---

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SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-Q

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|ý                                              | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|---------------------------------------------- | ----------------------------------------------------------------------------------------
|For the quarterly period ended August 31, 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)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 ý    No o

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of August 31, 2002: 2,656,167, net of Treasury Stock.

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ALCIDE CORPORATION

INDEX

PART I.    FINANCIAL INFORMATION

|                              |  |                                                                                                                |  | PAGE
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----
|Item 1.                       |  | Financial Statements (unaudited)                                                                               |  |     
|                              |  | Condensed Consolidated Balance SheetsAugust 31, 2002 and May 31, 2002                                         |  | 3   
|                              |  | Condensed Consolidated Statements of OperationsFor the three months ended August 31, 2002 and August 31, 2001 |  | 4   
|                              |  | Condensed Consolidated Statements of Shareholders' Equity                                                      |  | 5   
|                              |  | Condensed Consolidated Statements of Cash FlowsFor the three months ended August 31, 2002 and August 31, 2001 |  | 6   
|                              |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                 |  | 7   
|Item 2.                       |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                          |  | 10  
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                     |  | 14  
|Item 4.                       |  | Evaluation of Disclosure Controls and Procedures                                                               |  | 14  
|PART II.    OTHER INFORMATION
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                               |  | 15  
|SIGNATURE                     |  | 16                                                                                                            

2

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ALCIDE CORPORATION        CONDENSED CONSOLIDATED BALANCE SHEETS

|                                           |                                                                                                                                                                                  | August 31, 2002                                  |                                                 | May 31, 2002 |           
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------- | ------------ | ----------
|Assets:                                    |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           | Current assets:                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                  | Cash and cash equivalents                        |                                                 | $            | 1,989,641 
|                                           |                                                                                                                                                                                  | Accounts receivabletrade                        |                                                 |              | 3,130,146 
|                                           |                                                                                                                                                                                  | Inventory                                        |                                                 |              | 1,938,927 
|                                           |                                                                                                                                                                                  | Deferred and prepaid income taxes                |                                                 |              | 231,998   
|                                           |                                                                                                                                                                                  | Spare parts                                      |                                                 |              | 769,808   
|                                           |                                                                                                                                                                                  | Prepaid expenses and other current assets        |                                                 |              | 403,155   
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                  |                                                  | Total current assets                            |              |           
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           | Equipment and leasehold improvements:                                                                                                                                            |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                  | SANOVA plant assets                              |                                                 |              | 16,274,782
|                                           |                                                                                                                                                                                  | Construction in progress                         |                                                 |              | 2,216,473 
|                                           |                                                                                                                                                                                  | Office equipment                                 |                                                 |              | 557,729   
|                                           |                                                                                                                                                                                  | Laboratory, manufacturing equipment and vehicles |                                                 |              | 503,632   
|                                           |                                                                                                                                                                                  | Leasehold improvements                           |                                                 |              | 73,483    
|                                           |                                                                                                                                                                                  | Less: Accumulated depreciation and amortization  |                                                 |              | (6,980,138
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                  |                                                  | Total equipment and leasehold improvements, net |              |           
|                                           | Goodwill                                                                                                                                                                         |                                                  |                                                 | 478,807      |           
|                                           | Other assets                                                                                                                                                                     |                                                  |                                                 | 16,429       |           
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|Total Assets                               |                                                                                                                                                                                  | $                                                | 21,604,872                                      |              | $         
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|Liabilities and Shareholders' Equity:      |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           | Current liabilities:                                                                                                                                                             |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                  | Accounts payable                                 |                                                 | $            | 678,248   
|                                           |                                                                                                                                                                                  | Accrued expenses                                 |                                                 |              | 347,287   
|                                           |                                                                                                                                                                                  | Line of credit payable                           |                                                 |              | 2,000,000 
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                  |                                                  | Total current liabilities                       |              |           
|                                           | Deferred tax liability                                                                                                                                                           |                                                  |                                                 | 130,840      |           
|                                           | Other long-term liabilities                                                                                                                                                      |                                                  |                                                 | 7,390        |           
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|Total Liabilities                          |                                                                                                                                                                                  |                                                  | 3,163,765                                       |              |           
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           | Commitments and Contingencies                                                                                                                                                    |                                                  |                                                 |              |           
|                                           | Redeemable Class "B" Preferred Stocknoncumulative convertible $.01 par value: authorized 10,000,000 shares; issued and outstanding:
August 31, 200268,425; May 31, 200268,425 |                                                  |                                                 | 179,614      |           
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           | Shareholders' equity:                                                                                                                                                            |                                                  |                                                 |              |           
|                                           | Class "A" Preferred Stockno par value, authorized 1,000 shares; issued and outstanding: August 31, 2002138; May 31, 2002138                                                   |                                                  |                                                 | 18,636       |           
|                                           | Common Stock$.01 par value; authorized 100,000,000 shares; issued and outstanding: August 31, 20023,032,126; May 31, 20023,031,292                                            |                                                  |                                                 | 30,321       |           
|                                           | Common treasury stock at cost August 31, 2002375,959; May 31, 2002375,959                                                                                                      |                                                  |                                                 | (7,144,721   | )         
|                                           | Additional paid-in capital                                                                                                                                                       |                                                  |                                                 | 21,392,164   |           
|                                           | Retained earnings                                                                                                                                                                |                                                  |                                                 | 3,965,093    |           
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|                                           |                                                                                                                                                                                  |                                                  | Total shareholders' equity                      |              |           
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           
|Total Liabilities and Shareholders' Equity |                                                                                                                                                                                  | $                                                | 21,604,872                                      |              | $         
|                                           |                                                                                                                                                                                  |                                                  |                                                 |              |           

See notes to Unaudited Condensed Consolidated Financial Statements.

3

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ALCIDE CORPORATION        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                               |                                             | For the Three Months Ended
August 31, |          
|------------------------------------------------------------------------------ | ------------------------------------------- | ------------------------------------- | ---------
|
|Net Sales                                                                      |                                             | $                                     | 5,045,192
|Expenditures                                                                   |                                             |                                       |          
|                                                                               | Cost of goods sold                          |                                       |          
|                                                                               | Research and development expense            |                                       |          
|                                                                               | Consulting expense to related parties       |                                       |          
|                                                                               | Selling, general and administrative expense |                                       |          
|                                                                               |                                             |                                       |          
|                                                                               |                                             | Total Expenditures                    |          
|                                                                               |                                             |                                       |          
|Operating income                                                               |                                             |                                       | 98,916   
|Interest income                                                                |                                             |                                       | 7,867    
|Interest expense                                                               |                                             |                                       | (21,048  
|Other income                                                                   |                                             |                                       | 9,139    
|                                                                               |                                             |                                       |          
|Income before provision for income taxes                                       |                                             |                                       | 94,874   
|Provision for income taxes                                                     |                                             |                                       | 33,205   
|                                                                               |                                             |                                       |          
|Net income                                                                     |                                             | $                                     | 61,669   
|                                                                               |                                             |                                       |          
|Basic earnings per common share                                                |                                             | $                                     | .02      
|                                                                               |                                             |                                       |          
|Diluted earnings per common share and equivalents                              |                                             | $                                     | .02      
|                                                                               |                                             |                                       |          
|Weighted average common stock and dilutive potential common stock outstanding: |                                             |                                       |          
|                                                                               | Basic                                       |                                       |          
|                                                                               | Diluted                                     |                                       |          

See
notes to Unaudited Condensed Consolidated Financial Statements.

4

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ALCIDE CORPORATION        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

|                          |  | Class "A"
Preferred
Stock |  |   |        |  |           |  |   | Common
Treasury
Stock |  |   |            | 
|------------------------- |  | ------------------------- |  | - | ------ |  | --------- |  | - | --------------------- |  | - | ---------- | 
|
|
|
|Balance May 31, 2002      |  | 138                       |  | $ | 18,636 |  | 3,031,292 |  | $ | 30,313                |  | $ | 21,386,417 | 
|Exercise of stock options |  |                           |  |   |        |  | 834       |  |   | 8                     |  |   | 5,747      | 
|Net Income                |  |                           |  |   |        |  |           |  |   |                       |  |   |            | 
|                          |  |                           |  |   |        |  |           |  |   |                       |  |   |            | 
|Balance August 31, 2002   |  | 138                       |  | $ | 18,636 |  | 3,032,126 |  | $ | 30,321                |  | $ | 21,392,164 | 
|                          |  |                           |  |   |        |  |           |  |   |                       |  |   |            | 

See notes to Unaudited Condensed Consolidated Financial Statements.

5

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ALCIDE CORPORATION        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                   |                                                                                   | For the Three Months Ended August 31,      |                                          
|-------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------ | -----------------------------------------
|
|Cash Flows from Operating Activities:              |                                                                                   |                                            |                                          
|Net income                                         |                                                                                   | $                                          | 61,669                                   
|                                                   | Adjustments to reconcile net income to net cash provided by operating activities: |                                            |                                          
|                                                   |                                                                                   | Depreciation                               |                                          
|                                                   |                                                                                   | Amortization of investment premiums        |                                          
|                                                   |                                                                                   | 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
|                                                   |                                                                                   |                                            | Other assets                             
|                                                   |                                                                                   | Increase (decrease) in liabilities:        |                                          
|                                                   |                                                                                   |                                            | Accounts payable                         
|                                                   |                                                                                   |                                            | Accrued expenses                         
|                                                   |                                                                                   |                                            | Other long-term liabilities              
|                                                   |                                                                                   |                                            |                                          
|                                                   | 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 Condensed Consolidated Financial Statements.

6

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ALCIDE CORPORATION        NOTES TO UNAUDITED CONDENSED CONSOLIDATED 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, 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 condensed consolidated 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, 2002. In the opinion of management, the accompanying unaudited condensed consolidated 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, 2002

May 31, 2002Domestic Distributors

$
498,183

$
349,942International Distributors


778,499


813,155SANOVA Customers


1,784,461


1,580,444Other Receivables


69,003


105,562Total Accounts Receivable

$
3,130,146

$
2,849,103


3.    Inventory consisted of the following:

August 31, 2002

May 31, 2002Raw materials

$
480,121

$
307,922Finished products


497,345


630,517SANOVA inventory at customer sites


961,461


885,252Total

$
1,938,927

$
1,823,691


4.    Line of Credit Payable

In September 2002, the Company extended its $10,000,000 unrestricted line of credit with US Bank. The new expiration date is September 30, 2004.

Two
advances of $1,000,000 each have been taken on the line of credit. Currently, both advances are due in March 2003. The interest rates are approximately 3.1% for the first
advance and 3.0% for the second. Interest is paid monthly. Management believes the Company was in full compliance with all bank covenants as of August 31, 2002.

5.    Commitments and Contingencies

As of August 31, 2002, the Company had contracts for future startups of two meat processing operations. It is estimated that 65% to 70% of the assets
required for such installations have already been purchased and are classified on the balance sheet as construction in progress.

7

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6.    Taxes

The income tax provisions were as follows:

Three Months Ended August 31,2002

2001Federal Income Taxes

$
31,768

$
165,416State Income Taxes


1,437


7,485$
33,205

$
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 potential common shares outstanding during the period. Potential common shares of the Company include the
dilutive effect of outstanding stock options and warrants. Potential common shares, excluded because of their antidilutive effect, were 190,192 shares for the three months ended August 31, 2002
and 36,897 shares for the three months ended August 31, 2001.

Basic
and Diluted earnings per share were calculated as follows:

Three Months Ended August 31,2002

2001Net income

$
61,669

$
321,101Weighted average number of common shares outstanding


2,656,022


2,630,129Basic earnings per share

$
.02

$
.12Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options


34,704


95,078Weighted average common shares outstanding and dilutive potential common shares


2,690,726


2,725,207Diluted earnings per share

$
.02

$
.12


8.    Orders for Future Delivery

At August 31, 2002 and 2001, the Company had orders for future delivery of $637,722 and $638,347, respectively. The $637,722 orders for future delivery are
scheduled for shipment during the period September 2002 through November 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.

9.    Segment Information

The Company follows the provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" and reports segment information
in the same format as reviewed

8

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by the Company's management (the "Management Approach"), which is organized around differences in products and services. Management has determined the Company 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 prices and cost of
goods sold structures. The Company does not have any inter-segment revenues.

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.

Segment
net sales, gross margin, assets, fixed asset additions and depreciation expense are as follows:

Three Months Ended August 31,2002

2001Animal Health and Surface DisinfectantsNet SalesU.S.

$
867,680

$
1,494,286Net SalesInternational

$
823,126

$
1,218,180Total Net Sales

$
1,690,806

$
2,712,466Gross Margin

$
913,438

$
1,532,858Assets (at end of period)

$
2,750,886

$
3,195,900Fixed Asset Additions





Depreciation Expense

$
1,344

$
1,344SANOVANet SalesU.S.

$
3,354,386

$
2,687,364Gross Margin

$
1,326,476

$
1,096,272Assets (at end of period)

$
15,823,850

$
13,804,737Fixed Asset Additions

$
1,104,578

$
1,987,118Depreciation Expense

$
833,089

$
593,897Not Segment RelatedAssets (at end of period)

$
3,030,136

$
3,410,402Fixed Asset Additions

$
55,998

$
89,988Depreciation Expense

$
27,427

$
18,868TotalNet Sales

$
5,045,192

$
5,399,830Gross Margin

$
2,239,914

$
2,629,130Assets (at end of period)

$
21,604,872

$
20,411,039Fixed Asset Additions

$
1,160,576

$
2,077,106Depreciation Expense

$
861,860

$
614,109


Assets
assigned to the business segments include accounts receivable, inventories, fixed assets, spare parts, and goodwill. No single customer accounted for 10% or more of revenues in
either quarter.

9

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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.

Risks and Uncertainty

This report includes forward looking statements which involve risk and uncertainty including, without limitation, risk of dependence on patents, trademarks, third
party suppliers, market acceptance of and demand for the Company's products, distribution capabilities and the development of technology and government 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 necessarily 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 expected or projected. Readers are cautioned not to place undo 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.

Substantially
all of the Company's products are subject to regulatory approval of or control by various governmental agencies, such as the Food and Drug Administration, Department of
Agriculture and Environmental Protection Agency in the United States and their equivalents in international markets. The exercise of control and regulatory authority by these agencies can have a
material effect on the Company's business directly as it relates to the Company's products and indirectly as it may relate to competitors' products.

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 effect 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 sales 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 competitive products better meeting these customer needs can have a material impact on the Company's ability to sell and expand the use of its
SANOVA products.

The
Company's business model for its Food Safety business involves a capital investment ranging from $20,000 to $500,000 for each user plant site, depending on the size of the operation.
If a

10

---

substantial number of customers elect not to renew their contracts, non-productive assets would exist until new customers are found. The Company's experience after four years in the Food
Safety business is that all customers have renewed their contracts.

Critical Accounting Policies







Commitments and Contingencies

Leases:  The Company leases certain property and vehicles under non-cancelable operating leases that expire through May 2004.
Insurance, utilities and maintenance expenses are borne by the Company. There are no contingent rentals or sublease rentals.

Line
of Credit Payable:  In September 2002, the Company extended its $10,000,000 unrestricted line of credit with US Bank. The new expiration date is
September 30, 2004.

Two
advances of $1,000,000 each have been taken on the line of credit. Currently, both advances are due in March 2003. The interest rates are approximately 3.1% for the first
advance and 3.0% for the second. Interest is paid monthly. Management believes the Company was in full compliance with all bank covenants as of August 31, 2002.

New
Sanova Installations:  As of August 31, 2002, the Company had contracts for future startups of two meat processing operations. It is estimated that 65% to 70% of
the assets required for such installations have already been purchased and are classified on the balance sheet as construction in progress. An additional investment of $60,000 to $100,000 may be
required for successful startup of the two systems.

Employment
Agreements:  One officer has a one year, automatically renewable, employment agreement which obligates the Company to a salary of $260,253 per year. Bonus
compensation of 100% of base pay can be earned at the discretion of the Board of Directors.

11

---

Redeemable
Class "B" Preferred Stock:  On September 30th of each year, the Company redeems a portion of its outstanding Series 2 Class "B" Preferred Stock. The
amount redeemed is equal to .7% of the Company's prior year net income. As the company recorded net income of $1,781,252 in fiscal 2002, it redeemed 4,750 shares of Series 2 Stock on
September 30, 2002 for $12,469. This will leave a total of $167,145 of Class "B" Preferred Stock to be redeemed in subsequent fiscal years, dependent on net income.

Financial Condition and Results of Operations

Net Sales

Net sales of $5,045,192 for the quarter ended August 31, 2002 were 7% lower than for the first quarter last year.

Sales
of SANOVA® food antimicrobial to the poultry and red meat industries totaled $3,354,386, an increase of $667,022 or 25% compared to the first fiscal quarter last year
as this Alcide business unit continued to expand rapidly. At the end of the quarter, thirty-nine pre-chill poultry operations and three post-chill operations had
SANOVA installations in place including five operations that started during the quarter. In addition, six red meat plants had SANOVA operations in place including one slaughter operation, which began
use during the quarter. Three of the poultry processing plants and two of the red meat processing plants did not contribute significant revenue during the quarter either for operational reasons or
because of economic conditions within the meat and poultry industries.

The
Company's animal health and surface disinfectant sales for the quarter ended August 31, 2002, were $1,690,806, a decrease of $1,021,660 from business unit sales during the
first quarter last year. Management believes that sales of its animal health product line by distributors to dairy farmers are at a level approximating such sales during the first quarter last year
and that the Company's sales decrease reflects primarily changes in distributor inventory levels. In the United Kingdom, the Company established a new distributor relationship with
Agri-Lloyd beginning September 15, 2002, but the arrangement with the Company's previous distributor prevented Alcide's sale of its products during substantially all of the first
quarter and resulted in a $131,000 reduction from prior year. In the United States, Alcide introduced UDDERgold® 5-Star, an advanced, new product in early October 2002,
to maintain the Company's performance edge in the mastitis prevention market. In anticipation of the new product launch, U.S. distributors delayed their purchases, accounting for a reduction of
approximately $300,000 in sales activity during the first quarter this year. Lastly, IBA, the Company's largest distributor, is transitioning from a distributor arrangement with Alcide to a licensing
arrangement and this transition had the effect of reducing sales to IBA by $217,000 during the first quarter of fiscal 2003.

Cost of Goods Sold

The cost of goods sold was 56% of net sales for the quarter ended August 31, 2002, as compared to 51% of net sales for the equivalent quarter last year.
(See page 9 for net sales and gross margin by business segment).

Cost
of goods sold as a percentage of sales for the SANOVA business segment were 60% of net sales for the quarter ended August 31, 2002 versus 59% of net sales for the first
quarter of the previous fiscal year. The increase as a percentage of sales was caused primarily by underutilization of equipment at plants in operation during only a portion of the quarter.

Cost
of goods sold for the Animal Health and Surface Disinfectant segment were 46% of net sales for the quarter ended August 31, 2002 as compared to 43% of net sales for the
equivalent quarter in the previous fiscal year. The increased cost of goods sold as percentage of net sales for the segment was caused primarily by a shift in product mix as a result of the
aforementioned distributor inventory

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reductions which affected UDDERgold Plus® and UDDERgold® to a greater degree than other animal health products.

Research and Development Expense

The overall pace of research and development activities during the fiscal first quarter ended August 31, 2002 was at essentially the same rate as during
the past several quarters. Extensive effort was directed at international registration of the Company's mastitis control products in Europe necessitated by
changes in the distribution network and also preparation of registration dossiers for the Company's Sanova products in key European, Asian and Latin American markets. Research and development expenses
of $590,624 for the quarter increased 9% over the equivalent quarter last year representing normal inflationary increases plus a $21,370 charge from the British regulatory authorities for inspection
of a U.S. production site for Alcide's mastitis prevention products.

Selling, General and Administrative Expense

Selling, general and administrative expense of $1,535,374 for the quarter ended August 31, 2002, was $44,796 lower than for the equivalent quarter last
year. The reduced expenses resulted primarily from a $104,000 reduction in executive bonuses paid this fiscal year as compared to last fiscal year offset by inflationary increases.

Interest Income

The reduction of interest income from $27,816 during the first quarter of last fiscal year as compared to $7,867 during the first quarter of this fiscal year,
reflect the combination of lower investable income and lower prevailing interest rates.

Interest Expense

Interest expense of $21,048 for the quarter ended August 31, 2002, is lower than interest expense of $25,104 for the equivalent quarter last year as a
direct result of reduced prevailing interest rates.

Liquidity and Capital Resources

The Company's cash and cash equivalents totaled $1,989,641 on August 31, 2002, as compared to $2,847,581 on May 31, 2002. During the quarter, the
Company generated cash from operating activities of $296,881 and invested $1,160,576 in acquisition of new assets to support the expanding Sanova business. At this time, the Company expects to fund
its existing operations and growth with its current cash balance plus cash generated by operations. If growth exceeds current expectations, it may be necessary to take additional advances on the
Company's line of credit.

Outlook







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ITEM 3.Quantitative and Qualitative Disclosures About Market Risk

No material changes have occurred in the disclosure of qualitative and quantitative market risk set forth in our Annual Report on Form 10-K for
the fiscal year ended May 31, 2002.

ITEM 4.Evaluation of Disclosure Controls and Procedures

a)    The Company's Chairman and CEO, and President and CFO, after evaluating the effectiveness of the Company's "disclosure controls and procedures"
(as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the "Evaluation Date") within 90 days before the
filing date
of this quarterly report, have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were adequate and designed to ensure that material information relating to
the Company and its consolidated subsidiary would be made known to them by others within those entities.

b)    Changes
in internal controls:  Not applicable.

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PART II.    OTHER INFORMATION

ITEM 6.Exhibits and Reports on Form 8-K

a)    Exhibits:



b)    Reports
on Form 8-K:



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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: October 14, 2002 |  | By                               

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CERTIFICATIONS

I, Joseph A. Sasenick, Chairman and Chief Executive Officer, certify that:



|Date: October 14, 2002 |  | By |  | /s/JOSEPH A. SASENICKJoseph A. Sasenick Chairman
Chief Executive Officer
|---------------------- |  | -- |  | ------------------------------------------------------------------------

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I,
John P. Richards, President and Chief Financial Officer, certify that:



|Date: October 14, 2002 |  | By |  | /s/JOHN P. RICHARDSJohn P. Richards President
Chief Financial Officer
|---------------------- |  | -- |  | ---------------------------------------------------------------------

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