<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


(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:    33-20323


                              Royal BodyCare, Inc.
                              --------------------
             (Exact name of registrant as specified in its charter)

        Nevada                                                  91-2015186
------------------------                                        ----------
(State of Incorporation)                                  (IRS Employer ID No.)

            2301 Crown Court, Irving, Texas             75038
            -------------------------------             -----
       (Address of principal executive offices)       (Zip code)

Registrant's telephone number, including area code: 972-893-4000

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 Act of 1934 during the past
12 months and (2) has been subject to such filing requirements for the past 90
days.

                                X     YES            NO
                            --------        -------



Shares of common stock, par value $0.001, outstanding at November 1, 2001:


                                   13,936,294


<PAGE>

                                TABLE OF CONTENTS



<Table>
<Caption>
                                                                           Page Number

<S>      <C>       <C>                                                     <C>
PART I -- FINANCIAL INFORMATION

         Item 1.   Financial Statements

                   Condensed Consolidated Balance Sheets
                   as of September 30, 2001 and December 31, 2000               3

                   Condensed Consolidated Statements of
                   Operations for the quarters ended
                   September 30, 2001 and 2000                                  4

                   Condensed Consolidated  Statements of
                   Operations for the nine months ended
                   September 30, 2001 and 2000                                  5

                   Condensed Consolidated Statements of
                   Cash Flows for the nine months ended
                   September 30, 2001 and 2000                                  6

                   Notes to Condensed Consolidated Financial
                   Statements                                                   7

         Item 2.   Management's Discussion and Analysis
                   of Financial Condition and Results of
                   Operations                                                   14

         Item 3.   Quantitative and Qualitative Disclosure about
                   Market Risk                                                  20

PART II -- OTHER INFORMATION

         Item 1.   Legal Proceedings                                            21

         Item 2.   Changes in Securities                                        21

         Item 3.   Defaults Upon Senior Securities                              21

         Item 4.   Submission of Matters to a Vote of Security
                   Holders                                                      21

         Item 5.   Other Information                                            21

         Item 6.   Exhibits and Reports on Form 8-K                             21
</Table>


<PAGE>


ITEM 1.    FINANCIAL STATEMENTS

           ROYAL BODYCARE, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED BALANCE SHEETS
           (UNAUDITED)

<Table>
<Caption>
                                                            SEPTEMBER 30,      DECEMBER 31,
                                                                2001               2000
                                                            -------------      ------------

<S>                                                         <C>                <C>
ASSETS
Current assets:
    Cash                                                    $    370,234       $    230,460
    Interest bearing deposit                                     125,000            125,000
    Accounts receivable                                          363,297            491,406
    Inventories                                                3,027,984          3,465,172
    Deferred income tax assets                                   203,219             98,542
    Prepaid expenses and other                                   435,187            398,494
                                                            ------------       ------------
        Total current assets                                   4,524,921          4,809,074

Property & equipment, net                                      6,624,052          2,671,334

Goodwill, net                                                  2,409,868          2,273,081

Other assets                                                     556,784            991,502
                                                            ------------       ------------
                                                            $ 14,115,625       $ 10,744,991
                                                            ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                        $  1,358,150       $  1,554,817
    Accrued liabilities                                        2,137,188          2,309,133
    Current maturities of long-term debt                       1,081,369            759,142
    Lines of credit                                              342,400            415,607
    Net liabilities of discontinued operations                   100,000            100,000
                                                            ------------       ------------
        Total current liabilities                              5,019,107          5,138,699

Deferred income tax liabilities                                  262,274            262,274
Long term debt, less current maturities                        4,225,446            542,070

Shareholders' equity:
    Common stock, $0.001 par value; 50,000,000
        shares authorized; 13,936,294 and 13,916,294
        shares issued and outstanding at September 30,
        2001 and December 31, 2000, respectively                  13,936             13,916
    Additional paid-in capital                                12,179,098         12,159,118
    Accumulated deficit                                       (7,454,281)        (7,275,118)
    Accumulated other comprehensive loss                        (129,955)           (95,968)
                                                            ------------       ------------
                                                               4,608,798          4,801,948
                                                            ------------       ------------
                                                            $ 14,115,625       $ 10,744,991
                                                            ============       ============
</Table>


See notes to condensed consolidated financial statements.



                                       -3-


<PAGE>

           ROYAL BODYCARE, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           (UNAUDITED)


<Table>
<Caption>
                                                                    For the Quarter Ended September 30,
                                                                    -----------------------------------
                                                                           2001             2000
                                                                       -----------      -----------

<S>                                                                    <C>              <C>
Sales                                                                  $ 8,008,234      $ 9,647,419

Cost of goods sold                                                       2,413,168        2,773,741
                                                                       -----------      -----------
    Gross margin                                                         5,595,066        6,873,678

Operating expenses
    Distributor commissions                                              2,876,909        3,641,441
    Selling, general and administrative                                  2,684,021        3,118,972
                                                                       -----------      -----------
        Total operating expenses                                         5,560,930        6,760,413

                                                                       -----------      -----------
Earnings before income taxes                                                34,136          113,265

    Provision for income taxes                                              13,000           38,000
                                                                       -----------      -----------
Earnings from continuing operations                                         21,136           75,265

Earnings from discontinued operations                                         --             74,386
                                                                       -----------      -----------
Net earnings                                                           $    21,136      $   149,651
                                                                       ===========      ===========


Earnings per share -- basic and diluted:

    Earnings from continuing operations per share                      $      --        $      0.01
    Earnings from discontinued operations per share                           --               --
                                                                       -----------      -----------
    Net earnings per share                                             $      --        $      0.01
                                                                       ===========      ===========

    Weighted average common shares outstanding                          13,936,294       13,916,294
                                                                       ===========      ===========
</Table>


See notes to condensed consolidated financial statements.



                                       -4-


<PAGE>

           ROYAL BODYCARE, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           (UNAUDITED)


<Table>
<Caption>
                                                              For the Nine Months Ended September 30,
                                                              ---------------------------------------
                                                                       2001               2000
                                                                  ------------       ------------

<S>                                                               <C>                <C>
Sales                                                             $ 26,520,926       $ 30,606,016

Cost of goods sold                                                   8,145,578          8,661,765
                                                                  ------------       ------------
    Gross margin                                                    18,375,348         21,944,251

Operating expenses
    Distributor commissions                                          9,721,029         12,004,499
    Selling, general and administrative                              8,938,482          9,142,595
                                                                  ------------       ------------
        Total operating expenses                                    18,659,511         21,147,094
                                                                  ------------       ------------
Earnings (loss) before income taxes                                   (284,163)           797,157

    Provision (benefit) for income taxes                              (105,000)           270,000
                                                                  ------------       ------------
Earnings (loss) from continuing operations                            (179,163)           527,157

Earnings from discontinued operations                                     --               74,386
                                                                  ------------       ------------
Net earnings (loss)                                               $   (179,163)      $    601,543
                                                                  ============       ============


Earnings (loss) per share -- basic and diluted:

    Earnings (loss) from continuing operations per share          $      (0.01)      $       0.04
    Earnings from discontinued operations per share                       --                 --
                                                                  ------------       ------------
    Net earnings (loss) per share                                 $      (0.01)      $       0.04
                                                                  ============       ============

    Weighted average common shares outstanding                      13,931,850         13,916,294
                                                                  ============       ============
</Table>


See notes to condensed consolidated financial statements.



                                       -5-


<PAGE>

           ROYAL BODYCARE, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
           (UNAUDITED)


<Table>
<Caption>
                                                             For the Nine Months Ended September 30,
                                                             ---------------------------------------
                                                                      2001              2000
                                                                  -----------       -----------

<S>                                                               <C>               <C>
Cash flows from operating activities:
    Net earnings (loss)                                           $  (179,163)      $   601,543
    Less earnings from discontinued operations                           --             (74,386)
                                                                  -----------       -----------
    Earnings (loss) from continuing operations                       (179,163)          527,157
    Adjustment for non-cash items:
      Depreciation and amortization                                   676,326           502,801
      Deferred income taxes                                          (105,000)          143,981
      Accounts receivable                                             250,721           (64,272)
      Inventories                                                     429,422        (1,052,643)
      Prepaid expenses and other                                      (39,184)         (100,438)
      Other assets                                                    264,718          (155,486)
      Accounts payable and accrued liabilities                       (518,856)          707,305
                                                                  -----------       -----------
    Cash flows from continuing operations                             778,984           508,405
    Cash flows from discontinued operations                              --              74,386
                                                                  -----------       -----------
Net cash provided by operating activities                             778,984           582,791
                                                                  -----------       -----------

Cash flows from investing activities:
    Purchase of property and equipment                             (4,140,415)         (695,498)
                                                                  -----------       -----------
Net cash used for investing activities                             (4,140,415)         (695,498)
                                                                  -----------       -----------

Cash flows from financing activities:
    Net proceeds from (payments of) lines of credit                   (71,157)          239,348
    Proceeds from long term debt                                    3,997,000           420,839
    Payments of long term debt                                       (440,644)         (493,973)
                                                                  -----------       -----------
Net cash provided by financing activities                           3,485,199           166,214
                                                                  -----------       -----------

Effect of exchange rate changes on cash flows                          16,006            10,843
                                                                  -----------       -----------
Net increase in cash                                                  139,774            64,350

Cash, beginning of period                                             230,460           208,225
                                                                  -----------       -----------
Cash, end of period                                               $   370,234       $   272,575
                                                                  ===========       ===========
</Table>


See notes to condensed consolidated financial statements.



                                       -6-

<PAGE>

                      ROYAL BODYCARE, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE A -- UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the disclosures required by accounting principles generally accepted in the
United States of America. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of the Company's results for the interim periods have been
included. The Condensed Consolidated Balance Sheet as of December 31, 2000 was
derived from the Company's audited financial statements included in the
Company's Form 10-K for the year ended December 31, 2000. The accompanying
financial statements should be read in conjunction with the Company's Form 10-K
for the year ended December 31, 2000. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for the
full year.

NOTE B -- BUSINESS HISTORY:

The Company was formed in April 1997 through the merger of two entities,
GlobeNet, Inc. ("GlobeNet") and Mighty Power USA, Inc. ("Mighty Power").
Concurrent with this merger, the name of the Company was changed to GlobeNet
International I, Inc. In October 1999, the Company changed its name to Royal
BodyCare, Inc. ("RBC") in order to be more easily identified with the brand name
of its main products. The Company is engaged in the marketing of nutritional
supplements and personal care products and its continuing operations represent
the separate business strategies and product lines of GlobeNet preceding the
merger described above.

RBC has entered into agreements to license the exclusive rights to sell its
nutritional and personal care products internationally through third party
licensees in their respective countries. RBC has entered into seven such
arrangements to market its products. Under these agreements, independent
distributors in the licensed countries are compensated by the third party
licensees according to the same or a similar compensation plan as the one used
by RBC for its independent distributors in the United States and Canada.

In December 2000, RBC created a new subsidiary called BizAdigm(TM), Inc., a
Nevada Corporation ("BizAdigm(TM)"). BizAdigm(TM) offers internet products
including web sites, on-line training courses in over 170 different topics, and
mini CD's used for presenting promotional information. The BizAdigm(TM) products
are marketed through a network of independent distributors similar in approach
to the marketing of RBC's current nutritional and personal care products. Since
its initial launch in the first quarter of 2001, there has been limited activity
in BizAdigm(TM). RBC is working with key vendors and other industry consultants
to enhance the BizAdigm(TM) product offering and increase customer appeal.

In August 2001, RBC, through a newly formed subsidiary, purchased substantially
all of the assets of MPM Medical, Inc., a Texas corporation ("MPM Medical"). MPM
Medical distributed wound care products throughout the United States. The
acquisition of MPM Medical enhances RBC's ability to market products through
broadened distribution channels.



                                       -7-
<PAGE>

RBC acquired the assets of MPM Medical for $10,000 and the assumption of a
variety of MPM Medical's liabilities including a Small Business Administration
guaranteed note, which the principal amount outstanding was approximately
$290,000. The acquisition of MPM Medical was not significant to RBC's financial
statements.

The operations conducted by Mighty Power and its affiliates prior to the merger
of GlobeNet and Mighty Power were conducted post-merger by Great Xpectations
Marketing, Inc. ("GXI") and are classified in the accompanying consolidated
financial statements as discontinued operations.

NOTE C -- INVENTORIES:

Inventories at September 30, 2001 and December 31, 2000 consist of the
following:

<Table>
<Caption>
                                             September 30, 2001   December 31, 2000
                                             ------------------   -----------------

<S>                                          <C>                 <C>
Raw materials and bulk products                  $   576,318         $   931,436
Packaging Materials                                  426,228             289,357
Finished goods                                     2,025,438           2,244,379
                                                 -----------         -----------
                                                 $ 3,027,984         $ 3,465,172
                                                 ===========         ===========
</Table>

NOTE D -- PROPERTY AND EQUIPMENT:

Property and equipment at September 30, 2001 and December 31, 2000 consists of
the following:

<Table>
<Caption>
                                             September 30, 2001   December 31, 2000
                                             ------------------   -----------------

<S>                                          <C>                  <C>
Land and building                                $ 3,827,966          $      --
Computer software and
     office equipment                              4,427,113            3,717,310
Warehouse equipment                                  376,988              306,273
Automotive equipment                                 118,199              118,901
Leasehold improvements                                41,228              157,587
                                                 -----------          -----------
                                                   8,791,494            4,300,071
Less -- accumulated depreciation                  (2,167,442)          (1,628,737)
                                                 -----------          -----------
                                                 $ 6,624,052          $ 2,671,334
                                                 ===========          ===========
</Table>

In March 2001, the Company completed the purchase of its corporate headquarters
facility located in Irving, Texas.

NOTE E -- ACCRUED LIABILITIES:

Accrued liabilities at September 30, 2001 and December 31, 2000 consist of the
following:

<Table>
<Caption>
                                                  September 30, 2001   December 31, 2000
                                                  ------------------   -----------------

<S>                                               <C>                 <C>
Distributor commissions                               $ 1,090,392         $ 1,291,076
Deferred revenue                                          359,270             529,816
Sales and other taxes                                     209,278             196,472
Interest                                                   40,132              15,797
Other                                                     438,116             275,972
                                                      -----------         -----------
                                                      $ 2,137,188         $ 2,309,133
                                                      ===========         ===========
</Table>



                                       -8-


<PAGE>

NOTE F -- LONG TERM OBLIGATIONS:

At September 30, 2001 and December 31, 2000 long-term obligations consist of the
following:

<Table>
<Caption>
                                                                 September 30, 2001          December 31, 2000
                                                                 ------------------          -----------------

<S>                                                              <C>                          <C>
Mortgage note payable bearing interest at
     7.75%, payable in monthly installments
     of $25,797 through April 2019, collateralized
     by land and building                                            $ 2,967,472                     $    --

Note payable to previous owner of the
     Company's headquarters facility bearing
     interest at 7%, payable in monthly
     installments of $3,483 through March 2003
     at which time a final installment of $255,000
     is due                                                              289,448                          --

Note payable to bank bearing interest at prime
     plus .5% (7.0% at September 30, 2001) due
     in monthly installments of $7,474 through
     March 2006                                                          318,372                      148,000

U.S. Small Business Administration note
     bearing interest at prime plus 2.75% (8.75%
     at September 30, 2001) due in monthly
     installments of approximately $4,700
     through July 2008                                                   285,500                          --

Notes payable to banks bearing interest at rates
     ranging from 4.9% to 10.4%, payable
     through 2005, collateralized by automobiles                          75,358                      107,001

Note payable to bank bearing interest at 9%,
     due in monthly payments of $2,146 through
     2002, collateralized by equipment                                    28,344                       45,123

Convertible notes (original amount $730,000)
     bearing interest at 10% payable quarterly,
     originally due two years from the date of
     issuance, notes are convertible into common
     stock any time prior to maturity at the option
     of the holder based on a per share conversion
     price of $1.32                                                      193,000                      207,000

Litigation settlement to former marketing
     consultant and distributor, payable $5,000
     per month through April 2004, settlement is
     without interest and has been discounted at
     10%                                                                 136,101                      169,487

Capital lease obligations                                                888,220                      599,601
Other                                                                    125,000                       25,000
                                                                     -----------                   ----------
                                                                       5,306,815                    1,301,212
Less -- current maturities                                            (1,081,369)                    (759,142)
                                                                     -----------                   ----------

                                                                     $ 4,225,446                   $  542,070
                                                                     ===========                   ==========

</Table>



                                       -9-

<PAGE>


Certain purchases of equipment have been financed through capital leases. Such
leases have terms ending in 2004 and have various interest rates approximating
15%.

NOTE G -- CAPITAL TRANSACTIONS:

In connection with private placements of its common stock in October 1997, June
1998 and July 1998, the Company issued to the purchasers five-year warrants to
purchase an aggregate of 1,216,931 shares of the Company's unregistered common
stock at an exercise price of $2.00 per share. The investors also received
certain registration rights covering the private placement and warrant shares
exercisable under certain circumstances described in the stock purchase
agreements.

The Company has a stock option plan ("The 1998 Stock Option Plan") under which
500,000 shares of its common stock are reserved. As of September 30, 2001,
directors, officers and key employees have been granted options to acquire
62,000 shares of common stock that vest periodically through 2004. The options
have been granted at prices ranging from $.50 to $1.062 per share, which were
the market prices of the shares on the dates granted. The options expire at
various dates through 2005.

The Company has also entered into stock option agreements outside of the 1998
Stock Option Plan. As of September 30, 2001, individuals have been granted
options to acquire 886,520 shares of common stock.

NOTE H -- SEGMENT INFORMATION:

The Company has three operating segments. These operating segments are
components of the Company for which separate information is available that is
evaluated regularly by management in deciding how to allocate resources and in
assessing performance. The Company evaluates performance based on operating
earnings (loss).

The Company's operating segments are based on geographic operations and include
a domestic segment (United States) and two international segments (Canada and
other regions). The segments have similar business characteristics and each
offers similar products through similar methods of distribution as described in
Note B. Inter-segment sales, eliminated in consolidation, are not material.



                                      -10-


<PAGE>


Financial information summarized by geographical segment for the quarters and
nine-month periods ended September 30, 2001 and 2000 is listed below (in
thousands):

<Table>
<Caption>
                                                              Earnings
                                                               (loss)
                                             Sales to          before
                                             external          income         Long-lived       Total
                                             customers         taxes            assets         Assets
                                             ---------         -----            ------         ------

<S>                                          <C>              <C>              <C>             <C>
Quarter ended September 30, 2001
     Domestic                                $  5,958         $  (145)         $ 8,530         $ 12,571
     Canada                                     1,317             167              504            1,545
     All others                                   733              12             --               --
                                             --------         -------          -------         --------

Totals                                       $  8,008         $    34          $ 9,034         $ 14,116
                                             ========         =======          =======         ========

Quarter ended September 30, 2000
     Domestic                                $  7,369         $    (2)         $ 4,326         $  8,599
     Canada                                     1,779             107              700            1,880
     All others                                   499               8             --               --
                                             --------         -------          -------         --------

Totals                                       $  9,647         $   113          $ 5,026         $ 10,479
                                             ========         =======          =======         ========

Nine Months ended September 30, 2001
     Domestic                                $ 19,875         $  (725)         $ 8,530         $ 12,571
     Canada                                     4,504             348              504            1,545
     All others                                 2,142              93             --               --
                                             --------         -------          -------         --------

Totals                                       $ 26,521         $  (284)         $ 9,034         $ 14,116
                                             ========         =======          =======         ========

Nine Months ended September 30, 2000
     Domestic                                $ 23,433         $   317          $ 4,326         $  8,599
     Canada                                     5,670             404              700            1,880
     All others                                 1,503              76             --               --
                                             --------         -------          -------         --------

Totals                                       $ 30,606         $   797          $ 5,026         $ 10,479
                                             ========         =======          =======         ========
</Table>



                                      -11-

<PAGE>

NOTE I -- EARNINGS PER SHARE:

<Table>
<Caption>
                                                                  Quarter ended September 30,
                                                                -------------------------------
                                                                    2001                2000
                                                                -----------         -----------

<S>                                                             <C>                 <C>
Earnings from continuing operations                             $    21,136         $    75,265
Earnings from discontinued operations                                  --                74,386
                                                                -----------         -----------
Net earnings                                                    $    21,136         $   149,651
                                                                ===========         ===========

Weighted average common shares outstanding
     during period -- basic and diluted                          13,936,294          13,916,294
                                                                ===========         ===========

Earnings per share -- basic and diluted:
Earnings from continuing operations
     per share                                                  $      --           $      0.01
Earnings from discontinued operations per
     Share                                                             --                  --
                                                                -----------         -----------
Net earnings per common share                                   $      --           $      0.01
                                                                ===========         ===========
</Table>

<Table>
<Caption>
                                                                Nine Months ended September 30,
                                                                -------------------------------
                                                                    2001                2000
                                                                -----------          ----------

<S>                                                             <C>                  <C>
Earnings (loss) from continuing operations                      $  (179,163)         $   527,157
Earnings from discontinued operations                                  --                 74,386
                                                                -----------          -----------
Net earnings (loss)                                             $  (179,163)         $   601,543
                                                                ===========          ===========

Weighted average common shares outstanding
     during period -- basic and diluted                          13,931,850           13,916,294
                                                                ===========          ===========

Earnings (loss) per share -- basic and diluted:
Earnings (loss) from continuing operations
     per share                                                  $     (0.01)         $      0.04
Earnings from discontinued operations per
     Share                                                             --                   --
                                                                -----------          -----------
Net earnings (loss) per common share                            $     (0.01)         $      0.04
                                                                ===========          ===========
</Table>

The assumed conversion of the convertible notes would have an anti-dilutive
effect on diluted earnings per common share for the quarters and nine-month
periods ended September 30, 2001 and 2000, and accordingly have been excluded
from the computation.

All stock options and warrants outstanding in the respective periods were
excluded from the computation of diluted earnings per common share because their
exercise price was greater than the average market price of the common stock
and, therefore anti-dilutive.



                                      -12-


<PAGE>


NOTE J -- COMPREHENSIVE INCOME (LOSS):

Comprehensive income (loss) is net earnings (loss) plus other comprehensive
income (loss), which, for the periods presented, consists of the change in the
foreign currency translation adjustment. The following table provides
information regarding comprehensive income (loss):

<Table>
<Caption>
                                                                Quarter ended September 30,
                                                                ----------------------------
                                                                  2001               2000
                                                                ---------          ---------

<S>                                                             <C>                <C>
Net earnings                                                    $  21,136          $ 149,651

Other comprehensive income (loss):
     Foreign currency translation adjustment                      (34,976)             2,142
                                                                ---------          ---------

     Comprehensive income (loss)                                $ (13,840)         $ 151,793
                                                                =========          =========
</Table>

<Table>
<Caption>
                                                                Nine Months ended September 30,
                                                                -------------------------------
                                                                   2001                2000
                                                                ----------          ----------

<S>                                                             <C>                 <C>
Net earnings (loss)                                             $ (179,163)         $  601,543

Other comprehensive income (loss):
     Foreign currency translation adjustment                       (33,987)              7,871
                                                                ----------          ----------
     Comprehensive income (loss)                                $ (213,150)         $  609,414
                                                                ==========          ==========
</Table>

NOTE K -- RECENT ACCOUNTING PRONOUNCEMENTS:

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 (SFAS 141), Business Combinations. This
standard eliminates the pooling method of accounting for business combinations
initiated after June 30, 2001. In addition, SFAS 141 addresses the accounting
for intangible assets and goodwill acquired in a business combination. This
portion of SFAS 141 is effective for business combinations completed after June
30, 2001. The Company does not expect SFAS 141 to have a material effect on the
Company's financial position or results of operations.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Intangible
Assets, which revises the accounting for purchased goodwill and intangible
assets. Under SFAS 142, goodwill and intangible assets with indefinite lives
will no longer be amortized, but will be tested for impairment annually, and
also in the event of an impairment indicator. SFAS 142 is effective for fiscal
years beginning after December 15, 2001. The Company expects that adoption of
SFAS 142 will increase annual operating income by approximately $150,000.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144 Accounting for Impairment or Disposal of
Long-Lived Assets. SFAS 144 is effective for fiscal years beginning after
December 15, 2001. The Company does not believe that the implementation of this
standard will have any material effect on its financial position, results of
operations, or cash flows.



                                      -13-


<PAGE>


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

FORWARD-LOOKING STATEMENTS

The statements, other than statements of historical facts included in this
quarterly report on Form 10-Q, including statements set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding our future financial positions, business strategy,
budgets, project cost, and plans and objectives for future operations are
forward-looking statements. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "estimate", "anticipate" or "believe". We believe that the
expectations reflected in such forward-looking statements will prove to be
correct. However, we cannot assure you that such expectations will occur. Our
actual future performance could differ materially from such statements. Factors
or events that could cause or contribute to such differences include, but are
not limited to:

o    general economic conditions

o    general market acceptance of our products and distribution methods

o    introduction of competitive products

o    pricing of competitive products

o    regulatory actions effecting the market of our products and distribution
     methods

o    acceptance by our distributors and potential distributors of our marketing,
     promotional and recruiting activities

o    reduction in demand for our products or the rate at which new distributors
     are recruited to join us or an increased rate of attrition of our
     distributors

o    the discontinuance or reduction of the production of Flanagan
     Microclusters(R)and Nanocolloidal Hydride, essential ingredients in certain
     of our products and which are produced by a single source

o    fluctuations in the foreign currency exchange ratios

o    technical difficulties related to our, including delays related to the
     development of, or service interruptions to our Internet business



                                      -14-
<PAGE>

RESULTS OF OPERATIONS

Quarter Ended September 30, 2001 Compared with the Quarter Ended
September 30, 2000


Our sales for the quarter ended September 30, 2001 were $8,008,000 compared with
sales for same quarter of the prior year of $9,647,000, a decrease of $1,639,000
or 17%. The decline in third quarter sales resulted from sales declines of our
traditional nutritional and personal care products in the U.S. and Canadian
markets of $1,596,000 and $462,000, respectively. Declines in these markets were
partially offset by a sales increase in our international licensee markets,
principally Europe and Russia, of $234,000 and recognized sales related to our
BizAdigm(TM) Internet products of $185,000. While sales of our traditional
nutritional and personal care products outside of North America have continued
to grow, North American sales have declined. To reverse this trend, we
introduced enhancements to our marketing program in the second quarter of 2001.
These enhancements were well received by our independent distributors and early
indications were that these new programs would begin to reverse our sales
decline. However, during the third quarter, there were other events that offset
the effectiveness of these new programs. On July 1, 2001, our U.S. headquarters
facility was damaged when a portion of the warehouse roof collapsed during a
heavy rainstorm. We set up remote offices within 24 hours of the collapse, which
allowed to us to continue to process distributor orders with only a slight
service disruption. However, because we were unable to resume shipping
activities until July 10 and clear the backlog of shipments until July 17, July
sales were significantly affected. Our sales and recruiting activity improved in
August, but were negatively affected in September by the terrorist attacks in
New York City and Washington, D.C. on September 11. In spite of these events, we
believe that we will be able reverse the declining sales trend as we pursue our
present marketing strategies and programs.

The damage to our corporate headquarters facility was fully insured. Our
insurance policies covered damaged property as well lost profits associated with
the interruption of our business. We are presently engaged in discussions with
our insurance carrier regarding the amount of our claim for lost profits. The
accompanying financial statements do not reflect an estimate of this recovery
because we are not able at this time to estimate this amount with any certainty.

Our cost of goods sold for the quarter ended September 30, 2001 was $2,413,000
compared with cost of goods sold in the same quarter of the prior year of
$2,774,000, a decrease of $361,000 or 13%. As a percentage of sales, cost of
goods sold increased to 30% in 2001 compared with 29% in 2000. This increase was
attributable to the increase in export sales to our international licensees.
Export sales to our international licensees have a lower gross margin because we
do not pay the independent distributor commissions on the sales of these
products.

Our distributor commissions for the quarter ended September 30, 2001 were
$2,877,000 compared with distributor commissions in the same quarter of 2000 of
$3,641,000, a decrease of $764,000 or 21%. As a percentage of sales, distributor
commissions in the third quarter of 2001 were 36% compared with 38% in the same
period of 2000. As described above, this percentage decline was mainly related
to the increase in sales to our international licensees because we do not pay
distributor commissions on sales of these products.



                                      -15-
<PAGE>

Our general and administrative expenses for the quarter ended September 30,
2001, were $2,684,000 compared with such expenses in the same quarter of 2000 of
$3,119,000, a decrease of $435,000 or 14%. This decrease was mainly related to
management's efforts to reduce operating expenses in light of the decline in
sales. This expense decrease was partially offset by increased expenses related
to the enhancement and support of our information technology systems. As
percentage of sales, general and administrative expenses were 34% and 32% in
2001 and 2000, respectively.

Discontinued operations represent the operations of Great Xpectations. Earnings
from discontinued operations for the third quarter ended September 30, 2000,
which amounted to $74,000, was attributable to the reversal of certain accruals.
These accruals were originally based on estimates that assumed Great
Xpectations' operations would continue. Because these operations have been
discontinued, it was determined that the accruals were no longer necessary.

Our net earnings for the quarter ended September 30, 2001 were $21,000, or $.00
per share, compared with net earnings in the comparable quarter of the prior
year of $149,000 or $.01 per share, a decline of $128,000. This decline resulted
from the factors described above.

Nine Months Ended September 30, 2001 Compared with the Nine Months Ended
September 30, 2000

Our sales for the nine months ended September 30, 2001 were $26,521,000 compared
with sales for same nine months of the prior year of $30,606,000, a decrease of
$4,085,000 or 13%. This decline in sales resulted from sales declines of our
traditional nutritional and personal care products in the U.S. and Canadian
markets of $4,178,000 and $1,166,000, respectively. Declines in these markets
were partially offset by a sales increase in our international licensee markets,
principally Europe and Russia, of $639,000 and recognized sales related to our
BizAdigm(TM) Internet products of $620,000. While sales outside of North America
have continued to grow, North American sales have not. Sales in the first nine
months of 2000 benefited from sales generated in response to new promotional
programs that were introduced during that period and sales generated in
anticipation of changes that were made to the plan by which our independent
distributors are compensated. Our sales decline in the first nine months of 2001
occurred because this sales momentum was not sustained. We introduced
enhancements to our marketing program in the second quarter of 2001 that we
believed would stimulate increased third quarter sales and recruiting activities
among our North American independent distributors. As described above, the
partial collapse of the warehouse roof at our U.S. headquarters facility in July
2001 and the terrorist attacks in New York City and Washington, D.C. in
September 2001 more than offset the positive effect of these enhancements. In
spite of these events, we believe that we will be able to reverse the declining
sales trend as we pursue our present marketing strategies and programs. As
described above, the damage to our headquarters facility was fully insured.



                                      -16-
<PAGE>

Our cost of goods sold for the nine months ended September 30, 2001 was
$8,146,000 compared with cost of goods sold in the same period of the prior year
of $8,662,000, a decrease of $516,000 or 6%. As a percentage of sales, cost of
goods sold was 31% in 2001 compared with 28% in 2000. This increase resulted
from several factors. Approximately 1% of this increase was attributable to a
change in the product sales mix in the U.S. while an additional 1% was
attributable to the increase in sales to our international licensees. These
increases are offset by corresponding reductions in distributor commission
expense because lower margin products sold in the U.S. carry lower commission
values, and no distributor commissions are paid on sales to international
licensees. The remaining increase in the cost of goods sold percentage was
mainly attributable to increased shipping costs associated with our Canadian
operation. These cost increases were incurred as a result of a reorganization of
Canadian operations during which time a significant portion of our eastern
Canadian orders were shipped from the U.S. This reorganization was substantially
completed in April 2001 so our Canadian shipping costs have begun to return to
their former level.

Our distributor commissions for the nine months ended September 30, 2001 were
$9,721,000 compared with distributor commissions in the same nine months of 2000
of $12,004,000, a decrease of $2,283,000 or 19%. As a percentage of sales,
distributor commissions in the first nine months of 2001 were 37% compared with
39% during the same period of 2000. As described above, this percentage decline
was mainly related to a change in product sales mix in the U.S. and the increase
in sales to our international licensees. A portion of this percentage decrease
was also attributable to a re-structuring of our distributor compensation plan
that became fully effective June 1, 2000. We expect this percentage to increase
over time as distributors qualify for the highest commission levels in the plan.

Our general and administrative expenses for the nine months ended September 30,
2001, were $8,938,000 compared with such expenses in the same period of 2000 of
$9,143,000, a decrease of $205,000 or 2%. This decrease was mainly related to
decreased operating expenses associated with the decline in sales. This expense
decrease was partially offset by expenses incurred in connection with the
development and initial marketing of the BizAdigm(TM) Internet product line and
increased expenses related to the enhancement and support of our information
technology systems. The increase in general and administrative expenses was also
attributable to increased expenses incurred in support of our international
licensees. As percentage of sales, general and administrative expenses were 34%
and 30% in 2001 and 2000, respectively.

Discontinued operations represent the operations of Great Xpectations. Earnings
from discontinued operations for the nine months ended September 30, 2000, which
amounted to $74,000, was attributable to the reversal of certain accruals. These
accruals were originally based on estimates that assumed Great Xpectations'
operations would continue. Because these operations have been discontinued, it
was determined that the accruals were no longer necessary.



                                      -17-
<PAGE>


Our net loss for the nine months ended September 30, 2001 was $179,000, or $.01
per share, compared with net earnings in the comparable period of the prior year
of $602,000 or $.04 per share, a decline of $781,000. This decline resulted from
the factors described above. Associated with our operating loss, we recorded a
tax benefit of $105,000 because we expect to use this loss to offset taxable
income in future periods.

There have been no economic events or changes that have affected our sales or
operating results and we are not aware of any economic trends or uncertainties
that would have a material impact on our future sales or operating results. We
believe that we have purchased our products at the best price available and that
any price increases in the foreseeable future will be small. Any such price
increases would be passed through to our distributors. In addition, we do not
believe at this time that inflation will have a material impact on our operating
results.

LIQUIDITY AND CAPITAL RESOURCES

During the first nine months of 2001, we had a net increase in cash of $140,000.
This increase in cash resulted primarily from net cash provided by operating
activities and financing activities of $779,000, and $3,485,000, respectively,
that was partially offset by the net cash used to purchase property and
equipment of $4,140,000. The net cash flows from investing and financing
activities during the first nine months of 2001 principally related to the
purchase of our headquarters facility in Irving, Texas. The total cost of this
facility was approximately $3.7 million. Financing for this purchase was
provided by a $3 million mortgage note, a $300,000 note from the seller and a
$350,000 note from a bank.

In August 2001, we acquired substantially all of the assets of MPM Medical for
$10,000 and the assumption of a variety of MPM Medical's liabilities including a
Small Business Administration guaranteed note, which the principal amount
outstanding was approximately $290,000.

Consistent with industry practice, most of our sales are paid by our
distributors at the time of order. Therefore, our primary working capital need
is to maintain inventory at a level commensurate with sales activities. Because
our sales are generated through independent distributors who do not maintain a
significant inventory, it is necessary for us to have products on hand when the
distributors place their orders. During periods of sales growth we must purchase
inventory in anticipation of sales, thereby creating the need for additional
working capital.

We believe that we will be able to fund moderate sales increases through our
operations. Should sales growth increase beyond our ability to finance our
growth internally, we will again seek outside sources of capital including bank
borrowings, other types of debt or equity financings. There is no assurance,
however, that we would be able to obtain any additional outside financing or on
terms we would find acceptable. We have no plans or requirements for any other
significant capital expenditures during the next twelve months.

Other than those factors already described, we are not aware of any trends or
uncertainties that would significantly affect our liquidity or capital resources
in the future.





                                      -18-
<PAGE>


NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 (SFAS 141), Business Combinations. This
standard eliminates the pooling method of accounting for business combinations
initiated after June 30, 2001. In addition, SFAS 141 addresses the accounting
for intangible assets and goodwill acquired in a business combination. This
portion of SFAS 141 is effective for business combinations completed after June
30, 2001. We do not expect SFAS 141 to have a material effect on our financial
position or results of operations.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Intangible
Assets, which revises the accounting for purchased goodwill and intangible
assets. Under SFAS 142, goodwill and intangible assets with indefinite lives
will no longer be amortized, but will be tested for impairment annually, and
also in the event of an impairment indicator. SFAS 142 is effective for fiscal
years beginning after December 15, 2001. We expect that adoption of SFAS 142
will increase annual operating income by approximately $150,000.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144 Accounting for Impairment or Disposal of
Long-Lived Assets. SFAS 144 is effective for fiscal years beginning after
December 15, 2001. We do not believe that the implementation of this standard
will have any material effect on our financial position, results of operations,
or cash flows.



                                      -19-
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The following discussion about our market risk includes "forward-looking
statements" that involve risks and uncertainties. Actual results could differ
materially from those projected in the forward-looking statements. We do not use
derivative financial instruments for speculative or trading purposes. We are
exposed to market risk from changes in foreign currency exchange rates and
interest rates that could affect our future results of operations and financial
condition. We manage our exposure to these risks through our regular operating
and financing activities.

Foreign exchange

We have foreign-based operations in Canada that accounted for 17% of net sales
during the first nine months of 2001 and 18% of 2000 net sales. We make advances
to our foreign subsidiary denominated in U.S. dollars, exposing the foreign
subsidiary to the effect of changes in spot exchange rates of the Canadian
dollar relative to the U.S. dollar. We do not regularly use forward-exchange
contracts to hedge these exposures. Based on our foreign currency exchange rate
exposure for intercompany advances of approximately $205,000 at September 30,
2001, a 10% adverse change in the currency rate would reduce earnings before tax
by approximately $20,500.

Interest rates

Our credit arrangements expose us to fluctuations in interest rates. At
September 30, 2001, we had $946,000 outstanding in indebtedness, which provided
for interest to be paid monthly based on a variable rate. Thus, interest rate
changes would result in a change in the amount of interest to be paid each
month. Based upon the interest rates and borrowings at September 30, 2001, a 10%
increase in interest rates would adversely affect our financial position, annual
results of operations, or cash flows by approximately $9,000.



                                      -20-
<PAGE>


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.

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

        (a)       Exhibits

                  A list of exhibits required by Item 601 of Regulation S-K and
                  filed as part of this report is set forth in the Exhibit
                  Index, which immediately precedes such exhibits.

         (b)      Reports on Form 8-K

                  None.



                                      -21-
<PAGE>

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.


                                   Royal BodyCare, Inc.
                                   --------------------
                                   Registrant



                                   By:    /s/ Clinton H. Howard
                                      -----------------------------------------
                                   Its: President



DATE:             November 14, 2001
                  Irving, Texas


<PAGE>


                                  EXHIBIT INDEX



<Table>
<Caption>
                     EXHIBIT NUMBER                                             DESCRIPTION
                     --------------                                             -----------

<S>                                                              <C>
                         *10.1                                   Agreement for Assumption of Indebtedness

                         *10.2                                   Small Business Administration Note
</Table>


*Filed herewith