<PAGE>


               U.S. 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, 2000

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

    for the transition period from:

                         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) 925-4302



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


<PAGE>



     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. Yes X No

     State the number of shares  outstanding of each of the issuer's  classes of
common equity,  as of the latest  practicable  date:  15,905,276  shares,  as of
February 15, 2001.


<PAGE>



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


                                                                            PAGE
                                                                            ----

PART I  FINANCIAL INFORMATION

   Item 1.  Financial Statements

     1.  Consolidated Balance Sheet as of December 31, 2000 (unaudited)     3

     2.  Consolidated Statements of Operations for the three month
         and six month periods ended December 31, 2000 and 1999
         (unaudited)                                                        4

     3.  Consolidated Statements of Cash Flows for the
         six month periods ended December 31, 2000 and 1999 (unaudited)     5

     4.  Notes to Financial Statements                                    6-8

   Item 2.  Management's Discussion and Analysis
              or Plan of Operation                                        9-11

PART II  OTHER INFORMATION

   Item 2. Changes in securities and Use of Proceeds                        12

   Item 3. Defaults upon Senior Securities                                  12

   Item 4. Submission of Matters to a Vote of Security Holders              12

   Item 5. Other Information                                                12

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

SIGNATURES                                                                  13




                                        2


<PAGE>
                   BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                                December 31, 2000

                                     ASSETS
                                   (Unaudited)

CURRENT ASSETS
 Cash and cash equivalents                                  $          1,126
 Accounts receivable                                                 232,435
 Inventories                                                         151,006
 Prepaid expenses and other current assets                           170,506
                                                               -----------------
                 Total current assets                                555,073

WEB SITE DEVELOPMENT AND OTHER
PROPERTY AND EQUIPMENT, NET                                        6,185,352

DEPOSITS AND OTHER LONG-TERM ASSETS                                  396,186
                                                               -----------------

                                                            $      7,136,611
                                                               =================

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES NOT SUBJECT TO COMPROMISE
 CURRENT LIABILITIES
  Note payable                                              $        303,324
  Accounts payable                                                   829,592
  Officer loan payable                                                52,000
  Accrued liabilities                                                 30,272
                                                               -----------------
                 Total current liabilities                         1,215,188
Liabilities Subject to Compromise                                  4,080,469 (a)
                                                               -----------------
                 Total liabilities                                 5,295,657
                                                               -----------------

MINORITY INTEREST                                                  5,707,492

STOCKHOLDERS' DEFICIT
 Series A Convertible Preferred Stock                                   -
 Series B Convertible Preferred Stock                             10,000,000
 Common stock - no par value; 50,000,000 shares
  authorized; 12,451,276 issued and outstanding                   25,959,418
Additional paid-in capital                                         3,492,600
Accumulated deficit                                              (42,781,656)
Less 35,000 shares of common stock in treasury -
 at cost                                                            (536,900)
                                                               -----------------
                                                                  (3,866,538)
                                                               -----------------

                                                            $      7,136,611
                                                               =================

(a)  Liabilities subject to compromise consist of the following;
     Contracts and accounts payable                         $         3,160,219
     Accrued liabilities                                                920,250
                                                               -----------------
                                                            $         4,080,469
                                                               =================



         The accompanying notes are an integral part of these statements
                                        3

<PAGE>
                   BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>


                                                 For the three months ended         For the six months ended
                                                        December 31,                      December 31,
                                             --------------------------------------------------------------------
                                                     2000              1999             2000             1999
                                                --------------   ---------------   --------------    ------------
                                                 (Unaudited)      (Unaudited)       (Unaudited)      (Unaudited)

<S>                                          <C>              <C>               <C>               <C>
Net sales                                    $        104,163 $         268,954 $        582,322  $      413,399
Cost of sales                                          81,672           158,504          345,717         248,992
                                                --------------   ---------------   --------------    ------------
     Gross profit                                      22,491           110,450          236,605         164,407

Operating expenses
     Marketing and selling                            553,217         1,801,180        2,168,181       2,606,647
     General and administrative                     1,840,526         2,076,902        7,518,148       5,100,556
     Loss on investment                             1,500,000             -            1,500,000          -
     Research and development                         311,440           767,473          556,170       1,401,457
                                                --------------   ---------------   --------------    ------------
                                                    4,205,182         4,645,555       11,742,498       9,108,660

        Loss from operations                       (4,182,691)       (4,535,105)     (11,505,893)     (8,944,253)

Other income
     Interest and dividend income                     (64,694)           25,065              593          87,036
                                                --------------   ---------------   --------------    ------------

        Loss before minority interest              (4,247,385)       (4,510,040)     (11,505,300)     (8,857,217)

Minority interest in loss of subsidiary                80,132           190,726          218,601         190,726
                                                --------------   ---------------   --------------    ------------
        NET LOSS                                   (4,167,253)       (4,319,314)     (11,286,699)     (8,666,491)

Other comprehensive earnings (loss)
     Unrealized holding loss on subsidiary              -                  -                -            (15,750)
                                                --------------   ---------------   --------------    ------------
        NET LOSS APPLICABLE TO
       COMMON SHAREHOLDERS                   $     (4,167,253)$      (4,319,314)$    (11,286,699) $   (8,682,241)
                                                ==============   ===============   ==============    ============

Net loss per common share
     Basic and diluted                       $          (0.39)$           (0.67)$          (1.17) $        (1.37)
                                                ==============   ===============   ==============    ============

Weighted average common shares
     outstanding                                   10,789,670         6,406,578        9,634,534       6,352,802
                                                ==============   ===============   ==============    ============

</TABLE>

         The accompanying notes are an integral part of these statements
                                        4
<PAGE>
                   BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET



                                                     For the six months ended
                                                          December 31,
                                             -----------------------------------
                                                     2000                 1999
                                             ----------------    ---------------
                                                  (Unaudited)        (Unaudited)
Cash flows from operating activities
 Net loss                                 $      (11,286,697) $      (8,666,490)
 Adjustments to reconcile net loss to
  net cash used in operating activities:
  Depreciation and amortization                      638,205             39,300
  Minority interest in loss of subsidiary           (218,601)              -
  Issuance of stock, stock options and
   stock warrants for services rendered               28,000            257,000
 Changes in operating assets and
  liabilities:
 (Increase) decrease in:
  Accounts receivable                                (33,838)           190,052)
  Subscription receivable                               -             4,798,750
  Inventories                                        (47,550)           (28,000)
  Prepaid expenses and other
   current assets                                    (14,066)            53,473
  Deposits and other assets                         (300,000)        (4,698,361)
 Increase (decrease) in:
  Accounts payable                                 1,453,599          4,323,996
  Officer loan payable                               (58,000)              -
  Accrued liabilities and compensation            (1,155,375)           211,590
                                            ----------------    ----------------
Net cash used in operating activities            (10,994,323)        (3,898,794)
                                            ----------------    ----------------

Cash flows from investing activities
 Capital expenditures                             (1,045,169)        (1,143,041)
 Accumulated other income/loss                       105,000            (31,500)
 Purchase of marketable securities                      -                31,500
                                            ----------------    ----------------
Net cash used in investing activities               (940,169)        (1,143,041)
                                            ----------------    ----------------

Cash flows from financing activities
 Proceeds from debt                                2,000,000              -
 Repayment of debt                                (1,696,676)             -
 Contribution of capital                                -             1,433,087
 Proceeds from stock warrants exercised              125,000              -
 Proceeds from stock options exercised               542,380              -
 Stock issued under stock option plan                   -                41,568
 Proceeds from stock issuances, net                4,792,000          1,445,274
                                            ----------------    ----------------
Net cash provided by financing activities          5,762,704          2,919,929
                                            ----------------    ----------------
Net decrease in cash                              (6,171,788)        (2,121,906)

Cash at beginning of period                        6,172,914          2,500,561
                                            ----------------    ----------------

Cash at end of period                     $            1,126  $         378,655
                                            ================    ================


         The accompanying notes are an integral part of these statements
                                        5
<PAGE>



                   BioShield Technologies, Inc. and Subsidiary

                   Notes To Consolidated Financial Statements


1.   Basis Of Preparation

The interim  financial  statements  included  herein  have been  prepared by the
Company without audit. These statements  reflect all adjustments,  which are, in
the opinion of management, necessary to present fairly the financial position as
of  December  31,  2000,  and the results of  operations  and cash flows for the
period  then  ended.  All such  adjustments  are of a normal  recurring  nature.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted. It is suggested that these financial  statements
be read in  conjunction  with the financial  statements and notes for the fiscal
year ended June 30, 2000.

2.   Stock Options and Warrants

During the six months ended December 31, 2000, the following changes occurred
in outstanding employee stock options.
                                                         BSTI        eMD.com
                                                        -------      ---------
        Options outstanding at June 30, 2000            640,500      6,491,750
        Options granted                                 240,000        949,702
        Options cancelled                               (10,000)       (98,454)
        Options exercised                               (35,000)          -
                                                        --------     ---------
        Options outstanding at December 31, 2000        860,000      7,342,998
                                                        ========     =========

As of June 30, 2000, there were 180,000 options to purchase BSTI stock issued to
advisory board members. During the six months ended December 31, 2000 109,000 of
these options were  exercised.  No options were granted or cancelled  during the
six months ended December 31, 2000 for advisory  board  members.  As of June 30,
2000,  there were 8,000 options to purchase BSTI stock issued to a non- employee
for consulting services. No options were granted,  cancelled or exercised during
the six months ended December 31, 2000 for consulting services.

As of June 30, 2000,  there were 90,000 options to purchase eMD.com stock issued
to members of the  eMD.com  medical  advisory  board  members.  No options  were
granted,  cancelled or exercised  during the six months ended  December 31, 2000
for medical advisory board members.

During the six months ended December 31, 2000, the following changes occurred
in outstanding warrants.
                                                         BSTI        eMD.com
                                                        -------      ---------
        Warrants outstanding at June 30, 2000           882,281        370,098
        Warrants granted                                   -             5,720
        Warrants cancelled                                 -              -
        Warrants exercised                              (25,000)          -
                                                        --------     ---------
        Warrants outstanding at December 31, 2000       857,281        375,818
                                                        ========     =========


3.   Segment Information

The following information is presented in accordance with SFAS No. 131,
Disclosures About Segments of an Enterprise and Related Information, which was
adopted by the Company during 1999.

BSTI operates primarily in the antimicrobial and biostatic products segment.
During 1999, the Company established a subsidiary eMD.com which operates in the
pharmaceutical distribution segment via the internet.

The Company's reportable segments are strategic business units that offer
different products and services. they are managed separately because each
business requires different technology and marketing strategies. The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies. The Company evaluates performance based on
gross profit.

                                       6
<PAGE>

The following tables provide summarized information concerning the Company's
reportable segments.

                                Antimicrobial
                                and Biostatic   Pharmaceutical
                                Products        Distribution           Total
                                -------------   ---------------      -----------
As of December 31, 2000
-----------------------
Segment assets                  $ 814,642       $ 6,321,969          $ 7,136,611

Six months ended December 31, 2000
----------------------------------
Revenues from products/services $ 550,080       $   32,242           $   582,322
Gross profit                      312,066           33,651               345,717
Segment profit (loss)             238,014           (1,409)              236,605
Interest income                     9,262           23,350                32,612
Interest expense                     -                -                     -
Depreciation and amortization      40,320          597,885               638,205

                                Antimicrobial
                                and Biostatic   Pharmaceutical
                                Products        Distribution           Total
                                -------------   ---------------      -----------
Six months ended December 31, 1999
----------------------------------
Revenues from products/services $   269,954      $        -         $   269,954
Gross profit                        110,450               -             110,450
Segment profit (loss)            (1,903,022)        (2,632,096)      (4,535,118)
Interest income                      31,745             55,291           87,036
Interest expense                       -                  -                -
Depreciation and amortization        34,785              4,515           39,300

4.   Private Equity Credit Agreements

On June 30, 1999, BSTI entered into an equity agreement with an investor whereby
the Company may issue and sell to the investor, from time to time, up to
$10,000,000 of the Company's common stock.

Pursuant to the agreement, the Company may exercise a put by giving notice to
the investor of the amount the Company requires the investor to purchase. The
number of shares 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 10% of the market price. No more than 19.99% of the outstanding common
stock may be issued and sold under this agreement without shareholder approval.

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 million or number of shares having an
aggregate purchase price of the lesser of $10 million less the number of shares
actually delivered under this agreement without shareholder approval.

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.  During the six months ended  December  31,  2000,  the
Company  issued  3,847,743  shares at prices ranging from $1.00 to $10.00 per
share under this agreement.

On June 14, 2000, BSTI entered into another equity agreement with the same
investor whereby the Company may issue and sell to the investor, from time to
time, up to $50 million of BSTI's common stock.

This agreement has terms similar to the $10 million agreement with the following
exceptions. The purchase price for the put is determined as the market price of
the common stock on the date that the notice is delivered to the investor less
10% of the market price. The aggregate average daily trading volume must equal
or exceed 500,000 shares and the average of the market bid prices must equal or
exceed $7.50 per share for the ten trading days immediately preceding both the
date of the Company's notice to put the shares to the investor and the date of
the closing of the sale of shares to the investor. As of December 31, 2000
no shares have been put under this agreement.

The Company has reserved 5,500,000 shares at December 31, 2000 related to these
agreements.

                                       7
<PAGE>

5.  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. Such sale is subject to Bankruptcy Court approval.

         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.

6. Subsequent Event

On January 31, 2001,  Electronic Medical  Distribution,  Inc.  ("eMD.com") a 99%
owned subsidiary of the Company,  filed petitions for relief under Chapter 11 of
the  federal  bankruptcy  laws in the  United  States  Bankruptcy  Court for the
Northern  District of Georgia.  Under Chapter 11, certain claims against eMD.com
in existence  prior to the filing of the  petitions for relief under the federal
bankruptcy  laws are stayed while the debtor  continues  business  operations as
Debtor-in-possesion.  These  claims are  reflected  in the  December  31,  2000,
balance  sheet  as  "liabilities  subject  to  compromise."   Additional  claims
(liabilities  subject to  compromise)  may arise  subsequent  to the filing date
resulting from rejection of executory contracts,  including leases, and from the
determination  by the court (or  agreed to by parties  in  interest)  of allowed
claims for contingencies and disputed amounts.

                                       8
<PAGE>

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


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         BioShield  Technologies,  Inc.  ("Bioshield"),is a Georgia  corporation
organized  in  1995.  We   historically   have  been  engaged  in  research  and
development,  patent filings,  regulatory  issues and related  activities geared
towards the sale of our  retail,  industrial  and  institutional  products.  Due
largely to recent  Environmental  Protection Agency,  ("EPA") approvals,  we are
currently  selling and marketing  primarily  cleaning and deodorizing  products.
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.

         In 1999, we created a subsidiary to develop electronic commerce via the
internet called Electronic Medical  Distribution,  Inc. ("eMD").  eMD integrates
services for healthcare  providers with a comprehensive  internet-based  product
and  healthcare  website.  These  services  include  point  of  care  medication
management,   electronic  patient  charting,   pharmaceutical   fulfillment  and
pharmaceutical care services,  clinical services,  clinical co-op management and
clinical  supplies.  On December 7, 2000,  the Board of Directors of  Bioshield,
elected to shut down eMD and filed for protection under Chapter 7 of the federal
bankruptcy  laws.  Before the 7 election was completed,  the Company  elected to
change from  chapter 7 to 11, with the  intention  of selling the high  overhead
items and keeping the clinical  healthcare  service portion of the eMD, with the
further intention of spinning eMD out as a dividend to its public  shareholders,
thus creating a new,  separately traded public company. On or about December 12,
2000, Bioshield reorganized and restructured the Company,  including a change in
all directors,  to focus on the core antimcrobial  products in which the Company
has  received  E.P.A  approvals.  As a result,  BioShield  currently  has eMD in
Chapter 11 in which it is reorganizing  and preparing in the near future to spin
out to existing shareholders, and operates, antimicrobial and biostatic products
for use within the retail and institutional  markets.  BioShield is comprised of
four  business  divisions  for  the  sale,  distribution,   and  development  of
antimicrobial,  biostatic, and medical related products,  retail, industrial and
institutional, and specialty chemical markets.

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         Net sales for the six-month period ended December 31, 2000 were
$582,322,  a slight  increase over the same period last year. The increase was a
result of increased  distribution of the OdorFree(TM)  product.  Gross profit of
$236,605 for the period ended  December 31, 2000  represents 41% of net sales as
compared to $164,407, or 40% of net sales, for the period December 31, 1999. The
increase in gross margin is a result of the change in product mix and packaging,
combined with the continuous improvement in finding new ways to do business. The
Company is now gaining  momentum  focusing on its core  business  and has signed
several new  distribution  agreements  in the area of industrial  products.  The
Company settled its outstanding  claim with the EPA related to product  labeling
and gained a multiple of EPA  approvals  of its now two core  product  am500 and
am1860 in 2000.  The Company is  awaiting  final  approval of its third  product
am3651,  which will  allow the  Company to begin  nationwide  distribution  in a
multitude of product areas. BioShield continues to make breakthroughs in product
development  and testing.  These events have  bolstered  the  confidence  of our
customers  and have  prompted  a  significant  increase  in the last  month,  in
agreements and opportunities in our core technology

         Cost of sales was $345,717 or 59% of sales and $248,992 or 60% of sales
for the six-month  period ended  December 31, 2000 and 1999,  respectively.  The
lower  cost of sales  for the  six-month  period  ended  December  31,  2000 was
attributable to higher sales of the Hypoallergenic  OdorFree(TM)  product during
the period,  partially offset by efficiencies  attained in the production of the
Company's antimicrobial products. and continuous improvement in finding new ways
to do business.

         The Company's research and development expenses decreased to $556,170
in the six month period  ending  December 31, 2000 from  $1,401,457  for the six
month period ending September 30, 1999. The decreased expenses related primarily
to lower formulation  development costs of the Company's  antimicrobial products
and other  products under  development  combined with a reduction in development
cost paid to outside parties,  and the fact that the Company now has completed a
majority of its initial EPA  approvals.  All related  research  and  development
expenses for the six-month period ending December 31, 2000 were directly related
to BioShield Technologies, Inc.

                                       9
<PAGE>

         Total  marketing and selling  expenses in the  six-month  period ending
December  31,  2000 were  $2,168,181.  Marketing  and selling  expenses  related
primarily to the activities of eMD. This slight decrease relates  principally to
the eMD halting  all  marketing  and  selling  activities  at the  beginning  of
December 2000.

         Total general and administrative expenses for the six-month period
ending December 2000 was $7,518,148. General and administration expenses for The
Company  has been  significantly  reduced  since  December  31,  2000 due to the
reorganization  and  Chapter  11  filing of eMD.  There  were no  borrowings  or
interest  expense  incurred for the six-month  period ending  December 31, 2000.
General and  administrative  expenses related to eMD accounted for a significant
portion of al G&A.  These  higher  costs  related  primarily  to an  increase in
personnel  cost,  legal and regulatory  fees,  consulting  services and facility
costs primarily of eMD.

         As a result of the reasons set forth above, the Company's operations
generated a net loss of $11,286,699 for the six-month period ending December 31,
2000  compared  to a net  loss of  $8,666,491  for the  six-month  period  ended
December 31, 1999. A majority of the expenses  incurred in the six-month  period
will not be recurring in future  periods due to the filing of Chapter 11 for eMD
and the reorganization of BioShield.

LIQUIDITY

         The  Company  had cash and cash  equivalents  totaling  $1,126  for the
quarter  ending  December 31, 2000 compared to $2,207,902 for the quarter ending
September 30, 2000. The Company's primary sources of cash included, but was not
limited to  drawdowns on the  Company's  existing  equity line.  The Company has
elected not to put additional  common stock to its existing  $50,000,000  equity
line as not to create any more undo  pressure on its existing  share price.  The
terms of those equity credit  agreements are currently under  renegotiation.  We
cannot  assure you that we will be able to  renegotiate  the terms of the equity
credit agreements or 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. Instead the company began a private
placement of $500,000 in January  2001.  This was comprised of selling $0.25 per
share common stock and a promissory  note equal to the  investment due in twelve
months. The Company has the right to convert the note into common stock at a 25%
discount to market at the then  current  price of the stock on the twelve  month
anniversary of the closing of the private placement. Said offering was completed
by February  15, 2001.  It is  anticipated  that  Bioshield  will begin  another
private placement in the next three months for an amount between  $1,000,000 and
$2,000,000, however no assurance can be made that the company will be successful
in these planned private placements.

         The  Company's  primary  uses of cash to date  have  been in  operating
activities to fund research and development including EPA studies, and
marketing and selling and general and  administrative  expenses.  As of December
31, 2000, the Company's  investment in equipment,  website  development cost and
leasehold  improvement,  net of depreciation  and amortization was halted due to
the filing of Chapter 11 of eMD. The Company is currently in a work out plan and
has just  recently  signed a letter of  intent  to sell off three  pieces of eMd
(point of care  medication  management  system,  Pharmacy  and Lab  America) for
$2.000.000  leaving  clinical  services,  lab reporting and supplies.  Upon this
conclusion  and eMD coming out of Chapter 11 Bioshield  will no longer carry the
minority  interest  liability  of$6,405,600  as  well  as  accounts  payable  of
approximately  $3,300,000  attributable  to  eMD.  It  is  anticipated  to  take
approximately  ninety to one  hundred  eighty  days to  complete  the  potential
spinout of eMD, and the Company has  intentions of changing the name of eMD upon
the emergence from Chapter 11.

         The Company's  ability to fund its operating  requirements and maintain
an adequate level of working capital until it achieves  positive cash flows will
depend primarily on its ability to borrow, raise capital in the public equity
markets, and generate substantial growth in sales of its antimicrobial products.
In order to raise working  capital,  the Company is  negotiating  with potential
equity funding sources.  The successful  completion of a transaction with one or
more of these sources of working  capital is essential to the Company's  ability
to maintain  operations.  We cannot assure you that additional financing will be
available on commercially  reasonable  terms, or at all. Any inability to obtain
additional  financing when needed could require us to  significantly  curtail or
possibly  cease  operations.  The Company  expects to continue to have a need to
fund  operating  losses.  Accordingly,  the  Company  will be required to obtain
additional  capital  in the near  future.  The  commercialization  of the parent
company's  antimicrobial products will require additional capital. The Company's

                                       10

<PAGE>

failure  to  generate  substantial  growth  in the  sales  of its  antimicrobial
products;  progress in research and development programs; the cost and timing of
seeking  regulatory  approvals of the Company's product 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 prior to obtaining positive cash flows and substantial delay
or  reduction  of the  scope of  business.  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
--------------------------

     This  report  contains  forward-looking  statements  within the  meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934.  These statements  relate to future economic  performance,
plans and  objectives of management  for future  operations  and  projections of
revenues  and  other  financial  items  that  are  based on the  beliefs  of our
management,  as well as assumptions made by, and information currently available
to, our management.  The words "expect," "estimate," "anticipate," "believe" and
similar expressions are intended to identify forward-looking  statements.  Those
statements involve risks, uncertainties and assumptions,  including industry and
economic  conditions,  competition  and other factors  discussed in this and our
other  filings  with the SEC.  If one or more of  these  risks or  uncertainties
materialize or underlying assumptions prove incorrect,  actual outcomes may vary
materially form those indicated.



                                       11


<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. Such sale is subject to Bankruptcy Court approval.

         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.

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
-----------------------------------------------------------
- NONE -

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

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

(b)      Reports on Form 8-K             Date of report, December 26, 2000 filed
                                         January 4, 2001.



                                       12
<PAGE>



                               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 20, 2001          /s/  Timothy C. Moses
                                 -------------------------
                                 Name:Timothy C. Moses
                                 Title:President and Chief Executive Officer











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