**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

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**FORM 10-Q**

 

**QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF**

**THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended June 30, 2002**

 

**Commission File No. 0-10552**

 

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**SCHERER HEALTHCARE, INC.**

(Exact name of registrantas specified in its Charter)

 

| **Delaware**                                                                     |   | **59-0688813**                        |
|----------------------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization)                 |   | (I.R.S. Employer  Identification No.) |
|                                                                             |   |                                  |
| **120 Interstate North Parkway, S.E.,  Suite 305, Atlanta, Georgia  30339** |
| (Address of principal  executive offices, including Zip Code)                    |
|                                                                             |
| **(770) 933-1800**                                                               |
| (Registrant’s telephone  number, including area code)                       |

 

Indicate by check mark whether the Registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

 

YES   ý                            NO   o

 

Indicate the number of shares of each of the issuer’s classes of CommonStock, as of the latest practicable date:

 

| **Class**                     |   | **Outstanding  as of August 2, 2002** |   |
|-------------------------------|--------|---------------------------------------|--------|
| Common Stock, $0.01 par value |   | 4,390,264                             |   |

 

 

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**SCHERER HEALTHCARE, INC.**

 

**Quarterly Report on Form 10-Q**

**For the Quarter Ended June 30, 2002**

 

**Table of Contents**

 
| **ItemNumber** |   | **PART I.  FINANCIAL INFORMATION**                                                             |
|----------------|--------|-----------------------------------------------------------------------------------------------------|
|           |   |                                                                                                |
| 1              |   | Financial Statements:                                                                               |
|           |   |                                                                                                |
|           |   | Condensed Consolidated  Balance Sheets as of June 30, 2002 and March 31, 2002                       |
|           |   |                                                                                                |
|           |   | Condensed  Consolidated Statements of Operations for the Three Months Ended June 30,  2002 and 2001 |
|           |   |                                                                                                |
|           |   | Condensed  Consolidated Statements of Cash Flows for the Three Months Ended June 30,  2002 and 2001 |
|           |   |                                                                                                |
|           |   | Notes  to Condensed Consolidated Financial Statements                                               |
|           |   |                                                                                                |
| 2              |   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations         |
|           |   |                                                                                                |
| 3              |   | Quantitative  and Qualitative Disclosures About Market Risk                                         |
|           |   |                                                                                                |
|           |   | **PART II.  OTHER INFORMATION**                                                                |
|           |   |                                                                                                |
| 6              |   | Exhibits and Reports  on Form 8-K                                                                   |
|           |   |                                                                                                |
|           |   | **SIGNATURES**                                                                                      |

 

2

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**PARTI.  FINANCIAL INFORMATION**

**Item 1****. Financial Statements**

 

**SCHERER HEALTHCARE, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(Unaudited)**

 

ASSETS

 
|                                                                                               |   | **June 30,  2002** |       | **March 31,  2002** |   |
|----------------------------------------------------------------------------------------------------|--------|--------------------|------------|---------------------|--------|
| CURRENT ASSETS                                                                                     |   |               |       |                |   |
| Cash  and cash equivalents                                                                         |   | $                  | 6,445,000  |                | $      | 5,561,000 |   |
| Accounts  receivable, less allowance for doubtful accounts of $319,000 and $319,000,  respectively |   | 4,309,000          |       | 4,320,000           |   |
| Interest  receivable                                                                               |   | 184,000            |       | 219,000             |   |
| Inventories                                                                                        |   | 434,000            |       | 416,000             |   |
| Income taxes  receivable                                                                           |   | 130,000            |       | 130,000             |   |
| Prepaid and  other assets                                                                          |   | 320,000            |       | 374,000             |   |
|                                                                                               |   |               |       |                |   |
| Total current  assets                                                                              |   | 11,822,000         |       | 11,020,000          |   |
|                                                                                               |   |               |       |                |   |
| PROPERTY AND  EQUIPMENT                                                                            |   | 10,512,000         |       | 10,010,000          |   |
| Less accumulated  depreciation                                                                     |   | (5,782,000         | )          | (5,466,000          | )      |
| Net property and  equipment                                                                        |   | 4,730,000          |       | 4,544,000           |   |
|                                                                                               |   |               |       |                |   |
| OTHER ASSETS                                                                                       |   |               |       |                |   |
| Intangible  assets, net                                                                            |   | 3,346,000          |       | 3,331,000           |   |
| Investments                                                                                        |   | 9,053,000          |       | 9,143,000           |   |
| Deferred income  taxes                                                                             |   | 590,000            |       | 590,000             |   |
| Net assets of  discontinued operations                                                             |   | 502,000            |       | 498,000             |   |
|                                                                                               |   |               |       |                |   |
| Total other  assets                                                                                |   | 13,491,000         |       | 13,562,000          |   |
|                                                                                               |   |               |       |                |   |
| TOTAL ASSETS                                                                                       |   | $                  | 30,043,000 |                | $      | 29,126,000 |   |

 

See notes to condensedconsolidated financial statements.

 

3

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LIABILITIES ANDSTOCKHOLDERS’ EQUITY

(Unaudited)

 
|                                                                                                                                                                                                                |   | **June 30,  2002** |       | **March 31,  2002** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|---------------------|--------|
| CURRENT  LIABILITIES                                                                                                                                                                                                |   |               |       |                |   |
| Accounts payable                                                                                                                                                                                                    |   | $                  | 1,264,000  |                | $      | 1,070,000 |   |
| Accrued expenses                                                                                                                                                                                                    |   | 876,000            |       | 1,011,000           |   |
| Unearned  revenues                                                                                                                                                                                                  |   | 507,000            |       | 492,000             |   |
| Current  maturities of long-term debt                                                                                                                                                                               |   | 273,000            |       | 292,000             |   |
| Income taxes  payable                                                                                                                                                                                               |   | 142,000            |       | —              |   |
|                                                                                                                                                                                                                |   |               |       |                |   |
| Total current  liabilities                                                                                                                                                                                          |   | 3,062,000          |       | 2,865,000           |   |
|                                                                                                                                                                                                                |   |               |       |                |   |
| LONG-TERM  DEBT, net of current maturities                                                                                                                                                                          |   | 609,000            |       | 673,000             |   |
|                                                                                                                                                                                                                |   |               |       |                |   |
| OTHER  LIABILITIES                                                                                                                                                                                                  |   | 81,000             |       | 56,000              |   |
|                                                                                                                                                                                                                |   |               |       |                |   |
| COMMITMENTS AND  CONTINGENCIES                                                                                                                                                                                      |   | —             |       | —              |   |
|                                                                                                                                                                                                                |   |               |       |                |   |
| STOCKHOLDERS’  EQUITY                                                                                                                                                                                          |   |               |       |                |   |
| Convertible  preferred stock - $.01 par value, 2,000,000 shares authorized; 17,666 shares  issued and outstanding at June 30, 2002 and 17,939 at March 31, 2002                                                     |   | —             |       | —              |   |
| Common stock -  $.01 par value, 12,000,000 shares authorized; 4,781,293 shares issued at June  30, 2002 (4,730,085 at March 31, 2002); 4,390,264 shares outstanding at June  30, 2002 (4,339,056 at March 31, 2002) |   | 48,000             |       | 47,000              |   |
| Capital in  excess of par value                                                                                                                                                                                     |   | 22,478,000         |       | 22,394,000          |   |
| Unrealized gain  (loss) on marketable securities                                                                                                                                                                    |   | 56,000             |       | (330,000            | )      |
| Retained  earnings                                                                                                                                                                                                  |   | 6,800,000          |       | 6,512,000           |   |
| Less treasury  stock, at cost                                                                                                                                                                                       |   | (3,091,000         | )          | (3,091,000          | )      |
|                                                                                                                                                                                                                |   |               |       |                |   |
| Total  stockholders’ equity                                                                                                                                                                                    |   | 26,291,000         |       | 25,532,000          |   |
|                                                                                                                                                                                                                |   |               |       |                |   |
| TOTAL  LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                    |   | $                  | 30,043,000 |                | $      | 29,126,000 |   |

 

See notes to condensedconsolidated financial statements.

 

4

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**SCHERER HEALTHCARE, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**(Unaudited)**

 
|                                                     |   | **Three months  ended   June 30,** |      |
|----------------------------------------------------------|--------|------------------------------------|-----------|
|                                                     |   | **2002**                           |      | **2001** |   |
|                                                     |   |                               |      |   |   |
| NET SALES                                                |   | $                                  | 5,403,000 |   | $ | 5,034,000 |   |
|                                                     |   |                               |      |   |   |
| COSTS AND  EXPENSES                                      |   |                               |      |   |   |
| Cost of goods  sold                                      |   | 3,473,000                          |      | 3,192,000 |   |
| Selling, general  and administrative                     |   | 1,380,000                          |      | 1,288,000 |   |
|                                                     |   |                               |      |   |   |
| Total costs and expenses                                 |   | 4,853,000                          |      | 4,480,000 |   |
|                                                     |   |                               |      |   |   |
| OPERATING INCOME                                         |   | 550,000                            |      | 554,000 |   |
|                                                     |   |                               |      |   |   |
| OTHER INCOME  (EXPENSE)                                  |   |                               |      |   |   |
| Interest income                                          |   | 114,000                            |      | 192,000 |   |
| Equity in net  (loss) income of unconsolidated companies |   | (12,000                            | )         | 39,000 |   |
| Other income  (expense), net                             |   | (203,000                           | )         | (3,000 | ) |
|                                                     |   |                               |      |   |   |
| Total other  (expense) income, net                       |   | (101,000                           | )         | 228,000 |   |
|                                                     |   |                               |      |   |   |
| INCOME BEFORE  INCOME TAXES                              |   | 449,000                            |      | 782,000 |   |
|                                                     |   |                               |      |   |   |
| PROVISION FOR  INCOME TAXES                              |   | 161,000                            |      | 282,000 |   |
|                                                     |   |                               |      |   |   |
| NET INCOME                                               |   | $                                  | 288,000   |   | $ | 500,000 |   |
|                                                     |   |                               |      |   |   |
|                                                     |   |                               |      |   |   |
| Basic net income  per common share                       |   | $                                  | 0.07      |   | $ | 0.12 |   |
|                                                     |   |                               |      |   |   |
| Diluted net  income per common share                     |   | $                                  | 0.06      |   | $ | 0.11 |   |
|                                                     |   |                               |      |   |   |
| Weighted average  common shares outstanding - basic      |   | 4,357,422                          |      | 4,322,615 |   |
|                                                     |   |                               |      |   |   |
| Weighted average  common shares outstanding - diluted    |   | 4,515,593                          |      | 4,524,813 |   |

 

See notes to condensedconsolidated financial statements.

 

5

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**SCHERER HEALTHCARE, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
|                                                                                      |   | **Three  months ended  June 30,** |      |
|-------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                                      |   | **2002**                          |      | **2001** |   |
|                                                                                      |   |                              |      |   |   |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                                    |   |                              |      |   |   |
| Net income                                                                                |   | $                                 | 288,000   |   | $ | 500,000 |   |
| Adjustments to  reconcile net (loss) income to net cash provided by operating activities: |   |                              |      |   |   |
| Depreciation and  amortization                                                            |   | 367,000                           |      | 331,000 |   |
| Deferred taxes                                                                            |   | —                            |      | 264,000 |   |
| Equity in net  (loss) income of unconsolidated companies                                  |   | 12,000                            |      | (39,000 | ) |
| Loss on sale of  marketable securities                                                    |   | 204,000                           |      | — |   |
| Other noncash  charges and credits, net                                                   |   | —                            |      | 14,000 |   |
| Changes in operating  assets and liabilities:                                             |   |                              |      |   |   |
| Accounts  receivable                                                                      |   | 11,000                            |      | 380,000 |   |
| Interest  receivable                                                                      |   | 35,000                            |      | 11,000 |   |
| Inventories                                                                               |   | (19,000                           | )         | 30,000 |   |
| Prepaid and  other current assets                                                         |   | 3,000                             |      | (54,000 | ) |
| Other assets                                                                              |   | —                            |      | (6,000 | ) |
| Income taxes,  net                                                                        |   | 142,000                           |      | (36,000 | ) |
| Accounts payable  and accrued expenses                                                    |   | 60,000                            |      | 137,000 |   |
| Unearned revenue                                                                          |   | 15,000                            |      | 10,000 |   |
| Other  liabilities                                                                        |   | 25,000                            |      | (13,000 | ) |
|                                                                                      |   |                              |      |   |   |
| Net cash  provided by operating activities                                                |   | 1,143,000                         |      | 1,529,000 |   |
| Net cash (used  for) provided by discontinued operations                                  |   | (4,000                            | )         | 6,000 |   |
|                                                                                      |   |                              |      |   |   |
| Net cash  provided by operating activities                                                |   | 1,139,000                         |      | 1,535,000 |   |
|                                                                                      |   |                              |      |   |   |
| CASH FLOWS FROM  INVESTING ACTIVITIES:                                                    |   |                              |      |   |   |
| Additions to  property and equipment, net                                                 |   | (504,000                          | )         | (228,000 | ) |
| Purchase of  long-term equity investments                                                 |   | —                            |      | (87,000 | ) |
| Purchase of  marketable securities                                                        |   | (8,279,000                        | )         | — |   |
| Sale of  marketable securities                                                            |   | 8,538,000                         |      | 1,000 |   |
| Change in permit  acquisition costs                                                       |   | (12,000                           | )         | (67,000 | ) |
|                                                                                      |   |                              |      |   |   |
| Net cash (used  for) investing activities                                                 |   | (257,000                          | )         | (381,000 | ) |
|                                                                                      |   |                              |      |   |   |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                                                    |   |                              |      |   |   |
| Net issuances  (repayment) of borrowings                                                  |   | (83,000                           | )         | 10,000 |   |
| Cash received  from exercise of options                                                   |   | 85,000                            |      | — |   |
|                                                                                      |   |                              |      |   |   |
| Net cash  provided by financing activities                                                |   | 2,000                             |      | 10,000 |   |
|                                                                                      |   |                              |      |   |   |
| CHANGE IN CASH  AND CASH EQUIVALENTS                                                      |   | 884,000                           |      | 1,164,000 |   |
|                                                                                      |   |                              |      |   |   |
| CASH AND CASH  EQUIVALENTS, beginning of period                                           |   | 5,561,000                         |      | 4,398,000 |   |
|                                                                                      |   |                              |      |   |   |
| CASH AND CASH  EQUIVALENTS, end of period                                                 |   | $                                 | 6,445,000 |   | $ | 5,562,000 |   |
|                                                                                      |   |                              |      |   |   |   |   |
| SUPPLEMENTAL  DISCLOSURES:                                                                |   |                              |      |   |   |   |   |
| Cash paid for  income taxes                                                               |   | $                                 | 11,640    |   | $ | 117,992 |   |

 

See notes to condensedconsolidated financial statements.

 

6

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**SCHERER HEALTHCARE, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 

**NOTE 1.**

 

**Basis of Presentation**

 

The accompanying unaudited condensed consolidated financial statementsof Scherer Healthcare, Inc. and its subsidiaries (the “Company”) include alladjustments (all of which are of normal, recurring nature) that, in the opinionof management, are necessary for a fair presentation of the results for theperiod indicated.  Quarterly results ofoperations are not necessarily indicative of annual results.  These statements should be read inconjunction with the consolidated financial statements and the notes theretoincluded in the Company’s Annual Report on Form 10-K for the fiscal year endedMarch 31, 2002.

 

**Revenue Recognition**

 

Revenue for services provided is recorded when the Company hascompleted the service.  Product revenueis recorded by the Company when products are received by customers orindependent distributors.  The Company’spayment terms for product sales are the same for all customers, i.e. 1%discount if paid in 10 days, net due in 30 days.  The Company does not offer price protection.  In accordance with Statements of FinancialAccounting Standards (“SFAS”) No. 48, “Revenue Recognition When Right of ReturnExists,” transactions with customers and distributors qualify as sales atdelivery.  The Company’s return andexchange policy is as follows:

 

•                  The Company willaccept for exchange or credit all merchandise returned in the original andunopened packages within one year after the expiration date;

•                  Merchandise willnot be accepted for exchange or credit if purchased at sacrifice, fire orbankruptcy sale, or sold on a non-returnable basis or if deteriorated fromcauses beyond the Company’s control;

•                  Merchandiseeligible for return may be exchanged for merchandise of equal value, for areturn of the purchase price, or for credit to be applied to future orders;

•                  Exchangemerchandise is required to be shipped prepaid by the customer; and

•                  The return ofmerchandise constitutes an authorization without recourse to the Company todestroy without payment any return items deemed unfit for resale.

 

**Investments**

 

The Company uses the equity method of accounting for companies andother investments in which the Company has significant influence.  Generally this represents common stockownership or convertible rights of at least 20%, and not greater than 50%, ofthe company in which the Company has the investment and, for investments inlimited liability companies, investments of at least 5% of ownershippercentages.

 

The Company performs analysis of the operations and financial positionof all investments on a quarterly basis subsequent to its initial investment,including a review of quarterly unaudited financial statements.  The Company considers any increase/decreasein the Company’s investments to be temporary unless other information relatedto sale or cessation exists.

 

**Goodwill and Intangible Assets**

 

The Financial Accounting Standards Board (“FASB”) recently issued SFASNo. 141 “Business Combination” and SFAS No. 142 “Goodwill and Other IntangibleAssets.”  SFAS No. 141 eliminates thepooling method of accounting for all business combinations initiated after June30, 2001.  SFAS No. 142 requires thatgoodwill no longer be amortized against earnings, but instead be reviewedperiodically for impairment, with any identified impairment treated as acumulative effect of change in accounting principle.  As of April 1, 2002, no goodwill impairment was identified.

 

The Company adopted SFAS No. 142, effective April 1, 2002, as a resultamortization of goodwill was discontinued. The following is a proforma presentation of reported net income andearnings per share, adjusted for the exclusion of goodwill amortization net ofrelated income tax effect:

 

7

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|                                   |   | **Proforma Results  for the three months ended June 30,** |    |
|----------------------------------------|--------|-----------------------------------------------------------|---------|
|                                   |   | **2002**                                                  |    | **2001** |   |
|                                   |   |                                                      |    |   |   |
| Reported net  income                   |   | $                                                         | 288,000 |   | $ | 500,000 |   |
| Goodwill  amortization (net of tax)    |   | —                                                    |    | 38,000 |   |
|                                   |   |                                                      |    |   |   |
| Adjusted  net income                   |   | $                                                         | 288,000 |   | $ | 462,000 |   |
|                                   |   |                                                      |    |   |   |
| Basic earnings  per share:             |   |                                                      |    |   |   |
| Reported  earnings per share - basic   |   | $                                                         | .07     |   | $ | .11 |   |
| Goodwill  amortization (net of tax)    |   | —                                                    |    | .01 |   |
|                                   |   |                                                      |    |   |   |
| Adjusted  basic earnings per share     |   | $                                                         | .07     |   | $ | .12 |   |
|                                   |   |                                                      |    |   |   |
| Diluted earnings  per share:           |   |                                                      |    |   |   |
| Reported  earnings per share - diluted |   | $                                                         | .06     |   | $ | .10 |   |
| Goodwill  amortization (net of tax)    |   | —                                                    |    | .01 |   |
|                                   |   |                                                      |    |   |   |
| Adjusted  diluted earnings per share   |   | $                                                         | .06     |   | $ | .11 |   |

 

Intangible assets as of June 30, 2002, and March 31, 2002, were asfollows:

 
|                     |   | **Gross  Assets** |      | **Accumulated    Amortization** |   | **Net Assets** |   |
|--------------------------|--------|-------------------|-----------|---------------------------------|--------|----------------|--------|
| Permit acquisition cost: |   |              |      |                            |   |           |   |
|                     |   |              |      |                            |   |           |   |
| June 30, 2002            |   | $                 | 1,781,000 |                            | $      | (449,000       | )      | $ | 1,332,000 |   |
|                     |   |              |      |                            |   |           |   |
| March 31, 2002           |   | $                 | 1,788,000 |                            | $      | (431,000       | )      | $ | 1,357,000 |   |

 

The net amount of goodwill at June 30, 2002, and March 31, 2002, was$2,067,000.  There were no intangibleassets reclassified to goodwill upon adoption of SFAS No. 142.

 

Amortization, expense related to goodwill and intangible assets was$48,000 and $76,000 for the three months ended June 30, 2002 and 2001,respectively.  Estimated aggregatefuture amortization expense for intangible assets remaining as of June 30,2002, are $190,000 for fiscal 2003 and $200,000 for fiscal 2004.

 

**Recent Accounting Pronouncements**

 

In August 2001, the Financial Accounting Standards Board issued SFASNo. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  SFAS No. 144 addresses the financialaccounting and reporting for the impairment or disposal of long-livedassets.  SFAS No. 144 supersedes SFASNo. 121 but retains the fundamental provisions of SFAS No. 121 for (i)recognition/measurement of impairment of long-lived assets to be held and used,and (ii) measurement of long-lived assets to be disposed of by sale.  SFAS No. 144 also supersedes the accountingand reporting provisions of Accounting Principles Board's (“APB”) No. 30 , “Reporting the Results of Operations – Reporting the Effectsof Disposal of a Segment of a Business and Extraordinary, Unusual andInfrequently Occurring Events and Transaction,” for segments of business to bedisposed of, but retains APB No. 30’s requirement to report discontinuedoperations separately from continuing operations and extends that reporting toa component of an entity that either has been disposed of or is classified asheld for sale.  SFAS No. 144 is effectivefor fiscal years beginning after December 15, 2001.  The company adopted the provisions of SFAS No. 144 effectiveApril 1, 2002.  The adoption of thisstandard did not have any impact on the Company’s financial statements.

 

In April 2002, the Financial Accounting Standards Board (“FASB”) issuedSFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment ofFASB Statement No. 13, and Technical Corrections,” which provides for therescission of several previously issued accounting standards, new accountingguidance for the accounting of certain lease modifications

 

8

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and various technical corrections that are not substantive in nature toexisting pronouncements.  The Companywill adopt SFAS No. 145 on April 1, 2003, except for the provisions relating tothe amendment of SFAS No. 13, which was adopted for transactions occurringsubsequent to May 15, 2002.  The Companyis currently assessing the impact of SFAS No. 145 on its financial position andresults of operations.

 

In July 2002, the FASB issued SFAS No. 146, “Accounting for CostsAssociated with Exit or Disposal Activities,” which requires companies torecognize costs associated with exit or disposal activities when they areincurred rather than at the date of a commitment to an exit or disposalplan.  SFAS No. 146 is to be appliedprospectively to exit or disposal activities initiated after December 31,2002.  The Company is currentlyassessing the impact of SFAS No. 146 on its financial position and results ofoperations.

 

**NOTE 2.**

The components of inventory at June 30, 2002 and March 31, 2002consisted of the following:

 
|                                      |   | **June 30,  2002** |    | **March 31,  2002** |   |
|-------------------------------------------|--------|--------------------|---------|---------------------|--------|
| Finished products                         |   | $                  | 29,000  |                | $      | 53,000 |   |
| Containers,  packaging, and raw materials |   | 405,000            |    | 363,000             |   |
| Total                                     |   | $                  | 434,000 |                | $      | 416,000 |   |

 

Inventories are stated at the lower of net realizable value or costusing the first-in, first-out (“FIFO”) method.

 

**NOTE 3.**

Debt and obligations under capital leases at June 30, 2002 and March31, 2002 consisted of the following:

 
|                                                                               |   | **June 30,  2002** |    | **March 31,  2002** |   |
|------------------------------------------------------------------------------------|--------|--------------------|---------|---------------------|--------|
| Obligations  under capital leases, due in varying installments through fiscal 2007 |   | $                  | 882,000 |                | $      | 965,000 |   |
| Less current  maturities                                                           |   | 273,000            |    | 292,000             |   |
|                                                                               |   |               |    |                |   |
| Long-term debt                                                                     |   | $                  | 609,000 |                | $      | 673,000 |   |

 

**NOTE 4.**

The Company has the following investments as of June 30, 2002 and March31, 2002:

 
|                                                        |   | **June 30,  2002** |      | **March 31,  2002** |   |
|-------------------------------------------------------------|--------|--------------------|-----------|---------------------|--------|
| Investments in  marketable securities, at market value      |   | $                  | 8,734,000 |                | $      | 8,811,000 |   |
|                                                        |   |               |      |                |   |   |   |
| Equity method  investments in unconsolidated companies, net |   | 291,000            |      | 303,000             |   |
|                                                        |   |               |      |                |   |
| Other  investments, at cost                                 |   | 28,000             |      | 29,000              |   |
|                                                        |   |               |      |                |   |
| Total                                                       |   | $                  | 9,053,000 |                | $      | 9,143,000 |   |

 

The Company’s investments, at market value, consist of investments inlong-term high-grade marketable securities composed primarily of government andcorporate fixed income bonds.  Thesemarketable securities are classified as available-for-sale and are beingcarried at fair market value based on quoted market prices.  The net unrealized holding gains (losses) onthese investments are reported as a separate caption under stockholder equityand was a gain of $56,000 for the three months ended June 30, 2002, and theaccumulated balance was a (loss) of ($330,000) as of March 31, 2001.

 

The amortized cost and fair market value of the Company’s marketablesecurities are as follows:

 

|             |   | **Amortized  Cost** |      | **Net  Unrealized  Loss** |   | **Fair  Market  Value** |   |
|------------------|--------|---------------------|-----------|---------------------------|--------|-------------------------|--------|
| June 30, 2002    |   |                |      |                      |   |                    |   |
| Municipal bonds  |   | $                   | 8,273,000 |                      | $      | 67,000                  |   | $ | 8,340,000 |   |
| Corporate  bonds |   | 405,000             |      | (11,000                   | )      | 394,000                 |   |
|             |   |                |      |                      |   |                    |   |
| Total            |   | $                   | 8,678,000 |                      | $      | 56,000                  |   | $ | 8,734,000 |   |
|             |   |                |      |                      |   |                    |   |
| March 31, 2002   |   |                |      |                      |   |                    |   |
| Municipal bonds  |   | $                   | 6,408,000 |                      | $      | (243,000                | )      | $ | 6,165,000 |   |
| Corporate  bonds |   | 2,733,000           |      | (87,000                   | )      | 2,646,000               |   |
|             |   |                |      |                      |   |                    |   |
| Total            |   | $                   | 9,141,000 |                      | $      | (330,000                | )      | $ | 8,811,000 |   |

 

9

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The net unrealized losses of the Company’s marketable securities atJune 30, 2002, and March 30, 2002, are detailed as follows:

 

|             |   | **Gross   Unrealized   Gains** |   | **Gross   Unrealized  (Loss)** |   | **Net   Unrealized   Gains   (Losses)** |   |
|------------------|--------|--------------------------------|--------|--------------------------------|--------|-----------------------------------------|--------|
| June 30, 2002    |   |                           |   |                           |   |                                    |   |
| Municipal bonds  |   | $                              | 67,000 |                           | $      | —                                  |   | $ | 67,000 |   |
| Corporate  bonds |   | 2,000                          |   | (13,000                        | )      | (11,000                                 | )      |
|             |   |                           |   |                           |   |                                    |   |
| Total            |   | $                              | 69,000 |                           | $      | (13,000                                 | )      | $ | 56,000 |   |
|             |   |                           |   |                           |   |                                    |   |
| March 31, 2002   |   |                           |   |                           |   |                                    |   |
| Municipal bonds  |   | $                              | 24,000 |                           | $      | (267,000                                | )      | $ | (243,000 | ) |
| Corporate  bonds |   | 3,000                          |   | (90,000                        | )      | (87,000                                 | )      |
|             |   |                           |   |                           |   |                                    |   |
| Total            |   | $                              | 22,000 |                           | $      | (357,000                                | )      | $ | (330,000 | ) |

 

The amortized cost and estimated fair value of the securities at June30, 2002, by contractual maturity, are shown below:

 

|                                   |   | **Amortized   Cost** |      | **Fair  Market   Value** |   |
|----------------------------------------|--------|----------------------|-----------|--------------------------|--------|
| Due in one year  or less               |   | $                    | —    |                     | $      | — |   |
| Due  after one year through five years |   | 8,677,000            |      | 8,734,000                |   |
|                                   |   |                 |      |                     |   |
| Total                                  |   | $                    | 8,677,000 |                     | $      | 8,734,000 |   |

 

The Company had one investment in an unconsolidated company, MedicareFacts,LLC, recorded on the equity method of accounting, of $291,000 and $303,000 asof June 30, 2002 and March 31, 2002, respectively.  The Company’s equity in the net (loss) of the unconsolidatedcompany was $(12,000) for the first quarter of fiscal year 2003.

 

The equity method of accounting is used for investments in companies inwhich the Company has significant influence. This represents common stock ownership or convertible rights of at least5% for investments in limited liability companies.  MedicareFacts, LLC designs and develops reimbursement guideswhich provide a single source for all coding and coverage information needed tofile accurate Medicare claims, thus ensuring optimal reimbursement andcompliance with government regulations. These products are used principally by hospitals and clinicallaboratories.  The Company’s investmentis in the form of a two-year 10% series B unsecured convertible note in theaggregate principal amount of $400,000 that matures in October 2002, and whichconverts, at the Company’s option, into 17% of the outstanding common stock ofMedicareFacts, LLC as of June 30, 2002.

 

**Note 5.**

**ComprehensiveIncome**

 

The Company follows SFAS No. 130, “Reporting ComprehensiveIncome.”  This statement establishesstandards for reporting and display of comprehensive income and its componentsin a full set of general purpose financial statements.  The Company has chosen to disclosecomprehensive income, which consists of net income and unrealized gains(losses) on marketable securities, in the consolidated statements ofstockholders’ equity.  During thequarter ended June 30, 2002, the Company reclassed $204,000 from unrealizedloss to realized loss in the Statements of Operations.

 

10

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**Note 6.**

**SegmentReporting**

 

**NetSales and Operating Income (Loss).**

The following table sets forth, for the periods indicated, the netsales and operating income (loss) for each segment of the business of theCompany and its subsidiaries:

 
|                                  |   | **Three  months ended June 30,** |      |
|---------------------------------------|--------|----------------------------------|-----------|
|                                  |   | **2002**                         |      | **2001** |   |
| NET SALES:                            |   |                             |      |   |   |
| Waste Management  Services Segment    |   | $                                | 4,926,000 |   | $ | 4,571,000 |   |
| Consumer  Healthcare Products Segment |   | 477,000                          |      | 463,000 |   |
| Company Totals                        |   | $                                | 5,403,000 |   | $ | 5,034,000 |   |
|                                  |   |                             |      |   |   |
| OPERATING INCOME  (LOSS):             |   |                             |      |   |   |
| Waste Management  Services Segment    |   | $                                | 498,000   |   | $ | 598,000 |   |
| Consumer  Healthcare Products Segment |   | 234,000                          |      | 178,000 |   |
| Corporate                             |   | (182,000                         | )         | (222,000 | ) |
| Company Totals                        |   | $                                | 550,000   |   | $ | 554,000 |   |

 

**Note 7.**

During the three months ended June 30, 2002, an officer of the Companyexercised options for 50,000 shares at the approximate purchase price of$85,000.

 

**Item 2****.  Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

 

The following discussion contains, in addition to historicalinformation, “forward-looking statements” within the meaning of Section 27A ofthe Securities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended, which represent the Company’s expectations orbeliefs.  When used in this report, thewords “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,”“expect,” “intend,” “plan” and similar expressions are intended to identifyforward-looking statements.  Thesestatements by their nature involve substantial risks and uncertainties, certainof which are beyond the Company’s control. The Company cautions that various factors, including the factorsdescribed in the Company’s filings with the Securities and Exchange Commission,as well as general economic conditions, changes in applicable laws andregulations, industry trends, a dependence upon and/or loss of key employees,vendors or customers, the loss of strategic product shipping relationships,customer demand, product availability, competition (including pricing andavailability), concentrations of credit risks, distribution efficiencies,capacity constraints and technological difficulties could cause actual resultsor outcomes to differ materially from those expressed in any forward-lookingstatements of the Company.  Reference ismade to this report as well as the Company’s most recent Annual Report on Form10-K and other reports filed with the Securities and Exchange Commission forother factors that could affect the forward-looking statements.  Any forward-looking statement speaks only asof the date of this report and the Company undertakes no obligation to updateany forward-looking statement or statements to reflect events or circumstancesafter the date on which such statements is made or to reflect the occurrence ofan unanticipated event.  New factorsemerge from time to time, and it is not possible for the Company to predict allof such factors.  Further, the Companycannot assess the impact of each such factor on its business or the extent to whichany factor, or combination of factors, may cause actual results to differmaterially from those contained in any forward-looking statements.

 

**Application of Critical AccountingPolicies**

 

The methods, estimates and judgments the Company uses in applying itsmost critical accounting policies have been a significant impact on the resultsthe Company reports in its financial statements.  The Security and Exchange Commission has defined criticalaccounting policies as policies that involve critical accounting estimates thatrequire (i) management to make assumptions that are highly uncertain at thetime the estimate is made, and (ii) different estimates that could have beenreasonably used for the current period, or changes in the estimates that arereasonably likely to occur from period to period,

 

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which would have a material impact on the presentation of the Company’sfinancial condition, changes in financial condition or in results ofoperations.  Based on this definition,the Company’s most critical policies include: revenue recognition; accountingfor investments, which impacts write-offs of investments; allowances fordoubtful accounts, which impact cost of sales and gross margin; and theassessment of recoverability of goodwill and other intangible assets, whichimpacts write-offs of goodwill and intangibles.  These policies are discussed further below, as well as theestimates and management’s judgments involved. The Company also has other key accounting policies, such as policies forrevenue recognition, including unbilled accounts receivable and deferredrevenue, as well as policies governing the estimate of the useful life of itsproperty and equipment. The Company believes these other key policies either donot generally require it to make estimates and judgments that are as difficultor subjective, or it is less likely that they would have a material impact onthe Company’s reported results of operation for a given period.

 

Revenue for services provided is recorded when the Company hascompleted the service.  Product revenueis recorded by the Company when products are received by customers orindependent distributors.  The Company’spayment terms for product sales are the same for all customers, i.e. 1%discount if paid in 10 days, net due in 30 days.  The Company does not offer price protection.  In accordance with SFAS No. 48, “RevenueRecognition When Right of Return Exists,” transactions with customers anddistributors qualify as sales at delivery. The Company’s return and exchange policy is as follows:

 

•                  The Company willaccept for exchange or credit all merchandise returned in the original andunopened packages within one year after the expiration date;

•                  Merchandise willnot be accepted for exchange or credit if purchased at sacrifice, fire orbankruptcy sale, or sold on a non-returnable basis or if deteriorated fromcauses beyond the Company’s control;

•                  Merchandiseeligible for return may be exchanged for merchandise of equal value, for areturn of the purchase price, or for credit to be applied to future orders;

•                  Exchangemerchandise is required to be shipped prepaid by the customer; and

•                  The return ofmerchandise constitutes an authorization without recourse to the Company todestroy without payment any return items deemed unfit for resale.

 

The Company uses the equity method of accounting for companies andother investments in which the Company has significant influence.  Generally this represents common stockownership or convertible rights of at least 20%, and not greater than 50%, ofthe company in which the Company has the investment and, for investments inlimited liability companies, investments of at least 5% of ownershippercentages.

 

The Companyperforms analysis of the operations and financial position of all investmentson a quarterly basis subsequent to its initial investment, including a reviewof quarterly unaudited financial statements. The Company considers any increase/decrease in the Company’s investmentsto be temporary unless other information related to sale or cessation exists.

 

The Company maintains allowances for doubtful accounts for estimatedlosses resulting from the failure of its customers to make requiredpayments.  The Company bases itsestimates on the aging of its accounts receivable balances and its historicalwrite-off experience, net of recoveries. If the financial condition of the Company’s customers were todeteriorate, additional allowances may be required.  The Company believes the accounting estimate related to theallowance for doubtful accounts is a “critical accounting estimate” becausechanges in it can significantly affect net income and treatment of theallowance requires the Company to anticipate the economic viability of itscustomers and requires a degree of judgment.

 

The Company has adopted Financial Accounting Standards No. 141 and 142on accounting for business combinations and goodwill on April 1, 2002.  Accordingly, the Company will no longeramortize goodwill, but will continue to amortize other acquisition relatedcosts.  The Company expects amortizationof permit acquisition costs to be approximately $190,000 in fiscal 2003, downfrom $261,000 of amortized goodwill and permit acquisition costs in fiscal2002.  The Company assesses theimpairment of long-lived assets whenever events or changes in circumstancesindicate these carrying values may not be recoverable.

 

In conjunction with the implementation of the new accounting rules forgoodwill, the Company has completed the initial goodwill impairment testrequired by SFAS No. 142.  To accomplishthis, the Company identified its reporting units and determined the carryingvalue of each reporting unit by assigning the assets and liabilities, includingexisting goodwill and intangible assets, to those reporting units as of thedate of adoption and determined the fair value of each reporting unit andcompared it to the reporting unit’s carrying amount.  The Company considers itself to have two reporting units.  To the extent the reporting unit’s carryingamount exceeds its fair value, an indication exists that the reporting unit’sgoodwill may be impaired and the Company must perform the second step of theimpairment test.  In the second step,the Company must compare the implied fair value of the reporting unitsgoodwill, determined by allocating the reporting unit’s fair value to all ofits assets and liabilities in a manner similar to a purchase price allocationin accordance with SFAS No. 141, to its carrying amount, both of which would bemeasured as of the date of adoption.

 

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The Company performed the initial goodwill impairment test required bySFAS No. 142 during the first quarter of fiscal 2003.  The Company considers itself to have two reporting units.  As of April 1, 2002, based on the Company’scomparison of the fair value of the reporting units to its carrying valueinclusive of goodwill, there was no impairment of goodwill recorded upon implementationof SFAS No. 142.  The Company willcontinue to test for impairment on an annual basis, coinciding with its fiscalyear end, or on an interim basis if circumstances change that would more likelythan not reduce the fair value of the its reporting unit below its carryingamount.

 

The Company adopted Financial Accounting Standards No. 144 onaccounting for the impairment or disposal of long-lived assets effective April1, 2002.  The adoption of this standarddid not have an impact on the Company’s financial statements.

 

**Resultsof Operations**

 

**NetSales and Operating Income (Loss).**

The following table sets forth, for the periods indicated, the netsales and operating income (loss) for each segment of the business of theCompany and its subsidiaries:

 
|                                  |   | **Three  months ended June 30,** |      |
|---------------------------------------|--------|----------------------------------|-----------|
|                                  |   | **2002**                         |      | **2001** |   |
| NET SALES:                            |   |                             |      |   |   |
| Waste Management  Services Segment    |   | $                                | 4,926,000 |   | $ | 4,571,000 |   |
| Consumer  Healthcare Products Segment |   | 477,000                          |      | 463,000 |   |
| Company Totals                        |   | $                                | 5,403,000 |   | $ | 5,034,000 |   |
|                                  |   |                             |      |   |   |
| OPERATING INCOME  (LOSS):             |   |                             |      |   |   |
| Waste Management  Services Segment    |   | $                                | 498,000   |   | $ | 598,000 |   |
| Consumer  Healthcare Products Segment |   | 234,000                          |      | 178,000 |   |
| Corporate                             |   | (182,000                         | )         | (222,000 | ) |
| Company Totals                        |   | $                                | 550,000   |   | $ | 554,000 |   |

 

The Company’s net sales increased 7% to $5,403,000 for the firstquarter of fiscal 2003 from $5,034,000 for the first quarter of fiscal2002.  The Company’s operating incomedecreased 1% to $550,000 for the first quarter of fiscal 2003 from $554,000during the same period in fiscal 200. The Company’s cost of goods sold increased to 64% of net sales for thequarter ended June 30, 2002 from 63% of net sales for the quarter ended June30, 2001.  Selling, general, andadministrative expenses for the first quarter of fiscal 2003 and for the first quarterof fiscal 2002 remained unchanged at 26% of net sales.

 

The Company’s cost of goods sold of the Waste Management ServicesSegment is made up of direct labor and related costs and benefits to collectand process waste, vehicle and equipment maintenance, repair and depreciation,waste disposal costs and interest on capital leases used to finance vehicleacquisitions.  The cost of goods soldfor the Consumer Healthcare Products Segment is made up of the cost ofmaterials for products distributed and the related shipping expenses.  Selling, general and administrative expensesin both of the Company’s business segments is made up of:

 

•                  management,administrative and office compensation, related costs and benefits;

•                  utilities,insurance, property depreciation, bad debt, professional fees, rent,amortization, advertising promotion, travel and miscellaneous other expenses.

 

The results of operations of the Company are dependent upon the resultsof operations of each of its subsidiaries operating in the Company’s individualbusiness segments.  Set forth below is adiscussion of the results of operations of each of these segments.

 

***Waste Management Services Segment***

 

Net sales in the Company’s Waste Management Services Segment, whichoperates through Bio Systems Partners, Bio Waste Systems, Inc., and MedicalWaste Systems, Inc. (collectively, “Bio Systems”), increased 8% to $4,926,000for the first

 

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quarter of fiscal 2003 from $4,571,000 for the first quarter of fiscal2002.  As in the past few years, thesales growth is primarily due to securing new hospital contracts for BioSystems’ core business of providing “sharps” (including sharp-edged medicalwaste such as scalpels, syringes, and needles) disposal services which utilizecost effective reusable containers.

 

Bio Systems’ operating income decreased 17% to $498,000 for the quarterended June 30, 2002 from $598,000 for the quarter ended June 30, 2001.  Bio Systems’ cost of goods sold increased to68% of net sales for the first quarter of fiscal 2003 from 66% of net sales forthe first quarter of fiscal 2002. Selling, general, and administrative expenses increased to 22% of netsales for the quarter ended June 30, 2002 from 21% of net sales during the sameperiod in fiscal 2002 and accounted for the decrease in operating income forthe first quarter of fiscal 2003.

 

In the first quarter of fiscal 2003, Bio Systems began charging anadditional $40,000 per month to expense in addition to all medical claims paidand negotiated claim settlements due to recent increases in claims paid forself insured medical insurance.  Thisresulted in the first quarter of fiscal 2003 expensing $180,000 while the firstquarter of fiscal 2002 expensed $74,000.

 

Preparing new accounts for service requires, among other things,installation of Bio Systems’ reusable containers and sometimes considerableoperational follow-up which causes increases in certain costs and expenses suchas operating payroll and expense for the hardware related to the installationof the reusable containers.  AlthoughBio Systems continues to increase revenue through new hospital contracts,pricing pressures combined with certain contract restrictions have hampered BioSystems’ ability to effectively absorb these costs and expenses as compared toprior periods.  Additionally, BioSystems’ costs and expenses for waste disposal have increased slightly due tothe outsourcing of the disposal of the laboratory, surgical fluid waste, andred bag waste.  Disposal costs increasesamounted to $87,000 more for the first quarter of fiscal year 2003 than waspaid for the first quarter of fiscal 2002. Disposal costs were $549,000 and $462,000 for the first quarter offiscal 2003 and 2002 respectively.  Thereusable containers that Bio Systems uses to collect the laboratory andsurgical fluid waste are larger than the sharps collection containers and thewaste disposal machinery at Bio Systems’ processing facility is not currentlyequipped to process these larger containers. In future periods, Bio Systems intends to process these largercontainers at its processing facility by retrofitting its waste disposal systemat a cost that is not expected to be material to Bio Systems’ results ofoperations.

 

***Consumer Healthcare Products Segment***

 

Net sales for the Consumer Healthcare Products Segment, which operatesthrough Scherer Laboratories, Inc. (“Scherer Labs”), increased 3% to $477,000for the first quarter of fiscal 2003 from $463,000 during the same period infiscal 2002.  As in recent years, thisincrease is primarily due to new customers and increased volume to existingcustomers.

 

Scherer Labs’ operating income increased 30% to $234,000 for the firstquarter of fiscal 2003 from $178,000 for the first quarter of fiscal 2002.  The gross profit generated from increasedsales, increased operating income, and selling, general and administrativeexpenses did not materially change for the first quarter of fiscal 2003 fromfiscal 2002.  The increase of grossprofit was primarily attributed to packaging products in only one location.

 

***Corporate***

 

The Company’s operating expenses in the Corporate Segment decreased to$182,000 for the quarter ended June 30, 2002 from $222,000 for the quarterended June 30, 2001.  Certainadministrative, accounting, management oversight and payroll services areperformed by the Company’s Corporate segment. The Corporate operating expenses include the salaries and wages of thepersonnel who perform these functions (including the Company’s executiveofficers) rent expense, and professional accounting and legal fees.  The decrease in the Corporate operatingexpenses is primarily due to the decrease in accounting and consulting feesincurred during the first quarter of fiscal 2003.

 

**OtherIncome.**

The Company’s interest income decreased to $114,000 for the firstquarter of fiscal 2003 from $192,000 for the first quarter of fiscal 2002.  During the first quarter of fiscal 2003, theCompany recorded $(12,000) of equity in the net (loss) of Medicare Facts, LLCand accrued interest of $10,000 on its convertible debt of the unconsolidatedcompany.  And during the quarter, theCompany booked a net (loss) of $(204,000) from the sale of the investments inits marketable portfolio that had maturities beyond five years.  The majority of the proceeds were reinvestedin tax exempt bonds maturing in less than five years.

 

**Provision for Income Taxes**

During the first quarter of fiscal 2003, the Company’s taxable incomeused the remaining net operating loss carryforward balance that existed as ofMarch 31, 2002.  The provision forincome taxes decreased $121,000 for the first quarter of fiscal 2003 from$282,000 for the first quarter of fiscal 2002.

 

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**Liquidityand Capital Resources**

 

The Company’s cash and cash equivalents totaled $6,445,000 at June 30,2002, an increase of $884,000 from March 31, 2002.  The Company’s working capital increased to $8,760,000 at June 30,2002 from $8,155,000 at March 31, 2002. The increase was primarily for reasons described below.

 

**Cash Flowsfrom Operating Activities.**

The Company’s cash provided by operating activities from operationstotaled $1,139,000 for the first quarter of fiscal 2003, as compared to$1,535,000 for the first quarter of fiscal 2002.  The decrease is primarily due to the loss incurred from changingthe investments in the marketable securities portfolio and the projected taxliability now that the Company has used all of its net operating loss carryforwards.

 

**CashFlows from Investing and Financing Activities.**

The Company’s investing activities used cash of $257,000 during thequarter ended June 30, 2002, as compared to using $381,000 during the quarterended June 30, 2001.  In the firstquarter of 2003, the Company increased property and equipment by $504,000,which was offset by the net cash flow from marketable securities transactionsdescribed above.

 

The Waste Management Service Segment decreased the Company’s cash fromfinancing activities by $83,000 for the first quarter of fiscal 2003 comparedwith a $10,000 increase during the first quarter of fiscal 2002 for netborrowings in excess of repayments.

 

Management of the Company believes that its current cash on hand andits current cash flow is sufficient to maintain its current operations.  The Company continues to evaluate itslong-term options with regard to the use of its remaining cash on handincluding possible investment and acquisition opportunities.

 

**Item 3.  Quantitative Disclosures About Market Risk**

 

The Company has estimated the fair value of its financial instrumentsas of June 30, 2002, and March 31, 2002, using available market information orother appropriate valuation methodologies. Considerable judgment, however, isrequired in interpreting market data to develop the estimates of fair value.  Accordingly, the estimates presented hereinare not necessarily indicative of the amounts that the Company would realize ina current market exchange.

 

**PART II.  OTHER INFORMATION**

 

Item 6.                    **Exhibitsand Reports on Form 8-K**

 

(a)  Exhibits

 

99.1                           CertificationPursuant to 18 U.S.C. Section 1350 by Robert P. Scherer, Jr., Chief ExecutiveOfficer of the Registrant

 

99.2                           CertificationPursuant to 18 U.S.C. Section 1350 by Donald P. Zima, Chief Financial Officerof the Registrant

 

 

(b)  Reports onForm 8-K.

 

None.

 

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**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 theundersigned thereunto duly authorized.

 
|   |            | SCHERER HEALTHCARE, INC.                        |
|--------|-----------------|-------------------------------------------------|
|   |            | (Registrant)                                    |
|   |            |                                            |
| Date:  | August 14, 2002 |                                            | /s/ Robert P. Scherer, Jr. |   |
|   |            | Robert P. Scherer, Jr.                          |
|   |            | Chairman, Chief Executive Officer and President |
|   |            |                                            |
| Date:  | August 14, 2002 |                                            | /s/ Donald P. Zima |   |
|   |            | Donald P. Zima                                  |
|   |            | Vice President and Chief Financial Officer      |

 

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