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SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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FORM 10-Q

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

For the quarterly period ended February 28, 2002

or

|o | 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)


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

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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 ý    NO o

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of February 28, 2002: 2,651,887, net of Treasury Stock.

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ALCIDE CORPORATION    INDEX

|                                 |  |                                                                                                                                       |  | PAGE
|-------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|PART I.    FINANCIAL INFORMATION |  |                                                                                                                                      
|Item 1.                          |  | Financial Statements                                                                                                                  |  |     
|                                 |  | Consolidated Condensed Balance SheetsFebruary 28, 2002 (Unaudited) and May 31, 2001                                                  |  | 3   
|                                 |  | Unaudited Consolidated Condensed Statements of Operationsfor the three and nine months ended February 28, 2002 and February 28, 2001 |  | 4   
|                                 |  | Unaudited Consolidated Condensed Statements of Changes in Shareholders' Equity                                                        |  | 5   
|                                 |  | Unaudited Consolidated Condensed Statements of Cash Flowsfor the nine months ended February 28, 2002 and February 28, 2001           |  | 6   
|                                 |  | Notes to Unaudited Consolidated Condensed Financial Statements                                                                        |  | 7   
|Item 2.                          |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                 |  | 12  
|Item 3.                          |  | Legal Proceedings                                                                                                                     |  | 16  
|PART II.    OTHER INFORMATION    |  |                                                                                                                                      
|Item 6.                          |  | Exhibits and Reports on Form 8-K                                                                                                      |  | 16  
|SIGNATURE                        |  | 17                                                                                                                                   

2

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ALCIDE CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS

|                                           |                                                                                                                                                                                              | February 28, 2002                                |                                                 | May 31, 2001 |           
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------- | ------------ | ----------
|
|Assets:                                    |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           | Current assets:                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                              | Cash and cash equivalents                        |                                                 | $            | 1,516,966 
|                                           |                                                                                                                                                                                              | Short-term investments                           |                                                 |              |          
|                                           |                                                                                                                                                                                              | Accounts receivabletrade                        |                                                 |              | 3,816,848 
|                                           |                                                                                                                                                                                              | Inventory                                        |                                                 |              | 2,139,330 
|                                           |                                                                                                                                                                                              | Deferred and prepaid income taxes                |                                                 |              | 551,396   
|                                           |                                                                                                                                                                                              | Spare parts                                      |                                                 |              | 604,829   
|                                           |                                                                                                                                                                                              | Prepaid expenses and other current assets        |                                                 |              | 244,137   
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                              |                                                  | Total current assets                            |              |           
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           | Equipment and leasehold improvements:                                                                                                                                                        |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                              | SANOVA plant assets                              |                                                 |              | 13,842,210
|                                           |                                                                                                                                                                                              | Construction in progress                         |                                                 |              | 2,792,799 
|                                           |                                                                                                                                                                                              | Office equipment                                 |                                                 |              | 514,889   
|                                           |                                                                                                                                                                                              | Laboratory, manufacturing equipment and vehicles |                                                 |              | 426,317   
|                                           |                                                                                                                                                                                              | Leasehold improvements                           |                                                 |              | 73,483    
|                                           |                                                                                                                                                                                              | Less: Accumulated depreciation and amortization  |                                                 |              | (5,369,609
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                              |                                                  | Total equipment and leasehold improvements, net |              |           
|                                           | Deferred income tax asset                                                                                                                                                                    |                                                  |                                                 |             |           
|                                           | Goodwill and other intangibles, net                                                                                                                                                          |                                                  |                                                 | 478,807      |           
|                                           | Long-term investments and other assets                                                                                                                                                       |                                                  |                                                 | 55,871       |           
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|Total Assets                               |                                                                                                                                                                                              | $                                                | 21,688,273                                      |              | $         
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|Liabilities and Shareholders' Equity:      |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           | Current liabilities:                                                                                                                                                                         |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                              | Accounts payable                                 |                                                 | $            | 1,119,955 
|                                           |                                                                                                                                                                                              | Accrued expenses                                 |                                                 |              | 451,490   
|                                           |                                                                                                                                                                                              | Line of credit payable                           |                                                 |              | 2,000,000 
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                              |                                                  | Total current liabilities                       |              |           
|                                           | Deferred tax liability                                                                                                                                                                       |                                                  |                                                 | 222,632      |           
|                                           | Other long-term liabilities                                                                                                                                                                  |                                                  |                                                 | 43,500       |           
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|Total Liabilities                          |                                                                                                                                                                                              |                                                  | 3,837,577                                       |              |           
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|Commitments and Contingencies              |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           | Redeemable Class "B" Preferred Stocknoncumulative convertible $.01 par value: authorized 10,000,000 shares; issued and outstanding:
May 31, 200172,525 shares; Feb. 28, 200268,425 shares |                                                  |                                                 | 179,614      |           
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           | Shareholders' equity:                                                                                                                                                                        |                                                  |                                                 |              |           
|                                           | Class "A" Preferred Stockno par value, authorized 1,000 shares; issued and outstanding: May 31, 2001138 shares; Feb. 28, 2002138 shares                                                   |                                                  |                                                 | 18,636       |           
|                                           | Common Stock$.01 par value; authorized 100,000,000 shares; issued: May 31, 20013,007,819 shares; Feb. 28, 20023,027,846 shares                                                            |                                                  |                                                 | 30,278       |           
|                                           | Common treasury stock at cost
May 31, 2001380,959 shares; Feb. 28, 2002375,959 shares                                                                                                     |                                                  |                                                 | (7,144,721   | )         
|                                           | Additional paid-in capital                                                                                                                                                                   |                                                  |                                                 | 21,344,732   |           
|                                           | Retained earnings                                                                                                                                                                            |                                                  |                                                 | 3,422,157    |           
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                              |                                                  | Total shareholders' equity                      |              |           
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           
|Total Liabilities and Shareholders' Equity |                                                                                                                                                                                              | $                                                | 21,688,273                                      |              | $         
|                                           |                                                                                                                                                                                              |                                                  |                                                 |              |           

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
February 28, |           | For the Nine Months Ended
February 28,
|----------------------------------------------------------------------- | ------------------------------------------- | --------------------------------------- | --------- | --------------------------------------
|
|NET SALES                                                               |                                             | $                                       | 5,500,252 |                                       
|Expenditures                                                            |                                             |                                         |           |                                       
|                                                                        | Cost of goods sold                          |                                         |           | 2,913,369                             
|                                                                        | Research and development expense            |                                         |           | 573,978                               
|                                                                        | Consulting expense to related parties       |                                         |           | 15,000                                
|                                                                        | Selling, general and administrative expense |                                         |           | 1,167,953                             
|                                                                        |                                             |                                         |           |                                       
|                                                                        |                                             | Total Expenditures                      |           |                                       
|                                                                        |                                             |                                         |           |                                       
|Operating income                                                        |                                             |                                         | 829,952   |                                       
|Interest (expense)/income, net                                          |                                             |                                         | (8,898    | )                                     
|Other income                                                            |                                             |                                         | 10,203    |                                       
|                                                                        |                                             |                                         |           |                                       
|Income before provision for income taxes                                |                                             |                                         | 831,257   |                                       
|Provision for income taxes                                              |                                             |                                         | 290,941   |                                       
|                                                                        |                                             |                                         |           |                                       
|Net income                                                              |                                             | $                                       | 540,316   |                                       
|                                                                        |                                             |                                         |           |                                       
|Basic earnings per common share                                         |                                             | $                                       | .20       |                                       
|                                                                        |                                             |                                         |           |                                       
|Diluted earnings per common share and equivalents                       |                                             | $                                       | .20       |                                       
|                                                                        |                                             |                                         |           |                                       
|Weighted average common shares outstanding                              |                                             |                                         | 2,648,614 |                                       
|Weighted average common shares outstanding and common share equivalents |                                             |                                         | 2,715,849 |                                       

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 |  |   |        |  |           |  |   |        |  |   |            |  |          |  
|------------------------------------------ |  | ------------------------- |  | - | ------ |  | --------- |  | - | ------ |  | - | ---------- |  | -------- | -
|
|
|
|Balance May 31, 2001                       |  | 138                       |  | $ | 18,636 |  | 3,007,819 |  | $ | 30,078 |  | $ | 21,122,177 |  | (380,959 | )
|Exercise of stock options                  |  |                           |  |   |        |  | 11,494    |  |   | 115    |  |   | 39,861     |  |          |  
|Tax benefit from exercise of stock options |  |                           |  |   |        |  |           |  |   |        |  |   | 59,876     |  |          |  
|Net Income                                 |  |                           |  |   |        |  |           |  |   |        |  |   |            |  |          |  
|                                           |  |                           |  |   |        |  |           |  |   |        |  |   |            |  |          |  
|Balance August 31, 2001                    |  | 138                       |  | $ | 18,636 |  | 3,019,313 |  | $ | 30,193 |  | $ | 21,221,914 |  | (380,959 | )
|Exercise of stock options                  |  |                           |  |   |        |  | 3,256     |  |   | 33     |  |   | 40,773     |  |          |  
|Transferred stock to ESOP                  |  |                           |  |   |        |  |           |  |   |        |  |   |            |  | 5,000    |  
|Tax benefit from exercise of stock options |  |                           |  |   |        |  |           |  |   |        |  |   | 13,386     |  |          |  
|Net Income                                 |  |                           |  |   |        |  |           |  |   |        |  |   |            |  |          |  
|                                           |  |                           |  |   |        |  |           |  |   |        |  |   |            |  |          |  
|Balance November 30, 2001                  |  | 138                       |  | $ | 18,636 |  | 3,022,569 |  | $ | 30,226 |  | $ | 21,276,073 |  | (375,959 | )
|Exercise of stock options                  |  |                           |  |   |        |  | 5,277     |  |   | 52     |  |   | 44,101     |  |          |  
|Tax benefit from exercise of stock options |  |                           |  |   |        |  |           |  |   |        |  |   | 24,558     |  |          |  
|Net Income                                 |  |                           |  |   |        |  |           |  |   |        |  |   |            |  |          |  
|                                           |  |                           |  |   |        |  |           |  |   |        |  |   |            |  |          |  
|Balance February 28, 2002                  |  | 138                       |  | $ | 18,636 |  | 3,027,846 |  | $ | 30,278 |  | $ | 21,344,732 |  | (375,959 | )
|                                           |  |                           |  |   |        |  |           |  |   |        |  |   |            |  |          |  

See notes to Unaudited Consolidated Condensed Financial Statements

5

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ALCIDE CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

|                                                   |                                                                                   | For the Nine Months Ended February 28,               |                                                       
|-------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------------------------------
|
|Cash Flows from Operating Activities:              |                                                                                   |                                                      |                                                       
|Net income                                         |                                                                                   | $                                                    | 1,299,985                                             
|                                                   | Adjustments to reconcile net income to net cash provided by operating activities: |                                                      |                                                       
|                                                   |                                                                                   | Depreciation                                         |                                                       
|                                                   |                                                                                   | Amortization of investment premiums/goodwill         |                                                       
|                                                   |                                                                                   | Stock bonus to officers                              |                                                       
|                                                   |                                                                                   | Common stock issued to employee stock ownership plan |                                                       
|                                                   |                                                                                   | Tax benefit from exercise of stock options           |                                                       
|                                                   |                                                                                   | Deferred income taxes                                |                                                       
|                                                   |                                                                                   | Decrease (increase) in assets:                       |                                                       
|                                                   |                                                                                   |                                                      | Accounts receivabletrade                             
|                                                   |                                                                                   |                                                      | Inventory                                             
|                                                   |                                                                                   |                                                      | Prepaid income taxes                                  
|                                                   |                                                                                   |                                                      | Spare parts, prepaid expenses and other current assets
|                                                   |                                                                                   |                                                      | Long-term investments and other assets                
|                                                   |                                                                                   | Increase (decrease) in liabilities:                  |                                                       
|                                                   |                                                                                   |                                                      | Accounts payable                                      
|                                                   |                                                                                   |                                                      | Accrued expenses                                      
|                                                   |                                                                                   |                                                      | Unearned revenue                                      
|                                                   |                                                                                   |                                                      | Other long-term liabilities                           
|                                                   |                                                                                   |                                                      |                                                       
|Net cash provided by operating activities          |                                                                                   |                                                      | 2,613,926                                             
|                                                   |                                                                                   |                                                      |                                                       
|Cash Flows from Investing Activities:              |                                                                                   |                                                      |                                                       
|                                                   | Sale of investments                                                               |                                                      |                                                       
|                                                   | Goodwill and other intangibles                                                    |                                                      |                                                       
|                                                   | Acquisition of equipment                                                          |                                                      |                                                       
|                                                   |                                                                                   |                                                      |                                                       
|Net cash used in investing activities              |                                                                                   |                                                      | (3,050,235                                            
|                                                   |                                                                                   |                                                      |                                                       
|Cash Flows from Financing Activities:              |                                                                                   |                                                      |                                                       
|                                                   |                                                                                   | Purchase of Alcide Common Stock                      |                                                       
|                                                   |                                                                                   | Redemption of Class "B" Preferred Stock              |                                                       
|                                                   |                                                                                   | Borrowing on line of credit                          |                                                       
|                                                   |                                                                                   | Exercise of stock options                            |                                                       
|                                                   |                                                                                   |                                                      |                                                       
|                                                   | Net cash provided by financing activities                                         |                                                      |                                                       
|                                                   |                                                                                   |                                                      |                                                       
|                                                   | Net increase 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 income taxes                                      |                                                      | $                                                     
|                                                   | 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 and nine month periods ended
February 28, 2002 and 2001 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 nine month periods are not necessarily indicative of the results to be expected for the full year.

2. Accounts ReceivableTrade consisted of the following:

|                                |  | February 28, 2002 |           | May 31, 2001
|------------------------------- |  | ----------------- | --------- | ------------
|IBA, Inc.                       |  | $                 | 181,820   |             
|Other Domestic Distributors     |  |                   | 395,187   |             
|International Distributors      |  |                   | 1,214,441 |             
|SANOVA Customers                |  |                   | 1,944,920 |             
|Other Receivables               |  |                   | 80,480    |             
|                                |  |                   |           |             
|Total Accounts ReceivableTrade |  | $                 | 3,816,848 |             
|                                |  |                   |           |             

3. Inventory consisted of the following:

|                                   |  | February 28, 2002 |           | May 31, 2001
|---------------------------------- |  | ----------------- | --------- | ------------
|Raw Materials                      |  | $                 | 484,295   |             
|Finished Products                  |  |                   | 692,597   |             
|SANOVA Inventory at Customer Sites |  |                   | 962,438   |             
|                                   |  |                   |           |             
|Total Inventory                    |  | $                 | 2,139,330 |             
|                                   |  |                   |           |             

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 February, 2002, $48,408 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 has been allocated to maintenance of end-customer relationships. The goodwill and
end-customer relationships have indefinite lives and 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
unsecured 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. Commitments and Contingencies

As of February 28, 2002 the Company had contracts for future startups of five meat processing operations. It is estimated that 70% to 80% of the assets
required for such installations have already been purchased and are classified on the balance sheet as construction in progress.

7. Research and Development Expense

During management's review of research and development expenses for the purpose of determining allowable expenses for research and development credits for income
tax purposes, it came to management's attention that certain expenses that have been classified as general and administrative, more closely relate to research and development. As such, certain prior
period general and administrative expenses have been reclassified to research and development expense. Please see the table below for more detail on this reclassification.

Three Months Ended
February 28,

Nine Months Ended
February 28,2002

2001

2002

2001Research and Development Expense

$
372,122

$
560,481

$
1,395,309

$
1,355,012Design and Development Expenses previously reported as General and Administrative


201,856


171,067


663,684


531,708Total Research and Development Expense

$
573,978

$
731,548

$
2,058,993

$
1,886,720


8

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8. Income Taxes

The income tax provision for the nine month period ended February 28, 2002 consists of:

Federal Income Taxes

$
669,690State Income Taxes


30,302$
699,992


9. 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, except where their inclusion would be antidilutive. For the three and nine month periods ended February 28, 2002, common stock
equivalents excluded because of their antidilutive effect were 95,790 and 93,790 shares, respectively. For the three and nine month periods ended February 28, 2001, 45,897 and 51,290 shares
were excluded, respectively.

Basic
and Diluted earnings per share were calculated as follows:

|                                                                                                                                             |  | Three Months Ended
February 28, |           | Nine Months Ended
February 28,
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | --------- | ------------------------------
|
|Net income                                                                                                                                   |  | $                               | 540,316   |                               
|Weighted average common shares outstanding                                                                                                   |  |                                 | 2,648,614 |                               
|Basic earnings per common share                                                                                                              |  | $                               | .20       |                               
|Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options |  |                                 | 67,235    |                               
|                                                                                                                                             |  |                                 |           |                               
|Weighted average common shares outstanding and common share equivalents                                                                      |  |                                 | 2,715,849 |                               
|                                                                                                                                             |  |                                 |           |                               
|Diluted earnings per common share                                                                                                            |  | $                               | .20       |                               

10. Recently Issued Accounting Pronouncements

In June, 2001, the Financial Accounting Standards Board issued SFAS No. 143, "Accounting for Asset Retirement Obligations" (effective for the Company on
June 1, 2003). This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset
retirement costs. The Company is in the process of evaluating the financial statement impact of the adoption of SFAS No. 143.

In
August, 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (effective for the
Company on June 1, 2002). This Statement supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" and APB Opinion No. 30, "Reporting the Results of OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual

9

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and Infrequently Occurring Events and Transactions." The Company is in the process of evaluating the financial statement impact of the adoption of SFAS No. 144.

11. Orders for Future Delivery

At February 28, 2002 and 2001 the Company had orders for future delivery of $714,113 and $788,537, respectively. The $714,113 orders for future delivery
are scheduled for shipment during the period March, 2002 through May, 2002. 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.

12. Segment Information

The Company adopted Statement of Financial Accounting Standards No. 131 (SFAS No. 131) "Disclosures about Segments of an Enterprise and Related
Information," during 1998. Following the provisions of SFAS No. 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 structures.

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.

10

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

|                                        |                           | Three Months Ended
February 28 |   | Nine Months Ended
February 28
|--------------------------------------- | ------------------------- | ------------------------------ | - | -----------------------------
|
|Animal Health and Surface Disinfectants |                           |                                |   |                              
|                                        | Net SalesU.S.            |                                | $ | 1,252,731                    
|                                        | Net SalesInternational   |                                | $ | 995,703                      
|                                        |                           |                                |   |                              
|                                        | Total Net Sales           |                                | $ | 2,248,434                    
|                                        | Gross Margin              |                                | $ | 1,290,888                    
|                                        | Assets (at end of period) |                                | $ | 3,533,698                    
|SANOVA Food Antimicrobials              |                           |                                |   |                              
|                                        | Net SalesU.S.            |                                | $ | 3,251,818                    
|                                        | Gross Margin              |                                | $ | 1,295,995                    
|                                        | Assets (at end of period) |                                | $ | 15,526,988                   
|Not Segment Related                     |                           |                                |   |                              
|                                        | Assets (at end of period) |                                | $ | 2,627,587                    
|Total                                   |                           |                                |   |                              
|                                        | Net Sales                 |                                | $ | 5,500,252                    
|                                        | Gross Margin              |                                | $ | 2,586,883                    
|                                        | Assets (at end of period) |                                | $ | 21,688,273                   

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

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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.

Risk and Uncertainty

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.

Within
the Animal Health and Surface Disinfectant business segment, all of the Company's animal health products are sold through distributors having exclusive or
semi-exclusive rights to specified geographical territories. The loss of a distributor can have a material affect on the Company's sales particularly in the short-term until a replacement
is found, contracted and trained in the sale of the Company's products. Further, the company faces well established competition in each of the markets where its animal health products are sold. Such
competition, particularly, competition claiming equivalence to the Company's products, can limit the expansion potential for Alcide's products.

Alcide's
Food Safety products participate in a rapidly evolving marketplace which by its nature attracts innovation and competing technologies. The Company's SANOVA sales are based on
performance, price and convenience. Introduction of a competitive product better meeting these customer needs could have an impact on the Company's ability to expand its SANOVA business.

Alcide's
business model for its Food Safety business involves a capital investment ranging from $20,000 to $400,000 for each user plant site depending on the size of the operation. The
capital investments are depreciated over a five year life while customer contracts range from one to four years. If a substantial number of customers elect not to renew their contracts,
non-productive assets would exist until new customers are found.

Financial Condition and Results of Operations

Net sales of $5,500,252 for the quarter and $16,632,062 for the nine month period ending February 28, 2002 were 32% and 27% higher than for the respective
periods last year.

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Sales
of SANOVA® food antimicrobial to the poultry and red meat industries totaled $3,251,818 for the quarter ended February 28, 2002, an increase of $974,617 compared
to the third fiscal quarter last year, as this new Alcide business continued to expand. At the end of the quarter, 34 poultry plants and 6 red meat plants were utilizing the SANOVA System to improve
the quality of their product. Three of the poultry plants were using SANOVA applications both pre-chill and post-chill thus bringing the total to 43
SANOVA operations at quarter's end. SANOVA sales for the nine month period ended February 28, 2002 were $8,846,017, an increase of $2,899,840 or 49% compared to the equivalent nine month period
last year.

The
Company's animal health and surface disinfectant sales for the quarter ended February 28, 2002 were $2,248,434, 19% higher than for the third quarter last year. Nine month
sales of $7,786,045 were $634,229 or 9% higher than for the nine month period last year.

Cost
of goods sold was 53% of net sales for the quarter and 52% of net sales for the nine month period ended February 28, 2002 as compared to 49% and 47% of net sales for the
equivalent periods a year ago. (See page 10, sales and gross margin by business segment).

Cost
of goods sold for the animal health and surface disinfectant segment increased from 37% of net sales during the nine months of last year to 43% during the same period in fiscal
2002. 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, 2001 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 were at 60% of net sales for the first nine months of both FY 2001 and FY 2002.

Research
and development expenses for the quarter ended February 28, 2002 were $573,978 compared to $731,548 for the same period last year. The first nine months of FY 2002
research and development expenses were $2,058,993, $172,273 or 9% higher than expenses of $1,886,720 for the equivalent period last year. This increase is primarily due to filling staff positions that
were vacant last year coupled with an $87,000 increase in legal expenses focused on potential product approvals and registrations.

Selling,
general and administrative expense was $1,167,953 for the quarter ended February 28, 2002, a 16% increase from the $1,006,164 during the same period last year. Nine month
expenses of $3,906,317 were $795,814 or 26% higher than nine month expense last year. Major components of the increase for the nine month period were a $239,000, or 16% increase in engineering,
selling and administrative expenses to support the 49% growth in SANOVA sales, coupled with a $304,000 increase in marketing expenses to solidify the animal health and surface disinfectant business
segment and a $154,000 increase in variable compensation.

Interest
net was an expense of $8,898 for the quarter and $3,723 for the nine month period ended February 28, 2002, as compared to net interest income of $36,187 and $107,495 for
the respective periods a year ago. The decreases are due to lower investable cash resources this year compared to last and the incursion of interest expense, to support asset purchases for the growing
SANOVA business.
Interest expense for the nine months ended February 28, 2002 was $67,549 as compared to $1,458 for the same period last year.

Liquidity and Capital Resources

The Company's cash, cash equivalents, short-term investments and U.S. Treasury instruments (included in long-term investments and other
assets in fiscal year 2001) totaled $1,516,966 on February 28, 2002, an amount $815,816 lower than at the end of the previous fiscal year. During the first nine months of FY 2002, 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 net cash flow of $2,613,926

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provided by operating activities for the nine month period ended February 28, 2002, funded the investment of $4,543,431 for equipment to support expansion of the SANOVA business.

|                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Outlook                                  
|                                         |  | SANOVA Food Antimicrobials                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                          |  | The size of the Company's food antimicrobial business continues to expand. The 40 plants in operation on February 28, 2002 are expected to generate annual sales of approximately $14 million. This business segment has been growing at the
rate of one to two new plants per month.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                         |  | Animal Health and Surface Disinfectant Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                          |  | The worldwide market for teat dip products shows very little growth dynamic because the number of dairy cows decreases as the quantity of milk production per cow increases. Growth, therefore, is dependent on entering new markets and obtaining market
share increases in markets currently served. Despite the impact of new competition, the Company has held market share for its products in key market areas. The assumption going forward is that the market for Alcide's udder care products will result
in modest growth in year-to-year sales performance as new products are introduced and more emphasis is put into marketing. As part of the UMS acquisition in February, 2001, the Company acquired additional ancillary products for sale to the dairy
industry. Such products contributed $600,880 in sales during the nine month period ended February 28, 2002.
|                                          |  | During May, the Company will begin the transition to a new distribution network in the United Kingdom. During the transition period, the existing distributor will deplete its inventory of Alcide products and, subsequently, during the first quarter of
fiscal 2003 a new distributor will be brought on board. This transition process may have the impact of reducing Alcide sales by $100,000 to $150,000 during the fourth quarter of fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                           
|Recently Issued Accounting Pronouncements
|                                         |  | In June, 2001, the Financial Accounting Standards Board issued SFAS No. 143, "Accounting for Asset Retirement Obligations" (effective for the Company on June 1, 2003). This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company is in the process of evaluating the financial statement impact of the adoption of SFAS No. 143.                                                                                                                                                                                                                                                                                                                                                                                                             
|                                         |  | In August, 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (effective for the Company on June 1, 2002). This Statement supersedes FASB Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and APB Opinion No. 30, "Reporting the Results of OperationsReporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The Company is in the process of evaluating the financial statement impact of the adoption of SFAS No. 144.                                                                                                                                                                                                              
|Critical Accounting Policies             
|                                         |  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                          |  | Sales of SANOVA food antimicrobials are determined by the amount of product treated or gallons of SANOVA used at each processor. Alcide owned inventory is maintained at each customer processing site. Sales are recognized during the month in which
inventory is used to disinfect customers product, not at the time of delivery to the customer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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|  |  | Animal Health and Disinfectant Sales are recorded at the time of shipment to distributors or to end users. The Company provides a limited warranty to its distributor which limits the Company's obligation to replacement of defective product. Such
replacements have, for the past several years, been less than .1% of net sales. The distributors have no contractual right to return unsold product.                                                                                                                                                                                                                                                                                                                   
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Depreciation and Book Value of SANOVA Plant Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  |  | Capital investments for SANOVA plant assets are depreciated over a five year life while customer contracts range from one year to four years. As the SANOVA food antimicrobial business has been in existence for less than five years, the Company has no
reliable, practical basis on which to assign depreciable life. Management believes, however, based on greater than three years experience that well-maintained assets will be operational beyond five years and, further, that if customers decide not to
renew their contracts the assets can be relocated to new customer sites. The cost to maintain the assets as well as the cost to relocate assets, if necessary, would be recorded as a current year cost.

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ITEM 3. Legal Proceedings

None.

PART II.    OTHER INFORMATION

ITEM 6. Exhibits and Reports on Form 8-K

Exhibit 10.33

2001 Stock Incentive Plan

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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 CORPORATION
THE REGISTRANT
|------------------- |  | ---------------------------------
|Date: April 9, 2002 |  | By:                              

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