---

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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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

For the quarterly period ended August 31, 2001

or

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to
.

Commission File Number: 0-12395

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ALCIDE CORPORATION

DelawareState or other jurisdiction of incorporation or organization

22-2445061(I.R.S. Employer Identification No.)


8561 154th Avenue North East, Redmond WA(Address of principal executive offices)

98052(Zip Code)


Registrant's
telephone number, including area code(425) 882-2555

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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 outstanding of each of the issuer's classes of common stock, as of August 31, 2001: 2,638,354, net of Treasury Stock.

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ALCIDE CORPORATION    INDEX

|          |  |                                                                                                                          |  | PAGE
|--------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ----
|PART I.   |  | FINANCIAL INFORMATION                                                                                                    |  |     
|Item 1.   |  | Financial Statements                                                                                                     |  |     
|          |  | Consolidated Condensed Balance SheetsAugust 31, 2001 (Unaudited) and May 31, 2001                                       |  | 3   
|          |  | Unaudited Consolidated Condensed Statements of OperationsFor the three months ended August 31, 2001 and August 31, 2000 |  | 4   
|          |  | Unaudited Consolidated Condensed Statements of Changes in Shareholders' Equity                                           |  | 5   
|          |  | Unaudited Consolidated Condensed Statements of Cash FlowsFor the three months ended August 31, 2001 and August 31, 2000 |  | 6   
|          |  | Notes to Unaudited Consolidated Condensed Financial Statements                                                           |  | 7   
|Item 2.   |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                    |  | 11  
|Item 3.   |  | Legal Proceedings                                                                                                        |  | 13  
|PART II.  |  | OTHER INFORMATION                                                                                                        |  |     
|Item 6.   |  | Exhibits and Reports on Form 8-K                                                                                         |  | 14  
|SIGNATURE |  | 15                                                                                                                      

2

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ALCIDE CORPORATION        CONSOLIDATED CONDENSED BALANCE SHEETS

|                                           |                                                                                                                                                                                 | August 31, 2001                                  |                                           | May 31, 2001                                    |           
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------- | ----------------------------------------------- | ----------
|
|Assets:                                    |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           | Current assets:                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           |                                                                                                                                                                                 | Cash and cash equivalents                        |                                           | $                                               | 312,827   
|                                           |                                                                                                                                                                                 | Short term investments                           |                                           |                                                 | 1,506,407 
|                                           |                                                                                                                                                                                 | Accounts receivabletrade                        |                                           |                                                 | 3,172,387 
|                                           |                                                                                                                                                                                 | Inventory                                        |                                           |                                                 | 1,919,886 
|                                           |                                                                                                                                                                                 | Deferred and prepaid income taxes                |                                           |                                                 | 913,205   
|                                           |                                                                                                                                                                                 | Spare parts                                      |                                           |                                                 | 507,371   
|                                           |                                                                                                                                                                                 | Prepaid expenses and other current assets        |                                           |                                                 | 337,098   
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           |                                                                                                                                                                                 |                                                  |                                           | Total current assets                            |           
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           | Equipment and leasehold improvements:                                                                                                                                           |                                                  |                                           |                                                 |           
|                                           |                                                                                                                                                                                 | SANOVA plant assets                              |                                           |                                                 | 12,155,199
|                                           |                                                                                                                                                                                 | Construction in progress                         |                                           |                                                 | 2,091,676 
|                                           |                                                                                                                                                                                 | Office equipment                                 |                                           |                                                 | 486,796   
|                                           |                                                                                                                                                                                 | Laboratory, manufacturing equipment and vehicles |                                           |                                                 | 376,219   
|                                           |                                                                                                                                                                                 | Leasehold improvements                           |                                           |                                                 | 73,483    
|                                           |                                                                                                                                                                                 | Less:                                            |                                           |                                                 |           
|                                           |                                                                                                                                                                                 |                                                  | Accumulated depreciation and amortization |                                                 |           
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           |                                                                                                                                                                                 |                                                  |                                           | Total equipment and leasehold improvements, net |           
|                                           | Deferred income tax asset                                                                                                                                                       |                                                  |                                           |                                                |           
|                                           | Goodwill and other intangibles, net                                                                                                                                             |                                                  |                                           | 478,807                                         |           
|                                           | Long term investments and other assets                                                                                                                                          |                                                  |                                           | 70,497                                          |           
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|Total Assets                               |                                                                                                                                                                                 | $                                                | 20,411,039                                |                                                 | $         
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|Liabilities and Shareholders' Equity:      |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           | Current liabilities:                                                                                                                                                            |                                                  |                                           |                                                 |           
|                                           |                                                                                                                                                                                 | Accounts payable                                 |                                           | $                                               | 632,403   
|                                           |                                                                                                                                                                                 | Accrued expenses                                 |                                           |                                                 | 1,037,713 
|                                           |                                                                                                                                                                                 | Line of credit payable                           |                                           |                                                 | 2,000,000 
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           |                                                                                                                                                                                 |                                                  |                                           | Total current liabilities                       |           
|                                           | Deferred tax liability                                                                                                                                                          |                                                  |                                           | 119,695                                         |           
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|Total Liabilities                          |                                                                                                                                                                                 |                                                  | 3,789,811                                 |                                                 |           
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           | Commitments and Contingencies                                                                                                                                                   |                                                  |                                           |                                                 |           
|                                           | Redeemable Class "B" Preferred Stocknoncumulative convertible $.01 par value: authorized 10,000,000 shares; issued and outstanding: May 31, 200172,525 August 31, 200172,525 |                                                  |                                           | 190,377                                         |           
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|Shareholders' equity:                      |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           | Class "A" Preferred Stockno par value, authorized 1,000 shares; issued and outstanding: May 31, 2001138 August 31, 2001138                                                   |                                                  |                                           | 18,636                                          |           
|                                           | Common Stock$.01 par value; authorized 100,000,000 shares; issued and outstanding: May 31, 20013,007,819 August 31, 20013,019,313                                            |                                                  |                                           | 30,193                                          |           
|                                           | Common treasury stock at cost                                                                                                                                                   |                                                  |                                           | (7,283,165                                      | )         
|                                           | Additional paid-in capital                                                                                                                                                      |                                                  |                                           | 21,221,914                                      |           
|                                           | Retained earnings                                                                                                                                                               |                                                  |                                           | 2,443,273                                       |           
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|                                           |                                                                                                                                                                                 |                                                  |                                           | Total shareholders' equity                      |           
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           
|Total Liabilities and Shareholders' Equity |                                                                                                                                                                                 | $                                                | 20,411,039                                |                                                 | $         
|                                           |                                                                                                                                                                                 |                                                  |                                           |                                                 |           

See notes to Unaudited Consolidated Condensed Financial Statements.

3

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ALCIDE CORPORATION        UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

|                                                            |                                         | For the
Three Months Ended
August 31,
|----------------------------------------------------------- | --------------------------------------- | -------------------------------------
|
|NET SALES                                                   |                                         | $                                    
|Expenditures                                                |                                         |                                      
|                                                            | Cost of goods sold                      |                                      
|                                                            | Research and development expense        |                                      
|                                                            | Consulting expense to related parties   |                                      
|                                                            | Selling, general/administrative expense |                                      
|                                                            |                                         |                                      
|                                                            |                                         | Total Expenditures                   
|                                                            |                                         |                                      
|Operating income                                            |                                         |                                      
|Interest income, net                                        |                                         |                                      
|Other income                                                |                                         |                                      
|                                                            |                                         |                                      
|Income before provision for income taxes                    |                                         |                                      
|Provision for income taxes                                  |                                         |                                      
|                                                            |                                         |                                      
|Net income                                                  |                                         | $                                    
|                                                            |                                         |                                      
|Basic earnings per common share                             |                                         | $                                    
|                                                            |                                         |                                      
|Diluted earnings per common share and equivalents           |                                         | $                                    
|                                                            |                                         |                                      
|Weighted average common shares outstanding                  |                                         |                                      
|                                                            |                                         |                                      
|Weighted average common shares and common share equivalents |                                         |                                      
|                                                            |                                         |                                      

See
notes to Unaudited Consolidated Condensed Financial Statements.

4

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ALCIDE CORPORATION        UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

|                                           |  | Class "A" Preferred Stock |  | Common Stock |        |  |           | Common Treasury Stock |   |        |  |  
|------------------------------------------ |  | ------------------------- |  | ------------ | ------ |  | --------- | --------------------- | - | ------ |  | -
|
|
|Balance May 31, 2001                       |  | 138                       |  | $            | 18,636 |  | 3,007,819 |                       | $ | 30,078 |  | $
|Exercise of stock options                  |  |                           |  |              |        |  | 11,494    |                       |   | 115    |  |  
|Tax benefit from exercise of stock options |  |                           |  |              |        |  |           |                       |   |        |  |  
|Net Income                                 |  |                           |  |              |        |  |           |                       |   |        |  |  
|                                           |  |                           |  |              |        |  |           |                       |   |        |  |  
|Balance August 31, 2001                    |  | 138                       |  | $            | 18,636 |  | 3,019,313 |                       | $ | 30,193 |  | $
|                                           |  |                           |  |              |        |  |           |                       |   |        |  |  

See notes to Unaudited Consolidated Condensed Financial Statements.

5

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ALCIDE CORPORATION        UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

|                                                   |                                                                                   | For the Three Months
Ended August 31,      |                                          
|-------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------ | -----------------------------------------
|
|Cash Flows from Operating Activities:              |                                                                                   |                                            |                                          
|Net income                                         |                                                                                   | $                                          | 321,101                                  
|                                                   | Adjustments to reconcile net income to net cash provided by operating activities: |                                            |                                          
|                                                   |                                                                                   | Depreciation                               |                                          
|                                                   |                                                                                   | Amortization of investment premiums        |                                          
|                                                   |                                                                                   | Stock bonus to officers                    |                                          
|                                                   |                                                                                   | Tax benefit from exercise of stock options |                                          
|                                                   |                                                                                   | Deferred income taxes                      |                                          
|                                                   |                                                                                   | Decrease (increase) in assets:             |                                          
|                                                   |                                                                                   |                                            | Accounts receivabletrade                
|                                                   |                                                                                   |                                            | Inventory                                
|                                                   |                                                                                   |                                            | Prepaid expenses and other current assets
|                                                   |                                                                                   |                                            | Long term investments and other assets   
|                                                   |                                                                                   | Increase (decrease) in liabilities:        |                                          
|                                                   |                                                                                   |                                            | Accounts payable                         
|                                                   |                                                                                   |                                            | Accrued expenses                         
|                                                   |                                                                                   |                                            |                                          
|                                                   | Net cash provided by operating activities                                         |                                            |                                          
|                                                   |                                                                                   |                                            |                                          
|Cash Flows from Investing Activities:              |                                                                                   |                                            |                                          
|                                                   |                                                                                   | Acquisition of equipment                   |                                          
|                                                   |                                                                                   |                                            |                                          
|Cash Flows from Financing Activities:              |                                                                                   |                                            |                                          
|                                                   |                                                                                   | Borrowing on line of credit                |                                          
|                                                   |                                                                                   | Exercise of stock options                  |                                          
|                                                   |                                                                                   |                                            |                                          
|                                                   | Net cash provided by financing activities                                         |                                            |                                          
|                                                   |                                                                                   |                                            |                                          
|                                                   | Net decrease in cash and cash equivalents                                         |                                            |                                          
|                                                   | Cash and cash equivalents at beginning of period                                  |                                            |                                          
|                                                   |                                                                                   |                                            |                                          
|                                                   | Cash and cash equivalents at end of period                                        |                                            | $                                        
|                                                   |                                                                                   |                                            |                                          
|Supplemental Disclosures of Cash Flow Information: |                                                                                   |                                            |                                          
|                                                   | Cash paid during the period for interest                                          |                                            | $                                        

See
notes to Unaudited Consolidated Condensed Financial Statements.

6

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ALCIDE CORPORATION        NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.  Basis of Presentation

In the opinion of management, the accompanying unaudited financial statements of Alcide Corporation (the "Company") for the three month periods ended
August 31, 2001 and 2000 have been prepared in accordance with the instructions to Form 10-Q. Certain information and disclosures normally included in notes to financial
statements have been condensed or omitted according to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the
information presented not misleading. The accompanying unaudited consolidated condensed financial statements should be read in conjunction with the financial statements contained in the Company's
Annual Report on Form 10-K for the year ended May 31, 2001. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments
(consisting of only normal recurring accruals) considered necessary for a fair presentation. Certain reclassifications have been made to prior year financial statements to conform to current year
presentation. The results of operations for the three month periods are not necessarily indicative of the results to be expected for the full year.

2.  Accounts ReceivableTrade consisted of the following:

August 31, 2001

May 31, 2001IBA, Inc.

$
156,793

$
242,081Other Domestic Distributors


121,517


244,924International Distributors


1,250,939


851,896SANOVA Customers


1,574,345


1,195,578Other Receivables


68,793


93,331Total Accounts Receivable

$
3,172,387

$
2,627,810


3.  Inventory consisted of the following:

August 31, 2001

May 31, 2001Raw materials

$
464,009

$
416,236Finished products


632,261


910,245SANOVA inventory at customer sites


823,616


707,867Total

$
1,919,886

$
2,034,348


On
February 1, 2001 the Company purchased the assets of Universal Marketing Services, Inc. (UMS). The assets acquired included inventory sold to UMS by the Company in
prior periods. The inventory purchased was recorded at its fair market value of $1,154,467, which amount was subsequently adjusted to $1,100,493 per physical audit. At the end of August, 2001, $98,598
of this inventory remained in "finished products".

4.  Goodwill and Other Intangibles

In July, 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141 "Business Combinations" and SFAS No. 142 "Goodwill and Other
Intangible Assets". SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting and broadens the criteria for
recording intangible assets separate from goodwill. Recorded goodwill and intangibles will be evaluated against this new criteria and may result in certain intangibles

7

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being subsumed into goodwill or, alternatively, amounts initially recorded as goodwill may be separately identified and recognized apart from goodwill. SFAS No. 142 requires the use of a
nonamortization approach to account for purchased goodwill and certain intangibles. Under a nonamortization approach, goodwill and certain intangibles will not be amortized into results of operations,
but instead will be reviewed for impairment and written down and charged to results of operations only in the periods in which the recorded value of goodwill and certain intangibles is more than its
fair value. The provisions of each statement which apply to goodwill and intangible assets acquired prior to June 30, 2001 have been "early-adopted" by the Company on June 1, 2001. The
result of this "early-adoption" is that a portion of the existing goodwill and other intangibles have been allocated to a covenant-not-to-compete and to customer
relationships. The goodwill and customer relationships, both of which have indefinite lives, will be reviewed periodically for impairment.

5.  Line of Credit Payable

In August, 2001 the Company renewed its $10,000,000 unrestricted line of credit with US Bank. The new expiration date is August 31, 2003.

Two
advances of $1,000,000 each have been taken on the line of credit, one in February, 2001 and another in June, 2001. Currently both advances are due in September, 2002. The
interest rates are approximately 4.3% for the first advance and 3.9% for the second. Interest is paid monthly.

6.  Taxes

The income tax provision for the three month period ended August 31, 2001 consists of:

Federal Income Taxes

$
165,416State Income Taxes


7,485$
172,901


7.  Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per
share is computed by dividing net income by the weighted average number of common shares and common stock equivalents outstanding during the period. Common stock equivalents of the Company include the
dilutive effect of outstanding stock options and warrants. Common stock equivalents, excluded because of their antidilutive effect were 36,897 shares for the three months ended August 31, 2001
and 118,079 shares for the three months ended August 31, 2000.

8

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Basic and Diluted earnings per share were calculated as follows:

Three Months Ended
August 31,2001

2000Net Income

$
321,101

$
381,432Weighted average number of Common Shares outstanding


2,630,129


2,524,185Basic earnings per share

$
.12

$
.15Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options (Ø if antidilutive)


95,078


79,653Weighted average Common Shares outstanding and Common Share equivalents


2,725,207


2,603,838Diluted earnings per share

$
.12

$
.15


8.  Orders for Future Delivery

At August 31, 2001 and 2000 the Company had orders for future delivery of $638,347 and $964,654, respectively. The $638,347 orders for future delivery
are scheduled for shipment during the period September, 2001 through November, 2001. Data for both years excludes expected sales of SANOVA because contracts with SANOVA customers do not require
placement of purchase orders for future delivery. SANOVA sales are based on product usage reported by the customers after the fact.

9.  Segment Information

The Company adopted Statement of Financial Accounting Standards No. 131 (SFAS 131) "Disclosures about Segments of an Enterprise and Related
Information," during 1998. Following the provisions of SFAS 131, the Company is reporting segment information in the same format as reviewed by the Company's management (the "Management
Approach"), which is organized around differences in products and services. During fiscal 2001, management determined that due to the growth of the Company's SANOVA business, the Company now has two
reportable segments, Animal Health and Surface Disinfectants, and SANOVA Food Antimicrobial Products.

The
Company's reportable segments are strategic business units that offer similar products but to entirely different customers at substantially different selling price and cost of
goods sold structure.

The
accounting policies of the segments are the same as those described in Note 2Summary of Significant Accounting Policies, in the Company's
Form 10-K. The Company evaluates performance based on gross margin from the sale of each segment's products and does not allocate expenses beyond gross margin to the two segments.

9

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Segment net sales, gross margin and assets are as follows:

Three Months Ended August 31,2001

2000Animal Health and Surface DisinfectantsNet SalesU.S.

$
1,494,286

$
1,299,477Net SalesInternational

$
1,218,180

$
1,209,710Total Net Sales

$
2,712,466

$
2,509,187Gross Margin

$
1,532,858

$
1,630,204Assets (at end of period)

$
3,195,900

$
2,538,279SANOVANet SalesU.S.

$
2,687,364

$
1,737,382Gross Margin

$
1,096,272

$
597,106Assets (at end of period)

$
13,804,737

$
9,563,779Not Segment RelatedAssets (at end of period)

$
3,410,402

$
3,391,082TotalNet Sales

$
5,399,830

$
4,246,569Gross Margin

$
2,629,130

$
2,227,310Assets (at end of period)

$
20,411,039

$
15,493,140


Assets
assigned to the business segments include accounts receivable, inventories, fixed assets, spare parts, components and goodwill.

10

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PART I.

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

Introduction

Alcide Corporation (the "Company") is a Delaware Corporation organized in 1983 which has its executive offices and research laboratories at 8561 154th Avenue
N.E., Redmond, Washington 98052.

Alcide
is engaged in the research, development and commercialization of unique chemical compounds having intense microbiocidal activity. The Company holds substantial worldwide rights
to its discoveries through various patents, patent applications, trademarks and other intellectual property, technology, and know-how.

This
report includes forward-looking statements which involve risk and uncertainty including, without limitation, risk of dependence on patents and trademarks, third party suppliers,
market acceptance of and demand for the Company's products, distribution capabilities, development of technology and regulatory approval thereof. Sentences or phrases that use words such as
"believes," "anticipates," "hopes," "plans," "may," "can," "will," "expects," and others, are often used to flag such forward-looking statements, but their absence does not mean a statement is not
forward-looking. Such statements reflect management's current opinion and are designed to help readers understand management's thinking. By their very nature, however, such statements are subject to
certain risks and uncertainties that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements which
speak only as of the date hereof. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after
the date hereof, or to reflect the occurrence of unanticipated events.

Financial Condition and Results of Operations

Net sales of $5,399,830 for the quarter ended August 31, 2001 were the highest for any quarter in Alcide's history and were 27% higher than for the
first quarter last year. (See net sales, gross margin and assets for the Company's two business segments on page 10 of this report).

The
Company's animal health and surface disinfectant business segment sales for the quarter ended August 31, 2001 were $2,712,466 an increase of 8%, or $203,279 as compared to
first quarter sales last year. As part of the Company's acquisition of the assets of Universal Marketing Services, Inc. in February, 2001, Alcide acquired the right to distribute a number of
ancillary products to the dairy industry through the Company's distributors. Sales of such products during the quarter ended August 31, 2001 amounted to $217,338.

Sales
of SANOVA food antimicrobial totaled $2,687,364 for the quarter ended August 31, 2001, an increase of $949,982, or 55% compared to the first fiscal quarter last year, as
this new Alcide business continued to expand. At August 31, 2001, 31 plants, processing approximately 5.5 billion pounds of poultry annually and representing about 17% of the total U.S.
poultry market, were utilizing the SANOVA System to improve the quality of their product. In addition to the 31 plants now operational, four plants have contracted for SANOVA installation in the
future, resulting in a total of 35 poultry plants under contract.

Progress
was made during the current quarter with regard to expansion of SANOVA to the red meat industry. One beef slaughter operation is using SANOVA on beef carcasses and a second
plant is using SANOVA on beef parts and trim sold for production of ground beef. Four additional beef processing plants and one lamb processing plant have contracted for SANOVA System installations.
All

11

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such installations are dependent on achieving defined levels of antimicrobial performance as well as acceptable organoleptic qualities following startup.

Cost
of goods sold were 51% of net sales for the quarter ended August 31, 2001 vs. 48% of sales for the year ago quarter. (See page 10 for business segment detail). Cost of
goods sold for the Animal Health and Surface Disinfectant segment increased to 43% of net sales for the first quarter of this fiscal year as compared to 35% for the same quarter last year. The
increased cost of goods sold for the segment was caused primarily by the sale of high valued inventory acquired as part of the UMS acquisition in February and by transition to a new distributor and
new product launch in France.

Cost
of goods sold as a percentage of sales for the SANOVA business segment was 59% for the quarter ended August 31, 2001, a substantial reduction from the 66% of sales for the
year earlier quarter, reflecting a number of cost reduction programs implemented last fiscal year.

Research
and development expenses for the quarter ended August 31, 2001 were $364,006 as compared to $336,597 for the same quarterly period last year. The 8% increase reflects
the filling of staff positions that were vacant last year.

Selling,
general and administrative expenses were $1,756,085, a $442,734 increase over the first quarter last year. Major components of the increase were a $139,000 increase in
marketing expenses to solidify the Animal Health and Surface Disinfectant business segment, a $110,000 increase in engineering, selling and administrative expenses to support the 55% growth in the
Food Safety business segment and a $154,000 increase in variable compensation.

Interest
income net was $2,712 for the first quarter this fiscal year as compared to $36,670 for the first quarter last year. The decreased amount of interest resulted essentially
from lower investable cash resources this year as compared to the equivalent period a year ago. Also, the quarter this year includes interest expense of $25,104 to support asset purchases for the
growing SANOVA business, while no interest expense was incurred last fiscal year.

Liquidity and Capital Resources

The Company's cash, cash equivalents, short-term investments and U.S. Treasury instruments ($501,253 was included in long term investments and
other assets at May 31, 2001) totaled $1,819,234 on August 31, 2001 compared to $2,332,782 on May 31, 2001. During the quarter the Company took a $1,000,000 advance on its
$10,000,000 line of credit, bringing the total borrowed to $2,000,000.

This
additional borrowing, plus the net cash inflow of $510,854 provided by operating activities for the three month period ended August 31, 2001, funded the investment of
$2,077,106 in equipment to startup four new processing plants and to purchase other long lead time components to support future growth in the Food Safety business.

Outlook





12

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ITEM 3.  Legal Proceedings

None.

13

---



PART II.  OTHER INFORMATION

ITEM 6  Exhibits and Reports on Form 8-K

Exhibit 10.32*

Distributor Agreement by and between the Company and Sfan Laboratoire, effective June 1, 2001, covering the territories of France, Algeria, Morocco and
Tunisia.

14

---



SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) 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.

|                       |  | ALCIDE CORPORATIONThe Registrant
|---------------------- |  | --------------------------------
|                       |  |                                 
|                       |  |                                 
|Date: October 12, 2001 |  | By                              

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