SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

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

For the quarterly period ended June 30, 2001

Commission File No. 0-10552

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SCHERER HEALTHCARE, INC.(Exact name of registrant as specified in its Charter)

|Delaware(State or other jurisdiction
of incorporation or organization) |  | 59-0688813(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 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 / /

Indicate
the number of shares of each of the issuer's classes of Common Stock, as of the latest practicable date:

Class

Outstanding as of August 2, 2001Common Stock, $0.01 par value

4,323,130


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SCHERER HEALTHCARE, INC.

Quarterly Report on Form 10-Q  For the Quarter Ended June 30, 2001

Table of Contents

|Item
Number                |  | PART I. FINANCIAL INFORMATION                                                                     |  | Page
Number
|-------------------------- |  | ------------------------------------------------------------------------------------------------- |  | -----------
|1                          |  | Financial Statements:                                                                             |  |            
|                           |  | Condensed Consolidated Balance Sheets as of June 30, 2001 and March 31, 2001                      |  | 3          
|                           |  | Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2001 and 2000 |  | 5          
|                           |  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2001 and 2000 |  | 6          
|                           |  | Notes to Condensed Consolidated Financial Statements                                              |  | 7          
|2                          |  | Management's Discussion and Analysis of Financial Condition and Results of Operations             |  | 9          
|PART II. OTHER INFORMATION
|6                          |  | Exhibits and Reports on Form 8-K                                                                  |  | 13         
|                           |  | SIGNATURES                                                                                        |  | 14         

2

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

SCHERER HEALTHCARE, INC.  CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

|                       |                                                                                                  | June 30, 2001        |            | March 31, 2001 |           
|---------------------- | ------------------------------------------------------------------------------------------------ | -------------------- | ---------- | -------------- | ----------
|
|CURRENT ASSETS         |                                                                                                  |                      |            |                |           
|                       | Cash and cash equivalents                                                                        |                      | $          | 5,562,000      |           
|                       | Accounts receivable, less allowance for doubtful accounts of $333,000 and $319,000, respectively |                      |            | 4,353,000      |           
|                       | Interest receivable                                                                              |                      |            | 232,000        |           
|                       | Inventories                                                                                      |                      |            | 303,000        |           
|                       | Prepaid and other                                                                                |                      |            | 286,000        |           
|                       |                                                                                                  |                      |            |                |           
|                       |                                                                                                  | Total current assets |            |                | 10,736,000
|                       |                                                                                                  |                      |            |                |           
|PROPERTY AND EQUIPMENT |                                                                                                  |                      | 9,515,000  |                |           
|                       | Less accumulated depreciation                                                                    |                      |            | (5,007,000     | )         
|                       |                                                                                                  |                      |            |                |           
|                       | Net property and equipment                                                                       |                      |            | 4,508,000      |           
|                       |                                                                                                  |                      |            |                |           
|OTHER ASSETS           |                                                                                                  |                      |            |                |           
|                       | Intangible assets, net                                                                           |                      |            | 3,559,000      |           
|                       | Investments                                                                                      |                      |            | 11,357,000     |           
|                       | Deferred income taxes                                                                            |                      |            | 497,000        |           
|                       | Other                                                                                            |                      |            | 457,000        |           
|                       | Net assets of discontinued operations                                                            |                      |            | 475,000        |           
|                       |                                                                                                  |                      |            |                |           
|                       |                                                                                                  | Total other assets   |            |                | 16,345,000
|                       |                                                                                                  |                      |            |                |           
|TOTAL ASSETS           |                                                                                                  | $                    | 31,589,000 |                | $         
|                       |                                                                                                  |                      |            |                |           

See
notes to condensed consolidated financial statements.

3

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SCHERER HEALTHCARE, INC.  CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

|                                           |                                                                                                                                                                                                                | June 30, 2001              |            | March 31, 2001 |           
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ---------- | -------------- | ----------
|
|CURRENT LIABILITIES                        |                                                                                                                                                                                                                |                            |            |                |           
|                                           | Accounts payable                                                                                                                                                                                               |                            | $          | 1,210,000      |           
|                                           | Accrued expenses                                                                                                                                                                                               |                            |            | 1,005,000      |           
|                                           | Unearned revenues                                                                                                                                                                                              |                            |            | 488,000        |           
|                                           | Current maturities of long-term debt                                                                                                                                                                           |                            |            | 271,000        |           
|                                           | Income taxes payable                                                                                                                                                                                           |                            |            | [cad228]       |           
|                                           |                                                                                                                                                                                                                |                            |            |                |           
|                                           |                                                                                                                                                                                                                | Total current liabilities  |            |                | 2,974,000 
|                                           |                                                                                                                                                                                                                |                            |            |                |           
|LONG-TERM DEBT, net of current maturities  |                                                                                                                                                                                                                |                            | 555,000    |                |           
|OTHER LIABILITIES                          |                                                                                                                                                                                                                |                            | 87,000     |                |           
|COMMITMENTS AND CONTINGENCIES              |                                                                                                                                                                                                                |                            |           |                |           
|STOCKHOLDERS' EQUITY                       |                                                                                                                                                                                                                |                            |            |                |           
|                                           | Convertible preferred stock$.01 par value, 2,000,000 shares authorized; 21,535 shares issued and outstanding at June 30, 2001 and 21,704 at March 31, 2001                                                    |                            |            |               |           
|                                           | Common stock$.01 par value, 12,000,000 shares authorized; 4,714,159 shares issued at June 30, 2001 (4,713,411 at March 31, 2001); 4,323,130 shares outstanding at June 30, 2001 (4,322,382 at
March 31, 2001) |                            |            | 47,000         |           
|                                           | Capital in excess of par value                                                                                                                                                                                 |                            |            | 22,067,000     |           
|                                           | Retained earnings                                                                                                                                                                                              |                            |            | 8,950,000      |           
|                                           | Less treasury stock, at cost                                                                                                                                                                                   |                            |            | (3,091,000     | )         
|                                           |                                                                                                                                                                                                                |                            |            |                |           
|                                           |                                                                                                                                                                                                                | Total stockholders' equity |            |                | 27,973,000
|                                           |                                                                                                                                                                                                                |                            |            |                |           
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |                                                                                                                                                                                                                | $                          | 31,589,000 |                | $         
|                                           |                                                                                                                                                                                                                |                            |            |                |           

See
notes to condensed consolidated financial statements.

4

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SCHERER HEALTHCARE, INC.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)

|                                                   |                                                  | Three months ended
June 30, |          
|-------------------------------------------------- | ------------------------------------------------ | --------------------------- | ---------
|
|NET SALES                                          |                                                  | $                           | 5,034,000
|                                                   |                                                  |                             |          
|COSTS AND EXPENSES                                 |                                                  |                             |          
|                                                   | Cost of goods sold                               |                             |          
|                                                   | Selling, general and administrative              |                             |          
|                                                   |                                                  |                             |          
|                                                   |                                                  | Total costs and expenses    |          
|                                                   |                                                  |                             |          
|OPERATING INCOME                                   |                                                  |                             | 554,000  
|OTHER INCOME (EXPENSE)                             |                                                  |                             |          
|                                                   | Interest income                                  |                             |          
|                                                   | Equity in net income of unconsolidated companies |                             |          
|                                                   | Other income (expense), net                      |                             |          
|                                                   |                                                  |                             |          
|                                                   |                                                  | Total other income, net     |          
|                                                   |                                                  |                             |          
|INCOME BEFORE INCOME TAXES                         |                                                  |                             | 782,000  
|PROVISION FOR INCOME TAXES                         |                                                  |                             | 282,000  
|                                                   |                                                  |                             |          
|NET INCOME                                         |                                                  | $                           | 500,000  
|                                                   |                                                  |                             |          
|Basic net income per common share                  |                                                  | $                           | 0.12     
|                                                   |                                                  |                             |          
|Diluted net income per common share                |                                                  | $                           | 0.11     
|                                                   |                                                  |                             |          
|Weighted average common shares outstandingbasic   |                                                  |                             | 4,322,615
|                                                   |                                                  |                             |          
|Weighted average common shares outstandingdiluted |                                                  |                             | 4,524,813
|                                                   |                                                  |                             |          

See
notes to condensed consolidated financial statements.

5

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SCHERER HEALTHCARE, INC.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)

|                                               |                                                                                   | Three months ended
June 30,                      |          
|---------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------ | ---------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:          |                                                                                   |                                                  |          
|                                               | Net income                                                                        |                                                  | $        
|                                               | Adjustments to reconcile net income to net cash provided by operating activities: |                                                  |          
|                                               |                                                                                   | Depreciation and amortization                    |          
|                                               |                                                                                   | Deferred taxes                                   |          
|                                               |                                                                                   | Equity in net income of unconsolidated companies |          
|                                               |                                                                                   | Other noncash charges and credits, net           |          
|                                               | Changes in operating assets and liabilities:                                      |                                                  |          
|                                               |                                                                                   | Accounts receivable                              |          
|                                               |                                                                                   | Interest receivable                              |          
|                                               |                                                                                   | Inventories                                      |          
|                                               |                                                                                   | Prepaid and other                                |          
|                                               |                                                                                   | Other assets                                     |          
|                                               |                                                                                   | Income taxes, net                                |          
|                                               |                                                                                   | Accounts payable and accrued expenses            |          
|                                               |                                                                                   | Unearned revenue                                 |          
|                                               |                                                                                   | Net assets of discontinued operations            |          
|                                               |                                                                                   | Other liabilities                                |          
|                                               |                                                                                   |                                                  |          
|                                               | Net cash provided by operating activities                                         |                                                  |          
|                                               |                                                                                   |                                                  |          
|CASH FLOWS FROM INVESTING ACTIVITIES:          |                                                                                   |                                                  |          
|                                               | Additions to property and equipment                                               |                                                  |          
|                                               | Purchase of long-term equity investments                                          |                                                  |          
|                                               | Sale of marketable securities                                                     |                                                  |          
|                                               | Decrease in notes receivable                                                      |                                                  |          
|                                               | Loan from officer                                                                 |                                                  |          
|                                               | Payout of options to former officer                                               |                                                  |          
|                                               | Change in permit acquisition cost                                                 |                                                  |          
|                                               |                                                                                   |                                                  |          
|                                               | Net cash (used for) provided by investing activities                              |                                                  |          
|                                               |                                                                                   |                                                  |          
|CASH FLOWS FROM FINANCING ACTIVITIES           |                                                                                   |                                                  |          
|                                               | Net proceeds from borrowings                                                      |                                                  |          
|                                               |                                                                                   |                                                  |          
|CHANGE IN CASH AND CASH EQUIVALENTS            |                                                                                   |                                                  | 1,164,000
|CASH AND CASH EQUIVALENTS, beginning of period |                                                                                   |                                                  | 4,398,000
|                                               |                                                                                   |                                                  |          
|CASH AND CASH EQUIVALENTS, end of period       |                                                                                   | $                                                | 5,562,000
|                                               |                                                                                   |                                                  |          

See
notes to condensed consolidated financial statements.

6

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SCHERER HEALTHCARE, INC.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.

The
accompanying unaudited condensed consolidated financial statements of Scherer Healthcare, Inc. and its subsidiaries (the "Company") include all adjustments that, in the opinion of
management, are necessary for a fair presentation of the results for the period indicated. Quarterly results of operations are not necessarily indicative of annual results. These statements should be
read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2001.

NOTE 2.

The
components of inventory at June 30, 2001 and March 31, 2001 consisted of the following:

June 30, 2001

March 31, 2001Finished products

$
40,000

$
65,000Containers, packaging, and raw materials


263,000


268,000Total

$
303,000

$
333,000


Inventories
are stated at the lower of net realizable value or cost using the First-in, first-out ("FIFO") method.

NOTE 3.

Debt
and obligations under capital leases at June 30, 2001 and March 31, 2001 consisted of the following:

June 30, 2001

March 31, 2001Obligations under capital leases, due in varying installments through fiscal 2006

$
826,000

$
816,000Less current maturities


(271,000
)

(265,000
)Long-term debt

$
555,000

$
551,000


NOTE 4.

The
Company has the following investments as of June 30, 2001 and March 31, 2001:

June 30, 2001

March 31, 2001Investments in marketable securities, at fair value

$
7,794,000

$
7,843,000Equity method investments in unconsolidated companies, net


3,293,000


3,167,000Other investments, at cost


270,000


270,000Total

$
11,357,000

$
11,280,000


The
Company's investments, at market value, consist of investments in long-term high-grade marketable securities composed primarily of government and corporate fixed income
bonds. These marketable securities are classified as available-for-sale and are being carried at fair market value based on quoted market prices. The net unrealized holding
gains (losses) on these investments are reported under capital in excess of par value as other comprehensive income (loss) and were ($48,000) for the three months ended June 30, 2001, and the
accumulated balance was ($327,000) as of June 30, 2001.

7

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The amortized cost and fair market value of the Company's marketable securities are as follows:

Amortized
Cost

Net
Unrealized
Loss

Fair
Market
ValueJune 30, 2001Municipal bonds

$
6,609,000

$
(211,000
)
$
6,398,000Corporate bonds


1,214,000


(82,000
)

1,132,000Preferred stocks


298,000


(34,000
)

264,000Total

$
8,121,000

$
(327,000
)
$
7,794,000March 31, 2001Municipal bonds

$
6,608,000

$
(148,000
)
$
6,460,000Corporate bonds


1,215,000


(107,000
)

1,108,000Preferred stocks


299,000


(24,000
)

275,000Total

$
8,122,000

$
(279,000
)
$
7,843,000


The
net unrealized losses of the Company's marketable securities at June 30, 2001, and March 30, 2001, are detailed as follows:

June 30, 2001

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Net
Unrealized
LossesMunicipal bonds

$
20,000

$
(231,000
)
$
(211,000
)Corporate bonds


1,000


(83,000
)

(82,000
)Preferred stocks





(34,000
)

(34,000
)Total

$
21,000

$
(348,000
)
$
(327,000
)


March 30, 2001

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Net
Unrealized
LossesMunicipal bonds

$
21,000

$
(169,000
)
$
(148,000
)Corporate bonds


1,000


(108,000
)

(107,000
)Preferred stocks





(24,000
)

(24,000
)Total

$
22,000

$
(301,000
)
$
(279,000
)


The
amortized cost and estimated fair value of the securities (excluding the preferred stocks) at June 30, 2001, by contractual maturity, are shown below:

Amortized
Cost

Fair Market
ValueDue in one year or less

$


$
Due after one year through five years


454,000


466,000Due after five years through ten years


211,000


208,000Due after ten years


7,158,000


6,856,000Total

$
7,823,000

$
7,530,000


The
Company had investments in unconsolidated companies, recorded on the equity method of accounting, of $3,293,000 and $3,167,000 as of June 30, 2001 and March 31, 2001, respectively.
The Company's equity in net income of unconsolidated companies was $39,000 for the first quarter of fiscal year 2002.

8

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The equity method of accounting is used for companies and other investments in which the Company has significant influence. Generally this represents common stock ownership or convertible rights of at
least 20% and not greater than 50%, and for investments in limited liability companies of at least 5% of ownership percentages. The Company has equity method investments in Compliance1, Inc.,
MedicareFacts, LLC, and Econometrics, Inc.

Compliance1, Inc.
manages the Health and Safety Information Service, a joint venture with the U.S. Department of Commerce, which facilitates agri-chemical and crop protection
product compliance in cooperation with the U.S. Environmental Protection Agency and state departments of agriculture. Its internet-based solution consolidates the official
up-to-date information needed by online market places to comply with federal, state, and local regulations. The Company's investment is in the form of three-year
10% secured convertible debentures in the aggregate principal amount of $1,165,000, which mature on various dates during 2003, and which converts, at the Company's option, into 34.2% of the
outstanding common stock of Compliance1, Inc. as of June 30, 2001.

MedicareFacts,
LLC designs and develops reimbursement guides which provide a single source for all coding and coverage information needed to file accurate Medicare claims, thus ensuring optimal
reimbursement and compliance with government regulations. These products are used principally by hospitals and clinical laboratories. The Company's investment is in the form of a two-year
10% series B unsecured convertible note in the aggregate principal amount of $400,000 that matures in October 2002, and which converts, at the Company's option, into 20% of the
outstanding common stock of MedicareFacts, LLC as of June 30, 2001.

Econometrics, Inc.
is a database marketing company that manages its own national consumer database of 180 million consumers and links marketers to its national database through the
Internet. The Company's investment is in the form of a five-year 8% unsecured convertible debenture in the aggregate principal amount of $2,000,000 that matures in October 2004, a
three-year 10% unsecured convertible debenture for $100,000, plus warrants to purchase common stock, that matures in June 2003, and two 18% unsecured promissory notes for the
amounts of $50,000 and $87,000 that mature in December 2001. As of June 30 2001, the $2,100,000 in debentures converts into 24.5% of the outstanding common stock of
Econometrics, Inc.

The
Company has an investment in Renaissance Pharmaceuticals, Inc. which is recorded at historical cost under the cost method. Renaissance Pharmaceuticals, Inc. is a development stage
drug delivery company. The Company has a direct investment of $650,000 in Renaissance Pharmaceuticals, Inc. for 2.5% of the outstanding common stock as of June 30, 2001. During the
quarter ending December 31, 2000, the Company recorded an impairment charge of $380,000 against its investment in Renaissance Pharmaceuticals, Inc. due to a revised valuation by the
management of Renaissance Pharmaceuticals, Inc. in connection with Renaissance Pharmaceuticals, Inc.'s $5.2 million convertible preferred stock offering.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains, in addition to historical information, "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs. When used in this report, the
words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements. These statements
by their nature involve substantial risks and uncertainties, certain of which are beyond the Company's control. The Company cautions that various factors, including the factors described in the
Company's filings with the Securities and Exchange Commission, as well as general economic conditions, changes in applicable laws and regulations, industry trends, a dependence upon and/or loss of key
employees, vendors or customers, the loss of

9

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strategic product shipping relationships, customer demand, product availability, competition (including pricing and availability), concentrations of credit risks, distribution efficiencies, capacity
constraints and technological difficulties could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements of the Company. Reference is made to this
report as well as the Company's most recent Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission for other factors that could affect the
forward-looking statements. Any forward-looking statement speaks only as of the date of this report and the Company undertakes no obligation to update any forward-looking statement or statements to
reflect events or circumstances after the date on which such statements is made or to reflect the occurrence of an unanticipated event. New factors emerge from time to time, and it is not possible for
the Company to predict all of such factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking statements.

Results of Operations

Net Sales and Operating Income (Loss).

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

Three months ended June 30,2001

2000NET SALES:Waste Management Services Segment

$
4,571,000

$
4,204,000Consumer Healthcare Products Segment


463,000


422,000Company Totals

$
5,034,000

$
4,626,000OPERATING INCOME (LOSS):Waste Management Services Segment

$
598,000

$
585,000Consumer Healthcare Products Segment


178,000


167,000Corporate


(222,000
)

(186,000
)Company Totals

$
554,000

$
566,000


The
Company's net sales increased 9% to $5,034,000 for the first quarter of fiscal 2002 from $4,626,000 for the first quarter of fiscal 2001. The Company's operating income decreased 2% to $554,000
for the first quarter of fiscal 2002 from $566,000 during the same period in fiscal 2001. The Company's cost of goods sold increased to 63% of net sales for the quarter ended June 30, 2001 from
60% of net sales for the quarter ended June 30, 2000. Selling, general, and administrative expenses decreased to 26% of net sales for the first quarter of fiscal 2002 from 28% for the first
quarter of fiscal 2001. The primary reasons for these changes are discussed below.

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



10

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The
results of operations of the Company are dependent upon the results of operations of each of its subsidiaries operating in the Company's individual business segments. Set forth below is a
discussion of the results of operations of each of these segments.

Waste Management Services Segment

Net
sales in the Company's Waste Management Services Segment, which operates through Bio Systems Partners, Bio Waste Systems, Inc., and Medical Waste Systems, Inc. (collectively, "Bio
Systems"), increased to $4,571,000 for the first quarter of fiscal 2002 from $4,204,000 for the first quarter of fiscal 2001. As in the past few years, the sales growth is primarily due to securing
new hospital contracts for Bio Systems' core business of providing "sharps" (including sharp-edged medical waste such as scalpels, syringes, and needles) disposal services which utilize cost effective
reusable containers.

Bio
Systems' operating income increased 2% to $598,000 for the quarter ended June 30, 2001 from $585,000 for the quarter ended June 30, 2000. Bio Systems' cost of goods sold increased to
66% of net sales for the first quarter of fiscal 2002 from 62% of net sales for the first quarter of fiscal 2001. Selling, general, and administrative expenses decreased to 21% of net sales for the
quarter ended June 30, 2001 from 24% of net sales during the same period in fiscal 2001.

Preparing
new accounts for service requires, among other things, installation of Bio Systems' reusable containers and sometimes considerable operational follow-up which causes increases in
certain costs and expenses such as operating payroll and expense for the hardware related to the installation of the reusable containers. The average cost of hardware per new installation is $6,000
and the average payroll cost for a new installation is $2,000. Although Bio Systems continues to increase revenue through new hospital contracts, the pricing pressures discussed above combined with
certain contract restrictions have hampered Bio Systems' ability to effectively absorb these costs and expenses as compared to prior periods.

Additionally,
Bio Systems' costs and expenses for waste disposal have increased slightly due to the outsourcing of the disposal of the laboratory and surgical fluid waste discussed above. Disposal
costs increases amounted to $164,000 more for the first quarter of fiscal year 2002 than was paid for the first quarter of fiscal 2001. Disposal costs were $462,000 and $298,000 for fiscal 2002 and
2001 respectively. The reusable containers that Bio Systems uses to collect the laboratory and surgical fluid waste are larger than the sharps collection containers and the waste disposal machinery at
Bio Systems' processing facility is not currently equipped to process these larger containers. In future periods, Bio Systems intends to process these larger containers at its processing facility by
retrofitting its waste disposal system at a cost that is not expected to be material to Bio Systems' results of operations. The cost to upgrade the Company's processing facility to handle the large
containers is estimated to be $500,000.

Consumer Healthcare Products Segment

Net
sales for the Consumer Healthcare Products Segment, which operates through Scherer Laboratories, Inc. ("Scherer Labs"), increased 10% to $463,000 for the first quarter of fiscal 2002 from
$422,000 during the same period in fiscal 2001. As in recent years, this increase is primarily due to new customers and increased volume of existing customers.

Scherer
Labs' operating income increased 7% to $178,000 for the first quarter of fiscal 2002 from $167,000 for the first quarter of fiscal 2001. The gross profit generated from increased sales,
increased operation income, and selling, general and administrative expenses did not materially change for the first quarter of fiscal 2002 from fiscal 2001.

11

---

Corporate

The
Company's operating expenses in the Corporate Segment increased to $222,000 for the quarter ended June 30, 2001 from $186,000 for the quarter ended June 30, 2000. Certain
administrative, accounting, management oversight and payroll services are performed by the Company's Corporate office. The Corporate operating expenses include the salaries and wages of the personnel
who perform these functions (including the Company's executive officers) rent expense, and professional accounting and legal fees. The increase in the Corporate operating expenses is primarily due to
the increase in accounting and consulting fees incurred during the first quarter of fiscal 2002.

Other Income.

The
Company's interest income decreased to $192,000 for the first quarter of fiscal 2002 from $241,000 for the first quarter of fiscal 2001. The decrease is a result of the Company not accruing
interest earned on one of its equity investments. During the first quarter of fiscal 2002, the Company recorded $39,000 of equity in net income of unconsolidated companies.

Provision for Income Taxes

During
fiscal 2001, the Company determined that it would, more likely than not, realize the benefit of its deferred tax assets and so it removed the remaining valuation allowance against the net
amount of such assets. Therefore, the Company will recognize tax provision during fiscal year 2002 to the extent of its taxable income. During the first quarter of fiscal 2002, the Company's taxable
income used the remaining net operating loss carryforward balance that existed as of March 31, 2001. The provision for income taxes increased $253,000 to $282,000 for the first quarter of
fiscal 2002 from $29,000 for the first quarter of fiscal 2001.

Liquidity and Capital Resources

The
Company's cash and cash equivalents totaled $5,562,000 at June 30, 2001, an increase of $1,164,000 from March 31, 2001. Since March 31, 2001, the Company made an additional
investment of $87,000 in Econometrics, Inc.. The Company's working capital increased to $7,762,000 at June 30, 2001 from $7,096,000 at March 31, 2001. The increase was primarily
for reasons described below.

Cash Flows from Operating Activities.

The
Company's cash provided by operating activities from operations totaled $1,535,000 for the first quarter of fiscal 2002, as compared to $1,067,000 for the first quarter of fiscal 2001. The
increase is primarily due to increased sales, reduction of accounts receivable and increased accounts payable and accrued expenses at June 30, 2001.

Cash Flows from Investing and Financing Activities.

The
Company's investing activities used cash of $381,000 during the quarter ended June 30, 2001, as compared to providing $879,000 during the quarter ended June 30, 2000. In the first
quarter of 2002, the Company increased its investment in equity investments by $87,000 and increased property and equipment by $228,000. See Note 4 of the accompanying Notes to Condensed
Consolidated Financial Statements included elsewhere herein.

New
capital lease obligations associated with the Waste Management Service Segment decreased the Company's cash from financing activities to $10,000 for the first quarter of fiscal 2002 compared with
$49,000 during the first quarter of fiscal 2001.

Management
of the Company believes that its current cash on hand and its current cash flow is sufficient to maintain its current operations. The Company continues to evaluate its long-term
options

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with regard to the use of its remaining cash on hand including possible investment and acquisition opportunities.

Effects of Accounting Standards

In
June 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 141, "Business Combinations," which established new accounting and reporting standards for business
combinations and supersedes Accounting Principles Board (APB) Opinion No. 16. All business combinations initiated after June 30, 2001, must now be accounted for using the purchase method
of accounting.

Also
in June 2001, the FASB issued Statement No. 142, "Goodwill and Other Intangible Assets," which establishes new accounting and reporting standards for acquired goodwill and other
intangible assets and supersedes APB Opinion No. 17. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business
combination) should be accounted for upon acquisition and on an ongoing basis. Goodwill and intangible assets that have indefinite useful lives will not be amortized but rather will be tested at least
annually for impairment. Intangible assets that have finite useful lives will continue to be amortized over their useful lives, which are no longer limited to 40 years. The provisions of
Statement No. 142 must be adopted on April 1, 2002, by the Company. The Company recorded amortization expense related to goodwill of $27,000 for the three months ended June 30,
2001, and is expected to record $107,000 of goodwill amortization expense for the year ending March 31, 2002. The Company has not yet quantified the impact of adopting Statement No. 142
on its consolidated financial statements; however, the impact is not expected to be material upon adoption on April 1, 2002.

PART II. OTHER INFORMATION

Item
6.Exhibits and Reports on Form 8-K





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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 the undersigned
thereunto duly authorized.

|      |  | SCHERER HEALTHCARE, INC.
(Registrant)                                                          
|----- |  | -----------------------------------------------------------------------------------------------
|Date: |  | /s/ROBERT P. SCHERER, JR.Robert P. Scherer, Jr.
Chairman, Chief Executive Officer and President
|Date: |  | /s/DONALD P. ZIMADonald P. Zima
Vice President and Chief Financial Officer                     

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