<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

                 (Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended SEPTEMBER 30, 2001

                                       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: 000-20997

                           SRI/SURGICAL EXPRESS, INC.
             (Exact name of Registrant as specified in its Charter)

         FLORIDA                                              59-3252632
(State of Incorporation)                                    (I.R.S. Employer
                                                            Identification No.)

                              12425 RACETRACK ROAD
                              TAMPA, FLORIDA 33626
                    (Address of Principal Executive Offices)

                                 (813) 891-9550
                         (Registrant's Telephone Number)

          Indicate by 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 (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 [ ]

Number of outstanding shares of each class of Registrant's Common Stock as of
October 10, 2001:

                    Common Stock, par value $.001 - 6,316,977


<PAGE>

                                PORTIONS AMENDED

         As a result of a review of its revenue recognition procedures for
certain transactions in its third quarter ended September 30, 2001, and a change
in its characterization of its Tampa office lease from an operating lease to a
capital lease, SRI/Surgical Express, Inc. amends Part I, Items 1 and 2, and Part
II, Item 6, of its previously reported Form 10-Q for the three and nine month
periods ended September 30, 2001. The Company also amends Part II, Item 1 of the
Form 10-Q to reflect a recent development.


<PAGE>

                                      INDEX

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----
<S>                                                                               <C>
PART I   FINANCIAL INFORMATION

         Item 1   Condensed Financial Statements

                           Condensed Statements of Income for the three
                           months and nine months ended September 30,
                           2001 (unaudited) and September 30, 2000 (unaudited)      1

                           Condensed Balance Sheets as of September 30, 2001
                           (unaudited) and December 31, 2000 .................      2

                           Condensed Statements of Cash Flows for the
                           nine months ended September 30, 2001 (unaudited)
                           and September 30, 2000 (unaudited) ................      3

                           Notes to Condensed Financial Statements (unaudited)      4

         Item 2   Management's Discussion and Analysis of Financial
                  Condition and Results of Operations ........................      5


PART II  OTHER INFORMATION

         Item 1   Legal Proceedings ..........................................     12

         Item 2   Changes in Securities ......................................     12

         Item 3   Defaults Upon Senior Securities ............................     12

         Item 4   Submission of Matters to a Vote of Security Holders ........     12

         Item 5   Other Information ..........................................     12

         Item 6   Exhibits and Reports on Form 8-K ...........................     12

SIGNATURE ....................................................................     13
</TABLE>



<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

                           SRI/SURGICAL EXPRESS, INC.
                         CONDENSED STATEMENTS OF INCOME
                      (In thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                              Three Months Ended   Nine Months Ended
                                                 September 30,       September 30,
                                                 2001     2000      2001       2000
                                               -------   -------   -------   -------
                                              (restated)         (restated)
<S>                                           <C>        <C>      <C>        <C>
Revenues ...................................   $21,340   $19,493   $65,107   $57,487
Cost of revenues ...........................    14,250    13,269    43,813    39,619
                                               -------   -------   -------   -------
    Gross profit ...........................     7,090     6,224    21,294    17,868

Distribution expenses ......................     1,365     1,266     4,053     3,936
Selling and administrative expenses ........     3,052     2,594     8,962     8,222
                                               -------   -------   -------   -------
    Income from operations .................     2,673     2,364     8,279     5,710

Interest expense, net ......................       362       264     1,105       780
                                               -------   -------   -------   -------
    Income before income taxes .............     2,311     2,100     7,174     4,930

Income tax expense .........................       818       819     2,690     1,923
                                               -------   -------   -------   -------
    Net income .............................   $ 1,493   $ 1,281   $ 4,484   $ 3,007
                                               =======   =======   =======   =======
Dividends on preferred stock ...............        --        51        57       153
                                               -------   -------   -------   -------
Net income available for common shareholders   $ 1,493   $ 1,230   $ 4,427   $ 2,854
                                               =======   =======   =======   =======
Net income per common share - basic ........   $  0.24   $  0.22   $  0.74   $  0.50
                                               =======   =======   =======   =======
Net income per common share - diluted ......   $  0.22   $  0.20   $  0.68   $  0.48
                                               =======   =======   =======   =======
Weighted average common shares
          outstanding - basic ..............     6,287     5,677     5,992     5,677
                                               =======   =======   =======   =======
Weighted average common shares
          outstanding - diluted ............     6,789     6,373     6,611     6,304
                                               =======   =======   =======   =======
</TABLE>









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




                                       1
<PAGE>

                           SRI/SURGICAL EXPRESS, INC.
                            CONDENSED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                         September 30,    December 31,
                                                             2001            2000
                                                            -------         -------
                                                          (unaudited)
                                                           (restated)
<S>                                                         <C>             <C>
                           ASSETS

Cash and cash equivalents                                   $   599         $   132
Accounts receivable, net                                     11,517           9,825
Inventories, net                                              5,995           5,569
Prepaid expenses and other assets                             2,555           1,381
Reusable surgical products, net                              23,095          24,168
Property, plant and equipment, net                           28,143          19,979
Goodwill, net                                                 5,299           5,462
                                                            -------         -------
       Total assets                                         $77,203         $66,516
                                                            =======         =======


               LIABILITIES AND SHAREHOLDERS' EQUITY

Notes payable to bank                                       $14,911         $15,593
Accounts payable                                              5,958           4,325
Employee related accrued expenses                             1,062           1,402
Other accrued expenses                                        1,571           1,462
Future payments on capital obligations                        4,588              --
Deferred tax liability, net                                     882             882
                                                            -------         -------
      Total liabilities                                      28,972          23,664

Shareholders' equity
  Preferred stock                                                --               1
  Common stock                                                    6               6
  Additional paid-in capital                                 27,841          26,889
  Retained earnings                                          20,384          15,956
                                                            -------         -------
     Total shareholders' equity                              48,231          42,852
                                                            -------         -------
     Total liabilities and shareholders' equity             $77,203         $66,516
                                                            =======         =======
</TABLE>






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




                                       2
<PAGE>

                           SRI/SURGICAL EXPRESS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                               Nine Months Ended
                                                                  September 30,
                                                               2001          2000
                                                             --------      --------
                                                            (restated)
<S>                                                          <C>           <C>
Cash flows from operating activities
  Net income                                                 $  4,484      $  3,007
  Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation and amortization                              2,179         1,703
     Amortization of reusable surgical products                 3,055         3,602
     Provision for reusable surgical products shrinkage         1,254         1,472
     Change in assets and liabilities:
        Accounts receivable, net                               (1,692)       (1,226)
        Inventories, net                                         (426)       (1,507)
        Prepaid expenses and other assets                      (1,174)          740
        Accounts payable                                        2,610        (2,034)
        Employee related and other accrued expenses              (231)        1,227
                                                             --------      --------
            Net cash provided by operating activities          10,059         6,984
                                                             --------      --------
Cash flows from investing activities
  Purchases of property, plant and equipment                   (5,510)       (4,302)
  Purchases of reusable surgical products                      (4,194)       (7,628)
                                                             --------      --------
            Net cash used in investing activities              (9,704)      (11,930)
                                                             --------      --------
Cash flows from financing activities
  Net borrowings on notes payable to bank                        (682)        5,148
  Future payments on capital obligations                          (82)           --
  Net proceeds from issuance of common stock                      952            --
  Dividends paid                                                  (76)         (153)
                                                             --------      --------
            Net cash provided by financing activities             112         4,995
                                                             --------      --------
  Increase in cash and cash equivalents                           467            49
  Cash and cash equivalents at beginning of period                132            37
                                                             --------      --------
  Cash and cash equivalents at end of period                 $    599      $     86
                                                             ========      ========
Supplemental cash flow information
    Cash paid for interest                                   $  1,027      $    825
                                                             ========      ========
    Cash paid for income taxes                               $  2,385      $    523
                                                             ========      ========
</TABLE>








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




                                       3
<PAGE>

                           SRI/SURGICAL EXPRESS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

1.       BASIS OF PRESENTATION

         The accompanying unaudited condensed financial statements of
SRI/Surgical Express, Inc. (the "Company"), formerly Sterile Recoveries, Inc.,
have been prepared in accordance with the Securities and Exchange Commission's
instructions to Form 10-Q and, therefore, omit or condense footnotes and certain
other information normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States.
The accounting policies followed for quarterly financial reporting conform with
accounting principles generally accepted in the United States for interim
financial statements and include those accounting policies disclosed in the
Company's Form 10-K for the year ended December 31, 2000 filed with the
Securities and Exchange Commission. In the opinion of management, all
adjustments of a normal recurring nature that are necessary for a fair
presentation of the financial information for the interim periods reported have
been made. The results of operations for the nine months ended September 30,
2001 are not necessarily indicative of the results that can be expected for the
entire year ending December 31, 2001. The unaudited financial statements should
be read in conjunction with the financial statements and the notes thereto
included in the Form 10-K.

         The Company operates on a 52-53 week fiscal year ending the Sunday
nearest December 31. There are 39 weeks included for the nine-month periods
ended September 30, 2001 and September 30, 2000.

2.       LINE OF CREDIT

         The Company's outstanding balance under its $45.0 million revolving
credit facility was approximately $14.9 million and $14.0 million on September
30, 2001 and September 30, 2000, respectively.

         The credit facility is secured by substantially all of SRI's assets and
has a maturity date of June 30, 2003. The credit facility's interest rate varies
between 225 and 275 basis points over LIBOR (2.637% as of September 30, 2001),
depending on the Company's leverage. The credit facility requires the Company to
maintain (a) minimum consolidated net worth of not less than $37.0 million plus
75% of cumulative consolidated net income for each fiscal quarter beginning with
the fiscal quarter ending March 31, 2000; (b) a consolidated leverage ratio of
not more than 2.5 to 1.0; and (c) a fixed charge coverage ratio of 2.25 to 1.0
through December 31, 2002, and 2.35 to 1.0 thereafter. The credit facility
restricts the Company in paying dividends, engaging in acquisition transactions,
incurring additional indebtedness, and encumbering its assets.

         The credit facility allows the Company to repurchase up to $5 million
of its stock from time to time through open market purchases at prevailing
market prices. As of March 31, 2001, the Company had repurchased 75,400 shares
of its common stock for $1,118,100. The Company has not repurchased shares since
the first quarter of 2001, and does not anticipate repurchasing any additional
shares at this time.

3.       CAPITAL LEASE

         The Company, in compliance with FAS 98, Accounting for Leases, now
accounts for the lease on its Tampa, Florida office as a capital lease rather
than an operating lease. This resulted in establishing an asset and future
capital obligation of approximately $4.6 million as of September 30, 2001, and
did not materially affect earnings for the three and nine months ended September
30, 2001. The term of the financing transaction is 20 years commencing March 24,
2001.



                                       4
<PAGE>

4.       EARNINGS PER SHARE

         The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
                                                   Three Months Ended   Nine Months Ended
                                                       September 30,      September 30,
                                                       2001    2000      2001       2000
                                                      ------  -------   -------   -------
                                                     (restated)       (restated)
                                                     (In thousands, except per share data)
                                                                 (unaudited)
<S>                                                   <C>     <C>       <C>       <C>
BASIC
-----
   Numerator:
         Net income                                   $1,493  $ 1,281   $ 4,484   $ 3,007
         Less effect of dividends on preferred stock      --      (51)      (57)     (153)
                                                      ------  -------   -------   -------
         Net income available for common
            shareholders                              $1,493  $ 1,230   $ 4,427   $ 2,854
                                                      ======  =======   =======   =======
   Denominator:
          Weighted average common shares
             outstanding                               6,287    5,677     5,992     5,677
                                                      ======  =======   =======   =======
          Net income per common share - basic         $ 0.24  $  0.22   $  0.74   $  0.50
                                                      ======  =======   =======   =======
DILUTED
-------
    Numerator:
       Net income                                     $1,493  $ 1,281   $ 4,484   $ 3,007
                                                      ======  =======   =======   =======
    Denominator:
       Weighted average common shares
           outstanding                                 6,287    5,677     5,992     5,677
        Effect of dilutive securities:
          Employee stock options                         502      129       411        60
          Convertible preferred stock                     --      567       208       567
                                                      ------  -------   -------   -------
                                                       6,789    6,373     6,611     6,304
                                                      ======  =======   =======   =======
Net income per common share - diluted                 $ 0.22  $  0.20   $  0.68   $  0.48
                                                      ======  =======   =======   =======
</TABLE>

         Options to purchase 0 and 620,900 shares of common stock for the three
month periods ended September 30, 2001 and September 30, 2000, respectively, and
options to purchase 12,000 and 643,710 shares of common stock for the nine month
periods ended September 30, 2001 and September 30, 2000, respectively, were not
included for all or a portion of the computation of diluted net income per
common share because those options' exercise prices were greater than the
average market price of the common shares, and therefore the effect would be
anti-dilutive.

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

OVERVIEW

         From 18 service centers, the Company provides hospitals and surgery
centers with a comprehensive surgical procedure-based delivery and retrieval
service for reusable gowns, towels, drapes, basins, and instruments, and
provides other disposable products necessary for surgery. At 11 reprocessing
facilities and one disposable products division, the Company collects, sorts,
cleans, inspects, packages, sterilizes and delivers its reusable products on a
just-in-time basis. The Company offers an integrated "closed-loop" reprocessing
service that uses two of the most technologically advanced reusable textiles:
(i) a GORE(R) Surgical Barrier Fabric for gowns and drapes that is breathable
yet liquidproof and provides a viral/bacterial barrier and (ii) an advanced
microfiber polyester surgical fabric for gowns and drapes that is liquid and
bacterial resistant. The Company also offers state of the art reusable
laparoscopic

GORE(R)Surgical Barrier Fabric is a registered trademark of W.L. Gore &
Associates, Inc.



                                       5
<PAGE>

instruments from Aesculap, Inc., one of the oldest and largest worldwide
suppliers of surgical instruments. The surgical instruments have been designed
either to be taken apart or with flush ports to allow complete cleaning and
decontamination.

         The Company offers its Surgical Express(R) program, which uses daily
delivery and retrieval to provide customers an expanded program of products and
services. Surgical Express is an outsourced Surgical Case Cart Management
Program that the Company expects will reduce hospital and surgery centers'
processing costs and their investment in surgical products. With its Surgical
Express program, the Company supplements its core reusable products offering
with disposable accessory packs containing smaller surgical items that are not
reusable, such as needles, syringes, and tubing. Since the fourth quarter of
2000, the Company has offered customers its first complete procedure-based
service, Surgical Express for Laparoscopy, which combines the Company's core
reusable products offering with disposable products and laparoscopic instruments
required for laparoscopic surgical procedures. Aesculap, Inc. furnishes
laparoscopic instruments for this program under a joint marketing arrangement
with the Company. In 2001, the Company introduced additional instrument
procedures and expects to continue developing new instrument programs on a
regular basis. As of September 30, 2001, the Company was servicing 30 instrument
projects from eight of its facilities. The Company believes that its unique
product and service offerings improves its competitive position in the
marketplace.

          In May 2001, the Company announced its contract with HealthTrust
Purchasing Group (HPG), a group purchasing organization representing over 600
hospitals and surgery centers. The contract with HPG designates SRI as its
primary outsource vendor for reusable surgical products including instruments.
The Company was servicing 40 HPG hospitals and 18 surgery centers when the HPG
contract was signed, and 20 new hospitals have been added through the end of the
third quarter 2001. In addition, through its relationship with Standard Textile
Co., Inc., the Company has the opportunity to provide Surgical Express to
Novation member hospitals. With its acceptance by HPG and Novation, Surgical
Express is an available contracted alternative for over 2000 hospitals and
surgery centers across the country. The Company continues to pursue additional
GPO contracts that will allow it to further penetrate the surgical supply
market.

RESTATEMENT OF THIRD QUARTER FINANCIAL INFORMATION

          The Company initially announced its third quarter 2001 financial
results on October 22, 2001, and filed its Form 10-Q for its third quarter on
October 25, 2001. On November 27, 2001, the Company announced restated earnings
for the three and nine months ended September 30, 2001. The adverse impacts of
the restatement on the Company's revenues and earnings for the third quarter
were approximately $1,034,000 and approximately $262,000 (or $0.04 per diluted
share), respectively. The statements of income and balance sheets in this Form
10-Q reflect the restatement. The restatement did not affect the first and
second quarters of 2001.

         The Company bills some of its Surgical Express accounts "by procedure"
when it delivers to its hospital customers all of the components for the
surgical procedure. Following a review of its revenue recognition procedures,
the Company determined that products from two service centers totaling
approximately $832,000 involving its Surgical Express program were not
completely delivered by the end of the third quarter and that the associated
revenues and costs should not have been recognized in that quarter. The Company
also determined that approximately $202,000 of its product orders for its third
quarter were packed, processed, and confirmed for shipment before quarter end,
but not physically delivered to customers until the first days of the fourth
quarter (substantially all on the first day of the fourth quarter). All of these
revenues and the associated costs will be realized in the fourth quarter as
delivery is completed.

         The Company's revised balance sheet as of September 30, 2001, also
reflects a change in the Company's characterization of its Tampa office lease
from an operating lease to a capital lease. This



                                       6
<PAGE>

restatement increased both assets and liabilities of the Company by $4,600,000
and did not materially affect earnings for the quarter or the 2001-year to date.

RESULTS OF EARNINGS

         The following table sets forth for the periods shown the percentage of
revenues represented by certain items reflected in the condensed statements of
income of the Company.

<TABLE>
<CAPTION>
                                      Three Months Ended     Nine Months Ended
                                         September 30,         September 30,
                                        2001       2000       2001       2000
                                        -----      -----      -----      -----
                                     (restated)            (restated)
<S>                                  <C>           <C>     <C>           <C>
Revenues                                100.0%     100.0%     100.0%     100.0%
Cost of revenues                         66.8       68.1       67.3       68.9
                                        -----      -----      -----      -----
     Gross profit                        33.2       31.9       32.7       31.1
Distribution expenses                     6.4        6.5        6.2        6.9
Selling and administrative expenses      14.3       13.3       13.8       14.3
                                        -----      -----      -----      -----
     Income from operations              12.5       12.1       12.7        9.9
Interest expense, net                     1.7        1.3        1.7        1.3
                                        -----      -----      -----      -----
     Income before income taxes          10.8       10.8       11.0        8.6
Income tax expense                        3.8        4.2        4.1        3.4
                                        -----      -----      -----      -----
     Net income                           7.0%       6.6%       6.9%       5.2%
                                        =====      =====      =====      =====
</TABLE>


THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS
AND NINE MONTHS ENDED SEPTEMBER 30, 2000

         REVENUES. Revenues increased $1.8 million, or 9.5%, to $21.3 million in
the three months ended September 30 2001, from $19.5 million in the three months
ended September 30, 2000. In the nine months ended September 30, 2001, the
Company's revenues increased $7.6 million, or 13.3%, to $65.1 million, from
$57.5 million in the nine months ended September 30, 2000. Revenue increased
9.5% over last year's third quarter due to increased Surgical Express business
the expansion of the Company's instrument program (including Surgical Express
for Laparoscopy), and modest growth in its core reusable and disposable
business. The growth in new and existing core business was partially offset by
the unanticipated loss of several customers, the continuing effect of planned
reductions in the Company's base of smaller, less profitable accounts, and the
pricing impact of new group purchasing organization arrangements on existing
hospital customers.

         GROSS PROFIT. Gross profit increased $866,000, or 13.9%, to $7.1
million in the three months ended September 30, 2001, from $6.2 million in the
three months ended September 30, 2000; and $3.4 million, or 19.2%, to $21.3
million in the nine months ended September 30, 2001, from $17.9 million in the
nine months ended September 30, 2000. As a percentage of revenues, gross profit
increased by 1.3% to 33.2% in the three months ended September 30, 2001, from
31.9% in the three months ended September 30, 2000; and increased 1.6% to 32.7%
in the nine months ended September 30, 2001, from 31.1% in the nine months ended
September 30, 2000. The increase in gross profit reflects increased productivity
as a result of improved methods and leveraged fixed costs, coupled with the
Company's elimination of smaller, less profitable customers, and was aided in
the third quarter by reduced shrinkage expense.

         DISTRIBUTION EXPENSES. Distribution expenses increased $99,000, or
7.8%, to $1.4 million in the three months ended September 30, 2001, from $1.3
million in the three months ended September 30, 2000; and increased $117,000, or
3.0%, to $4.1 million in the nine months ended September 30, 2001, from $3.9
million in the nine months ended September 30, 2000. As a percentage of
revenues,



                                       7
<PAGE>

distribution expenses decreased 0.1% to 6.4% in the three months ended September
30, 2001, from 6.5% in the three months ended September 30, 2000; and decreased
0.7% to 6.2% in the nine months ended September 30, 2001, from 6.9% in the nine
months ended September 30, 2000. The Company benefited from increased volume per
shipment and use of more efficient truck routes.

         SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses increased $458,000, or 17.7%, to $3.1 million in three months ended
September 30, 2001, from $2.6 million in the three months ended September 30,
2000; and increased $740,000, or 9.0%, to $9.0 million in the nine months ended
September 30, 2001, from $8.2 million in the nine months ended September 30,
2000. As a percentage of revenues, selling and administrative expenses increased
1.0% to 14.3% for the three months ended September 30, 2001, from 13.3% in the
three months ended September 30, 2000, and decreased 0.5% to 13.8% in the nine
months ended September 30, 2001, from 14.3% in the nine months ended September
30, 2000. The Company's expenses increased due to marketing and administrative
fees for new GPO contracts, and growth in its sales and marketing personnel. The
increased expense, which started in the second quarter and continued in the
third quarter, resulted in an increase in selling and administrative expense as
a percentage of revenues for the three months ended September 30, 2001. Selling
and administrative expenses were positively impacted by $158,000 due to the
reclassification of the lease on its Tampa, Florida office from an operating
lease to a capital lease, and by a reduction of $98,000 in its bonus expense due
to reduced net income for the nine months ended September 30, 2001.

         INCOME FROM OPERATIONS. Income from operations increased $309,000, or
13.1%, to $2.7 million in the three months ended September 30, 2001, from $2.4
million in the three months ended September 30, 2000; and increased $2.6
million, or 45.0%, to $8.3 million in the nine months ended September 30, 2001,
from $5.7 million in the nine months ended September 30, 2000. As a percentage
of revenues, income from operations increased 0.4% to 12.5% for the three months
ended September 30, 2001 from 12.1% for the three months ended September 30,
2000; and increased 2.8% to 12.7% in the nine months ended September 30, 2001,
from 9.9% in the nine months ended September 30, 2000, as a result of the
decreased costs described above.

         INTEREST EXPENSE, NET. Interest expense increased $98,000 to $362,000
in the three months ended September 30, 2001, compared to $264,000 in the three
months ended September 30, 2000; and increased $325,000 to $1.1 million in the
nine months ended September 30, 2001, from $780,000 in the nine months ended
September 30, 2000, primarily due to higher borrowings under the Company's
revolving credit facility. Due to the recording of a capital lease for its
Tampa, Florida office, interest expense for the nine month period ended
September 30, 2001 increased $158,000. Additionally, for the nine month period
ended September 30, 2001, the Company reclassified $144,000 of interest expense
to lease expense (a component of cost of revenues) for other leased buildings.

         INCOME TAX EXPENSE. Income tax expense decreased $1,000 to $818,000 in
the three months ended September 30, 2001, compared to $819,000 in the three
months ended September 30, 2000; and increased $767,000 to $2.7 million in the
nine months ended September 30, 2001, from $1.9 million in the nine months ended
September 30, 2000. The Company's effective tax rate is 37.5%.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's principal sources of capital have been cash flows from
operations and borrowings under its revolving credit facility.

         The Company's positive cash flow provided by operating activities was
$10.0 million during the first nine months of 2001, compared to $7.0 million
during the first nine months of 2000. The increase in cash from operating
activities resulted primarily from increased net income before amortization,
shrinkage and depreciation, slower growth in inventories, and increased accounts
payable, and was partially offset by increased accounts receivable, decreased
employee related and other accrued expenses, and increased prepaid expenses.



                                       8
<PAGE>

         The Company's net cash used in investing activities decreased to $9.7
million in the nine months ended September 30, 2001, from $11.9 million in the
nine months ended September 30, 2000. The Company continues to make substantial
capital expenditures to improve its facilities and to purchase reusable surgical
products to support anticipated increases in business. The Company made
equipment expenditures of $5.5 million during the nine months ended September
30, 2001, primarily for new corporate offices, facility equipment and expansion,
including upgrading its facilities for instrument processing. The Company
expects to spend an additional $2.5 million for property, plant and equipment
during the balance of 2001, primarily for facility equipment and major
expansions to its facilities in Tampa, Florida, Baltimore, Maryland, and
Raleigh, North Carolina. The Company's expenditures of $4.2 million for reusable
surgical products during the nine months ended September 30, 2001 were
substantially lower than the first nine months of 2000 expenditures of $7.6
million. The Company's level of reusable surgical products exceeded its needs at
the close of 2000, and management accordingly adjusted its new product
expenditures this year. The Company expects to spend an additional $3.0 million
for reusable surgical products during the balance of 2001.

         As noted above, the Company previously recorded its Tampa, Florida
office as an operating lease, but after review, has reclassified it as a capital
lease. This restatement increased both assets and liabilities of the Company by
$4.6 million, and did not materially affect earnings for the three months and
nine months ended September 30, 2001. In addition, the Company incurred and
capitalized approximately $2.4 million as of September 30, 2001 for leasehold
improvements, furniture and equipment for its corporate offices.

         As of September 30, 2001, the Company's outstanding balance under its
$45.0 million revolving credit facility was approximately $14.9 million. The
credit facility is secured by substantially all of the Company's assets and
matures on June 30, 2003. The credit facility's interest rate varies between 225
and 275 basis points over LIBOR (2.637% as of September 30, 2001), depending on
the Company's leverage. The credit facility requires the Company to maintain (a)
minimum net worth of not less than $37.0 million plus 75% of cumulative net
income for each fiscal quarter beginning with the fiscal quarter ending March
31, 2000; (b) a leverage ratio of not more than 2.5 to 1.0; and (c) a fixed
charge coverage ratio of 2.25 to 1.0 through December 31, 2002, and 2.35 to 1.0
thereafter. The credit facility restricts the Company in paying dividends,
engaging in acquisition transactions, incurring additional indebtedness, and
encumbering its assets.

         The credit facility allows the Company to repurchase up to $5 million
of its stock from time to time through open market purchases at prevailing
market prices. The Company began repurchasing its stock on October 31, 2000 and
as of March 31, 2001, the Company had repurchased 75,400 shares of its common
stock for $1,118,100. The Company has not repurchased shares since the first
quarter of 2001, and does not anticipate repurchasing any additional shares at
this time.

         As of September 30, 2001, the Company had cash of approximately
$599,000. The Company believes that its cash flows from operating activities and
funds available under its credit facility will be sufficient to fund its growth
and anticipated capital requirements for the next twelve months.




                                       9
<PAGE>

CERTAIN CONSIDERATIONS

         This report, other documents that are publicly disseminated by the
Company, and oral statements that are made on behalf of the Company contain or
might contain both statements of historical fact and forward-looking statements.
Examples of forward-looking statements include: (a) projections of revenue,
earnings, capital structure, and other financial items, (b) statements of the
plans and objectives of the Company and its management, (c) statements of future
economic performance, and (d) assumptions underlying statements regarding the
Company or its business. The cautionary statements set forth below discuss
important factors that could cause actual results to differ materially from any
forward-looking statements.

         Sales Process and Market Acceptance of Products and Services. The
Company's future performance depends on its ability to increase revenues to new
and existing customers. The Company has an extended sales process due to the
complicated approval process within hospitals for purchases from new suppliers,
the long duration of existing supply contracts, and implementation delays
pending termination of a hospital's previous supply relationships. The long
sales process inhibits the ability of the Company to quickly increase revenues
from new and existing customers or enter into new markets. The Company's future
performance will also depend on market acceptance of its combination of reusable
surgical products, disposable accessory packs, instruments, and direct delivery
and retrieval service.

         Need for Capital. The Company's business is capital intensive and may
require substantial capital expenditures during the next several years to
achieve its expansion plans. In the longer term, the Company expects that its
needs for capital expenditures will depend on its growth and opportunities. The
Company's inability to obtain adequate capital could have a material adverse
effect on the Company. See -- "Liquidity and Capital Resources."

         New Product Offering; Dependence on a Supplier. Surgical Express for
Laparoscopy is the Company's first instrument offering. The Company is
implementing this and other instrument programs and remains subject to a risk
that the market will not broadly accept them. Further, the Company is relying on
Aesculap, Inc. as its major source of supply of laparoscopic instruments for its
first program. The Joint Marketing Agreement between SRI and Aesculap provides
for Aesculap to furnish instruments to the Company for at least three years,
subject to terms and conditions stated in the agreement. Any failure of Aesculap
to furnish instruments for any reason would have a materially adverse effect on
the Company's ability to implement this program.

         Dependence on Significant Customers. During the nine months ended
September 30, 2001, revenues from three hospital groups (Novation, Premier, Inc.
and HPG) accounted for approximately 28%, 14% and 12% of the Company's revenues,
respectively, compared to 19%, 17% and 12%, respectively, in the nine months
ended September 30, 2000. No single hospital or surgery center accounted for
more than 9% of the Company's revenues for the nine months ended September 30,
2001 and 2000, respectively. Although each Novation, Premier and HPG hospital
currently make purchasing decisions on an individual basis, loss of a
substantial portion of the Novation, Premier or HPG hospitals' business would
have a material adverse effect on the Company.

         Competition. The Company's business is highly competitive. The
Company's competitors include a number of distributors and manufacturers, as
well as the in-house reprocessing operations of hospitals. Certain of the
Company's existing and potential competitors possess substantially greater
resources than the Company. Some of the Company's competitors, including
Allegiance Corporation, serve as the sole supplier of a wide assortment of
products to a significant number of hospitals. Although the Company offers a
substantial array of surgical products, many of its competitors have a greater
number of products for the entire hospital, which in some instances is a
competitive disadvantage for the Company. There is no assurance that the Company
will be able to compete effectively with existing or potential competitors.



                                       10
<PAGE>

         Government Regulation. Significant aspects of the Company's businesses
are subject to state and federal statutes and regulations governing, among other
things, medical waste-disposal and workplace health and safety. In addition,
most of the products furnished or sold by the Company are subject to regulation
as medical devices by the U.S. Food and Drug Administration (FDA), as well as by
other federal and state agencies. The Company's facilities are subject to
regular inspections by FDA officials. The FDA has authority to enjoin future
violations, seize adulterated or misbranded devices, require the manufacturer to
remove products from the market, and publicize relevant facts. Federal or state
governments might impose additional restrictions or adopt interpretations of
existing laws that could materially adversely affect the Company.
















                                       11
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

            Class Action Litigation. A Class Action Complaint against the
Company was filed on November 30, 2001, in the United States District Court for
the Middle District of Florida. The plaintiffs purport to assert claims on
behalf of a class of purchasers of the Company's common stock during the period
from July 23, 2001 through November 27, 2001. The action claims violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. Among other things, the action alleges that during the
class period, the Company and certain of its officers made materially false
statements concerning the Company's financial condition and its future
prospects. The action seeks compensatory and other damages, and costs and
expenses associated with the litigation. The Company intends to defend the
action vigorously. The Company cannot predict whether any other material suits,
claims, or investigations will arise in the future based on the same claims.

         Neither the Company nor any of its property is subject to any other
litigation or other legal proceedings that is expected to have a material effect
on the Company or its business.

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

                               REPORTS ON FORM 8-K

         On November 27, 2001, the Company filed a report on Form 8-K announcing
its third quarter restatement.




                                       12
<PAGE>

                                    SIGNATURE

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


                                    SRI/SURGICAL EXPRESS, INC.



Date:  December 5, 2001             By: /s/ James T. Boosales
                                        ----------------------------------------
                                        Executive Vice President
                                        Chief Financial Officer












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