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

                                   FORM 10-QSB

        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For the Quarterly Period Ended: December 31, 2001

                                       OR
       [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934




                         Commission File Number 0-24913


                          BioShield Technologies, Inc.
                    -----------------------------------------
           (Name of small business issuer as specified in its charter)


                               Georgia 58-2181628
                      ----------------- ------------------
         (State or other jurisdiction (IRS Employer Identification No.)
                        of incorporation or organization)



                            4405 International Blvd.
                                   Suite B-109
                             Norcross, Georgia 30093
                -------------------------------------------------
                    (Address of principal executive offices)

         Issuer's telephone number, including area code: (770) 925-3653


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



         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2)has been subject to such filing requirements for the past 90 days. X Yes No

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 39,196,280 shares, as of
December 31, 2002.



<PAGE>






                                TABLE OF CONTENTS
                                -----------------




                                                                          PAGE
                                                                          ----

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

         Consolidated Balance Sheet as of December 31, 2001 (unaudited)      3

         Consolidated Statements of Operations for the Three and
           Six Months ended December 31, 2001 and 2000 (unaudited)           4

         Consolidated Statements of Cash Flows for the Six Months
         ended December 31, 2001 and 2000 (unaudited)                        5

         Notes to Consolidated Financial Statements                        6-11

   Item 2.  Management's Discussion and Analysis or Plan of Operation     12-13

PART II - OTHER INFORMATION

   Item 1. Legal Proceedings                                              14-15

   Item 2. Changes in Securities and Use of Proceeds                        15

   Item 3. Defaults upon Senior Securities                                  15

   Item 4. Submission of Matters to a Vote of Security Holders              15

   Item 5. Other Information                                                15

   Item 6. Exhibits and Reports on Form 8-K                                 15

SIGNATURES                                                                  15




                                        2
<PAGE>

                  BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET

                               December 31, 2001






                                     ASSETS

CURRENT ASSETS:
    Cash                                                        $        84,402
    Accounts receivable,
     net of allowance for doubtful
     accounts of $100,000                                             1,030,399
    Inventories                                                          40,000
    Other current assets                                                117,576
    Deferred financing costs                                            127,581
                                                                  --------------

       TOTAL CURRENT ASSETS                                           1,399,958

PROPERTY AND EQUIPMENT, net                                             179,635

INVESTMENT IN EQUITY-METHOD INVESTEE                                     41,000
                                                                  --------------

       TOTAL ASSETS                                             $     1,620,593
                                                                  ==============


                  LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
    Accounts payable                                            $     1,294,389
    Notes payable                                                     1,646,358
    Accrued expenses                                                  1,789,966
                                                                  --------------

       TOTAL CURRENT LIABILITIES                                      4,730,713
                                                                  --------------

STOCKHOLDERS' DEFICIT:
    Convertible preferred stock -
     Series B, no par value; 500 shares authorized;
       451 shares issued and outstanding
       total liquidation of outstanding - $9,020,000                  8,996,840
    Convertible preferred stock - Series C, no par value;
       500 shares authorized; 205 shares issued and outstanding
       total liquidation of outstanding - $4,100,000                  4,100,460
    Common stock, no par value; 50,000,000 shares authorized;
       39,196,280 issued  and outstanding                            33,638,790
    Additional paid-in capital                                        4,762,810
    Accumulated deficit                                             (53,991,370)
    Less 35,000 shares of common stock in treasury - at cost           (536,900)
    Deferred compensation                                               (80,750)
                                                                  --------------

       TOTAL STOCKHOLDERS' DEFICIT                                   (3,110,120)
                                                                  --------------

       TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT              $     1,620,593
                                                                  ==============



             See notes to consolidated financial statements.

                                        3

<PAGE>

                   BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS




<TABLE>
<CAPTION>
                                                                  Three Months Ended December 31,   Six Months Ended December 31,
                                                                 --------------------------------  ---------------------------------
                                                                      2001             2000             2001              2000
                                                                 ---------------  ---------------  ---------------   ---------------

<S>                                                            <C>              <C>              <C>               <C>
NET SALES                                                      $        179,730 $        104,127 $      1,114,147  $        550,080

COST OF SALES                                                            17,595           72,528          317,814           312,066
                                                                 ---------------  ---------------  ---------------   ---------------

GROSS PROFIT                                                            162,135           31,599          796,333           238,014
                                                                 ---------------  ---------------  ---------------   ---------------

OPERATING COSTS AND EXPENSES:
    Marketing and selling                                                22,331         (457,621)         140,085           397,130
    General and administrative                                          719,089        1,177,770        2,125,633         3,399,113
    Loss on investment                                                        -        1,500,000                -         1,500,000
    Research and development                                              1,930          113,010            3,184           357,740
                                                                 ---------------  ---------------  ---------------   ---------------
                                                                        743,350        2,333,159        2,268,902         5,653,983
                                                                 ---------------  ---------------  ---------------   ---------------

LOSS FROM OPERATIONS                                                   (581,215)      (2,301,560)      (1,472,569)       (5,415,969)

OTHER EXPENSES:
    Loss on equity-method investee                                      (44,000)               -          (44,000)                -
    Interest expense                                                   (325,432)               -         (668,030)                -
                                                                 ---------------  ---------------  ---------------   ---------------

       Total other expenses                                            (369,432)               -         (712,030)                -
                                                                 ---------------  ---------------  ---------------   ---------------

LOSS FROM CONTINUING OPERATIONS                                        (950,647)      (2,301,560)      (2,184,599)       (5,415,969)
                                                                 ---------------  ---------------  ---------------   ---------------

DISCONTINUED OPERATIONS:
    Loss from discontinued operations                                  (214,701)      (1,865,691)        (214,701)       (5,870,728)
    Gain on spin-off of majority-owned subsidiary                       240,361                -          240,361                 -
                                                                 ---------------  ---------------  ---------------   ---------------

INCOME (LOSS) FROM DISCONTINUED OPERATIONS                               25,660       (1,865,691)          25,660        (5,870,728)
                                                                 ---------------  ---------------  ---------------   ---------------

NET LOSS                                                               (924,987)      (4,167,251)      (2,158,939)      (11,286,697)

PREFERRED STOCK STOCK DIVIDENDS                                        (169,000)               -         (345,250)                -
                                                                 ---------------  ---------------  ---------------   ---------------

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS                     $     (1,093,987)$     (4,167,251)$     (2,504,189) $    (11,286,697)
                                                                 ===============  ===============  ===============   ===============

BASIC AND DILUTED NET LOSS PER COMMON SHARE:

       Continuing operations                                   $          (0.03)$          (0.22)$          (0.09) $          (0.56)
       Discontinued operations                                             0.00            (0.17)            0.00             (0.61)
                                                                 ---------------  ---------------  ---------------   ---------------
                                                               $          (0.03)$          (0.39)$          (0.09) $          (1.17)
                                                                 ===============  ===============  ===============   ===============

NUMBER OF SHARES USED IN CALCULATING BASIC
    AND DILUTED NET LOSS PER SHARE                                   35,637,607       10,789,670       29,488,844         9,634,534
                                                                 ===============  ===============  ===============   ===============

</TABLE>

                 See notes to consolidated financial statements.

                                        4
<PAGE>

                   BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>

                                                                               For the Six Months Ended
                                                                                     December 31,
                                                                            -------------------------------
                                                                                2001             2000
                                                                            --------------   --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                       <C>              <C>
    Loss from continuing operations                                       $    (2,184,599) $    (5,415,971)
    Adjustments to reconcile loss from continuing operations to
       net cash used in operating activities:
          Gain (loss) from discontinued operations                                 25,660       (5,870,728)
          Minority interest in loss of subsidiary                                    (740)        (218,601)
          Depreciation and amortization                                            35,475           53,836
          Issuance of stock, stock options and
           stock warrants for services rendered                                 1,156,186           28,000
          Deferred financing costs and interest                                   594,259                -
          Loss on equity-method investee                                           44,000                -

    Changes in assets and liabilities:
       (Increase) decrease in:
          Accounts receivable                                                    (580,845)         (20,735)
          Inventories                                                             (40,000)         (51,076)
          Other current assets                                                   (117,576)          42,506
          Deposits and other assets                                                11,721         (523,896)
       Increase (decrease) in:
          Accounts payable                                                        204,702          441,125
          Accrued expenses                                                        119,554         (318,622)
          Other liability                                                         (25,000)               -
                                                                            --------------   --------------

NET CASH USED IN OPERATING ACTIVITIES                                            (757,203)     (11,854,162)
                                                                            --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Investment in equity-method investee                                          (85,000)               -
    Capital expenditures                                                                -          (80,330)
                                                                            --------------   --------------

NET CASH USED IN INVESTING ACTIVITIES                                             (85,000)         (80,330)
                                                                            --------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from stock warrants exercised                                              -          125,000
    Proceeds from stock options exercised                                               -          542,380
    Proceeds from common stock issuances, net                                           -        4,792,000
    Proceeds from debt                                                            916,000        2,000,000
    Repayment of debt                                                            (374,000)      (1,696,676)
                                                                            --------------   --------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                         542,000        5,762,704
                                                                            --------------   --------------

NET DECREASE IN CASH                                                             (300,203)      (6,171,788)

CASH - BEGINNING OF PERIOD                                                        384,605        6,172,914
                                                                            --------------   --------------

CASH - END OF PERIOD                                                      $        84,402  $         1,126
                                                                            ==============   ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

    Cash paid during the period for interest and taxes                    $             -  $             -
                                                                            ==============   ==============

NON-CASH INVESTING AND FINANCING ACTIVITIES:
    Common stock issued for debt                                          $     1,741,367  $             -
                                                                            ==============   ==============

    Preferred stock converted in common stock                             $       857,660  $             -
                                                                            ==============   ==============

    Dividends accrued                                                     $       345,250  $             -
                                                                            ==============   ==============

</TABLE>

                 See notes to consolidated financial statements.

                                        5
<PAGE>


                   BioShield Technologies, Inc. and Subsidiary
                   Notes to Consolidated Financial Statements


NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). The accompanying consolidated
financial statements for the interim periods are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the periods presented. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements for the year ended June 30, 2001 and notes thereto
contained in the Report on Form 10-KSB of BioShield Technologies, Inc. and
Subsidiary (the "Company") as filed with the Securities and Exchange Commission.
The results of operations for the six months ended December 31, 2001 are not
necessarily indicative of the results for the full fiscal year ending June 30,
2002.

Through November 2001, the Company owned 52% of Healthcare Network Solutions,
Inc ("HNS"). During December 2001, 3,646,579 of HNS shares owned by the Company
(approximating 24% of all issued and outstanding shares of HNS) were spun-off to
the Company's shareholders on a one for ten basis with the Company retaining
4,453,421 shares (approximately 28.7% of all then issued and outstanding shares
of HNS)(See note 2).

The consolidated statements include the accounts of BioShield Technologies, Inc.
and its wholly owned subsidiary ("BSTI"). All significant inter-company balances
and transactions have been eliminated.

NOTE 2 - INVESTMENT IN EQUITY-METHOD INVESTEE

The Company holds an investment accounted for under the equity method. The
Company accounts for an investment under the equity method if the investment
gives the Company the ability to exercise significant influence, but not
control, over an investee. Significant influence is generally deemed to exist if
the Company has an ownership interest in the voting stock of the investee of
between 20% and 50%, although other factors, such as representation on the
investee's Board of Directors and the impact of commercial arrangements, are
considered in determining whether the equity method of accounting is
appropriate. As of December 31, 2001, the Company owned 4,453,421 shares of
common stock of Healthcare Network Solutions, Inc., which was received for
various management and other services provided to HNS at the inception of that
company. These shares are restricted under Rule 144 of the Securities and
Exchange Commission.

HNS is in the business of providing consolidated non-medical services to
physicians, particularly those physicians in small (five and under)practice
groups. These services include, billing and scheduling, supply ordering,
personnel staffing, marketing and dispensing. Also, consulting services are
offered to healthcare companies that include developing business strategies,
alliance and partnering programs, research projects and functional product
assessments. HNS is a public company traded under the symbol HNWS. As of
December 31, 2001, HNS had minimal revenues and has incurred losses since its
inception. Tim Moses, who is an officer and director of the Company, is also a
director of HNS and owns approximately 11.6% of the common shares of HNS.

The Company's common share holdings represent approximately 28.7% of the total
of 15,500,000 shares of common stock of HNS currently outstanding at December
31, 2001. The Company has the ability to exercise significant influence, but not
control HNS. Accordingly, under the equity method of accounting, the Company's
share of the investee's earnings or loss is included in the consolidated
statements of operations. The Company records its investments in equity-method
investee on the consolidated balance sheet as "Investment in equity-method
investee" and its share of the investee's earnings or losses in "Equity in
losses of equity-method investee."

The following is a summary of financial information that has been derived from
the financial statements of HNS.
                                           Six Months      Period from Inception
                                         Ended December      (April 23, 2001) to
                                           31, 2001             June 30, 2001
                                          (Unaudited)
   Balance Sheet Data
   Current Assets                    $         111,018     $          24,143
   Total Assets                      $         111,018     $          24,143
   Total Liabilities                 $         404,667     $          35,063
   Stockholders' Deficit             $        (293,649)    $         (10,920)

   Statement of Operations Data
   Total Revenue                     $         109,582     $          56,317
   Total Costs and Expenses          $         477,311     $          81,977
   Net Loss                          $        (367,729)    $         (25,660)
   Net Loss per Common Share         $            (.02)    $            (.00)

                                        6
<PAGE>


                   BioShield Technologies, Inc. and Subsidiary
                   Notes to Consolidated Financial Statements




NOTE 2 - INVESTMENT IN EQUITY-METHOD INVESTEE (Continued)

In the statement of operations for the six months ended December 31, 2001, the
Company recorded equity in losses of investee of $44,000. Management believes
the loss was other than temporary due to the continued losses and a net capital
deficiency of the investee.

NOTE 3 - NOTES PAYABLE

(a) On December 15, 2000, the Company conducted a private placement which was
comprised of the sale of units consisting of shares of common stock and a
promissory note equal to the dollar amount of the investment; with the latter
being due 12 months from the date of issuance. The unit holder at his option can
convert such note at a 25% discount based on the average closing cost of the
common stock for the twenty business days prior to conversion. Cash totaling
$487,500 was received under this placement but the stock was not issued until
July 18, 2001. Accordingly this amount which bears interest at 6% per annum is
showed in the financial statements as notes payable. In addition the beneficial
feature on the note amounting to $162,500 has been recorded and is being
amortized over the life of the note. Furthermore the stock that was issued in
July 2001, having a fair market value of $835,960 on the date that the funds
were received, was recorded as common stock and as deferred financing costs. The
deferred financing costs are being amortized over the life of the respective
note. As of December 31, 2001, the Company owes $470,358 related to this note
(net of deferred interest of $17,142).

(b) On June 19, 2001, the Company borrowed $500,000 from Jackson LLC. The loan
bears interest at 8% per annum and is payable on demand.

(c) The Company borrowed funds from a third party under a revolving line of
credit. The line of credit aggregates $1,000,000 and bears interest at a rate
equal to two and one-half (2.5%) per month, on a basis of a 360-day year and
actual number of days elapsed. To the extent that there are amounts due under
the line of credit (including unpaid principal and interest), the Company shall
pay to the lender an amount equal to 100% of the Company's collected
receivables, on a monthly basis. The line of credit is payable on demand and is
collateralized by substantially all of the Company's assets. As of December 31,
2001, the Company borrowed $631,000 under this line of credit.

(d) On June 19, 2001, the Company borrowed $45,000 from two individuals. These
loans are non-interest bearing and are payable on demand.

NOTE 4 - STOCKHOLDERS' DEFICIT

Common Stock

During the three months ended December 31, 2001, the Company issued 1,875,955
share of common stock in connection with a prior securities purchase agreement
which allows the holder of EMD (the Company's subsidiary) common stock to
exchange their shares for BSTI common stock at a predetermined exchange rate.
Accordingly, the Company reduced accrued expenses by $711,860 in connection with
this conversion.

In October and November 2001, the Company issued 6,000,000 shares of common
stock in connection with the conversion of 42 shares of its Series B convertible
preferred stock.

In December 2001, the Company issued 80,000 shares of common stock to employees
as a bonus. In connection with this issuance, the Company recorded non-cash
compensation expense of $33,840 based on the fair market value of the shares
issued.

In December 2001, the Company issued 150,000 shares of common stock to a
consultant for services related to the HNS spin off. In connection with this
issuance, the Company recorded non-cash compensation expense of $73,500 based on
the fair market value of the shares issued.

In October 2001, the Company issued 1,450,000 common shares in connection with
the exercise of previously issued stock options. Since the exercise of these
options were cashless, the Company recorded additional legal fees of $70,000 and
reduced an accrued liability by $70,000, which represents the difference between
the amount previously recognized and the fair market value of the common stock
on the date of grant.

During the three months ended December 31, 2001, the Company granted and
immediately exercised stock options for 1,282,000 shares of common stock for
consulting services rendered. Since the Company did not receive any cash for the
exercise of these options, the Company recorded non-cash compensation of
$435,895, $21,500 of legal fees, and reduced a payable by $2,500 based on the
fair market value of the common shares issued.

                                        7
<PAGE>


                   BioShield Technologies, Inc. and Subsidiary
                   Notes to Consolidated Financial Statements



NOTE 4 - STOCKHOLDERS' DEFICIT (Continued)

On December 21, 2001, the Company granted 175,000 stock options and immediately
exercised the options, issuing 175,000 shares of common stock as settlement for
this matter. In connection with this issuance, the Company recorded non-cash
compensation expense of $82,250 based on the fair market value of the shares
issued.

Stock Options

Pursuant to October 16, 2001 Board of Directors approval and subsequent
stockholder approval, the Company adopted it's 2002 Non-Statutory Stock Option
Plan ("Plan") whereby it reserved for issuance up to 7,000,000 shares of its
common stock. The Company has filed a Registration Statement on Form S-8 so to
register those 7,000,000 shares of common stock underlying the aforesaid
options. This Plan is intended as an employment incentive, to aid in attracting
and retaining in the employ or service of the Company and any Affiliated
Corporations, persons of experience and ability and whose services are
considered valuable, to encourage the sense of proprietorship in such persons,
and to stimulate the active interest of such persons in the development and
success of the Company. This Plan provides for the issuance of non-statutory
stock options ("NSOs" or "Options") which are not intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").

Stock option transactions for BSTI for the three months ended December 31, 2001
are summarized as follows:
                                                Weighted
                                                average
                                                exercise
                                     Shares      price
                                    ---------   --------
Outstanding, beginning of period   2,203,230     $ 2.50
  Granted                          1,457,000        .05
  Exercised                       (2,907,000)       .00
  Forfeited                                -         -
                                  -----------    -------
Outstanding, end of period           753,230     $ 6.94
                                  ===========    =======

Options exercisable at period end                753,230

Weighted average fair value of options
 granted during the three months ended
 December 31, 2001                            $    0.05


NOTE 5 - PRIVATE EQUITY CREDIT AGREEMENTS

On June 30, 1999, BSTI entered into a Private Equity Credit Agreement, as
amended, with an investor, whereby the Company may issue and sell to the
investor, from time to time, up to $10,000,000 of BSTI's common stock.

Pursuant to the agreement, the Company may exercise a put by giving notice to
the investor of the investment amount that the Company intends to require the
investor to purchase. The number of shares, which the investor will receive, is
determined by dividing the investment amount by the purchase price, determined
as the market price of the common stock on the date that the notice of the put
is delivered to the investor less 20% of the market price. Unless the Company
obtains requisite approval of its shareholders in accordance with the corporate
laws of the State of Georgia and the applicable rules of NASDAQ, no more than
19.99% of the outstanding common stock may be issued and sold under this
agreement.

The Company must reserve at all times the maximum number of common shares to
enable the Company to issue a sufficient number of shares having an aggregate
purchase price of the lesser of $10,000,000 or number of shares having an
aggregate purchase price of the lesser of $10,000,000 less the number of shares
actually delivered under the agreement. Additionally, the average market bid
prices for the twenty trading days preceding the Company's notice to put the
shares to the investor must equal or exceed $1.00 per share.



                                        8
<PAGE>


                   BioShield Technologies, Inc. and Subsidiary
                   Notes to Consolidated Financial Statements



NOTE 6 - LITIGATION

On September 7, 2000, AHT Corporation ("AHT") filed suit against the Company and
certain of its officers and directors in the Superior Court of Fulton County,
Georgia (the "Georgia Action") alleging breach of a June 30, 2000 acquisition
agreement and related common laws claims and seeking damages in excess of
$70,000,000. On September 21, 2000, the Company filed its Answer and
Counterclaim. On September 22, 2000, AHT filed, in the U.S. Bankruptcy Court for
the Southern District of New York, a petition for relief under Chapter 11 of the
Federal Bankruptcy Code. Following the filing of its Chapter 11 petition, AHT
filed a motion seeking approval of an asset purchase agreement dated as of
September 22, 2000 (the "APA"), which provided, for the sale of substantially
all of AHT's assets to the Company and AHT Acquisition Corp. for approximately
$15,000,000. Pursuant to a Debtor in Possession ('DIP") Financing, Escrow and
Settlement Agreement dated as of September 22, 2000, which was approved by the
Bankruptcy Court, the Company agreed to provide approximately $1.5 million in
post-petition financing to AHT. That agreement also provided for the dismissal
of the Georgia Action with prejudice, subject to certain conditions contained
therein. At September 30, 2000, AHT had requested and received $378,338 from the
Company under the DIP financing arrangement. Subsequent to September 30, 2000,
AHT had requested and received an additional $1,121,662 under the DIP financing
agreement.

The Bankruptcy Court had initially scheduled a hearing to approve the APA for
November 8, 2000. However, due to the decline in the Company's stock price, in
early November, the Company notified AHT that it would need additional time
beyond November 8, 2000 to obtain sufficient capital to acquire AHT's assets.
The Bankruptcy Court did not approve the APA on November 8, 2000. Rather, on
November 21, 2000, the Bankruptcy Court approved the sale of substantially all
of AHT's assets to Cybear, Inc.

On November 28, 2000, AHT Acquisition Corp. commenced a new lawsuit (in its
Bankruptcy case) against the Company, as well as the other defendants in the
Georgia Action. The prepetition claims asserted and relief sought in that action
are essentially the same as the claims and relief sought in the Georgia Action.
The lawsuit in the bankruptcy case also alleges breach of the APA and seeks
damages related to the APA, and to equitably subordinate the Company's $1.5
million claim against AHT relating to the postpetition advances made by the
Company to AHT under the DIP Financing, Escrow and Settlement Agreement. On
February 9, 2001, the Company filed an answer and counterclaim and intends to
vigorously defend the action. Motions to dismiss the action and/or abstain from
hearing the action have been denied and the parties are currently engaged in
discovery proceedings under Bankruptcy Order.

In the matter entitled Edward U. Miller v. BioShield Technologies, Inc.,
Superior Court of Gwinnett County, Georgia, Civil Action No. 01-A-0096103, a
former COO of the Company ("plaintiff") has brought action against the Company
alleging breach of the plaintiff's employment agreement by the Company and
claims that he is entitled to severance pay in the amount of approximately
$80,000 following his termination on December 5, 2000. On December 21, 2001, the
Company granted 175,000 stock option and immediately exercised the options,
issuing 175,000 shares of common stock as settlement for this matter (See Note
4).

In the matter entitled Bioshield, Inc. v. BioShield Technologies, Inc., United
States District Court, Eastern District, Michigan, Civil Action No.
00-CV-10181-BC, a Michigan corporation has brought a trademark violation suit
against the Company, which claims superior right to the use of the "Bioshield"
name and claims damages in an amount not less than $75,000. The Company denies
the claims and has filed a counterclaim for damages for infringement upon the
Company's intellectual property. The Company intends to vigorously defend the
action.




                                        9
<PAGE>



                   BioShield Technologies, Inc. and Subsidiary
             Notes to Consolidated Financial Statements (Continued)


NOTE 6 - LITIGATION (Continued)

In the matter of Duke Construction Limited Partnership v. Bioshield
Technologies, Inc., American Arbitration Association Arbitration No.
30-110-00023-01, Superior Court of Gwinnett County, Civil Action No.
01-A-7161-5, Duke Construction received its arbitration award in the amount of
$219,000 on June 8, 2001. On July 18, 2001, Duke Construction filed a complaint
in the Superior Court of Gwinnett County seeking confirmation of the award. The
Company is contesting approximately $5,000 of interest, which was included in
the award. Settlement negotiations regarding the payment of this judgment are
ongoing. The Company entered into a settlement agreement and made a down payment
of $25,000 in January 2002 and is obligated to pay $7,500 per month until the
debt is extinguished.

In the matters of Jamestown Management Corp. v. Bioshield Technologies, Inc. and
Mountain National Bank (garnishee) and Summit Marketing Group, Inc. v. Bioshield
Technologies,  Inc. and Mountain National Bank (garnishee),  Jamestown  received
condemned  funds as a result of the  garnishment it filed in DeKalb  County,  as
well as the  garnishment  filed by Summit in  Gwinnett  County  with a principal
amount of $78,699 remained outstanding on this judgement as of August 15, 200l.

Summit was involved in two garnishment actions, one filed in DeKalb County by
Jamestown and the other filed in Gwinnett County by Summit. Summit received a
total of $29,201 under the garnishments and has indicated that $36,000 remained
outstanding on Summit's judgment, including interest as of August 15, 2001.

NOTE 7 - SUBSEQUENT EVENTS

During January 2002, the Company granted and immediately exercised stock options
for 1,850,000 shares of common stock to employees and directors for services
rendered and to be rendered in the future. Since the Company did not receive any
cash for the exercise of these options, the Company valued these common shares
at the fair market value on the date of issuance of $469,000, which will be
amortized over the service period.

During January 2002, the Company granted and immediately exercised stock options
for 2,850,000 shares of common stock to consultants for services rendered and to
be rendered in the future. Since the Company did not receive any cash for the
exercise of these options, the Company valued these common shares at the fair
market value on the date of issuance or on the contract date of $597,500, which
will be amortized over the service period.

During January 2002, the Company granted and immediately exercised stock options
for 396,882 shares of common stock to an attorney for services rendered and to
be rendered in the future. Since the Company did not receive any cash for the
exercise of these options, the Company valued these common shares at the fair
market value on the date of issuance of $183,972, which will be amortized over
the service period.

In January 2002, the Company issued 250,000 shares of common stock to a third
party as a sales commission. In connection with this issuance, the Company
recorded non-cash compensation expense of $86,250 based on the fair market value
of the shares issued.

NOTE 8 - RECENT PRONOUNCEMENTS

In July, 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS
142, Goodwill and Intangible Assets. SFAS 141 is effective for all business
combinations completed after June 30, 2001. SFAS 142 is effective for the year
beginning January 1, 2002; however certain provisions of that Statement apply to
goodwill and other intangible assets acquired between July 1, 2001, and the
effective date of SFAS 142. The Company does not believe the adoption of these
standards will have a material impact on the Company's financial statements.




                                       10
<PAGE>


                   BioShield Technologies, Inc. and Subsidiary
             Notes to Consolidated Financial Statements (Continued)


NOTE 8 - RECENT PRONOUNCEMENTS (Continued)

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This Statement applies to all
entities. It applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and (or) the normal operation of a long-lived asset, except for certain
obligations of lessees. This Statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company does not
believe the adoption of these standards will have a material impact on the
Company's financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of. The Company does not believe the
adoption of these standards will have a material impact on the Company's
financial statements.

                                       11

<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         BioShield Technologies, Inc. ("BSTI") is a Georgia corporation and was
organized in 1995. The Company historically has engaged in research and
development, patent filings, regulatory issues and related activities geared
towards the sale of its retail, industrial and institutional products. BioShield
is currently selling antimicrobial products via licensing and distribution
contracts. Many of these products provide long-term killing action of
microorganisms responsible for cross contamination and viral contamination,
along with inhibiting and controlling the growth of over 100 viral, bacteria,
fungi and yeast organisms. The Company has continued to successfully build
recognition and market penetration of its recently approved E.P.A. antimicrobial
product line.

         BSTI is currently engaged in sale, distribution, and development of
antimicrobial, biostatic, and medical related products for the industrial and
institutional, and Specialty Chemical markets.

         Through November 2001, the Company owned 52% of Healthcare Network
Solutions, Inc ("HNS"). During December 2001, 3,646,579 of HNS shares owned by
the Company (approximating 24% of all issued and outstanding shares of HNS) were
spun-off to the Company's shareholders on a one for ten basis with the Company
retaining 4,453,421 shares (approximately 28.7% of all then issued and
outstanding shares of HNS)(See note 2).

FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Six Months Ended December 31, 2001 compared to six months ended December 31,
2000

         The Company's revenue increased to $1,114,147 for the six months ended
December 31, 2001, from $550,080 for the six months ended December 31, 2000. The
increase was attributable to an increase in the distribution and licensing of
the Company's core antimicrobial product line and the restructuring of the
marketing method in December of 2000. Gross profit of $796,333 for the six
months ended December 31, 2001 represents 72% of net sales as compared to
$238,014 or 43% of net sales for the six months ended December 31, 2000. The
increase in gross margin is due to a restructuring of the way in which the
Company sells its products, changing to a licensing and distribution model and
selling to large multi-national corporations. During the first and second
quarters of fiscal 2002, under the Company's restructuring, certain of the
Company's customers began purchasing high levels of the Company's antimicrobial
products. As of December 31, 2001, the Company has finished saleable product
under purchase orders totaling approximately $800,000, which will be recognized
upon shipment, which will be made during the third quarter of the Company's
current fiscal year.

         Marketing and selling expenses decreased to $140,085 for the six months
ended December 31, 2001 from $397,130 for the six months ended December 31,
2000. The decrease was attributable to change in the way in which the Company
sells its products, changing to a licensing and distribution model.

         General and administrative expenses decreased to $2,125,633 the six
months ended December 31, 2001 from $3,399,113 for the six months ended December
31, 2000. This decrease in costs related primarily to a decrease in personnel
and personnel related cost as part of the Company's restructuring. Accordingly,
salaries and payroll taxes decreased to $297,808 for the six months ended
December 31, 2001 from approximately $1,055,749 for the three months ended
September 30, 2000. Additionally, the Company experienced decreased personnel
related costs such as employee benefits and 401K expense due to the decrease in
staff. The Company's accounting and legal fees decreased to approximately
$335,465 for the three months ended September 30, 2001 from approximately
$438,365 for the six months ended December 31, 2000. This decrease was
attributable to a decrease in the professional fees associated with the Company
SEC filings and the restructuring of the Company. Consulting fees incurred for
investor relations fees and business development taxes was $1,169,779 for the
six months ended December 31, 2001, which included non-cash compensation of
$1,052,185 expensed due to the grant and exercise of stock options during the
six months ended December 31, 2001. Consulting expense for the six months ended
December 31, 2000 amounted to $911,840.

         The Company's research and development expenses decreased to $3,184 for
the six months ended December 31, 2001 from $357,740 for the six months ended
December 31, 2000. The decrease in expenses related primarily to (i) the
restructuring of the Company in December 2000, (ii) to lower formulation
development costs of the Company's antimicrobial products and other products
under development, (iii) a reduction in development cost paid to outside
parties, and (iv) the completion of a majority of the Company's initial EPA
approvals.

         Interest expense was $668,030 for the six months ended December 31,
2001 compared to $ -0- for the six months ended December 31, 2000. The interest
expense relates mainly to increased borrowings during fiscal year 2002.
Additionally, for the six months ended December 31, 2001, interest expense
includes amortization of deferred financing costs of $580,230 related to a note
payable.

                                       12

<PAGE>


         As a result of the reasons set forth above, the Company's operations
generated a net loss of $2,158,939 or $(.09) per common share for the six-month
period ending December 31, 2001 compared to a net loss of $11,286,697 or $(1.17)
per common share for the six-month period ended December 31, 2000.

LIQUIDITY

         At December 31, 2001, the Company had cash totaling $84,402 compared to
$384,605 at June 30, 2001. The decrease in cash of $300,203 is primarily due to
net losses of $1,397,939 and increases in our accounts receivable balance of
$1,381,845 offset by non-cash compensation of $1,156,186 and amortization of
deferred financing costs of $594,259. Additionally, we borrowed net funds of
$542,000 under a line of credit.


         The Company's primary source of cash included, but was not limited to
borrowings on the Company's existing equity line and funds raised from a private
placement. The Company has elected not to put additional common stock to its
existing $10,000,000 equity line as not to create any more undo pressure on its
existing share price. Additionally, the Company entered into a credit agreement
to borrow up to $1,000,000 under a line of credit. We cannot assure you that we
will be able to obtain additional capital from this or other investors. Our
inability to successfully renegotiate these agreements could cause the company
to dramatically curtail or cease operations.

         The Company's ability to fund its operating requirements and maintain
an adequate level of working capital until it achieves positive cash flow will
depend primarily on its ability to borrow money against its accounts receivable.
The Company's failure to generate substantial growth in sales and/or of its
antimicrobial products; progress in research and development programs; the cost
and timing of seeking regulatory approvals of the Company's products under
development; the Company's ability to manufacture products at an economically
feasible cost; cost in filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights and changes in economic,
regulatory, or competitive conditions or the Company's planned business could
cause the Company to require additional capital, and substantially delay or
reduce the scope of business. In the event the Company must raise additional
capital to fund its working capital needs, it may seek to raise such capital
through loans or issuance of debt securities, issuance of equity securities, or
through private placements. Moreover, there can be no assurance that the Company
will be successful in its efforts to obtain additional capital, and that capital
will be available on terms acceptable to the Company or on terms that will not
significantly dilute the interests of existing shareholders.

FORWARD-LOOKING STATEMENTS

         When used in this form 10-KSB, the words or phrases "will likely
result", "are expected to," "will continue," "is anticipated," "estimate,"
"project," or similar expressions are intended to identify "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties
including changes in economic conditions in the Company's market area, changes
in policies by regulatory agencies, fluctuations in interest rates, demand for
loans in the Company's market area and competition, that could cause actual
results to differ materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers not to place
undue reliance on any such Forward- looking statements, which speak only as to
the date made. The Company wishes to advise readers that the factors listed
above could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements. The Company does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.


                                       13

<PAGE>
                                     PART II

                                OTHER INFORMATION

Items 1. Legal Proceedings
--------------------------

        On September 7, 2000, AHT Corporation ("AHT") filed suit against the
Company and certain of its officers and directors in the Superior Court of
Fulton County, Georgia (the "Georgia Action") alleging breach of a June 30, 2000
acquisition agreement and related common laws claims and seeking damages in
excess of $70,000,000. On September 21, 2000, the Company filed its Answer and
Counterclaim. On September 22, 2000, AHT filed, in the U.S. Bankruptcy Court for
the Southern District of New York, a petition for relief under Chapter 11 of the
Federal Bankruptcy Code. Following the filing of its Chapter 11 petition, AHT
filed a motion seeking approval of an asset purchase agreement dated as of
September 22, 2000 (the "APA"), which provided, for the sale of substantially
all of AHT's assets to the Company and AHT Acquisition Corp. for approximately
$15,000,000. Pursuant to a Debtor in Possession ('DIP") Financing, Escrow and
Settlement Agreement dated as of September 22, 2000, which was approved by the
Bankruptcy Court, the Company agreed to provide approximately $1.5 million in
postpetition financing to AHT. That agreement also provided for the dismissal of
the Georgia Action with prejudice, subject to certain conditions contained
therein. At September 30, 2000, AHT had requested and received $378,338 from the
Company under the DIP financing arrangement. Subsequent to September 30, 2000,
AHT had requested and received an additional $1,121,662 under the DIP financing
agreement.

         The Bankruptcy Court had initially scheduled a hearing to approve the
APA for November 8, 2000. However, due to the decline in the Company's stock
price, in early November, the Company notified AHT that it would need additional
time beyond November 8, 2000 to obtain sufficient capital to acquire AHT's
assets. The Bankruptcy Court did not approve the APA on November 8, 2000.
Rather, on November 21, 2000, the Bankruptcy Court approved the sale of
substantially all of AHT's assets to Cybear, Inc.

         On November 28, 2000, AHT Acquisition Corp. commenced a new lawsuit (in
its Bankruptcy case) against the Company, as well as the other defendants in the
Georgia Action. The prepetition claims asserted and relief sought in that action
are essentially the same as the claims and relief sought in the Georgia Action.
The lawsuit in the bankruptcy case also alleges breach of the APA and seeks
damages related to the APA, and to equitably subordinate the Company's $1.5
million claim against AHT relating to the postpetition advances made by the
Company to AHT under the DIP Financing, Escrow and Settlement Agreement. On
February 9, 2001, the Company filed an answer and counterclaim and intends to
vigorously defend the action. Motions to dismiss the action and/or abstain from
hearing the action have been denied and the parties are currently engaged in
discovery proceedings under Bankruptcy Order that same be concluded by October
31, 2001.

         In the matter entitled Edward U. Miller v. BioShield Technologies,
Inc., Superior Court of Gwinnett County, Georgia, Civil Action No. 01-A-0096103,
a former COO of the Company ("plaintiff") has brought action against the Company
alleging breach of the plaintiff's employment agreement by the Company and
claims that he is entitled to severance pay in the amount of approximately
$80,000 following his termination on December 5, 2000. On December 21, 2001, the
Company granted 175,000 stock option and immediately exercised the options,
issuing 175,000 shares of common stock as settlement for this matter.

         In the matter entitled Douglas Calvert v. BioShield Technologies, Inc.,
Superior Court of Gwinnett County, Georgia, Civil Action No. 01-A-102272-4, a
former employee of the Company ("plaintiff") has brought action against the
Company alleging breach of employment contract. The plaintiff claims that the
Company wrongfully refused to pay him severance pay of $28,558 following his
termination on December 5, 2000. The Company has admitted that severance pay is
due and owing and this amount has been recorded as an accrued expense with a
balance approximating $15,000 being serviced.

         In the matter entitled Bioshield, Inc. v. BioShield Technologies, Inc.,
United States District Court, Eastern District, Michigan, Civil Action No.
00-CV-10181-BC, a Michigan corporation has brought a trademark violation suit
against the Company, which claims superior right to the use of the "Bioshield"
name and claims damages in an amount not less than $75,000. The Company denies
the claims and has filed a counterclaim for damages for infringement upon the
Company's intellectual property. The Company intends to vigorously defend the
action.





                                       14
<PAGE>


         In the matter of Duke Construction Limited Partnership v. Bioshield
Technologies, Inc., American Arbitration Association Arbitration No.
30-110-00023-01, Superior Court of Gwinnett County, Civil Action No.
01-A-7161-5, Duke Construction received its arbitration award in the amount of
$219,000 on June 8, 2001. On July 18, 2001, Duke Construction filed a complaint
in the Superior Court of Gwinnett County seeking confirmation of the award. The
Company is contesting approximately $5,000 of interest, which was included in
the award. Settlement negotiations regarding the payment of this judgment are
ongoing. The Company entered into a settlement agreement and made a down payment
of $25,000 in January 2002 and is obligated to pay $7,500 per month until the
debt is extinguished.

         In the matters of Jamestown Management Corp. v. Bioshield Technologies,
Inc.,  Mountain  National Bank (garnishee) and Summit  Marketing Group,  Inc. v.
Bioshield  Technologies,  Inc.,  Mountain National Bank  (garnishee),  Jamestown
received  condemned  funds as a result  of the  garnishment  it filed in  DeKalb
County,  as well as the  garnishment  filed by Summit in Gwinnett  County with a
principal amount of $78,699 remained  outstanding on this judgement as of August
15, 200l.

         Summit was involved in two garnishment actions, one filed in DeKalb
County by Jamestown and the other filed in Gwinnett County by Summit. Summit
received a total of $29,201 under the garnishments and has indicated that
$36,000 remained outstanding on Summit's judgment, including interest as of
August 15, 2001.


Item 2. Changes in securities and Use of Proceeds
-------------------------------------------------
            - NONE -

Item 3. Defaults upon Senior Securities
---------------------------------------
            - NONE -

Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------

            On December 21, 2001, the Company held its Annual Meeting of
Stockholders for fiscal year ended June 30, 2001. With proxies being received
for in excess of 87% of all shares entitled to vote, stockholders elected each
of the five nominees to the Company's Board of Directors by an overwhelming
majority approximating in excess of 85% of all votes cast. Stockholders also
overwhelmingly approved (a) the appointment of Feldman Sherb and Co., PC as
independent auditors for fiscal year ended June 30, 2002 (b) the proposal to
adopt the Company's 2002 Stock Option Plan and (c) the proposal to increase
authorized common shares from 50,000,000 to 100,000,000.

            The Company currently intends to hold its annual meeting for fiscal
year ended June 30, 2002 during the fourth quarter of the current calendar year.

Item 5. Other Information
-------------------------
- NONE -

Item 6. Exhibits and Reports on Form 8-K
----------------------------------------
(a)      Exhibits                        - NONE -

(b)      Reports on Form 8-K             - NONE -


                                   SIGNATURES

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



Date: February 19, 2002          /s/ Timothy C. Moses
                                 -------------------------
                                 Name: Timothy C. Moses
                                 Title: President and Chief Executive Officer


Date: February 19, 2002          /s/ Adam Wasserman
                                 -------------------------
                                 Name: Adam Wasserman
                                 Title: Chief Financial Officer

                                       15