<PAGE>
                                           
                                           
                       U.S. 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 Quarter ended September 30, 1997
                                           
                                          OR
                                           
[ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from             to
                                  ------------   -------------

                        Commission file number    1-11568     
                                              ----------------


                              UNIVERSAL SELF CARE, INC.
                (Exact Name of Registrant as Specified in its Charter)

      DELAWARE                                              95-4228470   
-------------------------------                       -------------------
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                       Identification No.)

                                11585 Farmington Road.
                               Livonia, Michigan 48150
                 (Address of principal executive offices) (Zip code)
                                           
          Registrant's telephone number, including area code (313) 261-2988
                                                             --------------

          Securities registered pursuant to Section 12(b) of the Act:  None
                                           
             Securities registered pursuant to Section 12(g) of the Act:
                            Common Stock, $.0001 par value
                                   (Title of Class)

    Check 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, and (2) has been subject to such filing requirements for
the past 90 days.  Yes  X  No    
                      ---    ---


    The number of shares outstanding of the registrant's Common Stock, $.0001
Par Value, as of September 30, 1997 was 9,724,579 shares.


<PAGE>

                      UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
                                           
                                        INDEX
                                           

PART I - FINANCIAL INFORMATION
                                                                       Page
                                                                       Number
                                                                       ------

    ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS

    Consolidated Balance Sheet - September 30, 1997
         and June 30, 1997                                                3

    Consolidated Statement of Operations - For the three
         months ended September 30, 1997 and 1996                         4
    Consolidated Statement of Cash Flows - For the
         three months ended September 30, 1997 and 1996                   5

    Notes to Consolidated Financial Statements                          6 - 14

    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATION                                 14 - 15


PART II - OTHER INFORMATION                                               15

    Asset Purchase Agreement                                              15

SIGNATURE                                                                 16


                                       2 of 16

<PAGE>



                      UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
                                           
                              CONSOLIDATED BALANCE SHEET
                                           
                                     (UNAUDITED)

<TABLE>
<CAPTION>

 
                                                                             September 30,     June 30,
                                            ASSETS                               1997           1997
                                                                             -------------   -----------

<S>                                                                         <C>             <C>           
CURRENT ASSETS:
  Cash                                                                       $    471,658    $   541,814  
  Accounts receivable, net allowance for doubtful accounts
    of $2,347,967 and $2,261,684, respectively                                  8,552,235     10,241,191  
  Inventories                                                                     461,437        551,692  
  Prepaid expenses                                                                 74,200        111,910  
                                                                             ------------   ------------  
      TOTAL CURRENT ASSETS                                                      9,559,530     11,446,607  
                                                                             ------------   ------------  

PROPERTY AND EQUIPMENT
  net of accumulated depreciation of $696,399 and $618,017, respectively          964,729        956,446  

INTANGIBLE ASSETS, net of 
  net of accumulated amortization of $  889,999 and $806,265, respectively      5,762,663      5,847,321  

DEPOSITS AND OTHER ASSETS                                                          41,706         48,356  
                                                                             ------------   ------------  

                                                                             $ 16,328,628   $ 18,298,730  
                                                                             ============   ============  

                                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                           $  4,416,705   $  5,319,625  
  Notes payable - current portion                                                 206,528        208,126  
  Accrued liabilities                                                           2,533,325      1,976,419  
  State audit reserves                                                            700,000        700,000  
  Payroll taxes payable                                                            75,252        113,632  
                                                                             ------------   ------------  
      TOTAL CURRENT LIABILITIES                                                 7,931,810      8,317,802  

LONG TERM NOTES PAYABLE, net of current portion                                   207,083        262,916  

REVOLVING CREDIT LOAN                                                           3,675,823      4,365,410  

REDEEMABLE PREFERRED STOCK, Series A                                            1,686,324      1,829,658  

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Preferred stock, Series B Cumulative Convertible, $.0001 par value, 
    10,000,000 shares authorized, 1,580,000 shares issued and outstanding         505,000        505,000  
  Common stock, $.0001 par value, 40,000,000 shares authorized, 9,724,579 
    shares issued and outstanding as of  September 30, 1997                           972            972  
  Additional paid-in capital                                                   14,045,838     14,045,838  
  Accumulated earnings/(deficit)                                              (11,724,222)   (11,028,866) 
                                                                             ------------   ------------  
      TOTAL STOCKHOLDERS' EQUITY                                                2,827,588      3,522,944  
                                                                             ------------   ------------  

                                                                             ------------   ------------  
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 16,328,628   $ 18,298,730  
                                                                             ============   ============  
</TABLE>

                                 See notes to consolidated financial statements.

                                                  Page 3 of 16

<PAGE>

                      UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
                                           
                         CONSOLIDATED STATEMENT OF OPERATIONS
                                           
                                     (UNAUDITED)
                                           
                                             Three Months Ended September 30,
                                                    1997         1996
                                             --------------------------------

REVENUES                                         $8,258,138     $9,212,566

COST OF GOODS SOLD                                4,884,197      5,363,823
                                                 ----------     ----------

GROSS PROFIT                                      3,373,941      3,848,743

SELLING, GENERAL AND 
ADMINISTRATIVE EXPENSES                           3,875,907      3,812,673
                                                 ----------     ----------

OPERATING INCOME/( LOSS)                           (501,966)        36,070

OTHER EXPENSES:
Interest expense, net                               143,391        200,492
                                                 ----------     ----------

NET INCOME/( LOSS)                               $ (645,357)    $ (164,422)
                                                 ==========     ==========

NET INCOME/(LOSS) PER SHARE                      $    (0.07)     $   (0.02)
                                                 ==========     ==========

WEIGHTED AVERAGE NUMBER OF SHARES
USED IN COMPUTATION                               9,724,579      7,888,006




                   See notes to consolidated financial statements.
                                           
                                     Page 4 of 16
                                           
<PAGE>


                      UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
                                           
                         CONSOLIDATED STATEMENT OF CASH FLOWS
                                           
                                     (UNAUDITED)


                                              Three Months Ended September 30,
                                              --------------------------------
                                                     1997         1996
CASH FLOWS FROM OPERATING ACTIVITIES:             ----------   -----------
  Net income/( loss)                              $ (645,357)  $  (164,422)
                                                  ----------   -----------
  Adjustments to reconcile net income/(loss)
    to net cash from operating activities:
      Depreciation and amortization                  163,040       158,841

  Changes in operating assets and liabilities:
    Decrease (Increase) in accounts receivables    1,688,956       (17,258)
    Decrease (Increase)  in inventories               90,255      (160,382)
    Decrease (Increase) in prepaid expenses           37,710      (117,747)
    Decrease in deposits and other assets              6,650        17,688
    (Increase) in intangible assets                   (7,664)            -
    (Decrease) increase in accounts payable         (902,921)   (1,253,834)
    Increase (Decrease) in accrued liabilities       556,906      (585,611)
    (Decrease) in payroll taxes payable              (38,380)     (532,395)
                                                  ----------   -----------
      Total adjustments                            1,594,552    (2,490,698)
                                                  ----------   -----------

    NET CASH  (USED IN) OPERATING ACTIVITIES         949,195    (2,655,120)
                                                  ----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                               (78,999)      (38,382)
                                                  ----------   -----------
    NET CASH (USED IN) INVESTING ACTIVITIES          (78,999)      (38,382)
                                                  ----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance/(Repayments) of related party loans             -       (15,000)
  Borrowing of revolving credit line                       -     3,000,000
  Repayment of revolving credit line                (689,589)     (110,191)
  Net proceeds from (repayment of) long-term debt    (57,431)     (102,370)
  Dividends paid on Series A Preferred Stock         (49,998)      (53,664)
  Redemption of Series A Preferred Stock            (143,334)      (91,336)
                                                  ----------   -----------

    NET CASH PROVIDED BY FINANCING ACTIVITIES       (940,352)    2,627,439
                                                  ----------   -----------

NET INCREASE (DECREASE) IN CASH                      (70,156)      (66,063)

CASH AT BEGINNING OF PERIOD                          541,814        91,066
                                                  ----------   -----------

CASH AT END OF PERIOD                             $  471,658   $    25,003
                                                  ==========   ===========


                   See notes to consolidated financial statements.

                                     Page 5 of 16


<PAGE>

                              UNIVERSAL SELF CARE, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - SEPTEMBER 30, 1997
                                     (UNAUDITED)
                                           


1.  BASIS OF PRESENTATION

     Reference is made to the annual report on form 10-KSB of Universal Self
Care, Inc. (the "Company") dated October 14, 1997 for the year ended June 30,
1997.

     The accompanying financial statements reflect all adjustments which, in the
opinion of management, are necessary for a fair presentation of financial
position and the results of operations for the interim periods presented. 
Except as otherwise disclosed, all such adjustments are of a normal and
recurring nature.  The results of operations for any interim period are not
necessarily indicative of the results attainable for a full fiscal year.

2.  EARNINGS/(LOSS) PER SHARE

     Earnings/(loss) per share are based on the weighted average number of
common shares and common share equivalents outstanding during the period after
giving effect for preferred stock dividends during the period.

3.  CONTINGENCIES

DEPARTMENT OF HEALTH SERVICES

     The Company has undergone an audit by representatives of the State of
California, State Controller's Office, Division of Audits.  The purpose of the
audit was to determine the level of the Company's compliance with the guidelines
of the California Department of Health Services (Medi-Cal) and the California
State Board of Equalization.  Representatives from the State Controller's Office
have raised the issue of whether the Company may have practiced two-tier pricing
policies in the charges to it's customers which are not in conformance with
Medi-Cal regulations.  Under such regulations, a company may not charge any
customer prices less than those charged to the Medi-Cal program.  Based upon
Management's independent review, the Company maintains that it has conformed
with pricing regulations because its prices are consistent within each of its
operating subsidiaries, Sugar Free and Home Therapy, and because these two
subsidiaries are offering different services.  The Company's Management further
believes that the Medi-Cal program was charged the "prevailing prices" charged
for supplies, and that those charges were in compliance with current
regulations, and that the Representatives from the Controller's Office compared
prices for different services with different delivery methods.  The State
Controller's Office contends that the reimbursement was paid for products, and
not for services, so the difference in pricing was not warranted based upon the
services rendered in conjunction with the products delivered.  In July 1994, the
State Controller's Office issued an Auditor's Report with findings to the
Department 


                                       6 of 16

<PAGE>

of Health Services ("DHS") for the period beginning July 1, 1990 through June
30, 1993.  The Report recommends a recovery of approximately $1.3 million due to
such alleged two-tier pricing.  In November 1994 the State Controller's Office
issued Letter of Demand for the recovery of such amounts due.  In November 1994,
the Company appealed the audit determination made by the State Controller's
Office.  In January 1996 a hearing was held before an Administrative Law Judge. 
In July 1996 the Judge recommended that the overpayment determination be upheld.
In August 1996 the DHS adopted the recommendation of the Law Judge as the final
decision of the Director of DHS.  In January 1997 the Company filed an appeal to
the decision with the Superior Court for the County of Los Angeles.  The Company
intends to vigorously contest any recovery by the State with respect to such
alleged improper pricing practices for services rendered.

Based upon the above contingency, the Company has provided a reserve, in the
event that a defense of its position does not prevail, of $700,000.  Management
believes that a total estimated settlement amount of $700,000, or 54% of the
maximum amount demanded, is reasonable under the circumstances with respect to
this matter.

CALIFORNIA STATE BOARD OF EQUALIZATION

     The Company has also undergone an audit by the California State Board of
Equalization ("SBE") as a result of separate findings made by the State
Controller's Office (see Department of Health Services above).  The SBE has
disagreed with the Company's policies regarding its sales tax payments on
certain items.  The SBE has maintained that blood glucose meters, testing strips
and finger-prick lancets are taxable items.  The Company has taken the position
that these items are exempt from sales tax because they were provided pursuant
to a doctor's prescription and furthermore, they are part of an integrated
treatment for providing insulin and insulin syringes, items which are
specifically exempt from sales tax in California.  In addition, the Company
maintains that a portion of the revenues earned from the sales of diabetic
supplies were non-taxable services rendered as a separate and distinct charge.

On January 6, 1997 the SBE issued a Notice of Determination of $860,004 for the
period July 1, 1989 through September 30, 1993.  Of this amount, penalties of
$69,170 were subsequently waived.  Additionally, interest has accrued on this
assessment of $186,330.  The Company filed for appeal of this assessment.  The
matter was referred to the SBE settlement department and Company management
determined that it would be in the Company's best interest to arrive at a final
negotiated settlement amount.  On April 24, 1997, the Company agreed to a
settlement of this matter for a total amount of $980,000.  Of this amount,
$50,000 had previously been paid.  Of the remaining $930,000, $691,695 is
associated with taxes and $238,305 is associated with accrued interest.  On
August 1, 1997 the members of the Board of Equalization tentatively approved the
Settlement Agreement signed by the Company on April 24, 1997.  Under the terms
of the settlement, the full $930,000 accepted in settlement will be payable in
installments: $300,000 was paid on September 8, 1997, and $63,000 was paid on
September 30, 1997, and $63,000 was paid on October 31, 1997, and monthly
installments of $63,000 to be paid on the last day of each succeeding month
until the liability,  plus accrued interest, is repaid through June 30, 1998.


                                       7 of 16

<PAGE>

MEDICARE PART B

     The Company has undergone an audit by Medicare covering the charges
submitted for reimbursement in the Western region (Region D) during the period
January 1, 1994 through December 31, 1995.  Medicare determined that an
overpayment to the Company may have occurred as a result of the use of a
superseded diagnosis code on claims submitted.  The claims in question were
originally submitted to Medicare in order to gain a denial of charges so that an
alternative carrier could be validly billed, since a denial is required by
certain intermediaries prior to billing for certain charges.  Medicare may have
inappropriately made reimbursements on these charges.  In November 1996 Medicare
issued a demand for refund of $795,702 plus interest of $35,475.  In January
1997 Medicare began to offset the Company's  claims for payment, and the
interest charged to the Company's account.  The balance claimed, in the most
recent correspondence from Medicare to be owed by the Company on March 31, 1997
was $808,887, of which $795,701 was principal and $22,290 was accrued interest. 
The Company rebilled Medi-Cal $732,853 in February and in March $62,849. 
Company management feels that the ultimate settlement to Medicare will not have
a material impact on earnings since the Company will collect any amounts paid to
Medicare out of amounts collected after rebillings to Medi-Cal.

     Patient Care Services was previously the subject of an investigation by
Medicare for (i) Medicare's alleged overpayment for products and services
provided by Patient Care Services  and (ii) Medicare's payment to Patient Care
Services for claims which were allegedly not properly subject to Medicare
reimbursement.  During fiscal 1995, Medicare withheld $300,766 of payments due
for claims reimbursement to cover previously  estimated liabilities resulting
from this investigation.  A further assessment in the amount of $78,500
resulting from a continuation of this investigation has been made, and that
amount withheld in July 1996.  The Company went through an in-person hearing on
May 28, 1997 to contest Medicare's aggregate $379,000 of withheld
reimbursements, and on July 28, 1997 the Company received a partially favorable
Hearing Decision.  The Company received a refund on October 31, 1997, for
$30,314 from Medicare Part B based upon the partially favorable Hearing
Decision.  The Company's intends to appeal the partially unfavorable amount of
$348,686 from the Hearing Officer's decision and has retained counsel to contest
the decision in proceedings before an administrative law judge.
   
4.  REVOLVING LINE OF CREDIT

     In August, 1996, the Company entered into an accounts receivable funding
agreement with Healthpartners Funding, L.P.  ("Healthpartners") under which the
Company is able to borrow up to $4,500,000 against its qualified accounts
receivable.  Qualified accounts are generally defined as those which are less
than 91 days old and are due from a third-party payee source (i.e. Medicare,
Medicaid or commercial insurance) as opposed to those that are payable directly
by patients. Of the total credit facility, $1,500,000 has been specifically
allocated by the lender towards payment of the final settlement amount of the
California audit and is unavailable to the Company for other purposes.  The base
rate applicable to outstanding principal amounts is prime + 2.2%. The term of
the agreement is three years.  Outstanding 


                                       8 of 16

<PAGE>

principal under the agreement is secured by a first priority lien against
substantially all of the Company's accounts receivable.

     On September 1, 1996, the Company transacted for the initial draw under
this agreement, the maximum available amount of $3,000,000.  Substantially all
such funds were immediately expended by the Company for the repayment of past
due payroll taxes, past due accounts payable and certain short-term notes
payable.

      The agreement contains certain other covenants, including but not limited
to, a deterioration in the Company's financial condition.  The agreement also
forbids the payment of dividends on the Company's common stock.  A violation of
such covenants gives the lender the right to immediately call the loan.

     On November 4, 1996, HealthPartners amended the Loan Agreement ("Amendment
No. 1") to reduce the initial reserve of $1,500,000 to $100,000 and to make
available to the Company a maximum loan amount of $4,500,000.  In consideration
for the supplemental $1,400,000 in financing, HealthPartners was issued warrants
to acquire 225,000 shares of common stock at  a exercise price $2.25 per share
expiring March 18, 2002. 

     On March 14, 1997, HealthPartners  amended the Loan Agreement ("Amendment
No. 2") to make available an increase in the $4,500,000 line of credit to a
maximum of $7,500,000 through June 18, 1997.  In consideration for the three
month increase in the line of credit, the Company paid additional administrative
fees to HealthPartners of $ 10,000.00. 
      
     On June 20, 1997, HealthPartners  amended the Loan Agreement ("Amendment
No. 3") to make available an increase in the $4,500,000 line of credit to a
maximum of $6,200,000 through September 22, 1997.  In consideration for the
three month increase in the line of credit, the Company paid additional
administrative fees to HealthPartners of $ 15,000.00.

     On September 25, 1997, HealthPartners  amended the Loan Agreement
("Amendment No. 4") which contained a financial covenant that the Company will
achieve net income of at least $500,000 for its fiscal year ending June 30,
1997. The Loan Agreement ("Amendment No. 4") now contains a financial covenant
which requires that the Company's net income for its fiscal year ended June 30,
1998 be no lower than $0 (zero).  In consideration for the waiver, the Company
paid additional administrative fees to HealthPartners of $ 2,500.00. 

     On November 6, 1997, Gainor Medical Management, L.L.C. entered into a
Security Agreement with Diabetes Self Care, Inc. and USCI Healthcare Management
Solutions.  The Company's inventory will secure the obligation for products
purchased by Gainor on the Company's behalf.


5.  ASSET PURCHASE AGREEMENT

     On November 14, 1997, Gainor Medical Management, LLC and its 
wholly-owned acquisition subsidiary ("Gainor"), and the Company, its 
principal operating subsidiaries and its principal management stockholders 
entered into an Asset Purchase Agreement (the "Agreement") to sell 
substantially all of its assets to Gainor (the "transaction") for 
approximately $37,000,000; $17,000,000 in cash at closing; and approximately 
$20,000,000 in the form of a minimum 5-year note bearing interest, payable 
quarterly, at 7% through December 31, 1998 and 8% thereafter (the "Note"). 
Closing is subject to several conditions, including but not limited to the 
Company's receipt of a satisfactory "fairness" opinion with respect to the 
terms of the Transaction, approval of the Transaction by the Company's 
stockholders, and Gainor's receipt of satisfactory financing for the 
Transaciton. In addition to offsets for damages incurred by Gainor that are 
indemnifiable under the terms of the Agreement, principal of the Note is 
subject to reduction in the event that Gainor does not achieve certain 
revenue levels from operation of the acquired assets during calendar 1998 and 
Gainor is not able to collect at least $5,000,000 from the accounts 
receivable sold to Gainor as part of the Transaction during the one-year 
period succeeding the closing. The Company anticipates consummation of the 
Transaction in January 1998.

     The following pro forma consolidated financial statements have been
prepared to show the proposed disposition of all of Universal Self Care, Inc.
and Subsidiaries' (the "Company") operating assets in a sale transaction to
Gainor Medical Management, LLC ("Gainor").  

    The following unaudited pro forma consolidated balance sheet presents the
pro forma financial position of the Company at September 30, 1997 as if the
proposed sale had occurred on such date.  Included are adjustments to record the
value of the consideration paid to the Company, the disposition of assets sold,
and liabilities assumed the write-off of intangible assets connected with the 
disposed operations and the settlement of a substantial portion of the remaining
liabilities.

    The unaudited pro forma consolidated statements of operations for the year
ended June 30, 1997 and three months ended September 30, 1997 reflect the
Company in a non-operating mode after the disposition, whereupon certain
corporate general and administrative expenses will remain with the Company and
the Company's income will consist of interest collected upon the note issued in
the sale and on excess cash, as if the sale had occurred on July 1, 1996.

    The unaudited pro forma consolidated statements of operations do not
necessarily represent actual results that would have been achieved had the sale
occurred on July 1, 1996, nor may it be indicative of future operations.  These
unaudited pro forma consolidated financial statements should be read in
conjunction with the Company's historical financial statements and notes
thereto.

                                       9 of 16
<PAGE>
                   UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
 
                 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
 
                                     ASSETS

<TABLE>
<CAPTION>
                                                    BALANCE AT          PRO FORMA ADJUSTMENTS
                                                   SEPTEMBER 30,   ------------------------------
                                                       1997             DEBIT          CREDIT          TOTAL
                                                  ---------------  ---------------  -------------  -------------
<S>                                               <C>              <C>              <C>            <C>
CURRENT ASSETS:
Cash............................................  $     471,658(1) $  13,130,970(3) $   4,241,300  $   9,361,328
Accounts receivable, net allowance for doubtful
  accounts of $2,347,967........................      8,552,235                 (1)     8,552,235         --
Inventories.....................................        461,437                 (1)       461,437         --
Prepaid expenses................................         74,200                 (1)        74,200         --
                                                  ---------------                                   -------------
    TOTAL CURRENT ASSETS........................      9,559,530                                        9,361,328
                                                                                                    -------------

LONG--TERM NOTES RECEIVABLE.....................               (1)    20,000,000                      20,000,000

PROPERTY AND EQUIPMENT, net of accumulated
  depreciation of $696,729......................        964,729                 (1)       964,729         --

INTANGIBLE ASSETS, net of accumulated
  amortization of $889,999......................      5,762,663                 (2)     5,762,663         --

DEPOSITS AND OTHER ASSETS.......................         41,706                 (1)        41,706         --
                                                  ---------------  ---------------  -------------  -------------
                                                  $  16,328,628    $  33,130,970    $  20,098,270  $  29,361,328
                                                  ---------------  ---------------  -------------  -------------
                                                  ---------------  ---------------  -------------  -------------

                                    LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable..............................  $   4,416,705(1) $   4,416,705    $              $      --
  Notes payable--current portion................        206,528                                          206,528
  Accrued liabilities...........................      2,533,325(1)       795,711                       1,172,137
                                                               (3)       565,477
State audit reserves                                    700,000                                          700,000
Payroll taxes payable...........................         75,252                                           75,252
Accrued income tax payable--current portion.....                                (1)     1,500,000      1,500,000
                                                  ---------------                                  -------------
    TOTAL CURRENT LIABILITIES..................       7,931,810                                        3,653,917

LONG-TERM NOTES PAYABLE, net of current
  portion.......................................        207,083                                          207,083

REVOLVING CREDIT LOAN...........................      3,675,823(3)     3,675,823                          --

DEFERRED INCOME TAXES PAYABLE--long term
  portion.......................................                                (1)     6,000,000      6,000,000

REDEEMABLE PREFERRED STOCK, Series A............      1,686,324                                        1,686,324

STOCKHOLDERS' EQUITY
  Preferred stock, Series B Cumulative
    Convertible, $.0001 par value, 10,000,000
    shares authorized, 1,580,000 shares issued 
    and outstanding.............................        505,000                                          505,000

  Common stock, $.0001 par value 40,000,000
    shares authorized, 9,724,579 shares issued and 
    outstanding as of September 30, 1997........            972                                              972

  Additional paid-in capital....................     14,045,838                                       14,045,838
  Retain earnings (deficit).....................    (11,724,222)(2)    5,762,663(1)    20,749,079      3,262,194
                                                  ---------------                                  -------------

    TOTAL STOCKHOLDERS' EQUITY..................      2,827,588                                       17,814,004
                                                  ---------------  ---------------  -------------  -------------

                                                  $  16,328,628     $ 15,216,379    $  28,249,079  $  29,361,328
                                                  ---------------  ---------------  -------------  -------------
                                                  ---------------  ---------------  -------------  -------------
</TABLE>

                 SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS

                                 10 of 16


<PAGE>

                   UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
 
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED        PRO FORMA ADJUSTMENTS
                                            SEPTEMBER 30,     -------------------------------
                                                1997               DEBIT             CREDIT          TOTAL
                                         -------------------  --------------     --------------   ------------
<S>                                      <C>                  <C>                <C>              <C>      
REVENUES...............................    $   8,258,138  (1)   $  8,258,138     $                $      --

COST OF GOODS SOLD.....................        4,884,197                    (1)     4,884,197            --
                                         ---------------                                          ------------

GROSS PROFIT...........................        3,373,941                                                 --

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES.............................        3,875,907(3)          279,250(1)     3,875,907          279,250
                                         -------------------                                      ------------
OPERATING INCOME (LOSS)................         (501,966)                                             (279,250)
                                         -------------------                                      ------------
OTHER INCOME (EXPENSES)
  Interest (expense), net..............         (143,391)                   (1)       133,051          (10,340)
  IRS interest on deferred installment
    gain...............................          --     (4)           87,500                           (87,500)
                                         
  Interest income......................          --                         (2)       437,920          437,920
                                         -------------------                                      ------------
  TOTAL OTHER INCOME (EXPENSES)........         (143,391)                                              340,080
                                         -------------------                                      ------------

NET INCOME INCOME (LOSS) BEFORE INCOME
  TAXES................................         (645,357)                                               60,830

PROVISION FOR INCOME TAXES.............          --     (5)           24,332                            24,332
                                         -------------------  --------------     --------------   ------------

NET INCOME (LOSS)......................    $    (645,357)       $  8,649,220     $  9,331,075     $     36,498
                                         -------------------  --------------     -------------    ------------
                                         -------------------  --------------     -------------    ------------

NET INCOME (LOSS) PER SHARE............    $       (0.07)                                         $       0.00
                                         -------------------                                      ------------
                                         -------------------                                      ------------

WEIGHTED AVERAGE SHARES................        9,724,579                                             9,724,579
                                         -------------------                                      ------------
                                         -------------------                                      ------------

</TABLE>
 
                  SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS

                                 11 of 16
<PAGE>

                   UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
 
            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                             YEAR ENDED            PRO FORMA ADJUSTMENTS
                                              JUNE 30,        -------------------------------
                                                1997               DEBIT             CREDIT          TOTAL
                                         -------------------  --------------     --------------   ------------
<S>                                      <C>                  <C>                <C>              <C>   
REVENUES...............................    $  34,001,626(1)     $  34,001,626      $                $     --

COST OF GOODS SOLD.....................       19,981,506                     (1)      19,981,506          --
                                         -------------------
GROSS PROFIT...........................       14,020,120                                                  --
SELLING, GENERAL AND ADMINISTRATIVE 
  EXPENSES.............................       15,798,780(3)         1,117,000(1)      15,798,780       1,117,000
                                         -------------------                                        ------------

OPERATING INCOME (LOSS)................       (1,778,660)                                             (1,117,000)
                                         -------------------                                        ------------
OTHER INCOME (EXPENSES)
  Interest (expense), net..............         (874,572)                    (1)         833,211         (41,361)
  IRS interest on deferred 
    installment gain...................                 (4)           350,000                           (350,000)
  Interest income......................            --                        (2)       1,739,618       1,739,618
                                         -------------------                                        ------------
    TOTAL OTHER INCOME (EXPENSES)......         (874,572)                                              1,348,257
                                         -------------------                                        ------------
NET INCOME (LOSS) BEFORE 
  INCOME TAXES.........................       (2,653,232)                                                231,257

PROVISION FOR INCOME TAXES.............            --   (5)            92,503             --              92,503
                                         -------------------    --------------     --------------   ------------

NET INCOME (LOSS)......................    $  (2,653,232)        $ 35,561,129        $ 38,353,115   $    138,754
                                         -------------------    --------------     --------------   ------------
                                         -------------------    --------------     --------------   ------------

NET INCOME (LOSS) PER SHARE............    $       (0.33)                                           $       0.02
                                         -------------------                                        ------------
                                         -------------------                                        ------------

WEIGHTED AVERAGE SHARES................        8,084,278                                               8,084,278
                                         -------------------                                        ------------
                                         -------------------                                        ------------
</TABLE>
 
                  SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS

                                  12 of 16

<PAGE>
                      UNIVERSAL SELF CARE, INC. AND SUBSIDIARIES
                             NOTES TO UNAUDITED PRO FORMA
                          CONSOLIDATED FINANCIAL STATEMENTS
                                           
A.       The following unaudited pro-forma adjustments are included in the
         accompanying unaudited pro forma consolidated balance sheet at
         September 30, 1997:

         (1)  To record the sale of all the Company's operating assets with
              assumption by the buyer of certain accounts payable totaling
              $4,416,705 and accrued expenses of $795,711. The sale price is
              assumed to be $37 million, constituted as follows: $17 million
              cash (as decreased for the assumption of accounts payable and
              accrued expenses totaling $5,212,416 and increased for the book
              value of inventory, property and equipment and prepaid and other
              assets) and a $20 million note receivable payable over a minimum
              of 5 years, bearing interest at 7% for the first year and 8%
              thereafter. The estimated gain on sale is $28,249,079. The
              estimated tax impact to the Company is $7.5 million (after
              consideration of the Company's net operating loss carry
              forwards).
 
         (2)  To write off all remaining goodwill and intangible assets related
              to the Company's operations upon the disposal. 

         (3)  To utilize a portion of cash receipts from the sale to pay off
              the revolving credit loan and amount due on the California sales
              tax audit settlement. 
         
B.       The following pro-forma adjustments are included in the accompanying
         unaudited pro  forma consolidated statement of operations for the year
         ended June 30, 1997 and three months ended September 30, 1997, which
         have been prepared to reflect the sale as if it had occurred on
         July 1, 1996:

         (1)  To eliminate the operations of the disposed business from the
              Company's statement of operations.

         (2)  To record interest income at an annual rate of 7% on the $20
              million note receivable, and 6% on the remaining cash.

         (3)  To record estimated general corporation expenses of  $1,117,000
              on an annual basis.

         (4)  To record IRS interest on deferred installment gain.

         (5) To record provision of income tax.

                                13 of 16






<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS 
          OF FINANCIAL CONDITION AND RESULTS OF
          OPERATIONS

FORWARD-LOOKING STATEMENTS

     When used in the Form 10-Q and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result"
and "the Company expects," "will continue," "is anticipated," "estimated,"
"project," or "outlook" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.  The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, each of which speak
only as of the date made.  Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected.  The Company
has no obligation to publicly release the result of any revisions which may be
made to any forward-looking statements to reflect anticipated or unanticipated
events or circumstances occurring after the date of such statements.      

RESULTS OF OPERATIONS

THE THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1997 THREE MONTH PERIOD") as 
COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (THE "1996 THREE MONTH 
PERIOD")

     Revenue for the 1997 Three Month Period was $8,258,138, a decrease of
$954,428, or 10% from the 1996 Three Month Period.  A contributing factor to the
decrease is the discontinuance of sales to certain unprofitable customers,
approximately $475,000 in net revenue in the 1997 Three Month Period, but which
discontinuance only reduced revenue by $108,000 in the 1996 Three Month Period.
Customer refunds increased $339,000 in the 1997 Three Month Period from the 1996
Three Month Period.

     Total cost of goods sold during the 1997 Three Month Period were
$4,884,197, representing costs of approximately 59% of revenue for the period, 
while total cost of goods sold for the 1996 Three Month Period were $5,363,823
or approximately 58% of revenue.  This one point unfavorable variance as a
percentage of revenue is in part the result of customer refunds as mentioned
above, offset by favorable product discounts from various vendors, as well as
reduced sales of less profitable products and services.  Additionally, the
Company continues to realize favorable variances regarding total cost of
packaging.  Total packaging costs in the 1997 Three Month Period were $63,000
compared to $83,000 in the 1996 Three Month Period.    

     Selling, general and administrative expenses during the 1997 Three Month
Period increased to $3,875,907 or 47% of revenue, as compared to $3,812,673 or
41% of revenue during the 1996 Three Month Period.  Contributing to this
unfavorable variance is partially due to an increase in accrual for bad debt
expense for the 1997 Three Month Period which is 7% of revenue, as compared to
2% in the 1996 Three Month Period, due to recent prior experience.  The combined
costs of payroll and fringe benefits, including sales commissions, increased by
2% during the 1997 Three Month Period over the 1996 Three Month Period.  This is
partially due to 


                                       14 of 16

<PAGE>

the one year waiver of income of Messrs. Bookmeier, Korby, and Gietzen which
ended May 1, 1997. 

     Other expenses include late fees and finance charges, which decreased by
$90,133 during the 1997 Three Month Period over the 1996 Three Month Period. 
Interest expense also decreased by $35,173 during the 1997 Three Month Period
over the 1996 Three Month Period. These decreases were primarily due to the
Healthpartners Funding, L.P. ("Healthpartners") line of credit, which enabled
the Company to significantly reduce short term payables in a timely manner.

     Net loss for the 1997 Three Month Period of $645,357 is primarily
attributable to the increase in selling, general and administrative expenses,
bad debt reserve and other factors identified above.  

LIQUIDITY AND CAPITAL RESOURCES

     As of September 30, 1997, the Company had working capital of $1,627,720,
compared to working capital of $3,128,805 at June 30, 1997. The decrease in
working capital during the 1997 Three Month Period is primarily due to a
combination of the decrease in net accounts receivable of $1,688,956, repayment
of the revolving credit line $689,588, the redemption of Series A payments of
$143,334 and the net loss of $645,357.  

     Cash provided by operations during the 1997 Three Month Period was $949,195
as compared to cash used by operations of $2,655,120 during the 1996 Three Month
Period.  This improvement is primarily attributable to, a net reduction in
accounts receivables as mentioned above, a net decreases of inventory on hand, a
net increase in accounts payable and accrued expenses as compared to the changes
which occurred in the 1996 Three Month Period.  

     On November 14, 1997, Gainor Medical Management, LLC and its 
wholly-owned acquisition subsidiary ("Gainor"), and the Company, its 
principal operating subsidiaries and its principal management stockholders 
entered into an Asset Purchase Agreement (the "Agreement") to sell 
substantially all of its assets to Gainor (the "transaction") for 
approximately $37,000,000; $17,000,000 in cash at closing; and approximately 
$20,000,000 in the form of a minimum 5-year note bearing interest, payable 
quarterly, at 7% through December 31, 1998 and 8% thereafter (the "Note"). 
Closing is subject to several conditions, including but not limited to the 
Company's receipt of a satisfactory "fairness" opinion with respect to the 
terms of the Transaction, approval of the Transaction by the Company's 
stockholders, and Gainor's receipt of satisfactory financing for the 
Transaciton. In addition to offsets for damages incurred by Gainor that are 
indemnifiable under the terms of the Agreement, principal of the Note is 
subject to reduction in the event that Gainor does not achieve certain 
revenue levels from operation of the acquired assets during calendar 1998 and 
Gainor is not able to collect at least $5,000,000 from the accounts 
receivable sold to Gainor as part of the Transaction during the one-year 
period succeeding the closing. The Company anticipates consummation of the 
Transaction in January 1998.

PART II - OTHER INFORMATION

1.   ASSET PURCHASE AGREEMENT

     On November 14, 1997, Gainor Medical Management, LLC and its 
wholly-owned acquisition subsidiary ("Gainor"), and the Company, its 
principal operating subsidiaries and its principal management stockholders 
entered into an Asset Purchase Agreement (the "Agreement") to sell 
substantially all of its assets to Gainor (the "transaction") for 
approximately $37,000,000; $17,000,000 in cash at closing; and approximately 
$20,000,000 in the form of a minimum 5-year note bearing interest, payable 
quarterly, at 7% through December 31, 1998 and 8% thereafter (the "Note"). 
Closing is subject to several conditions, including but not limited to the 
Company's receipt of a satisfactory "fairness" opinion with respect to the 
terms of the Transaction, approval of the Transaction by the Company's 
stockholders, and Gainor's receipt of satisfactory financing for the 
Transaciton. In addition to offsets for damages incurred by Gainor that are 
indemnifiable under the terms of the Agreement, principal of the Note is 
subject to reduction in the event that Gainor does not achieve certain 
revenue levels from operation of the acquired assets during calendar 1998 and 
Gainor is not able to collect at least $5,000,000 from the accounts 
receivable sold to Gainor as part of the Transaction during the one-year 
period succeeding the closing. The Company anticipates consummation of the 
Transaction in January 1998.

     5.  Exhibits and reports on form 8-K

          (a) Exhibits

          10.1    Asset Purchase Agreement, dated November 14, 1997, by and 
                  between Gainor Medical Management, LLC, the Company and 
                  certain of its subsidiaries, and certain stockholders of the
                  Company.
          27.0    Financial data schedule


                                       15 of 16
<PAGE>

SIGNATURE


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
it's behalf by the undersigned, thereunto duly authorized.



                              UNIVERSAL SELF CARE, INC.




                              BY: /S/ Brian Bookmeier
                                 ------------------------
                                   BRIAN BOOKMEIER
                                   PRESIDENT



Date: November 19, 1997

                                       15 of 16