SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


    X     Quarterly  report  pursuant  to Section 13 or 15(d) of the  Securities
--------- Exchange Act of 1934

          For the  quarterly  period ended  March 30, 2002  Commission  File
          Number 0-27050
                 -------

          Transition  report  pursuant to Section 13 or 15(d) of the  Securities
--------- Exchange Act of 1934

          For the transition period from           to
                                         ---------    ---------


                                 PHAR-MOR, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         PENNSYLVANIA                                          25-1466309
------------------------------------------------           ---------------------
         (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                    Identification No.)


         20 Federal Plaza West, Youngstown, Ohio            44501-0400
------------------------------------------------           ---------------------
         (Address of principal executive offices)          (Zip code)


Registrant's telephone number, including area code:        (330) 746-6641
                                                           --------------

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                            YES      X        No
                                                   -----           -----

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                                            YES      X        No
                                                   -----           -----

On April 1, 2002, there were 12,240,865 shares of the registrant's common stock
outstanding before deducting 1,482,424 shares which represent the Company's
25.2% equity interest in common stock of the Company owned by Avatex, Inc.



<PAGE>2


                         PHAR-MOR, INC. AND SUBSIDIARIES
                             (Debtor-in-Possession)

                                    FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 30, 2002


                                    I N D E X


                                                                           Page
--------------------------------------------------------------------------------
Part I:  Financial Information

         Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets as of  March 30,
              2002 and June 30, 2001                                          3

              Condensed Consolidated Statements of Operations for the
              Thirteen Weeks Ended March 30, 2002 and March 31, 2001          4

              Condensed Consolidated Statements of Operations for the
              Thirty-nine Weeks Ended March 30, 2002 and March 31, 2001       5

              Condensed Consolidated Statements of Cash Flows for the
              Thirty-nine Weeks Ended March 30, 2002 and March 31, 2001       6

              Notes to Condensed Consolidated Financial Statements            7

         Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                 12

Part II: Other Information

         Item 1.  Legal Proceedings                                          18
         Item 2.  Changes in Securities                                      18
         Item 3.  Defaults Upon Senior Securities                            18
         Item 4.  Submission of Matters to a Vote of Security Holders        18
         Item 5.  Other Information                                          18
         Item 6.  Exhibits and Reports on Form 8-K                           18
         Signatures                                                          19
         Exhibit Index                                                       20


<PAGE>3

<TABLE>
<CAPTION>


                                                        PHAR-MOR, INC. AND SUBSIDIARIES
                                                             (Debtor-in-Possession)
                                                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                 (In thousands)
                                                                  (Unaudited)


ASSETS
                                                                     March 30,       June 30,
                                                                       2002            2001
                                                                       ----            ----
<S>                                                                  <C>             <C>
Current assets:
  Cash and cash equivalents                                          $  11,262       $  14,393
  Marketable securities                                                   --               143
  Accounts receivable - net                                             33,056          27,459
  Merchandise inventories                                              114,857         186,226
  Prepaid expenses and other current assets                              4,337           6,595
                                                                     ---------       ---------

          Total current assets                                         163,512         234,816

Property and equipment - net                                            48,645          67,044
Goodwill                                                                 2,934           3,925
Investments                                                              1,251           3,233
Investment in Avatex                                                      --               789
Other assets                                                             3,040           5,593
                                                                     ---------       ---------

          Total assets                                               $ 219,382       $ 315,400
                                                                     =========       =========

LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY

Current liabilities:
  Accounts payable                                                   $  24,689       $  80,112
  Accrued expenses and other current liabilities                        20,071          33,387
  Current portion of long-term debt and capital
   lease obligations                                                     2,894           7,838
                                                                     ---------       ---------

          Total current liabilities                                     47,654         121,337

Liabilities subject to compromise                                      164,616            --
Long-term debt and capital lease obligations                            44,736         160,791
Long-term self insurance reserves                                        4,906           5,503
Deferred rent and unfavorable lease liability - net                      5,999           9,395
                                                                     ---------       ---------
          Total liabilities                                            267,911         297,026
                                                                     ---------       ---------

Commitments and contingencies                                             --              --
Minority interests                                                         535             535
                                                                     ---------       ---------

Stockholders' (deficiency) equity:
  Preferred stock                                                         --              --
  Common stock                                                             122             122
  Additional paid-in capital                                            90,326          90,326
  Stock options outstanding                                              1,881           1,881
  Retained deficit                                                    (134,696)        (67,807)
                                                                     ---------       ---------
                                                                       (42,367)         24,522
  Less: equity, through investment in Avatex, in cost of common
    stock of the Company held by Avatex, Inc.                           (6,697)         (6,683)
                                                                     ---------       ---------
        Total stockholders' (deficiency) equity                        (49,064)         17,839
                                                                     ---------       ---------

        Total liabilities and stockholders' (deficiency) equity      $ 219,382       $ 315,400
                                                                     =========       =========

</TABLE>


The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


<PAGE>4

<TABLE>
<CAPTION>


                         PHAR-MOR, INC. AND SUBSIDIARIES
                             (Debtor-in-Possession)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (Dollars in thousands, except per share amounts)
                                   (Unaudited)


                                                                  Thirteen              Thirteen
                                                                Weeks Ended           Weeks Ended
                                                               March 30, 2002        March 31, 2001
                                                               --------------        --------------

<S>                                                             <C>                <C>
Sales                                                           $    181,693       $    300,175

Less:
  Cost of goods sold, including occupancy and
      distribution costs                                             152,924            248,314
  Selling, general and administrative expenses                        33,338             50,704
  Depreciation and amortization                                        3,365              4,911
                                                                ------------       ------------
Loss from operations before interest expense,
interest income, investment loss, reorganization items,
  equity in income of affiliates and extraordinary item               (7,934)            (3,754)
Interest expense                                                      (1,147)            (3,977)
Interest income                                                          886                 11
Investment loss                                                          (49)               (63)
                                                                ------------       ------------
Loss before reorganization items, equity in income of
 affiliates and extraordinary item                                    (8,244)            (7,783)


Reorganization items                                                  (3,934)              --
Equity in income of affiliates                                          --                1,520
                                                                ------------       ------------
Loss before extraordinary item                                       (12,178)            (6,263)

Extraordinary item                                                      --                2,634
                                                                ------------       ------------
Net loss                                                        $    (12,178)      $     (3,629)
                                                                ============       ============

Loss per basic and diluted common share:
  Loss before extraordinary gain                                $      (1.13)      $       (.58)
  Extraordinary gain                                                    --                  .24
                                                                ------------       ------------
  Net loss                                                      $      (1.13)      $       (.34)
                                                                ============       ============

Weighted average number of basic and diluted common shares
outstanding                                                       10,758,441         10,810,801

</TABLE>




The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


<PAGE>5

<TABLE>
<CAPTION>

                         PHAR-MOR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (Dollars in thousands, except per share amounts)
                                   (Unaudited)


                                                                  Thirty-nine         Thirty-nine
                                                                  Weeks Ended         Weeks Ended
                                                                 March 30, 2002      March 31, 2001
                                                                 --------------      --------------

<S>                                                               <C>                <C>
Sales                                                             $    661,255       $    950,688

Less:
  Cost of goods sold, including occupancy and
      distribution costs                                               561,102            786,645
  Selling, general and administrative expenses                         118,131            154,686
  Depreciation and amortization                                         10,361             15,209
                                                                  ------------       ------------
Loss from operations before interest expense, interest
  income, investment loss, reorganization items, equity in
  (loss)income of affiliates and extraordinary item                    (28,339)            (5,852)

Interest expense                                                        (6,371)           (14,412)
Interest income                                                            903                 42
Investment loss                                                            (61)            (3,925)
                                                                  ------------       ------------
Loss before reorganization items, equity in (loss) income of
  affiliates and extraordinary item                                    (33,868)           (24,147)

Reorganization items                                                   (30,313)              --
Equity in (loss) income of affiliates                                   (2,709)               127
                                                                  ------------       ------------
Loss before extraordinary item                                         (66,890)           (24,020)

Extraordinary item                                                        --               19,731
                                                                  ------------       ------------

Net loss                                                          $    (66,890)      $     (4,289)
                                                                  ============       ============


Loss per basic and diluted common share:
  Loss before extraordinary gain                                  $      (6.22)      $      (2.20)
  Extraordinary gain                                                      --                 1.81
                                                                  ------------       ------------
  Net loss                                                        $      (6.22)      $       (.39)
                                                                  ============       ============

Weighted average number of basic and diluted common shares
   outstanding                                                      10,760,296         10,921,171

</TABLE>




<PAGE>6

<TABLE>
<CAPTION>

                         PHAR-MOR, INC. AND SUBSIDIARIES
                             (Debtor-in-Possession)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

                                                               Thirty-nine       Thirty-nine
                                                               Weeks Ended       Weeks Ended
                                                             March 30, 2002     March 31, 2001
                                                             --------------     --------------
OPERATING ACTIVITIES
<S>                                                               <C>            <C>
  Net loss                                                        $(66,890)      $ (4,289)
  Adjustments to reconcile net loss to net
    cash provided by (used for) operating activities:
    Items not requiring the outlay of cash:
      Depreciation                                                  10,132         13,092
      Amortization of video rental tapes                              --            1,137
      Non-cash reorganization items                                 20,551           --
      Amortization of deferred financing costs and goodwill          1,189          1,563
      Deferred rent and unfavorable lease liability                   (468)        (1,030)
      Equity in loss of affiliates                                   2,709           (127)
      Loss on other investment                                          50          1,000
      Gain on extinguishment of debt                                  --          (19,731)
    Changes in assets and liabilities:
      Accounts receivable                                           (4,442)        (1,546)
      Marketable securities                                            143          2,925
      Merchandise inventories                                       54,768         11,302
      Prepaid expenses                                               2,258           (343)
      Other assets                                                     407         (1,154)
      Accounts payable                                              37,732        (13,844)
      Liabilities subject to compromise                             (1,900)          --
      Accrued expenses and other current liabilities                 2,094         (9,455)
                                                                  --------       --------
  Net cash provided by (used for) operating activities              58,333        (20,500)
                                                                  --------       --------

INVESTING ACTIVITIES
  Proceeds from the sale of equity securities                         --            6,874
  Additions to rental videotapes                                      --             (871)
  Additions to property and equipment                               (1,727)        (3,382)
  Proceeds on sale of property and equipment                         1,246             23
  Proceeds on the sale of pharmacy files                            23,475           --
  Investment in equity securities                                     --             (229)
                                                                  --------       --------
  Net cash provided by investing activities                         22,994          2,415
                                                                  --------       --------

FINANCING ACTIVITIES
  (Payments) borrowings under revolving credit facility, net       (68,373)        44,453
  Retirement of senior notes                                          --          (20,270)
  Debt issuance cost                                                (1,511)          --
  Decrease in bank overdrafts, net                                 (10,360)        (3,557)
  Principal payments on long-term debt                              (2,299)        (1,265)
  Principal payments on capital lease obligations                   (1,915)        (3,210)
                                                                  --------       --------
  Net cash (used for) provided by financing activities             (84,458)        16,151
                                                                  --------       --------

  Decrease in cash and cash equivalents                             (3,131)        (1,934)
  Cash and cash equivalents, beginning of period                    14,393         16,752
                                                                  --------       --------
  Cash and cash equivalents, end of period                        $ 11,262       $ 14,818
                                                                  ========       ========
</TABLE>


The accompanying notes are an integral part of these condensed consolidated
financial statements.


<PAGE>7


PHAR-MOR, INC. AND SUBSIDIARIES
(Debtor-in-Possession)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
--------------------------------------------------------------------------------
1.       BASIS OF PRESENTATION

         The accompanying unaudited interim condensed consolidated financial
         statements have been prepared in accordance with generally accepted
         accounting principles for interim financial information. They do not
         include all information and footnotes which would be required by
         generally accepted accounting principles for complete financial
         statements. In the opinion of management of Phar-Mor, Inc. (the
         "Company") and its subsidiaries, these interim financial statements
         contain all adjustments considered necessary for a fair presentation of
         financial position, results of operations and cash flows for the
         periods presented. Reference should be made to the Company's Annual
         Report on Form 10-K for the fiscal year ended June 30, 2001 for
         additional disclosures, including a summary of the Company's accounting
         policies, which have not changed. Operating results for the thirteen
         and thirty-nine weeks ended March 30, 2002 are not necessarily
         indicative of the results that may be expected for the fifty-two weeks
         ending June 29, 2002.

         The accompanying unaudited condensed consolidated financial statements
         have been prepared on a going concern basis, which contemplates
         continuity of operations, realization of assets and liquidation of
         liabilities and commitments in the normal course of business and do not
         reflect any adjustments that might result if the Company is unable to
         continue as a going concern. The filing of the voluntary Chapter 11
         petitions referred to below, losses from operations and negative cash
         flow from operations raise substantial doubt about the Company's
         ability to continue as a going concern. The appropriateness of using a
         going concern basis is dependent upon, among other things, confirmation
         of a plan or plans of reorganization, future profitable operations and
         the ability to generate cash from operations and financing sources
         sufficient to meet obligations. As a result of the filing of the
         Chapter 11 cases and related circumstances, realization of assets and
         liquidation of liabilities is subject to significant uncertainty. While
         under the protection of Chapter 11, the Debtors (as defined below in
         Note 2) may sell or otherwise dispose of assets, and liquidate or
         settle liabilities for amounts other than those reflected in the
         condensed consolidated financial statements. Further, a plan or plans
         of reorganization could materially change the amounts reported in the
         accompanying condensed consolidated financial statements. The condensed
         consolidated financial statements do not include any adjustments
         relating to recoverability of the value of recorded asset amounts or
         the amount and classification of liabilities that might be necessary as
         a consequence of a plan of reorganization. The Company anticipates
         significant adjustments to the condensed consolidated financial
         statements as a result of applying the provisions of Statement of
         Position 90-7 "Financial Reporting by Entities in Reorganization Under
         the Bankruptcy Code" during the proceedings. At this time, it is not
         possible to predict the outcome of the Chapter 11 cases or their effect
         on the Company's business, its financial position, results of
         operations or cash flows. If it is determined that the liabilities
         subject to compromise in the Chapter 11 cases exceed the fair value of
         the assets, unsecured claims may be satisfied at less than 100% of
         their face value and equity interests of the Company's stockholders may
         have no value. The Company believes the DIP Credit Facility (as defined
         below in Note 3) should provide the Company with adequate liquidity to
         conduct its business while it prepares a reorganization plan.

2.       BANKRUPTCY

         On September 24, 2001, the Company and eight of its subsidiaries
         (collectively, the "Debtors") filed voluntary petitions under Chapter
         11 of the U.S. Bankruptcy Code (the "Bankruptcy Code") with the United
         States Bankruptcy Court for the Northern District of Ohio (the
         "Bankruptcy Court"). The Chapter 11 cases Nos. 01-44007 (REG) through
         01-44015 (REG) (the "Chapter 11 Cases") have been consolidated for the
         purpose of joint administration. As of May 1, 2002, the Debtors are
         continuing to operate their business as debtors-in-possession under
         Chapter 11 of the Bankruptcy Code and are subject to the jurisdiction
         of the Bankruptcy Court.

<PAGE>8

         As a result of these filings, actions to collect pre-petition
         indebtedness are stayed and other contractual obligations against the
         Debtors may not be enforceable. In addition, under the Bankruptcy Code,
         the Debtors may assume or reject executory contracts, including real
         estate leases, employment contracts, personal property leases, service
         contracts and other unexpired executory pre-petition contracts, subject
         to Bankruptcy Court approval. Parties affected by these rejections may
         file claims with the Bankruptcy Court in accordance with the Bankruptcy
         Code. The Debtors cannot presently determine or reasonably estimate the
         ultimate liability that may result from the filing of claims for all
         contracts that may be rejected. Substantially all pre-petition
         liabilities are subject to settlement under a plan of reorganization to
         be voted on by the creditors and equity holders and approved by the
         Bankruptcy Court. Although the Debtors expect to file a reorganization
         plan or plans that provide for emergence from bankruptcy sometime
         during calendar year 2002, there can be no assurance that a
         reorganization plan or plans will be proposed by the Debtors or
         confirmed by the Bankruptcy Court or that any such plan will be
         consummated.

         As provided by the Bankruptcy Code, the Debtors have the exclusive
         right to submit a plan of reorganization for 120 days from the date of
         the filing of the voluntary petitions. On January 11, 2002, the
         Bankruptcy Court granted the Company an additional 180 day extension of
         the period of exclusivity through July 23, 2002. Further extension may
         be sought and may be granted or rejected by the Bankruptcy Court. If
         the Debtors fail to file a plan of reorganization during such period or
         if the required number of creditors and equity holders does not accept
         such plan within the required period, any party in interest may
         subsequently submit its own plan of reorganization for the Debtors. The
         Bankruptcy Court may confirm a plan of reorganization notwithstanding
         the non-acceptance of the plan by an impaired class of creditors or
         equity holders if certain requirements of the Bankruptcy Code are met.
         A plan of reorganization also could result in holders of the Company's
         common stock receiving no value for their interest. The Chapter 11
         filing, the uncertainty regarding the eventual outcome of the
         reorganization case and the effect of other unknown adverse factors
         raise substantial doubt concerning the Company's existence as a going
         concern.

         Schedules have been filed with the Bankruptcy Court setting forth the
         assets and liabilities of the Debtors as of the filing date as shown by
         the Company's accounting records. Differences between amounts shown by
         the Company and claims filed by creditors will be investigated and, if
         necessary, unresolved disputes will be determined by the Bankruptcy
         Court. The ultimate settlement terms for such liabilities are subject
         to a plan of reorganization, and accordingly, are not presently
         determinable.

         Management determined that the reorganization was necessary to address
         operational and liquidity difficulties resulting from the slowing
         economy, changes in consumer buying habits, increased competition from
         larger retail chains, the geographic diversity of some Phar-Mor
         locations, the reduction of credit terms by vendors and the service of
         high-cost debt.

         As part of the restructuring, Phar-Mor has closed 65 of its 139 stores.
         These stores were identified as either under-performing or outside the
         Company's core markets. The decision to close the 65 stores resulted in
         an impairment charge of $12,360, recorded in the thirteen weeks ended
         September 29, 2001, to reduce the long-lived assets of the 65 stores to
         their net realizable value. The Company will focus continuing
         operations on the 74 remaining stores, while reducing corporate
         overhead and solidifying its position in the market it serves. During
         the thirteen weeks ended September 29, 2001, the Company identified
         certain store and corporate employee positions that would be terminated
         as part of the reorganization resulting in severance costs recorded in
         the amount of $1,485. On October 3, 2001 the Company sold its pharmacy
         prescription files for the stores that closed through a court approved

<PAGE>9

         auction for $23,475 resulting in a gain of $21,148. The Company also
         sold the pharmacy inventory in the closing stores as part of the
         pharmacy prescription file sale for $8,619, 100% of cost, and sold the
         remaining inventory in the closing stores to a liquidator on October
         11, 2001 for $30,630, approximately 65% of cost. The Company recorded
         write-downs of $499 and $16,394 in the thirteen and twenty-six weeks
         ended December 29, 2001, respectively, to reduce the inventory to its
         net realizable value. On December 1, 2001, the Company rejected the
         leases for the closed stores and recorded a reserve for lease rejection
         claims of $19,069 and eliminated deferred rent and unfavorable lease
         liabilities associated with the rejected leases totaling $6,689.

         During the thirteen weeks ended March 30, 2002 the Company decided to
         close one additional store. As a result the Company recorded
         write-downs of long-lived assets of $1,099 and inventory of $207 and a
         gain of $724 from the sale of the lease. The store closed in April
         2002.

3.       Debtor-in-Possession Credit Facility

         On September 24, 2001, the Company secured a $135 million
         Debtor-in-Possession ("DIP") Credit Facility through Fleet Retail
         Finance, the Company's principal secured lender, which will be used to
         fund the Company's operations through the reorganization process. The
         DIP Credit Facility received final approval from the Bankruptcy Court
         on October 23, 2001.

         Borrowings under the DIP Credit Facility may be used for working
         capital needs and general corporate purposes. Up to $20,000 of the
         facility at any time may be used for standby and documentary letters of
         credit. The facility includes restrictions on, among other things,
         additional debt, investments, dividends and other distributions,
         mergers and acquisitions. The facility contains a financial covenant
         that requires the Company to maintain a minimum excess availability of
         the greater of $8,000 or 7% of total availability.

         Credit availability under the DIP Credit Facility at any time is the
         lesser of the Availability (as defined in the Facility) or $135,000.
         Maximum credit availability under the DIP Credit Facility declined to
         $100,000 on November 1, 2001 at the Company's election. The DIP Credit
         Facility establishes a first priority lien and security interest in all
         of the assets of the Company.

         Advances made under the DIP Credit Facility bear interest at the Fleet
         National Bank prime rate plus 0% to .5% or LIBOR plus 2% to 2.5%
         depending on the average unused credit availability during the
         preceding quarter. Under the terms of the DIP Credit Facility, the
         Company is required to pay a commitment fee of 0.375% per annum on the
         unused portion of the facility, letter of credit fees and certain other
         fees.

         The DIP Credit Facility expires on the earlier of the Company's
         emergence from bankruptcy as a reorganized entity or September 24,
         2003.

         Unused availability under the DIP Credit Facility, after subtracting
         amounts used for outstanding letters of credit, was $45,810 at March
         30, 2002 and outstanding borrowings totaled $31,900.



<PAGE>10


4.       LIABILITIES SUBJECT TO COMPROMISE

         Liabilities subject to compromise are subject to future adjustments
         depending on Bankruptcy Court actions and further developments with
         respect to disputed claims. Liabilities subject to compromise as of
         March 30, 2002 were as follows:

                Accounts payable               $ 84,262
                Unsecured senior notes           41,312
                Lease rejection costs            19,069
                Accrued expenses                 12,873
                Term debt                         4,525
                Capital lease obligations         2,575
                                               --------
                                               $164,616
                                               ========

         Liabilities subject to compromise under reorganization proceedings
         include substantially all current and long-term unsecured liabilities
         as of the date of the Filing. Pursuant to the provisions of the
         Bankruptcy Code, payment of those liabilities may not be made except
         pursuant to a plan of reorganization or Bankruptcy Court order while
         the Debtors continue to operate as debtors-in-possession.


5.       REORGANIZATION ITEMS

         Reorganization items that were directly associated with the Company's
         Chapter 11 reorganization proceedings and the resulting restructuring
         of its operations consisted of the following for the thirteen and
         thirty-nine weeks ended March 30, 2002 (See Note 2 for a description of
         significant reorganization items):

<TABLE>
<CAPTION>
                                                            13 weeks ended     39 weeks ended
                                                            March 30, 2002     March 30, 2002
                                                            --------------     --------------

<S>                                                                <C>            <C>
        Gain on sale of prescription files                         $   --         $(21,148)
        Write-down inventory to expected net realizable value           207         16,601
        Impairment of long-lived assets                               1,099         13,442
        Lease rejection costs, net                                     --           12,380
        Professional fees                                             1,651          4,931
        Severance and retention costs                                 1,701          3,779
        Gain on sale of lease                                          (724)          (724)
        Other                                                          --            1,052
                                                                   --------       --------
        Total provision for reorganization                         $  3,934       $ 30,313
                                                                   ========       ========
</TABLE>

6.       NEW ACCOUNTING PRONOUNCEMENTS

         In June 2001, the FASB issued SFAS No. 141, Business Combinations, and
         SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141
         requires that all business combinations initiated after June 30, 2001,
         be accounted for using the purchase method of accounting. After giving
         consideration to the guidance provided by SFAS No. 141, we do not
         believe that the adoption of this statement will have a material impact
         on our consolidated financial position, results of operations or cash
         flows for fiscal 2002. SFAS No. 142 changes the accounting for goodwill
         and certain other intangible assets from an amortization method to an
         impairment only approach. The Company is currently assessing but has
         not determined the impact of SFAS No. 142, effective June 30, 2002, on
         its financial position and results of operations.

         In August 2001, the FASB issued SFAS No. 144, Accounting for the
         Impairment or Disposal of Long-Lived Assets, which provides guidance

<PAGE>11

         that will eliminate inconsistencies in accounting for the impairment or
         disposal of long-lived assets under existing accounting pronouncements.
         The Company will apply the provisions of this standard prospectively
         beginning June 30, 2002 and does not expect the adoption to have a
         material impact on its financial position or results of operations.


7.       LITIGATION

         The Company and its subsidiaries are involved in legal proceedings,
         claims and litigation arising in the ordinary course of business. In
         the opinion of management, the outcome of such current legal
         proceedings, claims and litigation will not have a material impact of
         the Company's consolidated financial position, results of operations or
         cash flows.

<PAGE>12

PHAR-MOR, INC. AND SUBSIDIARIES
(Debtor-in-Possession)
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (all dollar amounts in thousands)

The following discussion and analysis should be read in conjunction with the
condensed consolidated financial statements and footnotes presented in this
report.

CHAPTER 11 FILING

On September 24, 2001 the Company and eight of its subsidiaries (collectively,
the "Debtors") filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy
Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the
Northern District of Ohio (the "Bankruptcy Court"). The Chapter 11 cases Nos.
01-44007 (REG) through 01-44015 (REG) (the "Chapter 11 Cases") have been
consolidated for the purpose of joint administration. As of February 1, 2002,
the Debtors are continuing to operate their business as debtors-in-possession
under Chapter 11 of the Bankruptcy Code and are subject to the jurisdiction of
the Bankruptcy Court.

As a result of these filings, actions to collect pre-petition indebtedness are
stayed and other contractual obligations against the Debtors may not be
enforceable. In addition, under the Bankruptcy Code, the Debtors may assume or
reject executory contracts, including real estate leases, employment contracts,
personal property leases, service contracts and other unexpired executory
pre-petition contracts, subject to Bankruptcy Court approval. Parties affected
by these rejections may file claims with the Bankruptcy Court in accordance with
the Bankruptcy Code. The Debtors cannot presently determine or reasonably
estimate the ultimate liability that may result from the filing of claims for
all contracts that may be rejected. Substantially all pre-petition liabilities
are subject to settlement under a plan of reorganization to be voted on by the
creditors and equity holders and approved by the Bankruptcy Court. Although the
Debtors expect to file a reorganization plan or plans that provide for emergence
from bankruptcy sometime during calendar year 2002, there can be no assurance
that a reorganization plan or plans will be proposed by the Debtors or confirmed
by the Bankruptcy Court or that any such plan will be consummated.

As provided by the Bankruptcy Code, the Debtors have the exclusive right to
submit a plan of reorganization for 120 days from the date of the filing of the
voluntary petitions. On January 11, 2002, the Bankruptcy Court granted the
Company an additional 180 day extension of the period of exclusivity through
July 23, 2002. Further extension may be sought and may be granted or rejected by
the Bankruptcy Court. If the Debtors fail to file a plan of reorganization
during such period or if such plan is not accepted by the required number of
creditors and equity holders within the required period, any party in interest
may subsequently submit its own plan of reorganization for the Debtors. The
Bankruptcy Court may confirm a plan of reorganization notwithstanding the
non-acceptance of the plan by an impaired class of creditors or equity holders
if certain requirements of the Bankruptcy Code are met. A plan of reorganization
also could result in holders of the Company's common stock receiving no value
for their interest. The Chapter 11 filing, the uncertainty regarding the
eventual outcome of the reorganization case and the effect of other unknown
adverse factors raise substantial doubt concerning the Company's existence as a
going concern.

Schedules have been filed with the Bankruptcy Court setting forth the assets and
liabilities of the Debtors as of the filing date as shown by the Company's
accounting records. Differences between amounts shown by the Company and claims
filed by creditors will be investigated and, if necessary, unresolved disputes
will be determined by the Bankruptcy Court. The ultimate settlement terms for
such liabilities are subject to a plan of reorganization, and accordingly, are
not presently determinable.

Management determined that the reorganization was necessary to address
operational and liquidity difficulties resulting from the slowing economy,
changes in consumer buying habits, increased competition from larger retail
chains, the geographic diversity of some Phar-Mor locations, the reduction of
credit terms by vendors and the service of high-cost debt.

<PAGE>13

STORE CLOSINGS

As part of the restructuring, Phar-Mor has closed 65 of its 139 stores. These
stores were identified as either under-performing or outside the Company's core
markets. The Company will focus continuing operations on the 74 remaining
stores, while reducing corporate overhead and solidifying its position in the
market it serves. On October 3, 2001 the Company sold its pharmacy prescription
files for the stores that closed through a court approved auction for $23,475.
The Company also sold the pharmacy inventory in the closing stores as part of
the pharmacy prescription file sale for $8,619, 100% of cost, and sold the
remaining inventory in the closing stores to a liquidator on October 11, 2001
for $30,630, approximately 65% of cost.

CRITICAL ACCOUNTING POLICIES

The financial statements are prepared in accordance with generally accepted
accounting principals and include amounts based on management's prudent
judgements and estimates. Actual results may differ from these estimates.

Management believes that any reasonable deviation from those judgements and
estimates would not have a material impact on the company's consolidated
financial position or results of operations. Some of the more significant
estimates include liability insurance reserves, alowance for doubtful accounts
and inventory shrinkage reserves. The company uses the following techniques to
determine its estimates:

Liability insurance reserves -
         Incurred losses by policy year extended by historical growth factors to
         derive ultimate losses.

Allowance for doubtful accounts -
         Based on both specific receivables and historic write-off percents.

Inventory shrinkage reserves -
         Based primarily on historic shrink results on a individual store basis
         and adjusted based on periodic inventories taken throughout the year.

FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

Certain statements in this report contain "forward-looking" information that
involves risk and uncertainty, including our ability to continue as a going
concern, the timeframe for filing a plan of reorganization, the adequacy of our
DIP financing, our reduction of corporate overhead, solidifying our market
position and our attempt to manage interest rate risk. This forward-looking
information is based upon a number of assumptions including assumptions relating
to our successful negotiations with creditors, a plan of reorganization will be
timely proposed or consummated, future profitable operations, the ability to
generate cash from operations and financing sources sufficient to meet
obligations, general economic conditions, current and future markets for the
Company's products, demand for the Company's products and performance of
internal plans. Actual results and future trends may differ materially depending
on a variety of factors, including those factors contained in the Company's SEC
filings, including, without limitation, the Company's Annual Report on Form 10-K
for the year ended June 30, 2001.

RESULTS OF OPERATIONS

Thirteen Weeks Ended March 30, 2002 versus
    Thirteen Weeks Ended March 31, 2001

Total sales for the third quarter of fiscal year 2002 ("Fiscal 2002") decreased
39.5% compared to the third quarter of fiscal year 2001 ("Fiscal 2001").

<PAGE>14

Comparable store sales for the continuing 74 stores declined 8.8% from $199,232
in Fiscal 2001 to $181,693 in Fiscal 2002. Comparable store pharmacy sales
increased 4.7% while comparable store front-end sales decreased 15.6%.

Cost of sales as a percentage of sales was 84.2% in Fiscal 2002 compared to
82.7% in Fiscal 2001, an increase of 1.5% of sales. The increase was primarily
due to lower product margins due to the decrease in higher margin front end
sales and lower vendor allowances for promotional activity.

Selling, general and administrative expenses as a percentage of sales were 18.3%
in Fiscal 2002 compared to 16.9% in Fiscal 2001, an increase of 1.4% of sales.
This increase was primarily due to higher store wages as a percentage of sales,
higher advertising costs and higher corporate wage costs as a percentage of
sales.

The Company recorded a net charge of $3,934 during the third quarter of fiscal
year 2002 for reorganization items in connection with Company's bankruptcy
filing on September 24, 2001 including a provision for the closing of one of the
Company's stores.

The reorganization items consisted of the following:

        Severance and retention costs                              $ 1,701
        Professional fees                                            1,651
        Impairment of long-lived assets                              1,099
        Gain on sale of lease                                         (724)
        Write-down inventory to expected net realizable value          207
                                                                   -------
        Total provision for reorganization                         $ 3,934
                                                                   =======

Depreciation and amortization expense was $3,365 in Fiscal 2002 compared to
$4,911 in Fiscal 2001, a decrease of $1,546. The decrease was primarily due to
lower depreciation expense as a result of the closure of 65 stores in the second
quarter of fiscal year 2002, and a $273 reduction in video rental tape
amortization due to the elimination of the video rental departments in March
2001.

Interest expense was $1,147 in Fiscal 2002 compared to interest expense of
$3,977 in Fiscal 2001, a $2,830 decrease. The decrease in interest expense was
primarily due to the elimination of interest expense on the senior notes due to
the bankruptcy filing and decreased borrowings under the revolving credit
facility.

The Company recognized $886 in interest income in Fiscal 2002 as a result of a
favorable tax court decision relating to personal property taxes including
interest for fiscal years 1993 through 1996.

The Company recorded an equity in income of affiliates of $1,520 in Fiscal 2001.
There was no equity in loss of affiliates recorded in Fiscal 2002 since the
Company's investment in its affiliates was reduced to zero in the thirteen weeks
ended September 29, 2001.

The Company recorded an extraordinary gain on the early extinguishment of debt
of $2,634 in Fiscal 2001 from the repurchase of $5,348 of its 11.72% senior
notes.

Thirty-nine Weeks Ended March 30, 2002 versus
    Thirty-nine Weeks Ended March 31, 2001

Total sales for the thirty-nine weeks ended March 30, 2002 decreased 30.4%
compared to the thirty-nine weeks ended March 31, 2001. Comparable store sales
for the continuing 74 stores declined 11.1% from $629,329 for the thirty-nine
weeks ended March 31, 2001 to $559,181 for the thirty-nine weeks ended March 30,
2002. Comparable store pharmacy sales increased 5.0% while comparable store
front-end sales decreased 18.5%. Front-end sales were affected by interruptions
in supply prior to and after the Company's bankruptcy filing on September 24,
2001. The Company did not advertise the last two weeks in September and the

<PAGE>15

first two weeks in October as a result of the difficulty in obtaining sufficient
quantities of goods for products featured in its weekly advertising circulars.

Cost of sales as a percentage of sales was 84.9% in the thirty-nine weeks ended
March 30, 2002 compared to 82.7% in the thirty-nine weeks ended March 31, 2001,
an increase of 2.2% of sales. The increase was primarily due to lower product
margins due to the decrease in higher margin front end sales, lower vendor
allowances for promotional activity and higher occupancy costs as a percentage
of sales due to the decrease in sales.

Selling, general and administrative expenses as a percentage of sales were 17.9%
in the thirty-nine weeks ended March 30, 2002 compared to 16.3% in the
thirty-nine weeks ended March 31, 2001, an increase of 1.6% of sales. This
increase was primarily due to higher store wages as a percentage of sales due
primarily to the decrease in sales, higher advertising costs, higher utility
costs and higher corporate wage costs as a percentage of sales.

The Company recorded a charge of $30,313 during the thirty-nine weeks ended
March 30, 2002 for reorganization items in connection with Company's bankruptcy
filing on September 24, 2001 and the closing of 66 of the Company's stores.

The reorganization items consisted of the following:

        Gain on sale of prescription files                         $(21,148)
        Write-down inventory to expected net realizable value        16,601
        Impairment of long-lived assets                              13,442
        Lease rejection costs, net                                   12,380
        Professional fees                                             4,931
        Severance and retention costs                                 3,779
        Gain on sale of lease                                          (724)
        Other                                                         1,052
                                                                   --------
        Total provision for reorganization                         $ 30,313
                                                                   ========

Depreciation and amortization expense was $10,361 in the thirty-nine weeks ended
March 30, 2002 compared to $15,209 in the thirty-nine weeks ended March 31,
2001, a decrease of $4,848. The decrease was primarily due to lower depreciation
expense as a result of the closure of 65 stores in the second quarter of fiscal
year 2002 and a $1,137 reduction in video rental tape amortization due to the
elimination of the video rental departments in March 2001.

Interest expense was $6,371 in the thirty-nine weeks ended March 30, 2002
compared to interest expense of $14,412 in the thirty-nine weeks ended March 31,
2001, a $8,041 decrease. The decrease in interest expense was primarily due to
the elimination of interest expense on the senior notes after September 24, 2001
due to the bankruptcy filing and decreased borrowings under the revolving credit
facility.

Equity in (loss) / income of affiliates decreased from an income of $127 in the
thirty-nine weeks ended March 31, 2001 to a loss of $2,709 in the thirty-nine
weeks ended March 30, 2002, primarily due to the net loss of Avatex in the
thirty-nine weeks ended March 30, 2002 compared to the net income of Avatex in
the thirty-nine weeks ended March 31, 2001 and an impairment of long-lived asset
charge recorded by one of the Company's affiliates.

The Company recorded an extraordinary gain on the early extinguishment of debt
of $19,731 in the thirty-nine weeks ended March 31, 2001 from the repurchase of
$40,001 of its 11.72% senior notes.

FINANCIAL CONDITION AND LIQUIDITY (all dollar amounts in thousands)

The Company's liquidity position deteriorated in the first quarter of fiscal
year 2002 primarily due to a reduction in trade accounts payable due to a

<PAGE>16

reduction in credit terms from the Company's suppliers that resulted in a
significant deficiency in cash necessary for operating activities. As described
above under "Chapter 11 Filing," on September 24, 2001, the Company filed a
voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy
Code.

On September 24, 2001, the Company secured a $135 million Debtor-in-Possession
("DIP") Credit Facility through Fleet Retail Finance, the Company's principal
secured lender, which will be used to fund the Company's operations through the
reorganization process. The DIP Credit Facility received final approval from the
Bankruptcy Court on October 23, 2001.

Borrowings under the DIP Credit Facility may be used for working capital needs
and general corporate purposes. Up to $20,000 of the facility at any time may be
used for standby and documentary letters of credit. The facility includes
restrictions on, among other things, additional debt, investments, dividends and
other distributions, mergers and acquisitions. The facility contains a financial
covenant that requires the Company to maintain a minimum excess availability of
the greater of $8,000 or 7% of total availability.

Credit availability under the DIP Credit Facility at any time is the lesser of
the Availability (as defined in the Facility) or $135,000. Maximum credit
availability under the DIP Credit Facility declined to $100,000 on November 1,
2001 at the Company's election. The DIP Credit Facility establishes a first
priority lien and security interest in all of the assets of the Company.

Advances made under the DIP Credit Facility bear interest at the Fleet National
Bank prime rate plus 0% to .5% or LIBOR plus 2% to 2.5% depending on the average
unused credit availability during the preceding quarter. Under the terms of the
DIP Credit Facility, the Company is required to pay a commitment fee of 0.375%
per annum on the unused portion of the facility, letter of credit fees and
certain other fees.

The DIP Credit Facility expires on the earlier of the Company's emergence from
bankruptcy as a reorganized entity or September 24, 2003.

Unused availability under the DIP Credit Facility, after subtracting amounts
used for outstanding letters of credit, was $45,810 at March 30, 2002 and
outstanding borrowings totaled $31,900.


Thirty-nine weeks ended March 30, 2002

During the thirty-nine weeks ended March 30, 2002, the Company's cash position
decreased by $3,131. Net cash provided by operating activities was $58,333. The
major sources of cash from operating activities were a decrease in inventories
of $54,768 due mainly to the liquidation of the inventory in the 65 stores
closed during the period and an increase in accounts payable of $37,732 due
primarily to the disruption in payments of accounts payable resulting from the
Company's bankruptcy filing on September 24, 2001. These were partially offset
by a net loss of $66,890 less non-cash charges for depreciation and amortization
of $11,321 and non-cash reorganization items of $20,551.

Cash provided by investing activities consisted of proceeds on the sale of
pharmacy files of $23,475 and proceeds on the sale of equipment of $1,246. These
were partially offset by capital expenditures of $1,727.

Net cash used by financing activities of $84,458 consisted of repayments of the
revolving credit facility of $68,373, debt issuance cost of $1,511, decreases in
bank overdrafts of $10,360, principal payments on lease obligations of $1,915
and principal payments on long-term debt of $2,299.

The Company is exposed to certain market risks from transactions that are
entered into during the normal course of business. The Company's policies do not
permit active trading of, or speculation in, derivative financial instruments.
The Company's primary market risk exposure relates to interest rate risk. The

<PAGE>17

Company manages its interest rate risk in order to balance its exposure between
fixed and variable rates while attempting to minimize its interest costs.


Recently issued accounting standards

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that all
business combinations initiated after June 30, 2001, be accounted for using the
purchase method of accounting. After giving consideration to the guidance
provided by SFAS No. 141, we do not believe that the adoption of this statement
will have a material impact on our consolidated financial position, results of
operations or cash flows for fiscal 2002. SFAS No. 142 changes the accounting
for goodwill and certain other intangible assets from an amortization method to
an impairment only approach. The Company is currently assessing but has not
determined the impact of SFAS No. 142, effective June 30, 2002, on its financial
position and results of operations.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which provides guidance that will eliminate
inconsistencies in accounting for the impairment or disposal of long-lived
assets under existing accounting pronouncements. The Company will apply the
provisions of this standard prospectively beginning June 30, 2002 and does not
expect the adoption to have a material impact on its financial position or
results of operations.



<PAGE>18


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

                  On September 24, 2001, the Debtors filed their voluntary
                  petitions for reorganization under Chapter 11 of the
                  Bankruptcy Code with the United States Bankruptcy Court for
                  the Northern District of Ohio, Case Nos. 01-44007 (REG)
                  through 01-44015 (REG). All civil litigation commenced against
                  the Debtors prior to that date has been stayed by operation of
                  law.

ITEM 2.  CHANGES IN SECURITIES

                  None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                  None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  None.

ITEM 5.  OTHER INFORMATION

                  None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  See Exhibit Index on page 11.

         (b)      Reports on Form 8-K

                  The following reports on Form 8-K were filed with the
                  Securities and Exchange Commission during the quarter ended
                  March 30, 2002

                  None.


<PAGE>19

                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                 PHAR-MOR, INC.


Date:  May 6, 2002                    By:   /s/ Martin S. Seekely
                                                -------------------------
                                                Martin S. Seekely
                                                Vice President and Chief
                                                  Financial Officer



Date:  May 6, 2002                    By:   /s/ John R. Ficarro
                                                -----------------------
                                                John R. Ficarro
                                                Senior Vice President and Chief
                                                  Administrative Officer


<PAGE>20


                                 PHAR-MOR, INC.

                                INDEX TO EXHIBITS


Exhibit No.
*3.1             Amended and Restated Articles of Incorporation

**3.2            Amended and Restated By-laws

*4.1             Indenture dated September 11, 1995 between  Phar-Mor,  Inc. and
                 IBJ Schroder Bank & Trust Company

*4.2             Warrant  Agreement  dated  September 11, 1995 between Phar-Mor,
                 Inc. and Society National Bank

***10.1          Loan and Security  Agreement  dated  September 24, 2001 by  and
                 among the financial  institutions listed on the signature pages
                 therein, Fleet Retail Finance, Inc., as  agent,  and  Phar-Mor,
                 Inc., Phar-Mor, Inc. LLC, Phar-Mor of  Delaware, Inc., Phar-Mor
                 of Florida, Inc., Phar-Mor of Ohio,  Inc.,Phar-Mor of Virginia,
                 Inc., Phar-Mor of Wisconsin, Inc., and Pharmhouse Corp

10.2             Amended and Restated Employment Agreement between Phar-Mor,
                 Inc. and M. David Schwartz, dated February 15, 2002

10.3             Amended and Restated Employment Agreement between Phar-Mor,
                 Inc. and John R. Ficarro, dated February 15, 2002

10.4             Employment Agreement between Phar-Mor, Inc. and Martin S.
                 Seekely, dated February 15, 2002
--------------------------------------------------------------------------------
*        Previously filed in connection with the filing of Phar-Mor's Form 10,
         on October 23, 1995

**       Previously filed in connection with the filing of Phar-Mor's quarterly
         report on Form 10-Q, on May 1, 1998

***      Previously filed in connection with the filing of Phar-Mor's Form 10-K,
         on October 15, 2001