SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


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

          For the  quarterly  period ended  September 27, 1997  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
                                                  ------          ----- 
As of October 13, 1997,  12,159,199 shares of the registrant's common stock were
outstanding.



<PAGE>2


                         PHAR-MOR, INC. AND SUBSIDIARIES

                                    FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 27, 1997


                                    I N D E X


                                                                           Page

Part I:  Financial Information

         Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets as of  September 27,
              1997 and June 28, 1997                                          3

              Condensed Consolidated Statements of Operations for the
              Thirteen Weeks Ended September 27, 1997 and September 28,
              1996                                                            4

              Condensed Consolidated Statements of Cash Flows for the 
              Thirteen Weeks Ended September 27, 1997 and September 28,
              1996                                                            5

              Notes to Condensed Consolidated Financial Statements            6

         Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                  7

Part II: Other Information

         Item 1.  Legal Proceedings                                           8

         Item 2.  Changes in Securities                                       8

         Item 3.  Defaults Upon Senior Securities                             8

         Item 4.  Submission of Matters to a Vote of Security Holders         8

         Item 5.  Other Information                                           8

         Item 6.  Exhibits and Reports on Form 8-K                            9

         Signatures                                                          10

         Exhibit Index                                                       11


<PAGE>3


                         PHAR-MOR, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                (Unaudited)
                                                                September 27,   June 28,
                                                                     1997         1997
                                                                     ----         ----
<S>                                                                <C>          <C>    
ASSETS
Current assets: 
 Cash and cash equivalents                                         $  55,425    $ 79,847
 Accounts receivable - net                                            20,421      21,614
 Merchandise inventories                                             189,836     169,103
 Prepaid expenses and other current assets                             5,076       5,743
                                                                   ---------    --------
     Total current assets                                            270,758     276,307

Property and equipment - net                                          73,962      72,835
Deferred tax asset                                                     9,255       9,255
Other assets                                                           4,200       4,208
                                                                   ---------    --------

     Total assets                                                  $ 358,175    $362,605
                                                                   =========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                                                  $  71,402    $ 61,808
 Accrued expenses and other current liabilities                       35,638      40,534
 Current portion of long-term debt and capital lease obligations       9,155       9,155
                                                                   ---------    --------
     Total current liabilities                                       116,195     111,497

Long-term debt and capital lease obligations                         138,085     140,213
Long-term self insurance reserves                                      7,941       8,098
Deferred rent and unfavorable lease liability - net                   13,221      12,493
                                                                   ---------    --------
     Total liabilities                                               275,442     272,301
                                                                   ---------    --------

Commitments and contingencies                                           --          --

Minority interests                                                       535         535
                                                                   ---------    --------

Stockholders' equity:
 Preferred stock                                                        --          --
 Common stock                                                            122         122
 Additional paid-in capital                                           89,402      89,402
 Retained (deficit) earnings                                          (7,326)        245
                                                                   ---------    --------
     Total stockholders' equity                                       82,198      89,769
                                                                   ---------    --------

     Total liabilities and stockholders' equity                    $ 358,175    $362,605
                                                                   =========    ========
</TABLE>


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


<PAGE>4



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

<TABLE>
<CAPTION>

                                                            Thirteen             Thirteen
                                                          Weeks Ended          Weeks Ended
                                                       September 27, 1997    September 28, 1996
                                                       ------------------    ------------------

<S>                                                    <C>                   <C>               
Sales                                                  $          256,332    $          264,551

Less:
 Cost of goods sold, including occupancy and
    distribution costs                                            208,202               219,091
 Selling, general and administrative expenses                      41,832                41,272
 Chief Executive Officer severance expenses                         5,433                  --
 Depreciation and amortization                                      5,338                 4,908
                                                       ------------------    ------------------

Loss from operations before interest expense and
 income taxes                                                      (4,473)                 (720)

Interest expense - net                                              3,098                 2,939
                                                       ------------------    ------------------

Loss before income taxes                                           (7,571)               (3,659)

Income tax benefit                                                   --                  (1,464)
                                                       ------------------    ------------------

Net loss                                               $           (7,571)   $           (2,195)
                                                       ==================    ==================

Net loss per common share                              $             (.62)   $             (.18)
                                                       ==================    ==================

Weighted average number of common shares outstanding           12,159,199            12,157,054
                                                       ==================    ==================
</TABLE>


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


<PAGE>5


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

<TABLE>
<CAPTION>

                                                                Thirteen              Thirteen
                                                               Weeks Ended           Weeks Ended
                                                           September 27, 1997    September 28, 1996
                                                           ------------------    ------------------

<S>                                                        <C>                   <C>                
OPERATING ACTIVITIES
Net loss                                                   $           (7,571)   $           (2,195)
Adjustments to reconcile net loss to net cash (used for)
 provided by operating activities:
 Items not requiring the outlay of cash:
  Depreciation                                                          3,367                 2,759
  Amortization of video rental tapes                                    1,971                 2,149
  Amortization of deferred financing costs                                105                    93
  Deferred income taxes                                                  --                  (1,464)
  Deferred rent                                                           728                   447
Changes in assets and liabilities:
  Accounts receivable                                                   1,193                (1,538)
  Merchandise inventories                                             (20,630)              (15,539)
  Prepaid expenses                                                        667                    97
  Other assets                                                           (108)                 (213)
  Accounts payable                                                      9,594                20,966
  Accrued expenses and other current liabilities                       (5,054)               (3,943)
                                                           ------------------    ------------------
Net cash (used for) provided by operating activities                  (15,738)                1,619
                                                           ------------------    ------------------

INVESTING ACTIVITIES
 Additions to rental videotapes                                        (2,063)               (2,245)
 Additions to property and equipment                                   (4,493)               (3,983)
                                                           ------------------    ------------------
 Net cash used for investing activities                                (6,556)               (6,228)
                                                           ------------------    ------------------

FINANCING ACTIVITIES
 Principal payments on long-term debt                                    (547)               (1,210)
 Principal payments on capital lease obligations                       (1,581)               (1,456)
                                                           ------------------    ------------------
 Net cash used for financing activities                                (2,128)               (2,666)
                                                           ------------------    ------------------

 Decrease in cash and cash equivalents                                (24,422)               (7,275)
 Cash and cash equivalents, beginning of period                        79,847               104,265
                                                           ------------------    ------------------
 Cash and cash equivalents, end of period                  $           55,425    $           96,990
                                                           ==================    ==================
</TABLE>

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


<PAGE>6



PHAR-MOR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
--------------------------------------------------------------------------------

1.       BASIS OF PRESENTATION
         The accompanying  unaudited  interim condensed  consolidated  financial
         statements  have been prepared in accordance  with  generally  accepted
         accounting  principles for interim financial  information.  They do not
         include  all  information  and  footnotes  which  would be  required by
         generally  accepted   accounting   principles  for  complete  financial
         statements.  In the  opinion  of  management  of  Phar-Mor,  Inc.  (the
         "Company") and its  subsidiaries,  these interim  financial  statements
         contain all adjustments considered necessary for a fair presentation of
         financial  position,  results  of  operations  and cash  flows  for the
         periods  presented.  Reference  should be made to the Company's  Annual
         Report  on Form  10-K for the  fiscal  year  ended  June  28,  1997 for
         additional disclosures, including a summary of the Company's accounting
         policies,  which have not changed.  Operating  results for the thirteen
         weeks ended  September 27, 1997 are not  necessarily  indicative of the
         results  that may be expected for the  fifty-two  weeks ending June 27,
         1998.

2.       REORGANIZATION
         On August 17, 1992, the Company and its  subsidiaries  filed  petitions
         for  relief  under  Chapter  11 of the United  States  Bankruptcy  Code
         ("Chapter  11").  From that time until  September 11, 1995, the Company
         operated  its  business  as  a  debtor-in-possession   subject  to  the
         jurisdiction  of the United  States  Bankruptcy  Court for the Northern
         District of Ohio (the "Bankruptcy  Court").  On September 11, 1995, the
         Company and its subsidiaries  emerged from  reorganization  proceedings
         under Chapter 11 pursuant to the  confirmation  order entered on August
         29, 1995 by the  Bankruptcy  Court  confirming  the Third Amended Joint
         Plan of Reorganization dated May 25, 1995.


3.       CHIEF EXECUTIVE OFFICER RESIGNATION
         On September 19, 1997,  Robert Haft and Avatex  Corporation  ("Avatex")
         finalized  an  agreement   regarding  Hamilton  Morgan  LLC  ("Hamilton
         Morgan"), (the "Hamilton Morgan Agreement").  In exchange for 3,750,000
         shares of the Company's stock and the return of a voting proxy on other
         Company  shares,  Hamilton Morgan will redeem the 69.8% Avatex interest
         in Hamilton  Morgan,  repay  certain  indebtedness  and  receive  other
         consideration. As of September 27, 1997, Avatex beneficially owns 39.1%
         of the Company's  outstanding  common stock.  In  conjunction  with the
         Hamilton  Morgan  Agreement,  the  Company  entered  into  a  Severance
         Agreement  with  Robert  Haft  whereby he  resigned  his  positions  as
         Chairman of the Company's Board of Directors and as the Company's Chief
         Executive Officer and received a lump sum cash payment of $4,417. Under
         the terms of the  Severance  Agreement,  the Company  will  continue to
         provide  benefits to him through  September 19, 2000. He is indemnified
         and  entitled  to tax  reimbursement  in respect to any  payments  that
         constitute excess parachute payments under Federal Income Tax laws. The
         Company has provided a letter of credit in the amount of  approximately
         $2,900 to  secure  its  contractual  obligations  under  the  Severance
         Agreement.




<PAGE>7


PHAR-MOR,  INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS (all dollar amounts in thousands)

Thirteen Weeks Ended September 27, 1997 versus
    Thirteen Weeks Ended September 28, 1996

Sales for the first quarter of fiscal year 1998 ("Fiscal  1998")  decreased 3.1%
compared to the first  quarter of fiscal year 1997 ("Fiscal  1997").  Comparable
store sales  decreased 4.8% from $264,551 for Fiscal 1997 to $251,944 for Fiscal
1998.  The  decrease  in  comparable  store  sales  was  primarily  due  to  the
discontinuance of certain promotional  discount programs since the first quarter
of fiscal year 1997.

Cost of sales as a  percentage  of sales was 81.2% in Fiscal  1998  compared  to
82.8% in Fiscal 1997, a 1.6%  decrease.  This decrease is primarily due to lower
inventory shrinkage, higher product margins, lower promotional discounts, higher
vendor income and higher cash discounts partially offset by higher warehouse and
transportation  expenses and store  occupancy  costs. In August 1997 the Company
discontinued   purchasing   grocery   products  from  a  wholesaler   and  began
distributing  these  products  from its  distribution  center.  The  increase in
warehouse and  transportation  costs  associated  with this change was more than
offset by higher product margins,  increased cash discounts and increased vendor
income.

Selling, general and administrative expenses as a percentage of sales were 16.3%
in Fiscal 1998  compared to 15.6% in Fiscal  1997.  This  increase was due to an
increase in wages caused by the increase in the minimum wage, and by pre-opening
costs  associated  with the opening of the  Company's  104th store in July 1997,
partially offset by lower advertising expenses.

In Fiscal 1998 the Company  incurred  $5,433 in executive  severance and related
costs  associated  with the  resignation  of Robert Haft,  the Company's  former
Chairman of the Board and Chief Executive Officer.

Depreciation  and  amortization  expense was $5,338 in Fiscal  1998  compared to
$4,908 in Fiscal  1997,  an  increase  of $430.  The  increase  is the result of
depreciation  on capital  expenditures  made  since the first  quarter of Fiscal
1997.

Net interest  expense was $3,098 in Fiscal 1998 compared to net interest expense
of $2,939 in Fiscal 1997, a $159 increase.  The increase in net interest expense
was primarily due to a decrease in interest income in Fiscal 1998.

FINANCIAL CONDITION AND LIQUIDITY (all dollar amounts in thousands)

The Company's cash position as of September 27, 1997 was $55,425.  The Company's
cash  position may fluctuate as a result of seasonal  merchandise  purchases and
timing of payments.

On September 11, 1995, the Company  entered into the Revolving  Credit  Facility
(the  "Facility") with  BankAmerica  Business Credit,  Inc., as agent, and other
financial institutions (collectively,  the "Lenders"), that established a credit
facility in the maximum amount of $100,000.

Borrowings  under the Facility may be used for working capital needs and general
corporate  purposes.  Up to $50,000 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,  capital  expenditures,  investments,
dividends  and other  distributions,  mergers  and  acquisitions,  and  contains
covenants  requiring the Company to meet a specified  quarterly  minimum  EBITDA
Coverage Ratio (the sum of earnings before  interest,  taxes,  depreciation  and

<PAGE>8

amortization,  as defined, divided by interest expense), calculated on a rolling
four quarter basis, and a monthly minimum net worth test. As of the date hereof,
the Company is in compliance with all such financial covenants.

Credit  availability  under  the  Facility  at any  time  is the  lesser  of the
Aggregate  Availability  (as defined in the Facility) or $100,000.  The Facility
establishes a first priority lien and security interest in the current assets of
the  Company,  including,  among other  items,  cash,  accounts  receivable  and
inventory.  Advances made under the Facility  bear  interest at the  BankAmerica
reference rate plus 0.50% or, at the option of the Company, the London Interbank
Offered Rate ("LIBOR") plus the applicable  margin (as defined in the Facility),
which  ranges  between  1.50% and 2.00%.  Under the terms of the  Facility,  the
Company is required to pay a commitment  fee of 0.28125% per annum on the unused
portion of the  Facility,  letter of credit fees and certain  other fees.  As of
September 27, 1997, letters of credit totaling $5,709 were outstanding under the
Facility. The Facility expires on September 10, 1998.

Thirteen weeks ended September 27, 1997

During the thirteen weeks ended  September 27, 1997, the Company's cash position
decreased by $24,422.  Net cash used by operating  activities  was $15,738.  The
major uses of cash from operating  activities were for a net loss of $7,571,  an
increase in seasonal and grocery warehouse inventories of $20,630 and a decrease
in accrued  expenses of $5,054,  which were  partially  offset by an increase in
accounts payable of $9,594.

Capital  expenditures  of $4,493 and  additions  to video rental tapes of $2,063
were paid for with the Company's excess cash position.

Net cash used for financing  activities of $2,128 consists of principal payments
on lease obligations of $1,581 and principal payments on term debt of $547.



PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

                  None.

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.



<PAGE>9


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 27, 1997:

   Date of Report        Date of Filing                Description
   --------------        --------------                -----------
  August 22, 1997       August 29, 1997      Press release on agreement between 
                                             Hamilton Morgan LLC and Avatex
                                             resolving buy/sell agreement.

  September 19, 1997    September 23, 1997   Press release on resignation of
                                             Robert M. Haft as Chairman and 
                                             Chief Executive Officer.





<PAGE>10



                                   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:  October 21, 1997                   By:   /s/ Sankar Krishnan
                                                -------------------------------
                                                    Sankar Krishnan
                                                    Senior Vice President
                                                    and Chief Financial Officer



Date:  October 21, 1997                   By:   /s/ John R. Ficarro
                                                -------------------------------
                                                    John R. Ficarro
                                                    Senior Vice President and
                                                    Chief Administrative Officer


<PAGE>11






                                 PHAR-MOR, INC.

                                INDEX TO EXHIBITS


Exhibit No.

*3.1     Amended and Restated Articles of Incorporation

*3.2     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

27       Financial Data Schedule
-----------------------------------------------------------------
*        Previously filed in connection with the filing of Phar-Mor's Form 10, 
         on October 23, 1995