SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                   FORM 10-Q/A


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

          For the  quarterly  period ended  September 29, 2001  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 November 2, 2001,  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


EXPLANATORY NOTE

This  Amendment  No. 1 on Form  10-Q/A  of  Phar-Mor,  Inc.  hereby  amends  the
Company's Quarterly Report on Form 10-Q for the quarterly period ended September
29, 2001.  This  amendment  reflects the  restatement  of our September 29, 2001
financial  statements related to our equity investments in Chemlink  Acquisition
Corporation ("Chemlink") and Avatex Corporation ("Avatex").

On November 12, 2001 we issued our condensed  consolidated  financial statements
for the thirteen  weeks ended  September 29, 2001.  These  financial  statements
included  our  equity in  Chemlink's and  Avatex's losses  based on  information
provided to us by Chemlink and Avatex as of our filing date.  Subsequent  to the
issuance of these financial statements,  management determined that Chemlink and
Avatex recognized  additional  losses over the amount previously  reported to us
which we understand was due to an impairment  charge  recorded  against  certain
patents held by Chemlink.

As a result, we have restated our condensed  consolidated  financial  statements
for the three months ended  September 29, 2001 to recognize an  additional  $2.4
million of equity in the losses of Chemlink and Avatex,  the amount necessary to
reduce both of the investments to zero. Because we do not have any commitment to
provide  future  financial  support  to  Chemlink  or Avatex,  under  accounting
principles  generally  accepted  in the United  States of  America,  we will not
recognize our equity in any additional losses of Chemlink or Avatex.



<PAGE>3


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

                                    FORM 10-Q/A

                    FOR THE QUARTER ENDED SEPTEMBER 29, 2001


                                    I N D E X

                                                                            Page
--------------------------------------------------------------------------------

Part I: Financial Information

        Item 1. Financial Statements

          Condensed Consolidated Balance Sheets as of September 29,
          2001(restated) and June 30, 2001                                     4

          Condensed Consolidated Statements of Operations for the Thirteen
          Weeks Ended September 29, 2001(restated) and September 30, 2000      5

          Condensed Consolidated Statements of Cash Flows for the Thirteen
          Weeks Ended September 29, 2001(restated) and September 30, 2000      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                                             16
        Item 2. Changes in Securities                                         16
        Item 3. Defaults Upon Senior Securities                               16
        Item 4. Submission of Matters to a Vote of Security Holders           16
        Item 5. Other Information                                             16
        Item 6. Exhibits and Reports on Form 8-K                              16
        Signatures                                                            17
        Exhibit Index                                                         18

<PAGE>4
<TABLE>
<CAPTION>


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

ASSETS
                                                            September 29,
                                                                 2001
                                                             (Restated-          June 30,
                                                             see Note 1)           2001
                                                              ---------            ----
<S>                                                           <C>              <C>
Current assets:
  Cash and cash equivalents                                   $   10,964       $   14,393
  Marketable securities                                                9              143
  Accounts receivable - net                                       20,414           25,495
  Merchandise inventories                                        156,416          186,226
  Prepaid expenses and other current assets                        5,790            6,595
                                                              ----------       ----------

          Total current assets                                   193,593          232,852

Property and equipment - net                                      56,198           67,044
Goodwill                                                           3,925            3,925
Investments                                                        1,301            3,233
Investment in Avatex                                                --                789
Other assets                                                       5,653            5,593
                                                              ----------       ----------

          Total assets                                        $  260,670       $  313,436
                                                              ==========       ==========

LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY

Current liabilities:
  Accounts payable                                            $      993       $   78,148
  Accrued expenses and other current liabilities                  14,556           33,387
  Current portion of long-term debt and capital lease
    obligations                                                    1,584            7,838
                                                              ----------       ----------
          Total current liabilities                               17,133          119,373

Liabilities subject to compromise                                152,435             --
Long-term debt and capital lease obligations                     102,456          160,791
Long-term self insurance reserves                                  5,108            5,503
Deferred rent and unfavorable lease liability - net               12,883            9,395
                                                              ----------       ----------
          Total liabilities                                      290,015          295,062
                                                              ----------       ----------

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                                              (115,512)         (67,807)
                                                              ----------       ----------
                                                                 (23,183)          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                     (29,880)          17,839
                                                              ----------       ----------

     Total liabilities and stockholders' (deficiency) equity  $  260,670       $  313,436
                                                              ==========       ==========
</TABLE>



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


<PAGE>5

<TABLE>
<CAPTION>


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


                                                                 Thirteen
                                                               Weeks Ended
                                                           September 29, 2001       Thirteen
                                                              (Restated-see        Weeks Ended
                                                                  Note 1)        September 30, 2000
                                                           ------------------    ------------------

<S>                                                             <C>                <C>
Sales                                                           $    279,951       $    308,187

Less:
  Cost of goods sold, including occupancy and
      distribution costs                                             236,227            255,278
  Selling, general and administrative expenses                        49,848             50,422
  Depreciation and amortization                                        3,712              5,374
                                                                ------------       ------------
Loss before interest expense, investment loss,
  reorganization items and equity in loss of affiliates               (9,836)            (2,887)

Interest expense                                                      (3,929)            (5,033)
Investment loss                                                           (3)              (492)
                                                                ------------       ------------
Loss before reorganization items and equity in loss of
  affiliates                                                         (13,768)            (8,412)


Reorganization items                                                 (31,228)              --
Equity in loss of affiliates                                          (2,709)               (90)
                                                                ------------       ------------
Net loss                                                        $    (47,705)      $     (8,502)
                                                                ============       ============


Loss per basic and diluted common share                         $      (4.43)      $      ( .77)
                                                                ============       ============

Weighted average number of basic and diluted common shares
outstanding                                                       10,764,004         11,019,871

</TABLE>

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


<PAGE>6

<TABLE>
<CAPTION>


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

                                                               Thirteen
                                                             Weeks Ended
                                                         September 29, 2001      Thirteen
                                                             (Restated-see      Weeks Ended
                                                                Note 1)      September 30, 2000
                                                         ------------------  ------------------
<S>                                                               <C>            <C>
OPERATING ACTIVITIES
  Net loss                                                        $(47,705)      $ (8,502)
  Adjustments to reconcile net loss to net
    cash provided by (used for) operating activities:
    Items not requiring the outlay of cash:
      Depreciation                                                   3,622          4,546
      Amortization of video rental tapes                              --              519
      Impairment of long-lived assets                               12,360           --
      Write-down of inventory to expected net realizable value      15,895           --
      Amortization of deferred financing costs and goodwill            499            377
      Deferred rent and unfavorable lease liability                   (273)          (343)
      Equity in loss of affiliates                                   2,709             90
    Changes in assets and liabilities:
      Accounts receivable                                            5,511         (5,038)
      Marketable securities                                            134            503
      Merchandise inventories                                       13,915        (17,687)
      Prepaid expenses                                                 805           (314)
      Other assets                                                    (758)          (264)
      Accounts payable                                              19,497          5,258
      Accrued expenses and other current liabilities                (3,181)        (5,622)
                                                                  --------       --------
  Net cash provided by (used for) operating activities              23,030        (26,477)
                                                                  --------       --------

INVESTING ACTIVITIES
  Additions to rental videotapes                                      --             (337)
  Additions to property and equipment                               (1,375)        (1,251)
  Investment in equity securities                                     --             (107)
                                                                  --------       --------
  Net cash used for investing activities                            (1,375)        (1,695)
                                                                  --------       --------

FINANCING ACTIVITIES
  (Payments) borrowings under revolving credit facility, net        (7,016)        26,890
  Debt issuance cost                                                (1,511)          --
  (Decrease) increase in bank overdrafts, net                      (13,829)           928
  Principal payments on long-term debt                              (1,989)          (502)
  Principal payments on capital lease obligations                     (739)        (1,099)
                                                                  --------       --------
  Net cash (used for) provided by financing activities             (25,084)        26,217
                                                                  --------       --------

  Decrease in cash and cash equivalents                             (3,429)        (1,955)
  Cash and cash equivalents, beginning of period                    14,393         16,752
                                                                  --------       --------
  Cash and cash equivalents, end of period                        $ 10,964       $ 14,797
                                                                  ========       ========

The accompanying notes are an integral part of these condensed consolidated
financial statements.
</TABLE>


<PAGE>7


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

          On November 12, 2001 we issued our  condensed  consolidated  financial
          statements  for the thirteen  weeks ended  September  29, 2001.  These
          financial  statements  included  our  equity in  Chemlink  Acquisition
          Corporation's  ("Chemlink") and Avatex Corporation's ("Avatex") losses
          based on  information  provided to us by Chemlink and Avatex as of our
          filing date. Subsequent to the issuance of these financial statements,
          management   determined   that  Chemlink  and  Avatex  had  recognized
          additional losses over the amount  previously  reported to us which we
          understand was due to an impairment  charge  recorded  against certain
          patents held by Chemlink.

          As a result,  we have  restated our condensed  consolidated  financial
          statements for the three months ended  September 29, 2001 to recognize
          an  additional  $2.4  million of equity in the losses of Chemlink  and
          Avatex,  the amount  necessary  to reduce both of the  investments  to
          zero.  Because  we do  not  have  any  commitment  to  provide  future
          financial support to Chemlink or Avatex,  under accounting  principles
          generally accepted in the United States of America(herein  referred to
          as "GAAP"),  we will not recognize our equity in any additional losses
          of Chemlink or Avatex.

          A summary of the significant  effects of the restatement is as follows
          (in thousands of dollars, except per share amounts):
<TABLE>

                                                                         As Previously
                                                                           Reported          As Restated
<S>                                                                       <C>             <C>
         At September 29, 2001:
              Investments                                                 $   3,155       $    1,301
              Investment in Avatex                                              583                0
              Total assets                                                  263,107          260,670
              Retained deficit                                             (113,089)        (115,512)
              Total stockholders' deficiency                                (27,443)         (29,880)

         For the thirteen weeks ended Sepetember 29, 2001:
              Equity in loss of affiliates                                $    (286)      $   (2,709)
              Net loss                                                      (45,282)         (47,705)

         Basic and diluted loss per share for the thirteen weeks
              ended September 29, 2001                                    $   (4.21)      $    (4.43)
</TABLE>


2.       BASIS OF PRESENTATION

          The accompanying unaudited 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 GAAP 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  weeks  ended  September  29,  2001 are not
          necessarily  indicative  of the results  that may be expected  for the
          fifty-two weeks ending June 29, 2002.

<PAGE>8

          The accompanying unaudited consolidated condensed 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(as  defined  in Note 3) 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 3) may sell or
          otherwise dispose of assets,  and liquidate or settle  liabilities for
          amounts  other  than those  reflected  in the  consolidated  condensed
          financial statements. Further, a plan or plans of reorganization could
          materially   change  the   amounts   reported   in  the   accompanying
          consolidated   condensed   financial   statements.   The  consolidated
          condensed 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  consolidated  condensed  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 4) should  provide  the Company  with  adequate
          liquidity to conduct its business  while it prepares a  reorganization
          plan.

3.       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 November 12, 2001, 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 Fiscal 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.

<PAGE>9

          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. 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 file its own plan of reorganization for the Debtors.  The
          Bankruptcy  Court,  upon certain findings being made by the Bankruptcy
          Court that are required by the Bankruptcy Code, must confirm a plan of
          reorganization.   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  could  raise  substantial  doubt  about the
          Company's existence as a going concern.

          Schedules  will be 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 plans to close approximately 65
          of its 139  stores.  These  stores  have  been  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  approximately  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 will close 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  approximately  65% of
          cost,  estimated  at $31,000.  The Company  recorded a  write-down  of
          $15,895 in the thirteen  weeks ended  September 29, 2001 to reduce the
          inventory to its net realizable value.


4.       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.


<PAGE>10

          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 declines to
          $100,000 on the  earlier of the  Company's  election  or December  23,
          2001.  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.

5.       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
          September 29, 2001 were as follows:

                  Accounts payable                                       $83,561
                  Unsecured senior notes                                  41,312
                  Accrued expenses                                        15,540
                  Capital lease obligations                                7,110
                  Term debt                                                4,912
                                                                        --------
                                                                        $152,435
                                                                        ========

          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.


6.       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  weeks
          ended  September 29, 2001 (See Note 2 for a description of significant
          reorganization items):

                  Impairment of long-lived assets                        $12,360
                  Write-down inventory to expected net realizable value   15,895
                  Severance costs                                          1,485
                  Professional fees                                          636
                  Other                                                      852
                                                                         -------
                  Total provision for reorganization                     $31,228
                                                                         =======
<PAGE>11

7.       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
          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.


8.       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 on
          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
consolidated  condensed  financial  statements  and footnotes  presented in this
report.

As discussed in Note 1 to the condensed consolidated  financial statements,  the
Company has restated its financial  statements as of and for the thirteen  weeks
ended  September  29,  2001 to  recognize  additional  losses  in the  Company's
investments in Chemlink  Acquisition  Corporation  and Avatex  Corporation.  The
accompanying   management's   discussion   and  analysis  gives  effect to  that
restatement.

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 November 12, 2001,
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 Fiscal 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.  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 file its own plan of  reorganization  for the
Debtors.  The  Bankruptcy  Court,  upon  certain  findings  being  made  by  the
Bankruptcy  Court that are required by the Bankruptcy  Code, must confirm a plan
of  reorganization.  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 could raise  substantial  doubt  concerning  the
Company's existence as a going concern.

Schedules will be 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  diputes
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 plans to close  approximately 65 of its
139 stores.  These stores have been  identified  as either  under-performing  or
outside the Company's core markets. The Company will focus continuing operations
on the approximately 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 will close  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  approximately  65% of cost,  estimated  at
$31,000.

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,  our planned store
closings,  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 September 29, 2001 versus
    Thirteen Weeks Ended September 30, 2000

Total and  comparable  store  sales for the first  quarter  of fiscal  year 2002
("Fiscal 2002") decreased 9.2% compared to the first quarter of fiscal year 2001
("Fiscal 2001"). Comparable store pharmacy sales increased 4.3% while comparable
store  front-end  sales  decreased  15.7%.  Front-end  sales  were  affected  by
interruptions in supply in September prior to and after the Company's bankruptcy
filing on September  24, 2001.  The Company did not advertise the last two weeks
in September 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 84.4% in Fiscal  2002  compared  to
82.8% in Fiscal 2001,  an increase of 1.6% of sales.  The increase was primarily
due to 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 17.8%
in Fiscal 2002  compared to 16.4% in Fiscal 2001,  an increase of 1.4% of sales.
This  increase was  primarily due to higher store wages as a percentage of sales
due primarily to the decrease in sales and higher utility costs.

The  Company  recorded  $31,228  in  reorganization  items  in  connection  with
Company's  bankruptcy filing on September 24, 2001 and the planned closing of 65
of the Company's stores.


<PAGE>14


The reorganization items consisted of the following:

                  Impairment of long-lived assets                        $12,360
                  Write-down inventory to expected net realizable value   15,895
                  Severance costs                                          1,485
                  Professional fees                                          636
                  Other                                                      852
                                                                          ------
                  Total provision for reorganization                     $31,228
                                                                         =======

Depreciation  and  amortization  expense was $3,712 in Fiscal  2002  compared to
$5,374 in Fiscal 2001, a decrease of $1,662.  The decrease was  primarily due to
lower  depreciation  expense  in the 30  stores  that the  Company  recorded  an
impairment  of the fixed  assets at June 29, 2001 and a $591  reduction in video
rental tape amortization due to the elimination of the video rental  departments
in March 2001.

Interest  expense  was $3,929 in Fiscal 2002  compared  to  interest  expense of
$5,033 in Fiscal 2001, a $1,104  decrease.  The decrease in interest expense was
due to lower  interest  expense on the  senior  notes due to the  repurchase  of
$40,001 in senior notes in Fiscal 2001 partially offset by increased  borrowings
under the revolving credit facility.

Equity  in loss of  affiliates  increased  from a $90 loss in  Fiscal  2001 to a
$2,709 loss in Fiscal 2002,  primarily due an impairment charge recorded against
certain patents held by Chemlink and an increase in the net loss of Avatex.


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
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  declines to $100,000 on the earlier
of the  Company's  election  or  December  23,  2001.  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 $33,772 at September 29, 2001.

<PAGE>15


Thirteen weeks ended September 29, 2001

During the thirteen weeks ended  September 29, 2001, the Company's cash position
decreased by $3,429. Net cash provided by operating  activities was $23,030. The
major sources of cash from operating  activities  were a decrease in inventories
of $13,915 and an increase in accounts  payable of $19,497 due  primarily to the
disruption in merchandise  receipts and payments of accounts  payable  resulting
from the Company's bankruptcy filing on September 24, 2001. These were partially
offset by a net loss of  $47,705  less  non-cash  charges  for  depreciation  of
$3,622,  impairment of long-lived assets of $12,360, the write-down of inventory
to  expected  net  realizable  value of $15,895  and  amortization  of  deferred
financing costs and goodwill of $499.

Capital expenditures of $1,375 were paid for with borrowings under the Company's
revolving credit facility.

Net cash used by financing activities of $25,084 consisted of repayments of the
revolving credit facility of $7,016, debt issuance cost of $1,511, decreases in
bank overdrafts of $13,829, principal payments on lease obligations of $739 and
principal payments on long-term debt of $1,989.

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


Trends,  Demands,  Commitments,  Events or Uncertainties  (all dollar amounts in
thousands)

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>16


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  September 29,
               2001

               A Current  Report on Form 8-K  reporting  one item under Item 3 -
               Bankruptcy or Receivership and one item under Item 7(c) was filed
               on September 24, 2001.

               A Current  Report on Form 8-K  reporting  one item under Item 5 -
               Other  Events one item under Item 7(c) was filed on November  11,
               2001


<PAGE>17



                                   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:  February 7, 2002                By:   /s/ Martin S. Seekely
                                          -------------------------
                                                 Martin S. Seekely
                                                 Vice President and Chief
                                                   Financial Officer



Date:  February 7, 2002                By:   /s/ John R. Ficarro
                                          -----------------------
                                                 John R. Ficarro
                                                 Senior Vice President and Chief
                                                   Administrative Officer


<PAGE>18




                                 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

--------------------------------------------------------------------------------
*    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