SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended June 30, 2001

Commission file number 0-10822

BICO, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania 25-1229323
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification no.)

2275 Swallow Hill Road, Bldg. 2500, Pittsburgh, PA 15220
(Address of principal executive offices) (Zip Code)

(412) 429-0673
Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

Yes X No

As of June 30, 2001, 1,644,831,160 shares of BICO, Inc.
common stock, par value $.10 were outstanding.

BICO, Inc. and Subsidiaries
Consolidated Balance Sheets

(UNAUDITED)
Jun. 30, 2001 Dec. 31, 2000
------------- -------------

CURRENT ASSETS
Cash and equivalents $ 3,094,569 $ 7,844,807
Accounts receivable - net of allowance for doubtful accounts
of $43,664 at Jun. 30, 2001 and $43,664 at Dec. 31, 2000 431,553 400,950
Inventory - net of valuation allowance 1,063,460 805,224
Related party notes receivable 848,880 87,706
Notes receivable 3,083,704 1,926,363
Interest receivable 195,424 48,252
Prepaid expenses 850,067 988,354
Other current 62,268 47,268
------------ -------------

TOTAL CURRENT ASSETS 9,629,925 12,148,924

PROPERTY, PLANT AND EQUIPMENT
Building 2,529,176 2,529,176
Land 246,250 246,250
Leasehold improvements 1,982,336 1,848,674
Machinery and equipment 6,981,706 6,405,594
Furniture, fixtures & equipment 910,591 921,195
------------- -------------
Subtotal 12,650,059 11,950,889

Less accumulated depreciation 5,739,526 5,288,910
------------- -------------
6,910,533 6,661,979

OTHER ASSETS
Related Party Receivables
Notes receivable 1,145,968 1,174,738
Interest receivable 6,633 13,463
------------- -------------
1,152,601 1,188,201
Allowance for related party receivables (1,152,601) (1,188,201)
------------- ------------
- -

Notes receivable 165,208 200,000
Goodwill, net of amortization 676,674 694,895
Investment in unconsolidated subsidiaries 2,605,225 2,061,439
Other assets 191,521 162,833
------------- -------------
3,638,628 3,119,167
------------- -------------
TOTAL ASSETS $ 20,179,086 $ 21,930,070
============= =============

The accompanying notes are an integral part of these statements.

BICO,Inc. and Subsidiaries
Consolidated Balance Sheets
(Continued)

(UNAUDITED)
Jun. 30, 2001 Dec. 31, 2000
------------- -------------

CURRENT LIABILITIES
Accounts payable $ 1,093,672 $ 578,520
Notes payable 6,491,650 -
Current portion of long-term debt 4,129,935 5,182,783
Current portion of capital lease obligations 86,714 98,788
Debentures payable 913,808 2,400,000
Accrued liabilities 3,387,200 3,131,765
Escrow payable 2,700 2,700
------------- -------------
TOTAL CURRENT LIABILITIES 16,105,679 11,394,556

LONG-TERM LIABILITIES
Capital lease obligations 2,163,966 2,203,673
Long-term debt 1,848 7,864
------------- -------------
2,165,814 2,211,537
COMMITMENTS AND CONTINGENCIES

UNRELATED INVESTORS'INTEREST
IN SUBSIDIARY 355,486 434,990

STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share,
authorized 2,500,000,000 shares, issued and
outstanding 1,664,831,165 at Jun. 30, 2001 and
1,383,704,167 at Dec. 31, 2000 164,483,116 138,370,417
Additional paid-in capital 72,854,939 87,035,096
Warrants 6,221,649 6,204,235
Accumulated deficit (242,007,597) (223,720,761)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 1,552,107 7,888,987
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 20,179,086 $ 21,930,070
============= =============

The accompanying notes are an integral part of these statements.

BICO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

For the six months ended For the three months ended
Jun. 30, Jun. 30,
2001 2000 2001 2000
-------------- -------------- -------------- --------------

Revenues
Net Sales $ 1,355,475 $ 38,813 $ 756,468 $ 19,815
Other income 8,563 - 1,145 -
-------------- -------------- -------------- --------------
1,364,038 38,813 757,613 19,815
Costs and expenses
Cost of products sold 861,870 58,228 437,778 27,568
Research and development 2,861,146 3,805,960 1,575,924 1,655,637
General and administrative 11,810,788 6,579,463 5,571,932 3,403,798
Amortization of goodwill 374,768 136,737 192,053 59,530
-------------- -------------- -------------- --------------
15,908,572 10,580,388 7,777,687 5,146,533
-------------- -------------- -------------- --------------
Loss from operations (14,544,534) (10,541,575) (7,020,074) (5,126,718)
-------------- -------------- -------------- --------------

Other income
Interest 319,209 327,949 194,609 163,631

Other expense
Debt issue costs 1,520,158 985,000 840,984 -
Beneficial convertible debt feature 2,063,915 2,462,500 - -
Interest expense 437,366 316,422 208,172 136,363
Loss on unconsolidated subsidiary 165,588 8,750 93,396 -
Loss on disposal of assets 18,603 15,874 292 -
-------------- -------------- -------------- -------------
4,205,630 3,788,546 1,142,844 136,363
-------------- -------------- -------------- -------------

Loss before unrelated investors' interest (18,430,955) (14,002,172) (7,968,309) (5,099,450)

Unrelated investors' interest in net (income)
loss of subsidiary 144,119 72,496 80,185 301,320
-------------- -------------- -------------- --------------

Net loss $ (18,286,836) $(13,929,676) $ (7,888,124) $(4,798,130)
============== ============== ============== ==============

Loss per common share - Basic:
Net Loss $ (0.010) $ (0.010) $ (0.005) $ (0.005)
Less: Preferred stock dividends (0.000) (0.000) (0.000) (0.000)
-------------- -------------- ------------- --------------
Net loss attributable to common stockholders: $ (0.010) $ (0.010) $ (0.005) $ (0.005)
============== ============== ============= ==============

Loss per common share - Diluted:
Net Loss $ (0.012) $ (0.015) $ (0.005) $ (0.005)
Less: Preferred stock dividends (0.000) (0.000) (0.000) (0.000)
-------------- -------------- ------------- --------------
Net loss attributable to common stockholders: $ (0.012) $ (0.015) $ (0.005) $ (0.005)
============== ============== ============= ==============

Weighted-average number of common shares outstanding 1,533,608,788 959,461,176 1,601,603,647 961,451,231

The accompanying notes are an integral part of these statements.

BICO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the six months ended For the three months ended
Jun. 30, Jun. 30,

2001 2000 2001 2000
-------------- -------------- -------------- --------------

Cash flows used by operating activities:
Net loss ($18,286,836) ($13,929,676) ($7,888,124) ($4,798,130)
Adjustments to reconcile net loss to net
cash used by operating activities :
Depreciation 477,313 309,646 248,785 152,590
Amortization 374,768 136,737 192,053 59,530
Loss on disposal of assets 18,603 15,874 292 -
Loss on unconsolidated subsidiary 165,588 8,750 93,396 -
Unrelated investors' interest in subsidiary (144,119) (72,496) (80,185) (301,320)
Beneficial convertible debt feature 2,063,915 2,462,500 - -
Warrants granted 17,414 235,257 - 44,959
Warrants and warrant extensions by subsidiary 133,052 864,141 133,052 582,648
(Decrease)increase in allowance for related party
note receivable (35,600) (35,302) (3,874) (24,140)
(Increase) decrease in accounts receivables (30,603) 20,140 (25,026) 35,637
(Increase) decrease in inventories (760,934) 542,156 (461,574) (279,724)
Increase (decrease) in inventory valuation allowance 502,698 (888,415) 352,698 (74,042)
(Increase) decrease in prepaid expenses 138,287 (342,940) 136,499 (263,745)
(Increase) decrease in other assets (67,322) (499,003) (56,700) 1,247
(Decrease) increase in accounts payable 515,152 (501,999) 647,713 (506,947)
(Decrease) increase in other liabilities 255,435 (399,912) (50,391) 84,802
-------------- -------------- -------------- --------------

Net cash flow used by operating activities (14,663,189) (12,074,542) (6,761,386) (5,286,635)
-------------- -------------- -------------- --------------

Cash flows from investing activities:
Purchase of property, plant and equipment (744,470) (614,655) (416,291) (372,254)
(Increase) decrease in notes receivable (1,985,341) (22,000) (902,732) 33,000
Payments received on notes receivable 130,388 69,237 74,755 33,952
(Increase) decrease in interest receivable (140,342) (443) (96,923) (2,133)
Acquisition of unconsolidated subsidiary interests (983,948) (1,275,784) (230,000) (52,000)
-------------- -------------- -------------- --------------
Net cash provided (used) by investing activities (3,723,713) (1,843,645) (1,571,191) (359,435)
-------------- -------------- -------------- --------------

Cash flows from financing activities:
Proceeds from warrants exercised - 899,420 - -
Proceeds from sale of Preferred stock-Series F - 4,275,000 - -
Proceeds from debentures payable 8,255,659 9,850,000 - -
Increase in notes payable 6,491,650 - 6,491,650 -
Payments on long term debt (1,058,864) (67,075) (495,137) (29,169)
Payments on capital lease obligations (51,781) (39,026) (22,729) (18,692)
-------------- -------------- -------------- --------------
Net cash provided by financing activities 13,636,664 14,918,319 5,973,784 (47,861)
-------------- -------------- -------------- --------------

(Decrease) increase in cash and equivalents (4,750,238) 1,000,132 (2,358,793) (5,693,931)
Cash and equivalents, beginning of period 7,844,807 10,827,631 5,453,362 17,521,694
-------------- -------------- -------------- --------------

Cash and equivalents, end of period $ 3,094,569 $11,827,763 $3,094,569 $ 11,827,763
============== ============== ============== ==============

The accompanying notes are an integral part of these statements.

BICO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE A - Basis of Presentation

The accompanying consolidated financial statements of BICO,
Inc. (the "Company") and its 89.9% owned subsidiary, Coraflex,
Inc., and its 52% owned subsidiary, Diasense, Inc., and its
67% owned subsidiary, Petrol Rem, Inc., and its 99.1% owned
subsidiary, ViaCirQ, Inc., and its 58.4% owned subsidiary,
ICTI, Inc., and its 100% owned subsidiary Ceramic Coatings
Technologies, Inc., and its 99.1% owned subsidiary ViaTherm,
Inc., and its 51% owned subsidiary B-A Champ, Inc., and its 75%
owned subsidiary Rapid HIV Detection Corp. have been prepared
in accordance with generally accepted accounting principles
for interim financial information, and with the instructions
to Form 10-Q and Rule 10-O Regulation S-X. Accordingly, they
do not include all of the information and footnotes required
by generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. For further information, refer to the consolidated
financial statements and footnotes included in the Company's
annual report on Form 10-K for the year ended December 31,
2000.

NOTE B -Formation of Rapid HIV Detection Corporation

During the second quarter of 2001, BICO formed Rapid HIV
Detection Corp. to market a set of HIV diagnostic tests, which
were developed and are manufactured by the German-American
Institute for Applied Medical Research, GmbH (GAIFAR) in
Potsdam, Germany. Rapid HIV Detection Corp. acquired the
exclusive worldwide marketing rights for the new HIV
diagnostic tests from GAIFAR. BICO currently owns 75% of the
outstanding common stock of Rapid HIV Detection Corp. and the
other 25% is owned by Dr. Heinrich Repke, who developed the
technology.

NOTE C - Related Party Notes Receivable

In April 2001, the Company loaned $70,000 to Pascal M.
Nardelli, President and Chief Executive Officer of Petrol Rem,
Inc. This demand note bears interest at a rate of 10.75% per
year. In May 2001, the Company loaned $110,000 to Anthony J.
Delvicario, a member of Diasense's board of directors. This
demand note is secured by 110,000 shares of American
Intermetallics, Inc. common stock and bears interest at prime
rate plus two percent. Also in the second quarter, the
Company loaned $625,000 to GAIFAR and Dr. Heinrich Repke, a
member of the board of directors of Rapid HIV Detection Corp.
This loan is secured by the rights to certain inventory owned
by GAIFAR or the proceeds from the sale of such inventory.
Repayment of this loan plus interest accrued at 12% per year
is due in December 2001.

NOTE D - Notes Receivable

During the six months ended June 30, 2001, Petrol Rem, Inc. (a
75% owned subsidiary) loaned an additional $1,169,341 to a
company involved in the acquisition and management of
environmental entities. The loan, which has a principal
balance of $3,083,704 as of June 30, 2001, bears interest at a
rate of 10% per year and is due on August 31, 2001. The loan
is collateralized by a security interest and lien on all of
the company's assets including its rights to any and all
contracts, options or claims of that company to purchase or
acquire the assets of any environmental company.

NOTE E - Investments in Unconsolidated Subsidiaries

In 2000, the Company acquired a twenty-five percent (25%)
interest in Insight Data Link.com, Inc. for $100,000. The
Company made no additional investments in Insight Data
Link.com, Inc. in the six months ended June 30, 2001. Insight
is a Pennsylvania corporation formed to engage in the business
of acting as an internet clearinghouse for persons seeking to
acquire, and persons having available, shopping mall space, as
well as software development for related projects.

During the six months ended June 30, 2001 the Company invested
an additional $190,000 in American Inter-Metallics, Inc.
("AIM") an unconsolidated subsidiary interest initially
acquired during 1999. With this additional investment, the
Company has invested $1,000,000 in AIM and its ownership is
approximately 20%. AIM has its operations in Rhode Island,
and is developing a product that enhances performance in
rockets and other machinery by increasing the burn rate of
propellants.

During the six months ended June 30, 2001, Diasense invested
an additional $500,000 in MicroIslet, Inc., an unconsolidated
subsidiary interest initially acquired during 2000. With this
additional investment, Diasense has invested $1,500,000 in
MicroIslet and its ownership is approximately 20%. Diasense
holds a seat on the board of directors of this unconsolidated
subsidiary. MicroIslet is a California company, which has
licensed several diabetes research technologies from Duke
University with a specific focus on optimizing
microencapsulated islets for transplantation.

During the six months ended June 30, 2001, Diasense invested
an additional $293,948 in Diabecore Medical, Inc., an
unconsolidated subsidiary interest initially acquired during
2000. With this additional investment, Diasense has invested
$987,468 in Diabecore and owns approximately 28.2% of this
unconsolidated subsidiary. Diasense also owns warrants to
purchase additional shares of Diabecore, which, if exercised,
will increase the company's ownership to 35%. Diasense holds
a seat on the board of directors of Diabecore. Diabecore is a
Toronto-based company working to develop a new insulin for the
treatment of diabetes.

These investments are being reported on the equity basis and
differences between the investment and the underlying net
assets of the unconsolidated subsidiaries are being amortized
as goodwill over a 5-year period. The company's investment in
the underlying assets and the unamortized goodwill of each
unconsolidated subsidiary as of June 30, 2001 and December 31,
2000 are as follows:

Investment
Unconsolidated in Unamortized
Subsidiary Underlying Goodwill Total
Net Assets
Jun.30, Dec.31, Jun.30, Dec.31, Jun.30, Dec. 31,
2001 2000 2001 2000 2001 2000

American Inter-
Metallics,Inc. $313,400 $222,912 $ 471,557 $ 441,004 $ 784,957 $ 663,916

Insight Data 12,837 28,503 45,978 52,546 58,815 81,049
Link.com

MicroIslet,Inc. 51,752 50,731 958,189 688,508 1,009,941 739,239

Diabecore
Medical, Inc. 113,565 50,615 637,947 526,620 751,512 577,235
------- ------ ------- ------- ------- -------
Total $491,554 $352,761 $2,113,671 $1,708,678 $2,605,225 $2,061,439

NOTE F - Notes Payable

During the six months ended June 30, 2001, the Company issued
promissory notes totaling $6,450,000. These notes bear
interest at a rate of 10% per year and are payable on or
before August 13, 2001. Also during this six-month period,
the Company obtained a $50,000 line of credit with PNC Bank.
As of June 30, 2001, $41,650 had been borrowed under this line
of credit. The outstanding balance bears interest at a rate
of 7% per year.

NOTE G- Subordinated Convertible Debentures

At December 31, 2000, the Company had subordinated 4%
convertible debentures outstanding totaling $2,400,000.
During the first quarter of 2001 the Company issued additional
subordinated 4% convertible debentures totaling $8,255,659.
Such convertible debentures were issued pursuant to Regulation
D, and /or Section 4(2), and have a one-year maturity and are
not saleable or convertible for a minimum of 90 days from
issuance. A $2,063,915 expense was recognized upon issuance
for the beneficial conversion feature of these debentures.
During the six months ended June 30, 2001, debentures totaling
$9,741,851 were converted into 261,126,988 shares of common
stock.

NOTE H - Legal Proceedings

During April 1998, the Company and its affiliates were served
with subpoenas by the U.S. Attorneys' office for the U.S.
District Court for the Western District of Pennsylvania. The
subpoenas requested certain corporate, financial and
scientific documents and the Company continues to provide
documents in response to such requests.

On April 30, 1996, a class action lawsuit was filed against
the Company, Diasense, Inc., and individual officers and
directors. The suit, captioned Walsingham v. Biocontrol
Technology, et al., was certified as a class action in the
U.S. District Court for the Western District of Pennsylvania.
The suit alleged misleading disclosures in connection with the
Noninvasive Glucose Sensor and other related activities, which
the company denies. Without agreeing to the alleged charges
or acknowledging any liability or wrongdoing, the company
agreed to settle the lawsuit for a total amount of $3,450,000.
As of June 30, 2001, $2,150,000 has been paid toward the
settlement. An additional $1,300,000 is included in accrued
liabilities and will be paid in September 2001. Although it
is not known whether the class action plaintiffs have been
formally notified of the settlement, or if they have accepted
its terms, the company believes that the existing settlement
will end this matter.

NOTE I - Impact of Recently Issued Accounting Standards.

In June 2001, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
No. 141, "Business Combinations." SFAS 141 supersedes APB
Opinion No. 16 and FASB Statement No. 38 and requires that
all business combinations be accounted for using the
purchase method. The provisions of this statement apply to
all business combinations initiated after June 30, 2001.
The Company is in the process of assessing the impact of
this pronouncement on its financial statements.

Also in June 2001, the FASB issued Statement of Financial
Accounting Standards No. 142, "Goodwill and Other
Intangible Assets." SFAS 142 supersedes APB Opinion No. 17
and addresses financial accounting and reporting for
acquired goodwill and other intangible assets. Under this
provision, goodwill and certain intangible assets will no
longer be amortized. These assets will be evaluated on a
periodic basis to determine if an impairment loss needs to
be recorded. The provisions of this statement will be
effective for the Company's fiscal year ending December 31,
2002. The Company is in the process of assessing the
impact of this pronouncement on its financial statements.

NOTE J - Subsequent Events

In July and August 2001, the Company raised $11,164,000
through the sale of common stock subscriptions. As of August
10, 2001, 409,100,387 shares of stock had been issued to satisfy
$5,650,000 of these subscriptions.

In July 2001, the Company repaid $6,450,000 in current notes
payable.

In July 2001, $854,606 of subordinated convertible debentures
were converted to 30,867,237 shares of common stock.

Management's Discussion and Analysis of Financial Condition
and Cash Flows

Liquidity and Capital Resources

Our cash decreased to $3,094,569 as of June 30, 2001 from
$7,844,807 as of December 31, 2000 primarily due to the
factors discussed below.

During the six months ended June 30, 2001 our net cash flow
used by operating activities was ($14,663,189). During the
same period, our net cash flow used by investing activities
was ($3,723,713) due primarily to the acquisition of property,
plant and equipment, additional loans made to a company
involved in the acquisition and management of environmental
entities, loans to a company which manufactures the HIV
diagnostic tests which we are marketing, and additional
investments in unconsolidated subsidiaries which we discuss in
the following three paragraphs.

During the first six months of 2001, we made additional
investments in unconsolidated subsidiaries. BICO invested an
additional $190,000 in American Inter-Metallics, bringing our
total investment in AIM's rocket propulsion project to
$1,000,000. We increased our investment in AIM because our
management believes this company will generate earnings.

Our subsidiary, Diasense, Inc. also made investments in
unconsolidated subsidiaries during the first quarter of 2001.
An additional $500,000 was invested in MicroIslet, Inc., a
company working with Duke University on several diabetes
research technologies that focus on optimizing
microencapsulated islets for transplantation. The project is
in the research and development phase. As of June 30, 2001,
Diasense had invested $1,500,000 in MicroIslet and owned
approximately 20% of this company. Diasense also increased
its investment in Diabecore Medical, Inc. Diabecore is a
company in Toronto working with other research institutions to
develop a new insulin to treat diabetes. In the first six
months of 2001, Diasense invested $293,948 in Diabecore
increasing the total amount invested to $987,468 and its
ownership in this company to approximately 28.2%. This
project is also in the research and development phase.
Diasense increased these investments because management
believes that these diabetes research organizations and the
institutions they affiliate with will bring strength and
support to our own diabetes research and development projects.
As a result of those additional investments in American Inter-
Metallics, MicroIslet and Diabecore Medical, our overall
investment in unconsolidated subsidiaries increased from
$2,061,439 as of December 31, 2000 to $2,605,225 at June 30,
2001. The money we spent investing in these companies came
from notes payable, debenture payable and stock sales during
2000 and 2001.

Acquisitions of property, plant and equipment included
increases of machinery and equipment of $576,112 for the six
months ended June 30, 2001 primarily due to additions of
hyperthermia equipment for our ViaCirQ subsidiary. Leasehold
improvements increased by $133,662 primarily due to
renovations made to the Indiana, PA facility.

Current related party receivables increased during the six-
month period ended June 30, 2001 due to a short-term $110,000
loan made to Anthony Delvicario, a member of Diasense's board
of directors. This loan is secured by 110,000 shares of
American Intermetallics, Inc. common stock owned by Mr.
Delvicario. Repayment of this loan is expected in the third
quarter of 2001. Also a $70,000 short-term loan was made to
Pascal M. Nardelli, President and Chief Executive Officer of
Petrol Rem, Inc. Repayment of this loan is expected in the
third quarter of 2001. Also in the second quarter, the
Company loaned $625,000 to GAIFAR and Dr. Heinrich Repke, a
member of the board of directors of Rapid HIV Detection Corp.
This loan is secured by the rights to certain inventory owned
by GAIFAR or the proceeds from the sale of this inventory.
Repayment of this loan plus interest accrued at 12% per year
is due in December 2001. These additional current related
party receivables were partially offset by repayments on other
related party notes.

Current notes receivable increased during the six months ended
June 30, 2001 when our subsidiary, Petrol Rem, advanced an
additional $1,169,341 to Practical Environmental Solutions, an
unaffiliated company involved in the acquisition and
management of environmental companies. Interest receivable
increased from $48,252 as of December 31, 2000 to $194,024 at
June 30, 2001 due to additional interest accrued on notes
receivable.

Our net inventory increased from $805,224 as of December 31,
2000 to $1,063,460 as of June 30, 2001. The increase was
primarily due to an inventory build-up for the ThermoChem
hyperthermia products.

Prepaid expenses decreased from $988,354 as of December 31,
2000 to $850,067 as of June 30, 2001. The decrease was
primarily due to amounts prepaid at December 31, 2000 for
insurance and debt acquisition costs being amortized as
expense during the six months ended June 30, 2001.

Accounts payable increased by $515,152 during the six months
ended June 30, 2001 due to the timing of payments made in the
ordinary course of business. Accrued liabilities increased by
$255,435 during the same period due to accrued interest on
notes payable and debentures and increased liabilities for
accrued payroll and vacation.

Notes payable increased from zero at December 31, 2000 to
$6,491,650 at June 30, 2001 due to $6,450,000 of notes payable
issued in order to fund operations and investing activities and
borrowings of $41,650 under a $50,000 line of credit agreement.
In July 2001, the $6,450,000 of notes payable were repaid with
proceeds from the sale of common stock subscriptions.

Our current portion of long-term debt, decreased by $1,052,848
during the six months ended June 30, 2001 primarily due to
payments of $850,000 on a note payable related to Petrol Rem's
acquisition of 51% interest in INTCO, Inc. and payments of
monthly installments on debt related to commercial insurance
premiums.

Debentures payable decreased by $1,486,192 during the six
months ended June 30, 2001 due to the conversion of $9,741,851
of debentures into common stock partially offset by the sale
of $8,255,659 of convertible subordinated debentures to raise
capital to fund operations.

In July and August 2001, the Company raised $11,164,000 through
the sale of common stock subscriptions. As of August 10, 2001,
409,100,387 shares of stock had been issued to satisfy $5,650,000
of these subscriptions.

Results of Operations

Our sales and corresponding costs of products sold during the
six months increased to $1,355,475 and $861,870 respectively
in 2001 from $38,813 and $58,228 in 2000. The increase was
primarily due to sales of $1,115,635 by Petrol Rem's
subsidiary, INTCO, which was acquired in the fourth quarter of
2000 and, therefore, not included in the first six months of
2000 operations. In addition, we recognized sales of $122,467
from our hyperthermia products, which produced no sales in the
first six months of 2000 and $65,721 from our metal coating
products compared with $21,131 in the first six months of
2000. The increase in sales of metal coating products was due
to repeat customers who sent us more work once they were
satisfied with our earlier performance as well as the
introduction of a product line for knives and knife
sharpeners. Other product sales increased in total, but not
significantly. Bioremediation product sales totaled $35,818
during the first six months of 2001 compared to $18,967 during
the first six months of 2000. During the first six months of
2001, we recognized sales of $15,775 for our theraPORT, an
implantable device used by patients who have repeated
injections of drugs. The theraPORT is implanted in the
patient's chest and provides a fixed port for catheters used
to deliver the drugs the patient needs. Until we have
significant sales, we can't predict any trends for future
revenues. Our costs of products sold increased due to the
increase in sales of our various products.

Other income increased from zero during the first six months
of 2000 to $8,563 during the first six months of 2001. The
increase was primarily due to rental income.

Research and Development expenses during the first six months
decreased to $2,861,146 in 2001 from $3,805,960 in 2000. The
decrease was due to reduced research activities on our
hyperthermia products and the redeployment of resources from
research activities to production of hyperthermia products.

General and administrative expenses increased a total of
approximately $5.2 million for the first six months of 2001 as
compared to 2000. Approximately $3.1 million of the increase
is attributable to additional salaries, which include a
$912,727 payment to David L. Purdy in connection with his
resignation from the Company and its affiliates and new hiring
at ViaCirq and Petrol Rem (Including INTCO and Tireless, LLC).
$1.4 million of the increase represents increased outside
consulting fees, approximately $600,000 of which was incurred
in connection with ViaCirq's sales and marketing efforts for
the ThermoChem system. Approximately $400,000 of the increase
is due to increased travel expenses, primarily for ViaCirq's
and Petrol Rem's increased marketing efforts.

Amortization of goodwill increased from $136,737 to $374,768
for the first six months of 2000 to 2001. The increase is due
to additional investments in unconsolidated subsidiaries as of
June 30, 2001 compared with June 30, 2000. A portion of these
investments is recognized as goodwill and amortized over a
five-year period. Our loss in unconsolidated subsidiaries
increased to $165,588 for the first six months of 2001
compared to $8,750 for the same period in 2000 due to the
increased investments in unconsolidated subsidiaries. This
loss resulted because we absorbed part of losses incurred by
unconsolidated subsidiaries. Our share of the loss is
determined by applying our ownership percentage to the total
loss incurred.

Debt issue costs increased from $985,000 to $1,520,158 for the
first six months of 2000 to 2001. The increase is due to
additional debentures and notes payable during the first six
months of 2001 compared to the same period in 2000.

Beneficial conversion terms included in our convertible
debentures are recognized as expense and credited to
additional paid in capital at the time the associated
debentures are issued. We recognized $2,063,915 of expense in
connection with the issuance of our subordinated convertible
debentures in the first six months of 2001 compared to
$2,462,500 for the same period in 2000. The amount decreased
primarily because we issued fewer debentures this year
compared to last year.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings
None.

Item 2. Changes in Securities
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

(B) Reports on Form 8-K

A report on form 8-K filed May 17, 2001 for the event
dated May 16 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed May 18, 2001 for the event
dated May 17, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed May 21, 2001 for the event
dated May 17, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed May 23, 2001 for the event
dated May 22, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed May 23, 2001 for the event
dated May 23, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed July 13, 2001 for the event
dated July 11, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed July 18, 2001 for the event
dated July 16, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed July 26, 2001 for the event
dated July 24, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed July 30, 2001 for the event
dated July 26, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed August 2, 2001 for the event
dated July 31, 2001. The items listed were Item 5, Other
Events, and Item 7(c), Exhibits.

A report on form 8-K filed August 2, 2001 for the event
dated August 2, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

A report on form 8-K filed August 8, 2001 for the event
dated August 6, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

A report on form 8-K filed August 8, 2001 for the event
dated August 8, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized on this 10th day of August 2001.

BICO, INC.

By /s/ Fred E. Cooper
Fred E. Cooper
CEO and Director (Principal
Executive Officer)

By /s/ Michael P. Thompson
Michael P. Thompson
(Principal Financial
Officer and Principal
Accounting Officer)