with ACH
       Food Companies, Inc. ("ACH", formerly known as AC HUMKO CORP.), wherein
       InCon transferred substantially all of its assets to a newly-formed
       limited liability company, InCon Processing, L.L.C. ("InCon Processing"),
       for which it received a payment of $3,000,000 and a 50 percent interest
       in the joint venture. InCon Processing took over substantially all of the
       business previously engaged in by InCon relating to toll processing,
       molecular separation, and the design and sale of molecular separation
       facilities. InCon Processing expects to utilize the InCon expertise to
       expand its existing business and to expand its business into processing
       micronutrients that would be available for food grade products. In
       connection with this transaction, the remaining amount of goodwill
       recorded at the date of acquisition of InCon was written off (Note 11).
       See related issuance of shares later in this footnote.

       On September 7, 2000, the Company and a private investor entered into a
       Common Stock Purchase Agreement (the "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 4,000,000 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. The Company can establish a threshold price below which it will
       not sell shares. The price is discounted by 10 percent, decreasing by .25
       percent to 7 percent for each $12,500,000 that the Company's market
       capitalization exceeds $60,000,000. In lieu of a minimum draw down
       commitment, the Company has issued a three-year warrant for the purchase
       of 200,000 shares of common stock at an exercise price of $1.535 per
       share, equal to 120 percent of the average volume weighted average daily
       price for the 15 trading days before the date of issuance of the warrant.
       In addition, 35 day warrants will be issued in connection with each draw
       down for the purchase of a number of shares equal to 17.5 percent of the
       draw down amount divided by the weighted average of the purchase prices
       during the applicable period. In payment of fees and expenses of the
       investor, the Company has issued 25,000 shares of its common stock to the
       investor.

       The Company is not permitted to draw down funds if the issuance of shares
       to the investor pursuant to the draw down facility would result in the
       investor owning more than 9.9 percent of the Company's common stock or
       would require stockholder approval under applicable Nasdaq rules. The
       agreement contains various termination rights for the investor,
       including, among others, due to materially adverse changes to the
       Company.

       The Company intends to use the proceeds of the offering for general
       corporate and working capital purposes.

       On September 20, 2000, the Company raised $500,000 in capital through
       issuance of common stock. This capital stock was issued at $1.00 per
       share. In conjunction with this issuance, 50,000 warrants were issued
       with an exercise price of $1.10. These warrants expire on September 20,
       2003. Additionally, in connection with this transaction the Company
       issued 10,000 shares of common stock to the investors as payment for
       their legal fees, expenses and related disbursements. The agreement
       allows for a 2 percent penalty to be charged to the Company if such
       shares are not registered with the SEC on a timely basis.

       On October 25, 2000, the Company raised $500,000 in capital through the
       sale of common stock. This capital stock was subscribed to at $1.00 per
       share. In conjunction with this issuance, 50,000 warrants were issued
       with an exercise price of $1.00. These warrants expire on October 24,
       2002. These shares were issued on November 28, 2000.

                                      F-8
<PAGE>   52
       On October 27, 2000, the Company agreed to issue 591,850 shares of its
       Series A Convertible Preferred Stock as consideration for the
       cancellation of $798,998 of debt owed under certain promissory notes
       dated December 22, 1999 and June 19, 2000 to a director. The shares have
       an annual cumulative dividend of $0.108 per share, a liquidation rate of
       $1.35 per share and each share is convertible to one share of Common
       Stock on or after October 27, 2001. The shares are also redeemable by the
       Company at any time at $1.35 per share. These shares were issued on
       December 6, 2000.

       On October 28, 2000, the Company agreed to issue 150,000 shares of its
       Common Stock as consideration for the release of its obligation to repay
       a $150,000 Bridge Loan the Company received on April 7, 2000. Under the
       agreement, the Company has the right to repurchase the shares at fair
       market value, between $1.00 and $3.00, for three years.

       On October 30, 2000, the Company agreed to issue 300,000 shares of its
       Common Stock to ACH as consideration for the release of certain
       contingent obligations under the Master Formation Agreement and Members
       Agreement related to the formation of their 50/50 joint venture, InCon
       Processing.

       On October 30, 2000, the Company issued 2,000,000, 1 year warrants with
       an exercise price of $2.00 to ACH. These warrants were issued to
       effectively extend the exercise period for the original warrants issued
       to ACH that expired August 14, 2000, as the Company wishes to extend the
       period during which ACH may obtain an additional equity interest in the
       Company.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       The Company prepares its financial statements in accordance with
       accounting principles generally accepted in the United States of America.

       PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
       include the accounts of Bionutrics and its wholly-owned subsidiaries,
       LipoGenics, Inc., Bionutrics Health Products, Inc., InCon Technologies,
       Inc. and Nutrition Technology Corp. All significant intercompany balances
       and transactions have been eliminated.

       USE OF ESTIMATES - The preparation of financial statements in conformity
       with accounting principles generally accepted in the United States of
       America requires management to make estimates and assumptions that affect
       the reported amounts of assets and liabilities and disclosures of
       contingent assets and liabilities at the date of the financial statements
       and the reported amounts of revenues and expenses during the reporting
       period. Actual results could differ from those estimates.

       CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt
       instruments purchased with an original maturity of three months or less
       to be cash and cash equivalents.

       INVENTORY is stated at the lower of cost or market. Cost is determined
       using the first-in, first-out method.

       PROPERTY AND DEPRECIATION - Property is stated at cost. Depreciation is
       computed using the straight-line method over the estimated useful lives
       of the individual assets. The estimated useful lives of depreciable
       assets are:

<TABLE>
<CAPTION>
                        ASSET TYPE                             ESTIMATED USEFUL LIFE
<S>                                                            <C>
                Equipment, furniture and fixtures                   3 - 10 years
                Leasehold improvements                                  10 years
                Capitalized software                                     3 years
                Leased equipment                                         3 years
</TABLE>

                                      F-9
<PAGE>   53
       Leasehold improvements and leased equipment are amortized over the lessor
       of the lease life or the useful life of the asset. Expenditures of a
       repair and maintenance nature are expensed when incurred.

       REVENUE - The Company generally recognizes product revenue at the time of
       shipment to the customer. Revenues from the sale of consignment inventory
       is recognized upon notification from third parties. Revenues from
       services are recorded at the time service is rendered and/or reimbursable
       expenses are incurred. Provisions for returns and other adjustments are
       provided for in the same period the related sales are recorded.

       The Company had one customer that accounted for approximately 28 percent
       of total revenues for the year ended October 31, 2000 and two customers
       that accounted for approximately 67 percent and 52 percent of total
       revenues for the years ended October 31, 1999 and 1998, respectively.

       PATENTS - Legal and other costs related to patent applications are
       expensed as incurred. Patents which are acquired are amortized using a
       straight-line basis over 17 years commencing at the date patent approval
       is obtained or the remaining life at the time of acquisition. Patents
       currently capitalized relate to both the processes and products
       associated with the Company's business.

       INCOME TAXES are accounted for under the asset and liability approach,
       which can result in recording tax provisions or benefits in periods
       different from the periods in which such taxes are paid or benefits
       realized. Deferred federal income taxes result principally from certain
       tax carryforwards that are recognized for financial reporting purposes in
       different years than for income tax reporting purposes. Deferred tax
       assets were fully offset by a valuation allowance in 2000, 1999, and
       1998.

       RESEARCH AND DEVELOPMENT - The cost of research and development is
       charged to expense as incurred.

       FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair values of cash, trade and
       notes receivable (except for the receivable which is classified as
       contra-equity for which a fair market value is indeterminable), accounts
       payable, accrued liabilities and notes payable approximate the carrying
       value due to the short-term nature of these instruments.

       STOCK OPTIONS AND WARRANTS granted to consultants or independent
       contractors have been accounted for in accordance with the fair value
       method of Statement of Financial Accounting Standards ("SFAS") No. 123,
       Accounting for Stock-Based Compensation. In accordance with Accounting
       Principles Board Opinion ("APB") No. 25, options granted to employees of
       the Company are recorded as expense, based on the difference, if any,
       between the fair market value of the stock, on the date of grant and the
       option's exercise price. No compensation cost was recognized in the
       Company's consolidated statements of operations for employee-based
       options and warrants for 2000, 1999 or 1998.

       LOSS PER SHARE - Basic earnings per share ("EPS") excludes potential
       dilution from stock options, warrants and other securities or contracts
       to issue common stock. Diluted EPS takes into account the potential
       issuance of these shares in the calculation of EPS. Due to losses from
       continuing operations for years ended October 31, 2000, 1999, and 1998,
       the Company has concluded that issuance of any additional shares would be
       antidilutive and, therefore, a dual presentation is not required. There
       were 5,991,811, 5,360,145 and 4,957,978 shares considered antidilutive
       for the years ended October 31, 2000, 1999 and 1998, respectively.

       NEW ACCOUNTING PRONOUNCEMENT - In June 1998, the Financial Accounting
       Standards Board ("FASB") issued SFAS No. 133, Accounting for Derivative
       Instruments and Hedging Activities.  SFAS No. 133 requires that an
       enterprise recognize certain derivatives as either assets or liabilities
       in the statement of

                                      F-10
<PAGE>   54
       financial position and measure those instruments at fair value. The
       statement is effective for the Company's fiscal year beginning November
       1, 2000. SFAS No. 133 is not expected to have a material impact on the
       Company's consolidated financial statements.

       RECLASSIFICATIONS - Certain reclassifications have been made to the prior
       years financial statements to conform to the current year presentation.

3.     INVENTORY

       As of October 31, inventory consists of the following:

<TABLE>
<CAPTION>
                                   2000              1999
<S>                              <C>                <C>
Work in process                                    $107,733
Finished goods                   $100,401           151,756
                                 --------           -------
Total                            $100,401          $259,489
                                 ========          ========
</TABLE>

4.     PROPERTY AND EQUIPMENT

       As of October 31, the components of property and equipment consist of the
       following:

<TABLE>
<CAPTION>
                                                            2000               1999
<S>                                                      <C>                <C>
Equipment, furniture and fixtures                         $262,068           $259,034
Leasehold improvements                                      41,444             41,444
Capitalized software                                        30,181             30,181
Leased equipment under capital lease (Note 8)               24,354             24,354
                                                            ------             ------
Property and equipment - gross                             358,047            355,013
Less accumulated depreciation and amortization           (342,573)          (264,354)
                                                         ---------          ---------
Property and equipment - net                               $15,474            $90,659
                                                           =======            =======
</TABLE>

5.     LONG-TERM RECEIVABLE

       The long-term receivable represents a trade receivable acquired from
       InCon in connection with the purchase of InCon by the Company. As
       $263,071 of this receivable remains uncollected as of October 31, 2000,
       the Company has reclassified this receivable to long-term but still
       considers the amount to be fully collectible.

6.     NOTES PAYABLE

       At October 31, 1999, the Company had $322,883 outstanding as note
       payable. Payment of this note, which is due to Rye, a party related
       through stock ownership, is contingent upon collection of a certain
       receivable. The Company has reclassified such receivable, net of this
       note, to stockholders' equity for the year ended October 31, 2000 (Note
       7).

7.     STOCKHOLDERS' EQUITY

       At October 31, 2000, the Company had four agreements for stock to be
       issued. These future stock issuances are composed of the following:

       -      150,000 shares to an unrelated third party as repayment for a
              $150,000 bridge loan received during April 2000.

                                      F-11


<PAGE>   55
       -      300,000 shares to ACH as consideration for the release of certain
              contingent obligations under the Master Agreement and Members
              Agreement related to the formation of their 50/50 joint venture,
              InCon Processing.

       -      591,850 shares of Series A Convertible Preferred Stock to a
              director as consideration for previously borrowed funds of
              $750,000, plus accrued interest of $48,998.

       -      500,000 shares sold for $1.00 per share on October 25, 2000.

       At October 31, 2000, the Company had $677,117 as a net receivable
       collateralized by 1.4 million shares of the Company's common stock. This
       amount represents a receivable acquired from InCon in connection with the
       acquisition of InCon by the Company. As this receivable is dependent on
       future actions by a customer which have not occurred, but is
       collateralized by the Company's stock, management has elected to
       reclassify it to stockholders' equity. This receivable has been reduced
       by the note payable to Rye of $322,883, as the payment of that note is
       contingent upon collection of the receivable.

       In August 1998, ACH acquired 2,000,000 shares of the Company's common
       stock for $2.00 per share. ACH also acquired Bionutrics' rice bran
       processing technology for $2,000,000. The technology transfer gives ACH
       the exclusive right to use and practice Bionutrics' proprietary rice bran
       processing technology in North America, with Bionutrics retaining the
       right to use and practice the technology worldwide, other than in North
       America. Bionutrics acquired a perpetual profit sharing interest in ACH's
       rice bran business. As of October 31, 2000, the Company has received $0
       in connection with this agreement.

       In February 1998, Novartis Nutrition acquired exclusive worldwide rights
       to evaluate the Company's Clearesterol(TM) complex for potential
       application as a functional food ingredient. The evaluation right was
       acquired as part of a $3,000,000 stock investment in Bionutrics.

       At October 31, 1996, the Company authorized 1,900,000 shares of common
       stock for issuance under its Nonqualified 1996 Stock Option Plan (the
       "1996 Plan") to key personnel, consultants and independent contractors.
       On December 12, 1997, an additional 950,000 shares of common stock were
       authorized for issuance under the 1996 Plan, for a total of 2,850,000
       authorized as of October 31, 1998. The incentive stock options are
       granted to purchase common stock at 100 percent (110% for an optionee who
       is a 10% stockholder) of the fair market value of the stock on the date
       of grant. Stock options are granted to purchase common stock at a price
       determined by the plan administrator and can be exercisable for a period
       of up to ten years from the date of grant (five years for an option
       granted to a 10% stockholder). All participants are eligible to receive
       stock awards and stock appreciation rights, as to be determined by the
       Company's Board of Directors. No stock awards or stock appreciation
       rights have been granted under the plan.

       DIVIDEND POLICY - The Company has not declared or paid any cash dividends
       on its common stock and does not intend to declare or pay any cash
       dividend in the foreseeable future. The payment of dividends, if any, is
       within the discretion of the Board of Directors and will depend on the
       Company's earnings, if any, its capital requirements and financial
       condition and such other factors as the Board of Directors may consider.

                                      F-12
<PAGE>   56
       EMPLOYEE STOCK-BASED COMPENSATION - A summary of transactions for
       employee stock options and warrants for the years ended October 31, 2000,
       1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                                                        WEIGHTED AVERAGE
                                                                 NUMBER            OPTION            -----------------------
                                                                   OF              PRICE             REMAINING      EXERCISE
                                                                 SHARES            RANGE               LIFE           PRICE
<S>                                                             <C>             <C>                  <C>            <C>
Options outstanding at October 31, 1997                         2,026,244       $1.36 - $9.13           3.9           $5.59
  Options granted                                                 382,000       $4.00 - $5.00
  Warrants granted                                                700,000       $3.25 - $4.00
  Options canceled                                              (233,600)           $5.00
                                                                ---------
Options and warrants outstanding at
  October 31, 1998                                              2,874,644       $1.36 - $5.00           4.84          $4.08
    Options granted                                                60,000       $2.00 - $4.00
    Options canceled                                            (724,500)       $4.00 - $5.00
                                                                ---------
Options and warrants outstanding at
  October 31, 1999                                              2,210,144       $1.36 - $5.00           4.33          $4.01
    Options granted                                               615,000       $1.75 - $3.63
    Options canceled                                            (300,000)           $4.00
                                                                ---------
Options and warrants outstanding at
  October 31, 2000                                              2,525,144       $1.36 - $5.00           3.62          $3.49
                                                                =========
Options available for future grant
  under the 1996 Plan                                             499,100
                                                                =========
</TABLE>

       On September 17, 1998, the compensation committee of the Board of
       Directors reduced the exercise price for options held by employees who
       were not Directors to $4.00. None of the other terms was modified.


                                      F-13
<PAGE>   57
      NONEMPLOYEE STOCK-BASED COMPENSATION - A summary of transactions for
      nonemployee stock options and warrants for the years ended October 31,
      2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                                                   WEIGHTED AVERAGE
                                                        NUMBER              OPTION            --------------------------
                                                          OF                 PRICE            REMAINING         EXERCISE
                                                        SHARES               RANGE               LIFE            PRICE
<S>                                                  <C>                  <C>                 <C>               <C>
Options and warrants outstanding
  at October 31, 1997                                   658,333           $2.50 - $5.00           8.0             $3.40
    Warrants issued                                   2,000,000              $2.00                1.8             $2.00
    Warrants canceled                                  (600,000)          $2.50 - $4.00             -             $3.25
    Options issued                                       33,334              $4.00                1.7             $4.00
    Options exercised                                    (8,333)             $5.00                  -             $5.00
                                                     ----------
Options and warrants outstanding
  at October 31, 1998                                 2,083,334           $2.00 - $5.00           1.9             $2.10
    Warrants issued                                     980,000           $2.00 - $7.00           1.0             $2.48
    Warrants canceled                                  (250,000)             $2.00                  -             $2.00
    Options issued                                      386,667           $2.00 - $5.00           2.2             $3.28
    Options canceled                                    (50,000)             $4.00                  -             $4.00
                                                     ----------
Options and warrants outstanding
  at October 31, 1999                                 3,150,001           $2.00 - $7.00           1.2             $2.37
    Warrants issued                                   2,300,000           $1.00 - $2.00           1.2             $1.92
    Warrants canceled                                (2,250,000)             $2.00
    Options issued                                      300,000              $2.00                2.4             $2.00
    Options canceled                                    (33,334)             $4.00
                                                     ----------
Options and warrants outstanding
  at October 31, 2000                                 3,466,667           $1.00 - $7.00                           $2.23
                                                     ==========
As of October 31, 2000:
  Exercisable options                                   620,000                                                   $3.20
                                                     ==========

  Exercisable warrants                                2,780,000                                                   $2.02
                                                     ==========
</TABLE>


      In accordance with the methodology prescribed under SFAS No. 123, pro
      forma compensation cost for the employee stock options for 2000, 1999 and
      1998 was estimated to be $618,098, $1,345,661 and $3,807,706,
      respectively.

      Had the Company elected to recognize the above-mentioned compensation cost
      in 2000, 1999 and 1998, loss from continuing operations would be
      $3,154,829, $6,968,805 and $13,050,111, respectively, and the basic net
      loss per share would be $.15, $.34 and $.70, respectively.

      In accordance with the methodology prescribed under SFAS No. 123, the
      Company recognized $207,199, $193,773 and $175,422 of compensation expense
      to the nonemployee stock options in the 2000, 1999 and 1998 consolidated
      statements of operations, respectively.


                                      F-14
<PAGE>   58


      The fair value of each employee-nonemployee option and warrant was
      calculated on the date of grant using the Black-Scholes pricing model with
      the following weighted average assumptions:

<TABLE>
<CAPTION>
                      RISK FREE        VOLATILITY        OPTION       DIVIDEND
                       INTEREST           RATE           LIVES          YIELD
<S>                   <C>              <C>               <C>          <C>
2000                    5.63 %             68 %            3              0
1999                    5.15 %             71 %            3              0
1998                    4.83 %            117 %            3              0
</TABLE>

8.    INCOME TAXES

      At October 31, 2000, the Company has net operating loss carryforwards for
      federal income tax purposes of approximately $30,256,733 which expire on
      various dates through 2020. The deferred tax assets related to such
      totaled approximately $11,974,000 and $10,839,000 at October 31, 2000 and
      1999, respectively, and were offset by a valuation allowance.

      The difference between the statutory tax rate and the Company's effective
      tax rate is due to the nonrecognition of tax benefits from operating
      losses due to their uncertainty of recoverability.

9.    LEASES

      The Company has operating leases for office space, vehicles and equipment
      which expire on various dates through January 31, 2003. Total rental
      expense was approximately $207,000, $510,000 and $794,000 for fiscal years
      2000, 1999 and 1998, respectively. Future minimum lease payments under
      noncancelable operating leases at October 31, 2000 are as follows:

<TABLE>
<S>                                            <C>
                   2001                        $ 178,747
                   2002                          181,825
                   2003                           45,456
                                               ---------
                   Total                       $ 406,028
                                               =========
</TABLE>

10.   RELATED PARTY

      Various stockholders have provided consulting and other administrative
      services to the Company. Expense for the years ended October 31, 2000,
      1999 and 1998 was approximately $0, $141,000 and $510,000, respectively,
      and was included in selling, general and administrative expenses in the
      accompanying consolidated statements of operations.

      Interest paid to stockholders in connection with outstanding notes
      described in Note 6 was approximately $63,557 and $45,475 for the years
      ended October 31, 1999 and 1998, respectively. No interest was paid to
      stockholders during 2000.

11.   INVESTMENT IN JOINT VENTURE

      InCon Processing is a limited liability company formed in July 1999, in
      which the Company is a 50 percent member, as noted in Note 1. The Company
      accounts for this investment using the equity method.

      InCon Processing had three customers which accounted for approximately 63
      percent of total revenues for the 12-month period ended October 31, 2000
      and 73 percent of total revenues for the four-month period ended October
      31, 1999.


                                      F-15
<PAGE>   59


      The following represents summarized financial information of InCon
      Processing at October 31, 2000 and 1999, and for the 12-month period then
      ended October 31, 2000 and the four-month period ended October 31, 1999:

<TABLE>
<CAPTION>
      (dollars in thousands)                                  2000       1999
      <S>                                                  <C>        <C>
      ASSETS
      Cash and cash equivalents                            $   659    $   436
      Accounts receivable                                      634        491
      Property, plant and equipment and other - net          4,369      4,750
                                                           -------    -------
      Total                                                $ 5,662    $ 5,677
                                                           =======    =======
      LIABILITIES AND MEMBERS' CAPITAL
      Accounts payable and other liabilities               $   301    $   263
      Members' capital                                       5,361      5,414
                                                           -------    -------
      Total                                                $ 5,662    $ 5,677
                                                           =======    =======
      OPERATIONS
      Revenues                                             $ 5,403    $ 1,675
      Expenses                                               5,456      1,788
                                                           -------    -------
      Net loss                                             $  (53)    $ (113)
                                                           =======    =======
</TABLE>

12.   EMPLOYEE BENEFIT PLAN

      The Company has a defined contribution plan under Section 401(k) of the
      Internal Revenue Code. Each participant may elect to defer up to 15
      percent of his or her compensation and have such amounts matched with
      common stock of the Company at a rate of 50 percent for the first 6
      percent contributed. The Company recognized expenses under this plan of
      approximately $10,000, $49,000 and $130,000 during the years ended October
      31, 2000, 1999 and 1998, respectively.


                                      F-16
<PAGE>   60

13.   SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

      Consolidated quarterly financial information for 2000, 1999 and 1998 is as
      follows:

<TABLE>
<CAPTION>
                                                                       BASIC NET
                                                            NET        EARNINGS
                             GROSS         GROSS         EARNINGS        (LOSS)
                           REVENUES    PROFIT (LOSS)      (LOSS)       PER SHARE
<S>                      <C>            <C>           <C>               <C>
2000
First quarter            $   187,536    $  133,882    $   (519,060)     $ (0.02)
Second quarter                75,915        11,967        (961,014)       (0.05)
Third quarter                 67,943       (89,249)       (634,208)       (0.03)
Fourth quarter                24,230       (87,563)       (452,449)       (0.02)
                         -----------    ----------    ------------      -------
Total                    $   355,624    $  (30,963)   $ (2,566,731)     $ (0.12)
                         ===========    ==========    ============      =======

1999
First quarter            $ 1,134,817    $   71,464    $ (1,634,988)     $ (0.08)
Second quarter             1,647,910       522,329      (1,495,739)       (0.07)
Third quarter                836,891       190,787      (1,467,222)       (0.07)
Fourth quarter                70,129        12,066      (1,025,195)       (0.05)
                         -----------    ----------    ------------      -------
Total                    $ 3,689,747    $  796,646    $ (5,623,144)     $ (0.27)
                         ===========    ==========    ============      =======

1998
First quarter            $ 1,794,942    $ (196,557)   $ (3,336,407)     $ (0.19)
Second quarter             1,584,660      (335,887)     (3,772,764)       (0.21)
Third quarter              1,767,295      (269,677)     (2,651,686)       (0.14)
Fourth quarter             1,507,007      (105,616)        518,452         0.05
                         -----------    ----------    ------------      -------
Total                    $ 6,653,904    $ (907,737)   $ (9,242,405)     $ (0.49)
                         ===========    ==========    ============      =======
</TABLE>


14.   SUBSEQUENT EVENT

      On December 30, 2000 (effective December 20, 2000), the Company entered
      into a Common Stock Purchase Agreement (the "Agreement") for the future
      issuance and purchase of shares of the Company's Common Stock. This new
      Agreement is with Ropart Investments LLC, of which Robert B. Goergen, a
      director of Bionutrics, is also a managing member. The Agreement
      establishes what is sometimes termed as an equity line of credit or an
      equity draw down facility. The Agreement permits the Company to sell up to
      an aggregate of 500,000 shares at $1.00 per share, based on a minimum
      investment amount of $100,000 and a maximum investment amount of $500,000.
      The period during which the Company can make such sales begins December
      20, 2000 and terminates December 31, 2001. In lieu of a minimum draw down
      commitment by the Company, the Company has issued a three-year warrant for
      the purchase of 70,000 shares of Common Stock at an exercise price of
      $1.00 per share. In addition, three-year warrants will be issued in
      connection with each draw down for the purchase of a number of shares
      equal to 10 percent of the shares purchased at such draw down. In the
      event the Company does not exercise its right to fully draw down under
      this Agreement, then on the Termination date, Investor shall have the
      right to purchase up to 100,000 shares of Common Stock at $1.00 per share,
      such number of shares together with shares purchased pursuant to draw
      downs not to exceed 500,000 shares of Common Stock. In connection with the
      Agreement, the Company amended the January 28, 1999 warrant agreement for
      the purchase of 250,000 shares of the Company's Common Stock at $2.00 per
      share. The original expiration date of December 31, 2000 was extended one
      year to December 31, 2001.


                                      F-17
<PAGE>   61


                                Bionutrics, Inc.

                        Valuation and Qualifying Accounts
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                               Additions
                                                           Balance at        Charged to Costs                        Balance at
Description                                             Beginning of Year     and Expenses       Deductions         End of Year
-----------                                             -----------------------------------------------------------------------
<S>                                                     <C>                  <C>                 <C>               <C>
Year ended October 31, 1998
   Allowance for doubtful accounts ...............            $23                 $49               $  0                $72

Year ended October 31, 1999
   Allowance for doubtful accounts ...............            $72                 $ 5               ($28)               $49

Year ended October 31, 2000
   Allowance for doubtful accounts ...............            $49                 $ 1               ($ 2)               $48
</TABLE>

                                      F-18
<PAGE>   62
                                 Exhibit Index


<TABLE>
<S>                <C>
          3.1      Restated Articles of Incorporation (1)

          3.2      Articles of Amendment to the Articles of Incorporation (1)

          3.3      Bylaws (1)

          4.1      Form of Certificate evidencing shares of Common Stock (1)

          10.1     Option granted to Hunt-Wesson, Inc. by LipoGenics, Inc., dated
                   July 1992 (1)

          10.2     Agreement dated October 1995 between the Company and Milton Okin,
                   Kenneth Okin, Robert Okin and Nicki Closset and Amendment to
                   Agreement dated October 1995 (1)

          10.3     Agreement between the Company and C. Everett Koop for the purchase
                   of 20,000 shares of Common Stock and the issuance of 180,000
                   options dated October 1995 (1)

          10.4     Additional Secured Loan Agreement dated March 1996 between the
                   Company and Milton Okin (1)

          10.6     Stock Purchase Agreements dated September 16, 1996 and October
                   31, 1996 between the Company and Spanswick Limited(1)

          10.7     1996 Stock Option Plan, as amended through March 26, 1998 (7)

          10.8     Form of Stock Purchase Agreement and Subscription Application
                   entered into between the Company and certain European investors
                   in January and March 1997 pursuant to Regulation S (3)

          10.9     Form of Stock Purchase Agreement entered into between the Company
                   and an institutional investor in September 1997 (3)

          10.10    Form of Stock Purchase Agreement and Note between the Company and
                   two overseas investors in October 1997 (3)

          10.11    Employment Agreement between the Registrant and John R. Palmer (3)

          10.13    Agreement and Plan of Merger by and among InCon Technologies,
                   Inc., InCon Holdings, LLC, Bionutrics, Inc. and BNRX, Inc.(2)

          10.14    Stock Purchase Agreement dated as of August 14, 1998, between the
                   Registrant and AC HUMKO CORP.(4)

          10.15    Warrant Agreement dated as of August 14, 1998, between the
                   Registrant and AC HUMKO CORP.(4)

          10.16    Technology Agreement dated as of August 14, 1998, between AC HUMKO
                   CORP. and Bionutrics Entities (filed in redacted format pursuant
                   to a confidential treatment request) (5)

          10.17    Exclusive Supply Agreement dated as of August 14, 1998, between AC
                   HUMKO CORP. and Bionutrics Entities (filed in redacted format
                   pursuant to a confidential treatment request) (5)

          10.19    Form of Asset Purchase Agreement dated as of October 1998 between
                   AC HUMKO CORP. and Bionutrics Entities (6)

          10.20    Warrant Agreement for the purchase of 100,000 shares of Common
                   Stock between the Company and William M. McCormick dated August 7,
                   1998 (7)

          10.21    Warrant Agreement for the purchase of 600,000 shares of Common
                   Stock between the Company and William M. McCormick dated August 7,
                   1998 (7)

          10.22    Stock Purchase Agreement and Common Stock Purchase Warrants dated January
                   28, 1999 between Ropart Investments, LLC and the Company (8)

          10.23    Warrant Certificates dated April 27, 1999 issued to Gary J.
                   Shemano, Mart Bailey and Michael Jacks for an aggregate of
                   100,000 shares of Common Stock and Warrant Agreement effective
                   April 9, 1998 between The Shemano Group and the Company (8)

          10.24    Master Formation Agreement for InCon Processing, LLC among AC HUMKO CORP.,
                   InCon Technologies, Inc., InCon International, Inc., Nutrition
                   Technology Corp., and
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                   Bionutrics, Inc., dated June 25, 1999 (filed in redacted
                   format pursuant to a confidential treatment request) (9)

          10.25    Members Agreement for InCon Processing, LLC, between AC HUMKO CORP. and
                   InCon Technologies, Inc., dated June 5, 1999 (filed in redacted
                   format pursuant to a confidential treatment request) (9)

          10.26    First Amendment to Agreement for Purchase and Sale of Assets (9)

          10.27    Warrant Agreement for the purchase of 30,000 shares of Common
                   Stock between the Company and IK Biotech, Inc. dated as of
                   March 19, 1998. (12)

          10.28    Warrant Agreement for the purchase of 100,000 shares of Common Stock
                   between the Company and Cameron Associates Inc. dated as of
                   November 23, 1998. (12)

          10.29    Promissory note for $500,000 dated December 22, 1999 between Milton Okin
                   and the Company (10)

          10.30    Common Stock Purchase Agreement dated September 7, 2000 between the Company
                   and Justicia Holdings Limited (11)

          10.31    Registration Rights Agreement dated September 7, 2000 between
                   the Company and Justicia Holdings Limited (11)

          10.32    Escrow Agreement dated September 7, 2000 among the Company, Justicia
                   Holdings Limited and Epstein, Becker & Green P.C. (11)

          10.33    Form of Stock Purchase Warrant pursuant to Common Stock Purchase Agreement
                   dated September 7, 2000 (11)

          10.34    Promissory note for $250,000 dated June 19, 2000 between Milton Okin and
                   the Company

          10.35    Common Stock Purchase Agreement dated September 20, 2000 between
                   the Company and AMRO International, S.A.

          10.36    Registration Rights Agreement dated September 20, 2000 between
                   the Company and AMRO International, S.A.

          10.37    Escrow Agreement dated September 20, 2000 among the Company, AMRO
                   International, S.A. and Epstein, Becker & Green P.C.

          10.38    Warrant Agreement for the purchase of 50,000 shares of Common
                   Stock dated September 20, 2000 between the Company and AMRO
                   International, S.A.

          10.39    Common Stock Purchase Agreement dated October 25, 2000 between the Company
                   and Tamarack International Limited

          10.40    Warrant Agreement for the purchase of 50,000 shares of Common
                   Stock dated October 25, 2000 between the Company and Tamarack
                   International Limited

          10.41    Series A Convertible Preferred Stock Acquisition Agreement dated October
                   27, 2000 between the Company and Milton Okin

          10.42    Common Stock Acquisition Agreement dated October 28, 2000 between the
                   Company and Macropower Development Limited

          10.43    First Modification to the Master Formation Agreement for InCon Processing,
                   LLC, entered into October 30, 2000 among ACH Food Companies, Inc.
                   (formerly AC HUMKO CORP.), InCon Technologies, Inc., InCon
                   International, Inc., Nutrition Technology Corp. and Bionutrics,
                   Inc.

          10.44    First Modification to the Members Agreement for InCon Processing, LLC,
                   entered into October 30, 2000 among ACH Food Companies, Inc.
                   (formerly AC HUMKO CORP.), InCon Technologies, Inc. and
                   Bionutrics, Inc.

          10.45    Common Stock Acquisition Agreement dated October 30, 2000 between the
                   Company and ACH Food Companies, Inc. (formerly AC HUMKO CORP.)

          10.46    Warrant Agreement for the purchase of 2,000,000 shares of Common Stock
                   dated October 30, 2000 between the Company and ACH Food Companies,
                   Inc. (formerly AC HUMKO CORP.)

          10.47    Common Stock Purchase Agreement dated December 20, 2000 by and
                   between the Company and Ropart Investments, LLC

          10.48    Warrant Agreement for the purchase of 70,000 shares of Common
                   Stock dated December 20, 2000 between the Company and Ropart
                   Investments, LLC

          21       Subsidiaries of the Company
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          23.1     Consent of Deloitte & Touche

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

      (1) Incorporated by reference to Registrant's Form 10 filed with the
          Commission on or about January 21, 1997.

      (2) Incorporated by reference to Registrant's Form 8-K filed with the
          Commission on or about November 7, 1997, as amended by Registrant's
          Form 8-K/A filed with the Commission on or about January 30, 1998.

      (3) Incorporated by reference to Registrant's Form 10-K filed with the
          Commission on or about January 15, 1998, as amended by Registrant's
          Form 10-K/A filed with the Commission on or about January 30, 1998.

      (4) Incorporated by reference to Registrant's Form 8-K filed with the
          Commission on or about August 31, 1998.

      (5) Incorporated by reference to Registrant's Form 8-K/A filed with the
          Commission on or about October 13, 1998.

      (6) Incorporated by reference to Registrant's Form 8-K filed with the
          Commission on or about October 21, 1998.

      (7) Incorporated by reference to Registrant's Form 10-K filed with the
          Commission on or about January 29, 1999.

      (8) Incorporated by reference to Registrant's Second Quarter Form 10-Q
          filed with the Commission on or about June 10, 1999.

      (9) Incorporated by reference to Registrant's form 8-K filed with the
          Commission on or about July 12, 1999.

      (10)Incorporated by reference to Registrant's First Quarter Form 10-Q
          filed with the Commission on or about March 15, 2000.

      (11)Incorporated by reference to Registrant's Third Quarter Form 10-Q
          filed with the Commission on or about September 13, 2000.

      (12)Incorporated by reference to Registrant's Form 10-K405 filed with
          the Commission on January 26, 2000.