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 September 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 September 30, 2001, 2,450,631,119 shares of BICO,
Inc. common stock, par value $.10 were outstanding.

BICO, Inc. and Subsidiaries
Consolidated Balance Sheets

(Unaudited)
Sept. 30, 2001 Dec. 31, 2000
------------- -------------

CURRENT ASSETS
Cash and equivalents $ 1,349,907 $ 7,844,807
Accounts receivable - net of allowance for doubtful accounts
of $43,664 at Sept. 30, 2001 and $43,664 at Dec. 31, 2000 1,273,100 400,950
Inventory - net of valuation allowance ($5,052,887 at Sept.
30, 2001 and $3,493,922 at Dec. 31, 2000) 1,575,373 805,224
Related party notes receivable 142,278 87,706
Notes receivable - 12,000
Notes receivable - Practical Environmental Solutions, Inc. - 1,914,363
Interest receivable 97,826 48,252
Prepaid expenses 1,017,322 988,354
Other current assets 62,270 47,268
------------ -------------

TOTAL CURRENT ASSETS 5,518,076 12,148,924

PROPERTY, PLANT AND EQUIPMENT
Building 2,529,176 2,529,176
Land 246,250 246,250
Leasehold improvements 2,019,016 1,848,674
Machinery and equipment 7,535,953 6,405,594
Furniture, fixtures & equipment 935,516 921,195
------------- -------------
Subtotal 13,265,911 11,950,889

Less accumulated depreciation 6,010,467 5,288,910
------------- -------------
7,255,444 6,661,979

OTHER ASSETS
Related Party Receivables
Notes receivable 1,128,455 1,174,738
Interest receivable 8,918 13,463
------------- -------------
1,137,373 1,188,201
Allowance for related party receivables (1,137,373) (1,188,201)
------------- ------------
- -

Notes receivable 138,646 200,000
Notes receivable - Practical Environmental Solutions, Inc. 3,083,704 -
Notes receivable - GAIFAR 1,025,000 -
Goodwill, net of amortization 635,129 694,895
Investment in unconsolidated subsidiaries 2,507,865 2,061,439
Other assets 245,924 162,833
------------- -------------
7,636,268 3,119,167
------------- -------------
TOTAL ASSETS $ 20,409,788 $ 21,930,070
============= =============

See notes to consolidated financial statements.

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

(Unaudited)
Sept. 30, Dec. 31,
2001 2000
------------- -------------

CURRENT LIABILITIES
Accounts payable $ 2,045,526 $ 578,520
Notes payable 3,414,336 -
Current portion of long-term debt 4,222,375 5,182,783
Current portion of capital lease obligations 79,031 98,788
Debentures payable - 2,400,000
Accrued liabilities 3,578,295 3,131,765
Escrow payable 2,700 2,700
------------- -------------
TOTAL CURRENT LIABILITIES 13,342,263 11,394,556

LONG-TERM LIABILITIES
Capital lease obligations 2,145,698 2,203,673
Long-term debt 1,233 7,864
------------- -------------
2,146,931 2,211,537
COMMITMENTS AND CONTINGENCIES

UNRELATED INVESTORS'INTEREST
IN SUBSIDIARY 454,757 434,990

STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share,
authorized 2,500,000,000 shares, issued and
outstanding 2,450,631,119 at Sept. 30, 2001 and
1,383,704,167 at Dec. 31, 2000 245,063,111 138,370,417
Additional paid-in capital 2,482,952 87,035,096
Warrants 6,221,655 6,204,235
Accumulated deficit (249,301,881) (223,720,761)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 4,465,837 7,888,987
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 20,409,788 $ 21,930,070
============= =============

See notes to consolidated financial statements.

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

For the nine months ended For the three months ended
Sept. 30, Sept. 30,
2001 2000 2001 2000
-------------- -------------- -------------- --------------

Revenues
Net Sales $ 2,869,611 $ 98,831 $ 1,514,136 $ 60,018
Other income 9,497 - 934 -
-------------- -------------- -------------- --------------
2,879,108 98,831 1,515,070 60,018
Costs and expenses
Cost of products sold 2,082,021 132,644 1,220,151 74,416
Research and development 5,142,507 5,082,319 2,281,361 1,276,359
General and administrative 16,217,485 11,962,387 4,406,697 4,341,320
Amortization of goodwill 579,671 279,681 204,903 142,944
-------------- -------------- -------------- --------------
24,021,684 17,457,031 8,113,112 5,835,039
-------------- -------------- -------------- --------------
Loss from operations (21,142,576) (17,358,200) (6,598,042) (5,775,021)
-------------- -------------- -------------- --------------

Other income
Interest 478,399 449,559 159,190 121,610

Other expense
Debt issue costs 1,741,886 985,000 221,728 985,000
Beneficial convertible debt feature 2,063,915 2,462,500 - -
Warrant extensions - 6,390 - 6,390
Interest expense 690,948 1,343,393 253,582 1,083,575
Loss on unconsolidated subsidiaries 221,407 493,925 55,819 485,175
Loss on disposal of assets 18,635 15,874 32 -
Unusual item (Note I) 225,000 3,450,000 225,000 3,450,000
-------------- -------------- -------------- -------------
4,961,791 8,757,082 756,161 6,010,140
-------------- -------------- -------------- -------------

Loss before unrelated investors' interest (25,625,968) (25,665,723) (7,195,013) (11,663,551)

Unrelated investors' interest in net (income)
loss of subsidiaries 44,848 54,222 (99,271) (18,274)
-------------- -------------- -------------- --------------

Net loss $ (25,581,120) $(25,611,501) $ (7,294,284) $(11,681,825)
============== ============== ============== ==============

Loss per common share - Basic:
Net Loss $ (0.015) $ (0.026) $ (0.003) $ (0.012)
Less: Preferred stock dividends (0.000) (0.000) (0.000) (0.000)
-------------- -------------- ------------- --------------
Net loss attributable to common stockholders: $ (0.015) $ (0.026) $ (0.003) $ (0.012)
============== ============== ============= ==============

Loss per common share - Diluted:
Net Loss $ (0.015) $ (0.026) $ (0.003) $ (0.012)
Less: Preferred stock dividends (0.000) (0.000) (0.000) (0.000)
-------------- -------------- ------------- --------------
Net loss attributable to common stockholders: $ (0.015) $ (0.026) $ (0.003) $ (0.012)
============== ============== ============= ==============

Weighted-average number of common shares outstanding 1,675,879,572 974,820,742 2,120,615,637 1,005,539,922

See notes to consolidated financial statements.

BICO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the nine months ended For the three months ended
Sept. 30, Sept. 30,

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

Cash flows used by operating activities:
Net loss ($25,581,120) ($25,611,501) ($7,294,284) ($11,681,825)
Adjustments to reconcile net loss to net
cash used by operating activities :
Depreciation 749,526 397,778 272,213 88,132
Amortization 579,671 279,681 204,903 142,944
Loss on disposal of assets 18,635 15,874 32 -
Loss on unconsolidated subsidiary 221,407 110,723 55,819 101,973
Unrelated investors' interest in subsidiary (44,848) 8,523 99,271 81,019
Stock issued in exchange for services - 338,000 - 338,000
Beneficial convertible debt feature 2,063,915 2,462,500 - -
Warrants granted 17,420 322,028 6 86,771
Warrants and warrant extensions by subsidiary 188,252 1,598,936 55,200 734,795
(Decrease)increase in allowance for related party recv. (50,828) (90,333) (15,228) (55,031)
Debenture interest converted to stock - 120,547 - 120,547
(Increase) decrease in accounts receivables (872,150) (38,266) (841,547) (58,406)
(Increase) decrease in inventories (2,329,114) 134,373 (1,568,180) (407,783)
(Decrease) increase in inventory valuation allowance 1,558,965 (891,321) 1,056,267 (2,906)
(Increase) decrease in prepaid expenses (28,968) (300,945) (167,255) 41,995
(Increase) decrease in other assets (133,544) (186) (66,222) 498,817
(Decrease) increase in accounts payable 1,467,006 (523,111) 951,854 (21,112)
(Decrease) increase in other liabilities 446,530 1,270,377 191,095 1,670,289
-------------- -------------- -------------- --------------

Net cash flow used by operating activities (21,729,245) (20,396,323) (7,066,056) (8,321,781)
-------------- -------------- -------------- --------------

Cash flows from investing activities:
Purchase of property, plant and equipment (1,361,626) (2,499,808) (617,156) (1,885,153)
(Increase) decrease in notes receivable (2,385,341) (1,034,500) (400,000) (1,012,500)
Payments received on notes receivable 256,065 88,524 125,677 19,287
(Increase) decrease in interest receivable (45,029) (3,084) 95,313 (2,641)
Acquisition of unconsolidated subsidiary interests (1,093,948) (1,725,784) (110,000) (450,000)
-------------- -------------- -------------- --------------
Net cash provided (used) by investing activities (4,629,879) (5,174,652) (906,166) (3,331,007)
-------------- -------------- -------------- --------------

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 - -
Proceeds from public offering 10,692,600 17,026,106 10,692,600 17,026,106
Redemption of Stock Subscriptions (1,453,600) - (1,453,600) -
Increase in notes payable 9,983,885 - 3,492,235 -
Payments on long term debt (7,536,588) (15,915) (6,477,724) 51,160
Redemption of debentures - (5,850,000) - (5,850,000)
Additional capital lease obligations - 1,434,066 - 1,434,066
Payments on capital lease obligations (77,732) (522,457) (25,951) (483,431)
-------------- -------------- -------------- --------------
Net cash provided by financing activities 19,864,224 27,096,220 6,227,560 12,177,901
-------------- -------------- -------------- --------------

(Decrease) increase in cash and equivalents (6,494,900) 1,525,245 (1,744,662) 525,113
Cash and equivalents, beginning of period 7,844,807 10,827,631 3,094,569 11,827,763
-------------- -------------- -------------- --------------

Cash and equivalents, end of period $ 1,349,907 $ 12,352,876 $ 1,349,907 $ 12,352,876
============== ============== ============== ==============

See notes to consolidated financial 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 10-01 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 -Operations and Liquidity

The Company continues to be dependent on security sales as its
primary source of working capital. As of November 15, 2001,
the Company had total authorized common stock of 2,500,000,000
shares of which 2,450,631,119 shares were issued and
outstanding. A Stockholders' meeting is scheduled for
November 30, 2001 at which time stockholders will be asked to
authorize an additional 1,500,000,000 shares. The
authorization of these additional shares is essential to the
Company's ability to generate sufficient working capital to
continue as a going concern.

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. In August 2001, this demand note and accrued interest of
$2,110 were paid in full. In May 2001, the Company loaned
$110,000 to Anthony J. Delvicario, the president of the
Company's unconsolidated subsidiary, American Inter-Metallics,
Inc., and a member of Diasense's board of directors. The
original demand note was secured by 110,000 shares of American
Inter-Metallics, Inc. common stock and bore interest at prime
rate plus two percent. In November 2001, the note was
converted into a new note for $114,000 to reflect accrued
interest, with a due date of December 17, 2001. The new note
is secured by an unconditional guaranty by American Inter-
Metallics and all of American Inter-Metallics' assets,
including all of its equipment.

NOTE D - Notes Receivable - Practical Environmental Solutions,
Inc.

During the nine months ended September 30, 2001, Petrol Rem,
Inc. (a 75% owned subsidiary) loaned an additional $1,169,341
to Practical Environmental Solutions, Inc., a company involved
in the acquisition and management of environmental entities.
The loan, which has a principal balance of $3,083,704 as of
September 30, 2001, bears interest at a rate of 10% per year
and is due on demand on or before January 21, 2002. The loan
is collateralized by a security interest and lien on all of
Practical Environmental'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.
The note is classified as a noncurrent asset as of September
30, 2001 because the management of Petrol Rem is considering
converting all or part of this note into a controlling equity
interest in Practical Environmental Solutions with the balance
of the note being converted to a term loan.

NOTE E - Notes Receivable - GAIFAR

In June 2001, the Company entered into a marketing agreement
with GAIFAR, a German company that owned all the rights to
certain rapid HIV tests, and Dr. Heinrich Repke, the man who
developed the tests. The marketing rights were assigned to
Rapid HIV Detection Corp., of which the Company owns 75% and
GAIFAR owns 25%. GAIFAR retained the manufacturing rights for
the tests. The agreement, as amended, provided for a due
diligence period until October 15, 2001 and approval by the
Company's board of directors. In October 2001, the due
diligence period was completed and the Company's board
provided their unanimous resolution, making the marketing
agreement fully effective. The marketing agreement has a
minimum ten-year term and calls for total payments of
$7,000,000 through the third quarter of 2002. When the
marketing agreement became effective in October 2001,
$1,000,000 previously loaned to GAIFAR was applied to the $7
million consideration. The original agreement called for a
loan of $500,000 to the owner of the rapid HIV tests and
technology, but the Company agreed to loan another $125,000
during the second quarter while the due diligence was
continuing. During the third quarter, the Company loaned an
additional $400,000 while the due diligence was completed. Of
these funds loaned to GAIFAR, $1 million was made part of the
consideration paid to acquire the exclusive worldwide
marketing rights to the rapid HIV tests and technology and is
now part of the Company's investment in Rapid HIV Detection
Corp. The remaining $6 million in payments are due from
October 20, 2001 through August 20, 2002. The payments
include $125,000 per month for the three months from October
through December 2001, $200,000 in January 2002, $250,000 in
February 2002, $500,000 in March 2002, $1 million per month
for the four months from April through July of 2002 and a
final payment of $675,000 in August 2002.

NOTE F - Investments in Unconsolidated Subsidiaries

During the third quarter of 2001, the Company invested an
additional $10,000 in Insight Data Link.com, Inc. ("IDL"), an
unconsolidated subsidiary interest initially acquired in 2000.
With this additional investment, the Company has invested
$110,000 in IDL and its ownership percentage is approximately
27%. 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 nine months ended September 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 nine months ended September 30, 2001, Diasense
invested an additional $600,000 in MicroIslet, Inc., an
unconsolidated subsidiary interest initially acquired during
2000. With this additional investment, Diasense has invested
$1,600,000 in MicroIslet and its ownership is approximately
20.2%. 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 nine months ended September 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 24% of this
unconsolidated subsidiary. 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 September 30, 2001 and
December 31, 2000 are as follows:

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

American Inter-
Metallics,Inc. $313,400 $222,912 $ 435,122 $ 441,004 $ 748,522 $ 663,916

Insight Data 7,603 28,503 44,920 52,546 52,523 81,049
Link.com

MicroIslet,Inc. 11,335 50,731 966,238 688,508 977,573 739,239

Diabecore
Medical, Inc. 172,695 50,615 556,552 526,620 729,247 577,235
------- ------ ------- ------- ------- -------
Total $505,033 $352,761 $2,002,832 $1,708,678 $2,507,865 $2,061,439
======= ====== ======= ======= ======= =======

NOTE G - Notes Payable

During the nine months ended September 30, 2001, the Company
issued promissory notes totaling $9,825,000. As of September
30, 2001, promissory notes totaling $6,450,000 had been repaid
with proceeds from the sale of common stock subscriptions.
The outstanding notes payable of $3,375,000 at September 30,
2001 bear interest at a rate of 10% per year and are payable
on various dates in January 2002. Also during this nine-month
period, the Company obtained a $50,000 line of credit with PNC
Bank. As of September 30, 2001, $39,336 was outstanding under
this line of credit. The outstanding balance bears interest
at a rate of 6.75% per year.

NOTE H- 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 nine months ended September 30, 2001,
all of these debentures totaling $10,655,659 were converted
into 297,516,846 shares of common stock.

NOTE I - Stockholders Equity

During the third quarter of 2001, the Company raised
$11,164,000 through the sales of common stock subscriptions.
As of September 30, 2001, 769,410,099 shares of common stock
had been issued to satisfy $9,900,000 of the subscriptions.
In addition, subscriptions totaling $1,264,000 were
repurchased by the company for the original subscription
amount plus a premium of $189,600, which was charged to
additional paid in capital.

NOTE J - Legal Proceedings and Contingencies

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 September 30, 2001, $2,150,000 has been paid toward the
settlement. During the third quarter of 2001, the parties
agreed to extend the payments on the remaining balance. An
additional $1,525,000 is included in accrued liabilities,
including $225,000 for extending the due dates, and is due in
the fourth quarter of 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.

In July 2001, the Company filed a registration statement on
Form S-3 to conduct an offering of 800 million shares of its
common stock at $.04 per share on a best-efforts basis. The
Company's stock price fell below $.04 and 769,410,099 shares
of stock were sold at an average price of approximately $.013
per share to a small number of institutional or accredited
investors. In mid-August, following these sales, a post
effective amendment to the registration statement was filed
indicating that the Company would offer the shares at $.015.
Neither the registration statement nor the post-effective
amendment correctly reflected the pricing of the offering to
the accredited investors. The Company has been advised by
counsel that it is not likely that the Company would face
liability from initial investors in the offering. The Company
is uncertain what effect, if any, the incorrect disclosure
regarding the terms of the offering may have had on secondary
market transactions, and whether there may be a basis to
assert any claims against the Company by purchasers or sellers
of the stock other than the initial investors, or the amount
of any possible claims.

NOTE K - 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 L - Reclassification

Certain items included in the financial statements of prior
periods have been reclassified to conform to classifications
in the 2001 financial statements. Such reclassifications had
no effect on prior period reported net losses.

NOTE M - Subsequent Event

On October 11, 2001, Petrol Rem borrowed $500,000 from the
minority owner of its subsidiary, INTCO, Inc., under a
promissory note that bears interest at 7% per year and is
payable upon demand. To secure payment of the note, Petrol
Rem pledged all of its shares in INTCO, Inc.

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

Liquidity and Capital Resources

We continue to be dependent on security sales as our
primary source of working capital. As of November 15, 2001,
we had total authorized common stock of 2,500,000,000 shares
of which 2,450,631,119 shares were issued and outstanding. We
have a stockholders' meeting scheduled for November 30, 2001
at which time our stockholders will be asked to authorize an
additional 1,500,000,000 shares. If we don't receive approval
to authorize these additional shares, we will not be able to
raise enough money to continue our operations.

Once the new shares are approved, assuming that they are
approved, we will be selling those new shares. We plan to sell
convertible preferred stock in a private offering, as we have
done in the past. Those new convertible securities will not be
and have not been registered under the federal securities laws
and may not be offered or sold in the United States without
registration or an applicable exemption from registration
requirements. The convertible preferred stock will be
convertible into common stock after a period of time ranging
from approximately 35 days to 75 days at a 20-24% discount to
our stock's market price at the time of conversion with no
minimum price. The terms of the deal require us to file a
registration statement covering the common stock with the
Securities and Exchange Commission within 90 days. The
convertible preferred stock will not be secured and we will
have the right to redeem them. When we sell these convertible
securities, it could cause our stock price to fall
significantly, and we don't have any control over that.
Factors including the timing of conversions and the additional
number of shares needed for conversion with no limit
contribute to the downward pressure on our stock price. In
addition, although the purchasers of our convertible preferred
stock agree not to sell our stock short, if other investors
sell short, it will further contribute to the decline of our
stock price. In the past few years, we've sold both
convertible securities and common stock in various offerings,
all of which were on a best-efforts basis:

We registered 800 million shares of common stock in the
third quarter of 2001;

We registered approximately 431 million shares in the
third quarter of 2000, which included both common stock
and conversion shares for convertible preferred stock and
convertible debentures;

We registered 375 million shares of common stock in the
second quarter of 1999; and

We registered 200 million shares of common stock in the
last quarter of 1998.

Selling more of these convertible securities will further
dilute ownership of existing stockholders but, until we find
another way of raising significant funds, we must continue to
sell our stock.

Our cash decreased to $1,349,907 as of September 30, 2001
from $7,844,807 as of December 31, 2000 primarily due to the
factors discussed below.

During the nine months ended September 30, 2001 our net cash
flow used by operating activities was ($21,729,245). During
the same period, our net cash flow used by investing
activities was ($4,629,879) due primarily to the acquisition
of property, plant and equipment, additional loans made to
Practical Environmental Solutions, a company involved in the
acquisition and management of environmental entities, loans to
GAIFAR, the company which manufactures the HIV diagnostic
tests which we are marketing, and additional investments in
unconsolidated subsidiaries which we discuss in the following
paragraphs. We made all of these investments because we
believe that they will either generate revenue or will help us
with our diabetes-related projects.

During the first nine months of 2001, we made additional
investments in unconsolidated subsidiaries. We invested an
additional $190,000 in American Inter-Metallics, bringing our
total investment in AIM's rocket propulsion project to
$1,000,000. In addition, we loaned $110,000 to Anthony J.
Delvicario, the president of American Inter-Metallics, Inc.
and a member of Diasense's board of directors to help fund a
transaction involving the creation of a distribution system in
Europe to sell AIM's products which we believe will generate
revenue. The original demand note was secured by 110,000
shares of American Inter-Metallics, Inc. common stock and bore
interest at prime rate plus two percent. In November 2001, we
converted the original note into a new note for $114,000 to
reflect accrued interest, with a due date of December 17,
2001. The new note is secured by an unconditional guaranty by
American Inter-Metallics and all of American Inter-Metallics'
assets, including all of its equipment. AIM informed us that
they are in the final stage of closing the transaction, and
they expect to repay the loan by the due date. We also
increased our total investment in Insight Data Link.com, Inc.
to $110,000 by investing an additional $10,000. We increased
our investment in AIM and Insight Data Link because our
management believes they will generate earnings. However, AIM
has not yet generated any revenue, and Insight Data Link has
only generated minimal revenues of approximately $2,000 to
date.

Our subsidiary, Diasense, Inc. also made investments in
unconsolidated subsidiaries during the first nine months of
2001. Diasense invested an additional $600,000 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 September 30,
2001, Diasense had invested $1,600,000 in MicroIslet and owned
approximately 20.2% 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 nine
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 24%. 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, Insight Data Link.com, MicroIslet and Diabecore
Medical, our overall investment in unconsolidated subsidiaries
increased from $2,061,439 as of December 31, 2000 to
$2,507,865 at September 30, 2001.

During the nine months ended September 30, 2001, our
subsidiary, Petrol Rem, advanced an additional $1,169,341 to
Practical Environmental Solutions, a Pennsylvania company that
acquired technology used to safely convert municipal sludge to
recyclables that comply with state and federal environmental
laws. Petrol Rem has loaned a total of $3,083,704 to
Practical Environmental as of September 30, 2001. Practical
Environmental has made interest payments on the amount due.
The loan, which was originally due on August 31, 2001 has been
extended until January 31, 2002; no principal payments have
been made to date. The loan is classified as a non-current
asset as of September 30, 2001 because our management is
considering whether to convert all or part of that loan to an
equity investment - they are making that decision because
Practical Environmental is willing to make that conversion and
because Practical Environmental has been generating revenues
since January 2001. As of September 30, 2001, although they
are still operating at a loss, Practical Environmental's
internal financial information shows revenues of $426,000. We
may consider making additional loans or investments in
Practical Environmental if those loans or investments could
help increase earnings.

During the nine months ended September 30, 2001 Petrol Rem
also invested an additional $99,060 in Tireless LLC, which is
another part of our Petrol Rem operations, bringing our total
equity investment to $455,000.Tireless is a company that shreds
and helps recycle tires, addressing some significant
environmental issues that arise from large piles of used
tires. We also loaned Tireless $461,610 during the nine
months ended September 30, 2001, which was used primarily to
purchase a mobile tire-shredding machine that is being used to
fulfill a contract in Ohio. As of September 30, 2001, Tireless
has not generated any revenues.

In 2001, we formed Rapid HIV Detection Corp. to market rapid
HIV tests. Those rapid HIV tests include:

InstantScreen, which is the initial test for HIV;

InstantConfirm, which is used to verify all positive
results; and

InstantDifferentiate, which indicates whether the patient
has HIV-1 or HIV-2. HIV-1 is the most common form of HIV;
HIV-2 is a less aggressive form found in some parts of the
world, including West Africa.

The InstantScreen test takes 30 seconds to produce
results. Only a few drops of blood are needed, and the blood
is drawn with a finger prick, rather than intravenously with a
needle and vial of blood. No additional material or special
knowledge is needed to administer the test, and only
elementary level reading skills are required. The test can be
produced in different formats, depending upon whether it will
be used in a doctor's office, hospital or in the field. The
InstantConfirm test takes about 8 minutes to perform and is
the first rapid HIV test to use the Western-Blot type HIV
confirmation technology. The Western-Blot is recognized as
the gold standard of HIV confirmation. This phase of the test
is critical, since false-positive results have been a
significant historical problem with HIV testing. The
InstantDifferentiate is used if the patient tests positive for
HIV, in order to determine whether the patient is infected
with HIV-1 or HIV-2. HIV-2 is a less aggressive form of HIV
that causes AIDs after a longer period of time than HIV-1, and
is prevalent in certain parts of the world, including West
Africa.

In order to acquire the exclusive, world-wide marketing
rights to the rapid HIV tests, we entered into a marketing
agreement with GAIFAR, a German company which owned all the
rights to the tests, and Dr. Heinrich Repke, the man who
developed the tests. The marketing rights were assigned to
Rapid HIV Detection Corp - we own 75% and GAIFAR owns 25% of
Rapid HIV's common stock. GAIFAR retained the manufacturing
rights for the tests. We entered into the agreement in June
2001 and acquired the marketing rights at that time. The
initial terms of the agreement allowed us a due diligence
period of 8 weeks to withdraw from the agreement, but in July,
all the parties agreed to extend that date until October 15,
2001. The parties also agreed that we would need to provide a
copy of a resolution signed by our board of directors
approving the contract. In October, we completed our due
diligence period and our board provided their unanimous
resolution, making the marketing agreement fully effective,
which means that we no longer have a right to withdraw. The
marketing agreement, which we filed as an exhibit to a Form 8-
K filed October 15, 2001, has a minimum ten-year term and
calls for total payments of $7,000,000 through the 3rd quarter
of 2002. When the marketing agreement became effective in
October 2001, $1 million of the funds previously loaned were
applied to the total $7 million consideration. The original
agreement called for a loan in the amount of $500,000 to the
owner of the rapid HIV tests and technology, but we agreed to
loan another $125,000 during the 2nd quarter while we
continued our due diligence, so the total loans were $625,000
as of June 30, 2001. During the 3rd quarter of 2001, we
loaned an additional $400,000 while we completed our due
diligence; the total loan amount applied to the $7 million
total due was $1 million. The remaining $25,000 loan will
either be repaid or applied to a future payment obligation.
The loan was made part of the consideration we paid to acquire
the exclusive worldwide marketing rights to the rapid HIV
tests and technology, and is now part of our investment in
Rapid HIV. Therefore, the loan is classified as a non-current
asset. The remaining $6 million in payments are due from
October 20, 2001 through August 20, 2002. We made the
$125,000 payment due in October, and the remaining payments
include a range of $125,000 per month for November and
December 2001 to $1 million per month for the 4 months from
April - July of 2002. The original marketing agreement
provided for payments through the 2nd quarter of 2002, and we
renegotiated for a longer payment period in October 2001. We
made our investment in Rapid HIV because we believe Rapid HIV
will generate earnings.

The money we spent investing in these companies came from
notes payable, debentures payable and stock sales during 2000
and 2001.

In July 2001, we announced that ViaCirq entered into a
Memorandum of Understanding with Phoenix Hospital Mangagement
to pursue a joint venture to market and sell ViaCirq products
in China. In August we announced that negotiations were
continuing. The tragic events of September 11, 2001 further
delayed the travel and communication necessary to continue
meaningful work on or to finalize the transaction. As of the
date of this filing, due primarily to the international
economic and trading instability resulting from the terrorist
attacks and the military response to those attacks, we no
longer believe this transaction is feasible and have
discontinued negotiations. We may re-open negotiations in
the future, but at this point, we do not believe the joint
venture will occur.

Accounts receivable, net of allowance for doubtful accounts,
increased from $400,950 as of December 31, 2000 to $1,273,100
as of September 30, 2001. The increase is primarily
attributable to the increase in revenues for INTCO, a
consolidated subsidiary of Petrol Rem, and the timing of
billings and collections related to these revenues.

Our net inventory increased from $805,224 as of December 31,
2000 to $1,575,373 as of September 30, 2001. The increase
was primarily due to an inventory build-up for the ThermoChem
hyperthermia products and for other manufacturing projects
being completed at our Indiana, PA facility.

Current related party receivables increased during the nine-
month period ended September 30, 2001 due to the $110,000 loan
made to Anthony Delvicario (a member of Diasense's board of
directors) which was previously discussed. This addition to
current related party receivables was partially offset by
repayments on other related party notes.

Acquisitions of property, plant and equipment included
increases of machinery and equipment of $1,130,359 for the
nine months ended September 30, 2001 primarily due to
additions of hyperthermia equipment for our ViaCirQ subsidiary
and the purchase of tire-shredding equipment for Petrol Rem's
subsidiary, Tireless. Leasehold improvements increased by
$170,342 primarily due to renovations made to the Indiana, PA
facility.

Accounts payable increased by $1,467,006 during the nine
months ended September 30, 2001 due to the timing of payments
that were slower than normal due to our shortage of working
capital. Accrued liabilities increased by $446,530 during the
same period due to accrued interest on notes payable and
increased liabilities for accrued payroll and vacation. We
also accrued an additional $225,000 for extending the due
dates on the payments due on our class action settlement.

Notes payable increased from zero at December 31, 2000 to
$3,414,336 at September 30, 2001 due to $9,825,000 of notes
payable issued in order to fund operations and investing
activities and borrowings of $39,336 under a $50,000 line of
credit agreement. In July 2001, $6,450,000 of the notes
payable were repaid with proceeds from the sale of common
stock subscriptions.

Our current portion of long-term debt, decreased by $960,408
during the nine months ended September 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 partially offset by additional debt of
$117,235 acquired related to commercial insurance premiums.

We are currently renegotiating loans due in connection debt
incurred when we purchased ICTI. As of September 30, 2001,
our current portion of long-term debt includes $4,091,667 and
our accrued liabilities includes $1,261,683 in accrued
interest, all of which is due in connection with ICTI. We
believe we have an agreement to make payments and issue
convertible preferred stock in return for a reduction in the
total amounts due, however, our counsel is still negotiating
and finalizing the documents to accomplish the deal, so we
cannot be sure that it will be finalized before the end of
2001.

Debentures payable decreased by $2,400,000 during the nine
months ended September 30, 2001 due to the conversion of
$10,655,659 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, the Company raised $11,164,000 through the
sale of common stock subscriptions. As of September 30, 2001,
769,410,099 shares of stock had been issued to satisfy
$9,900,000 of these subscriptions. In addition, the Company
repurchased subscriptions totaling $1,264,000 for $1,453,600.
As a result of the conversion of debentures and the issuance
of common stock to satisfy stock subscriptions, our common
stock balance increased to $245,063,111 as of September 30,
2001 compared to $138,370,417 as of December 31, 2000.
Because the common stock was issued at prices below par value,
our additional paid in capital decreased from $87,035,096 at
December 31, 2000 to $2,482,952 at September 30, 2001.

Results of Operations

Our sales and corresponding costs of products sold during the
nine months increased to $2,869,611 and $2,082,021
respectively in 2001 from $98,831 and $132,644 in 2000. The
increase was primarily due to sales of $2,419,659 by Petrol
Rem's subsidiary, INTCO, which was acquired in the fourth
quarter of 2000 and, therefore, not included in the first nine
months of 2000 operations. Petrol Rem's increase also
included an increase in bioremediation product sales to
$75,801 during the first nine months of 2001 compared to
$25,982 during the same period in 2000. Although we had
anticipated revenue of $1.67 million from Petrol Rem during
the 3rd quarter of 2001, actual revenues were approximately
$1.33 million. During the 3rd quarter, Petrol Rem received a
distribution agreement for approximately $125,000 per year
from an Alaskan oil spill clean-up company called F.R.O.G. to
distribute Petrol Rem products. The contract has an initial
term of one year, with automatic renewals on a yearly basis.
Due to recent international events, including the September
11th tragedy, the Alaskan company has been focused on other
matters, and they've told us that they hope to begin selling
our products soon. Through Tireless, LLC, we received a sub-
contract to help clean up tire piles in Ohio. We began that
project at the beginning of October, and we recently began
billing for our services. We believe the Tireless sub-
contract could generate revenue of at least $500,000 over the
next year based on our equipment's capacity to shred tires
over the one-year period of the contract.

In addition, for the first nine months of 2001, we recognized
sales of $208,284 from our hyperthermia products, which
produced sales of $35,808 during the first nine months of
2000. The increase was due to placements and installations of
ViaCirq's ThermoChemHT system and corresponding sales of
disposables in several hospitals.

Other product sales increased in total, but not significantly.
We received $80,405 from CCTI's metal coating products
compared with $28,098 in the first nine months of 2000. The
increase in sales of metal coating products was due primarily
to the introduction of a product line for sharpeners used for
knives and other tools in the professional culinary field, for
sportsmen's knives and fish hooks, for professional
woodworkers and for household use. CCTI also continues to
receive work from repeat customers who sent us more work once
they were satisfied with our earlier performance. During the
first nine months of 2001, we recognized sales of $49,403 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. We also
recognized sales of $36,000 for HIV tests marketed by Rapid
HIV Corporation. Until we have significant and consistent
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.

During the 3rd quarter of 2001, our manufacturing division in
Indiana, PA received contracts, which we anticipate will begin
generating revenue during late 2001 and early 2002. Our
Biocontrol Technology division received a $1.5 million
manufacturing contract from the U.S. Army, and $238,000
manufacturing contract from a private company. We began work
on the U.S. Army contract, which we believe will generate $1.5
million in revenue during the first year, beginning in the 4th
quarter of 2001, with additional revenue for two additional
years; we filed a copy of that contract as an exhibit to our
Form 8-K/A filed October 15, 2001.

Other income increased from zero during the first nine months
of 2000 to $9,497 during the first nine months of 2001. The
increase was primarily due to rental income.

Research and Development expenses during the first nine months
increased to $5,142,507 in 2001 from $5,082,319 in 2000. The
increase was due to expenses incurred for the Diasensor
clinical trials partially offset by 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 $4.3 million for the first nine months of 2001
as compared to 2000. Approximately $3.4 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).
$1.3 million of the increase represents increased outside
professional fees, approximately $500,000 of which was
incurred in connection with ViaCirq's sales and marketing
efforts for the ThermoChem system. Approximately $500,000 of
the increase is due to increased travel expenses, primarily
for ViaCirq's and Petrol Rem's increased marketing efforts.
The above increases were partially offset by a decrease of
approximately $600,000 in expense recognized in connection
with the granting of warrants for services.

Amortization of goodwill increased from $279,681 to $579,671
for the first nine months of 2000 to 2001. The increase is
due to additional investments in unconsolidated subsidiaries
as of September 30, 2001 compared with September 30, 2000. A
portion of these investments is recognized as goodwill and
amortized over a five-year period. Our loss in unconsolidated
subsidiaries decreased to $221,407 for the first nine months
of 2001 compared to $493,925 for the same period in 2000.
This loss results because we absorb 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 $1,741,886 for the
first nine months of 2000 to 2001. The increase is due to
additional debentures and notes payable during the first nine
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 nine 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, August 14, 2001 for the event
dated August 10, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

A report on form 8-K filed August 16, 2001 for the event
dated August 14, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

A report on form 8-K filed September 9, 2001 for the
event dated August 31, 2001. The items listed were Item
5, Other Events, and Item 7(c), Exhibits.

A report on form 8-K filed September 12, 2001 for the
event dated September 10, 2001. The items listed were
Item 5, Other Events, and Item 7(c), Exhibits.

A report on form 8-K filed October 1, 2001 for the event
dated September 27, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

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

A report on form 8-K filed October 5, 2001 for the event
dated October 4, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

A report on form 8-K filed October 11, 2001 for the event
dated October 9, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

A report on form 8-K filed October 15, 2001 for the event
dated October 15, 2001. The items listed were Item 5,
Other Events, and Item 7(c), Exhibits.

A report on form 8-K/A filed October 15, 2001 for the
event dated October 15, 2001. The items listed were Item
5, Other Events, and Item 7(c), Exhibits.

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

A report on form 8-K filed November 9, 2001 for the event
dated November 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 15th day of November 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)