UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 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 June 30, 2005

                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                SECURITIES EXCHANGE ACT OF 1934
 ----
                For the transition from                to
                                        --------------    ----------------

                           Commission File No. 0-27222

                             CFC INTERNATIONAL, INC.

                (Exact name of Registrant as specified in its charter)

                DELAWARE                               36-3434526
         (State or other jurisdiction of              (I.R.S.Employer
          incorporation or organization)              Identification No.)

                500 State Street, Chicago Heights, Illinois 60411
                    (Address of Principal Executive Offices)

         Registrant's telephone number, including
         area code:                                            (708) 891-3456


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

            YES  ( X )                                  NO  (    )

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined by Rule 12b-2 of the Exchange Act).

            YES  (   )                                  NO  ( X  )

As of August 15,  2005,  the  Registrant  had issued and  outstanding  3,998,801
shares of Common Stock,  par value $.01 per share, and 512,989 shares of Class B
Common Stock, par value $.01 per share.


<PAGE>








                             CFC INTERNATIONAL, INC.

                               INDEX TO FORM 10-Q



                                                                     Pages
                                                                     -----

Part I - Financial Information:

  Item 1. Financial Statements

    Consolidated Balance Sheets - June 30, 2005 and
      December 31, 2004............................................      5

    Consolidated Statements of Operations for the
      three months and for the six months ended June 30, 2005
      and June 30, 2004............................................      6

    Consolidated Statements of Cash Flows for the six months ended
      June 30, 2005 and June 30, 2004..............................      7

    Notes to Consolidated Financial Statements.....................   8-12


  Item 2. Management's Discussion and Analysis of
    Financial Condition and Results of Operations..................  13-18

  Item 3. Quantitative and Qualitative Disclosures about
    Market Risks...................................................     19

  Item 4.  Controls and Procedures.................................  19-20

  Item 5.  Other Information, Common Stock Repurchases.............     20


Part II - Other Information

  Item 6.  Exhibits and Report on Form 8-K.........................     20

  Signatures.......................................................     21

  Certifications...................................................  22-27



<PAGE>







                   SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

The Company believes that certain statements contained in this report and in the
future filings by the Company with the Securities and Exchange Commission and in
the  Company's  written and oral  statements  made by or with the approval of an
authorized   executive   officer  that  are  not  historical   facts  constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and  Section 21E of the  Securities  Exchange  Act of 1934,  and the
Company  intends  that such  forward-looking  statements  be subject to the safe
harbors created thereby.

The words and phrases  "looking  ahead," "is  confident,"  "should  be," "will,"
"predicted,"  "believe," "plan," "intend,"  "estimates,"  "likely," "expect" and
"anticipate" and similar expressions identify forward-looking statements.

These  forward-looking  statements  reflect  the  Company's  current  views with
respect to future  events and  financial  performance,  but are  subject to many
uncertainties  and factors  relating to the  Company's  operations  and business
environment  which may affect the  accuracy of  forward-looking  statements  and
cause the actual  results of the  Company to be  materially  different  from any
future results  expressed or implied by such  forward-looking  statements.  As a
result,  in some future quarter the Company's  operating  results may fall below
the  expectations of securities  analysts and investors.  In such an event,  the
trading  price of the  Company's  common  stock would likely be  materially  and
adversely  affected.  Many  of  the  factors  that  will  determine  results  of
operations are beyond the Company's ability to control or predict.

Some of the factors that could cause or contribute to such differences include:

o    The effect of the continuing unfavorable economic conditions on market
     growth trends in general and the impact on the Company's customers, the
     demand for the Company's products and services, and the Company's ordinary
     sources of supply, in particular;

o    Risks inherent in international operations, including possible economic,
     political or monetary instability and its impact on the level and
     profitability of foreign sales;

o    Uncertainties relating to the Company's ability to consummate its business
     strategy, including the unavailability of suitable acquisition candidates,
     or the Company's inability to finance future acquisitions or successfully
     realize synergies and cost savings from the integration of acquired
     businesses;

o    Changes in the costs and availability of raw materials and the Company's
     ability to adjust selling prices to reflect those changes;

o    The Company's reliance on existing senior management and the impact of the
     loss of any of those persons or its inability to continue to identify, hire
     and retain qualified management personnel;

o    Uncertainties relating to the Company's ability to develop and distribute
     new proprietary products to respond to market needs in a timely manner and
     the Company's ability to continue to protect its proprietary product
     information and technology;


<PAGE>





o    The Company's ability to continue to successfully identify and implement
     productivity improvements and cost reduction initiatives;

o    The Company's reliance on a small number of significant customers;

o    Uncertainties relating to the Company's ability to continue to compete
     effectively with other producers of specialty transferable coatings and
     producers of alternative products with greater financial and management
     resources;

o    Control of the Company by a principal stockholder; and

o    The effects of terrorism and armed conflicts on the Company's operations,
     demands for products and sources of supply.

The risks included here are not exhaustive. We operate in a very competitive and
rapidly changing  environment.  New risk factors emerge from time to time and it
is not possible for us to predict all such risk  factors,  nor can we assess the
impacts  of all such risk  factors  on our  business  or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any  forward-looking  statements.  Given these risks and
uncertainties,  investors  should not place undue  reliance  on  forward-looking
statements as a prediction of actual results. We have no obligation to revise or
update these forward-looking  statements to reflect events or circumstances that
arise after August 15, 2005 or to reflect the occurrence of anticipated events.

Investors should also be aware that while we do, from time to time,  communicate
with  securities  analysts,  it is against  our policy to  disclose  to them any
material non-public  information or other confidential  commercial  information.
Accordingly,  investors  should not assume that we agree with any  statement  or
report  issued by any analyst  irrespective  of the content of the  statement or
report.  Thus, to the extent that reports issued by securities  analysts contain
any projections, forecasts or opinions, such reports are not our responsibility.




<PAGE>


                         Part I - Financial Information
                          Item 1. Financial Statements
                             CFC INTERNATIONAL, INC.
                         CONSOLIDATED BALANCE SHEETS AT
                       JUNE 30, 2005 AND DECEMBER 31, 2004


                                                        June 30,    December 31,
                                                          2005          2004
                                                          ----          ----
                                                              (Unaudited)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................     $ 4,205,555    $ 4,554,699
Restricted cash ................................         306,579        306,271
Accounts receivable, less allowance
  for doubtful accounts and customer
  credits of $1,313,000 (2005) and
  $1,320,000 (2004) ............................      12,400,167     12,547,380
Inventories:
  Raw materials ................................       3,859,853      4,958,900
  Work in process ..............................       2,063,728      3,160,195
  Finished goods ...............................      11,281,068      9,590,043
                                                     -----------    -----------
                                                      17,204,649     17,709,138

Prepaid expenses and other current assets ......         146,796        387,231

Deferred income tax assets
                                                       1,160,072      1,002,559
                                                     -----------    -----------
  Total current assets .........................      35,423,818     36,507,278
                                                     -----------    -----------
Property, plant and equipment, net .............      26,511,532     28,602,311
Deferred income tax assets .....................       3,517,612      3,528,686
Goodwill .......................................       1,029,462      1,029,462
Intangible assets, net .........................       2,274,730      2,393,466
Other assets ...................................         251,852        266,806
Fair value of interest rate swap ...............          71,139         39,553
                                                     -----------    -----------
  Total assets .................................     $69,080,145    $72,367,562
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt...............     $ 5,000,387    $ 5,625,085
Accounts payable................................       4,802,963      6,802,792
Accrued compensation and benefits...............       1,657,670      1,427,215
Accrued bonuses.................................         595,000      2,056,778
Income taxes payable - current and deferred.....       1,476,221      1,554,641
Accrued expenses and other current liabilities..       3,822,113      3,473,356
                                                     -----------    -----------
  Total current liabilities.....................      17,354,354     20,939,867
                                                     -----------    -----------
Deferred income tax liabilities.................       3,221,756      3,229,584
Long-term debt, net of current portion..........      14,093,068     15,698,791
                                                     -----------    -----------
  Total liabilities.............................      34,669,178     39,868,242
                                                     -----------    -----------

COMMITMENTS AND CONTINGENCIES...................

STOCKHOLDERS' EQUITY:
Voting Preferred Stock, par value $.01 per
  share, 750 shares authorized, no shares
  issued and outstanding........................               -              -
Common stock, $.01 par value, 10,000,000
  shares authorized; shares issued of
  4,581,526 (2005) and 4,513,111 (2004).........          45,816         45,132
Class B common stock, $.01 par value,
  750,000 shares authorized; 512,989 shares
  issued and outstanding .......................           5,130          5,130
Additional paid-in capital......................      13,718,673     12,822,575
Retained earnings...............................      23,213,659     21,215,235
Accumulated other comprehensive income..........         369,184      1,188,860
                                                     -----------    -----------
                                                      37,352,462     35,276,932
Less - 582,727 (2005) and 574,171 (2004)
  treasury shares of common stock, at cost .....      (2,941,495)    (2,777,612)
                                                     -----------    -----------
                                                      34,410,967     32,499,320
                                                     -----------    -----------
  Total liabilities and stockholders' equity....     $69,080,145    $72,367,562
                                                     ===========    ===========

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


<PAGE>







                             CFC INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    FOR THE THREE MONTHS AND SIX MONTHS ENDED
                             JUNE 30, 2005 AND 2004


                                Three Months Ended          Six Months Ended
                                     June 30,                   June 30,
                                2005           2004         2005         2004
                                ----           ----         ----         ----
                                   (Unaudited)                (Unaudited)

Net sales .................. $22,227,720  $19,355,179  $45,216,558  $40,179,476
                             -----------  -----------  -----------  -----------
Cost of goods sold
  (excluding depreciation
  and amortization shown
  below) ...................  14,548,516   13,062,489   28,951,897   26,086,684
Selling, general and
  administrative expenses...   3,840,920    3,629,915    7,763,223    7,456,284
Research and development
  expenses..................     708,768      788,846    1,412,798    1,396,962
Depreciation and
  amortization..............   1,169,513    1,016,467    2,343,945    2,355,148
Transaction expenses .......     434,038           --      434,038           --
                             -----------  -----------   ----------   ----------
Total operating expenses ...  20,701,755   18,497,717   40,905,901   37,295,078
                             -----------  -----------   ----------   ----------

Operating income ...........   1,525,965      857,462    4,310,657    2,884,398

Other (income) expenses:
  Interest expense .........     268,899      288,109      547,882      587,245
  Interest income ..........      (3,929)        (308)      (9,195)        (853)
  Rental (income), net .....     (35,106)     (40,370)     (68,412)     (68,382)
  Interest rate swap valuation
    (benefit) provision ....      33,735     (162,884)     (31,586)     (96,422)
  Foreign currency exchange
    loss (gain) ............     488,088      (51,749)     765,544      (27,047)
                             -----------  -----------   ----------   ----------
Total other expenses, net...     751,687       32,798    1,204,233      394,541
                             -----------  -----------   ----------   ----------
Income before income taxes..     774,278      824,664    3,106,424    2,489,857
Provision for income taxes..     276,014      257,169    1,108,000      768,359
                             -----------  -----------   ----------   ----------
Net income ................. $   498,264  $   567,495   $1,998,424   $1,721,498
                             ===========  ===========   ==========   ==========

Basic earnings per share.... $      0.11  $      0.13   $     0.44   $     0.39
Diluted earnings per share.. $      0.11  $      0.13   $     0.43   $     0.39




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



<PAGE>






                             CFC INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE SIX MONTHS ENDED
                             JUNE 30, 2005 AND 2004



                                                 Six Months Ended June 30,
                                               ---------------------------
                                                   2005            2004
                                                   ----            ----
                                                       (Unaudited)

Cash flow from operating activities:
  Net income ...............................   $ 1,998,424    $ 1,721,498
    Adjustments to reconcile net
     income to net cash  provided
     by operating activities:
       Depreciation and amortization .......     2,436,750      2,390,275
       Interest swap valuation .............       (31,586)       (96,422)
       Loss on disposition of assets .......        32,704           --
       Tax benefit of stock options ........       220,700           --
       Deferred income taxes ...............        32,554       (203,063)
       Changes in assets and liabilities:
         Accounts receivable ...............      (376,273)    (2,080,827)
         Inventories .......................      (152,760)      (620,480)
         Prepaid and other current assets ..       219,634       (298,020)
         Other assets ......................       (17,019)        12,304
         Accounts payable ..................    (1,863,883)      (664,773)
         Accrued compensation and benefits .       479,931      1,457,098
         Accrued bonus .....................    (1,626,778)       203,242
         Income taxes payable ..............        84,010        755,919
         Accrued expenses and other current
           liabilities .....................       455,645       (647,016)
                                               -----------    -----------
Net cash provided by operating activities ..   $ 1,892,053    $ 1,929,735
                                               -----------    -----------

Cash flows from investing activities:
  Additions to property, plant and equipment    (1,535,193)    (2,197,151)
                                               -----------    -----------
Cash used in investing activities ..........    (1,535,193)    (2,197,151)
                                               -----------    -----------

Cash flows from financing activities:
  Proceeds from term loans .................          --        3,713,317
  Repayment of revolver ....................      (762,349)    (1,043,940)
  Proceeds from revolver ...................       771,714      2,536,537
  Repayments of term loan ..................      (900,395)    (3,765,549)
  Proceeds from exercise of stock options ..       342,616           --
  Repurchase of treasury shares ............      (163,883)          --
                                               -----------    -----------
Net cash (used in) provided by
  financing activities .....................      (712,297)     1,440,365
                                               -----------    -----------

Effect of exchange rate changes on
  cash and cash equivalents ................         6,293        315,871
                                               -----------    -----------
(Decrease) increase in cash
  and cash equivalents .....................      (349,144)     1,488,820

Cash and cash equivalents:
Beginning of period ........................     4,554,699      5,672,647
                                               -----------    -----------
End of period ..............................   $ 4,205,555    $ 7,161,467
                                               ===========    ===========


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



<PAGE>





                             CFC INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2005 AND 2004
                                   (Unaudited)

Note 1.  Basis of Presentation

In the opinion of management,  the accompanying  interim unaudited  consolidated
financial  statements  contain  all  adjustments   (consisting  of  only  normal
recurring adjustments) necessary to present fairly the financial position of the
Company as of June 30,  2005 and  December  31, 2004  (audited),  the results of
operations for the three months and six months ended June 30, 2005 and 2004, and
statements of cash flows for the six months ended June 30, 2005 and 2004.

The unaudited interim  consolidated  financial  statements  included herein have
been prepared  pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly,  certain information and footnote disclosures normally accompanying
the annual  consolidated  financial  statements  have been omitted.  The interim
consolidated  financial  statements  should  be read  in  conjunction  with  the
consolidated  financial  statements and notes thereto  included in the Company's
latest annual report on Form 10-K.

Results for an interim period are not necessarily  indicative of results for the
entire  year and  such  results  are  subject  to  year-end  adjustments  and an
independent audit.

Note 2.  Earnings Per Share

The table below provides the  reconciliation of the numerator and denominator in
computing earnings per share.

                                          Three Months Ended
                        --------------------------------------------------------
                              June 30, 2005                 June 30, 2004
                        --------------------------    --------------------------
                                              Per                           Per
                        Income     Shares    Share    Income     Shares    Share
                        ------     ------    -----    ------     ------    -----
Basic Earnings
 Per Share:
Income available
 to Common
 Stockholders......... $498,264   4,511,432   $.11   $567,495   4,393,249   $.13
Effect of
 Dilutive
 Securities:
 Options exercisable..              122,924                        49,172
 Convertible debt.....        -           -            10,425      71,427
                        -------   ---------   ----   --------   ---------   ----
Diluted Earnings
 per Share............ $498,264   4,634,356   $.11   $577,920   4,513,848   $.13
                       ========   =========   ====   ========   =========   ====


                                                 Six Months Ended
                        --------------------------------------------------------
                              June 30, 2005                 June 30, 2004
                        --------------------------    --------------------------
                                              Per                           Per
                        Income     Shares    Share    Income     Shares    Share
                        ------     ------    -----    ------     ------    -----


Basic Earnings
 Per Share:
Income available
 to Common
 Stockholders....... $1,998,424   4,511,078   $.44  $1,721,498   4,393,249  $.39
Effect of
 Dilutive
 Securities:
 Options exercisable.              117,322   (.01)                 39,220      -
 Convertible debt....       108        794              20,850     71,427
                        -------   ---------   ----    --------  ---------   ----
Diluted Earnings
 per Share...........$1,998,532   4,629,194   $.43  $1,742,348  4,503,896   $.39
                       ========   =========   ====   ========   =========   ====



<PAGE>






Note 3.  Business Segments and International Operations

The Company operates a single business segment, which is the formulating and
manufacturing of chemically complex, multi-layered functional coatings. The
Company produces five primary types of coating products. Net sales for each of
these products (in thousands) for the three months and six months ended June 30,
2005 and 2004 were as follows:

                             Three Months Ended        Six Months Ended
                                   June 30,                 June 30,
                             -----------------------  -------------------------
                             2005   %     2004    %   2005     %   2004    %
                             ----   -     ----    -   ----     -   ----    -
Holographic Products ...... $ 6.5  29.4  $ 4.5  23.1  $10.9  24.3  $ 8.6  21.4
Printed Products ..........   7.3  32.9    6.1  31.5   16.0  35.5   13.9  34.6
Pharmaceutical Products ..... 3.6  16.0    2.6  13.5    7.5  16.5    5.8  14.3
Security Products ........... 2.0   9.0    3.3  17.0    4.7  10.3    5.5  13.7
Specialty Pigmented and Other
   Simulated Metal Products.. 2.8  12.7    2.9  14.9    6.1  13.4    6.4  16.0
                            ----- -----  ----- -----  ----- -----  ----- -----
Total ......................$22.2 100.0  $19.4 100.0  $45.2 100.0  $40.2 100.0
                            ===== =====  ===== =====  ===== =====  ===== =====

The following is sales  information by geographic  area for the three months and
six months ended June 30, 2005 and 2004, and long lived asset  information as of
June 30, 2005 and December 31, 2004:

                               Three months ended            Six months ended
                                   June 30,                      June 30,
                               --------------------       ----------------------
Net Sales (In Thousands)         2005          2004         2005          2004
                                 ----          ----         ----          ----
United States ..........       $12,137       $ 9,991       $24,497       $20,846
Europe .................         6,993         6,194        14,180        13,045
Other Foreign ..........         3,098         3,170         6,540         6,288
                               -------       -------       -------       -------
Total ..................       $22,228       $19,355       $45,217       $40,179
                               =======       =======       =======       =======


Long-Lived Assets
(In Thousands)                                June 30, 2005    December 31, 2004
                                              -------------    -----------------
United States ..........................         $18,316             $19,117
Europe .................................          11,755              13,215
                                                 -------             -------
Total ..................................         $30,071             $32,332
                                                 =======             =======

Europe and other foreign  revenue are based on the country in which the customer
is domiciled.

Note 4.  Comprehensive Income

The Company's total comprehensive (loss) income was as follows:

                             Three Months Ended      Six Months Ended
                                   June 30,             June 30,
                            --------------------  ------------------------
                              2005       2004        2005         2004
                              ----       ----        ----         ----
Net income................. $498,264   $567,495   $1,998,424   $1,721,498
(Less) foreign currency
 translation adjustment.... (535,999)   (81,002)    (819,676)    (144,081)
                           ---------  ---------   ----------- -----------
Total comprehensive
 income (loss).............$(.37,735)  $486,493   $1,178,748   $1,577,417
                           ==========  ========   ==========   ==========



<PAGE>







Note 5. Contingencies and Commitments

From time to time, the Company is subject to legal  proceedings  and claims that
arise in the normal course of business. In the opinion of management, the amount
of ultimate  liability  with  respect to these  actions will not have a material
adverse effect on the Company's  consolidated  financial  condition,  results of
operations or cash flows.

Note 6.  Derivative Instruments

On April 4, 2003, the Company  executed two interest rate swap agreements to fix
the interest  rates on the Company's U.S. term loans.  The Company  entered into
these  agreements  to reduce the risk of adverse  changes in  variable  interest
rates. The notional  amounts were $4,606,324  (with a fixed rate of 4.43%),  and
$2,303,840  (with a fixed rate of 4.82%) on April 4, 2003.  The swap  agreements
terminate  on January  31,  2008.  These  derivatives  do not  qualify for hedge
accounting  and,   accordingly,   the  Company  has  recorded  these  derivative
instruments  and the associated  assets or liabilities at their fair values with
the  related  gains  or  losses  recorded  as other  income  or  expense  in the
consolidated statements of operations.

Note 7.  Supplemental Pro Forma Information

The Company currently  accounts for stock based  compensation in accordance with
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees,"  and related  Interpretations.  Had the Company  accounted for stock
based  compensation  in  accordance  with  Statement  of  Financial   Accounting
Standards No. 123 (SFAS No. 123) "Accounting for Stock-Based  Compensation," the
Company  would have  reported the  following pro forma amounts for the three and
six months ended June 30, 2005 and 2004:



                                   Three Months Ended       Six Months Ended
                                   -------------------  ------------------------
                                   June 30,   June 30,    June 30,      June 30,
                                    2005       2004        2005          2004
                                    ----       ----        ----          ----

Net income as reported........... $498,264   $567,495   $1,998,424   $1,721,498
Stock based compensation expense
 included in reported net income,
 net of related tax..............        -          -            -            -
Pro forma adjustment - additional
 compensation expense had
 SFAS No. 123 been adopted,
 net of tax......................  (14,833)   (16,296)     (29,936)     (32,591)
                                  ---------  ---------  -----------  -----------
Pro forma net income............. $483,431   $551,199   $1,968,488   $1,688,907
                                  =========  =========  ===========  ===========

Basic earnings per share as
  reported .....................     $0.11     $0.13         $0.44        $0.39
Pro forma effect of
  compensation expense..........      0.00     (0.01)        (0.01)       (0.01)
                                     ------    ------        ------       ------
Pro forma basic earnings per
  share.........................     $0.11     $0.12         $0.43        $0.38
Diluted earnings per share
  as reported ..................     $0.11     $0.13         $0.43        $0.39
Pro forma effect of
  compensation expense..........      0.00     (0.01)        (0.01)       (0.01)
                                     ------    ------        ------       ------
Pro forma diluted earnings
  per share.....................     $0.11     $0.12         $0.42        $0.38



<PAGE>







Note 8.  Net Operating Loss Tax Asset

Our German  business  has  generated  cumulative  tax net  operating  loss carry
forwards  (NOLs)  totaling 6.8 million  Euros at June 30,  2005.  These NOLs are
being carried  forward to offset future taxable  income in Germany.  The Company
has recorded  cumulative deferred tax assets of $3.8 million as of June 30, 2005
relating to the benefit of these NOLs.  At present  time the unused NOLs have no
expiration date. Although  realization of the deferred tax asset is not assured,
the  Company  has  concluded  that it is more likely than not that the tax asset
will be realized, and accordingly no valuation allowance has been provided. This
is principally  based upon a prudent and feasible business strategy which shifts
production to the Company's plant in Germany. If the Company concludes that as a
result of actions  planned or taken,  that the operating  results in Germany can
not maintain  profitability,  or if there are changes to the German tax law, the
Company  may need to  adjust  the value of the  Company's  deferred  tax  assets
resulting in a reduction to income in the period in which such  determination is
made.

Note 9.  Material Announcement and Adoption of Retention Plan

The Company issued a press release on May 3, 2005  announcing  that the Board of
Directors   recommended  to   shareholders   a  sale  of  the  Company   between
$19.50-$20.00  per share.  The  Company  announced  on August 15,  2005 that the
letter of intent with Audax Group of the  proposed  acquisition  of CFC has been
terminated.  The Company  also filed a Form 8-K on May 4, 2005  stating that the
Company's  Board of  Directors  approved a retention  agreement  with Gregory M.
Jehlik,  its  President and Chief  Executive  Officer that include the following
terms:

     Retention  Incentive Payment.  Under the terms of the retention  agreement,
Mr. Jehlik is entitled to receive a retention  incentive  payment of $981,864 in
the event of a sale of the Company (as defined in the retention agreement).  The
retention  incentive payment is payable in two equal  installments,  one-half on
the closing of any sale of the Company and one-half on the six month anniversary
of the sale of the Company.

     Acceleration of Option Vesting.  If a sale of the Company occurs, all stock
options  granted  to  Mr.  Jehlik  will  become  fully  vested  and  exercisable
immediately.

     Tax  Reduction.   The  retention  agreement  provides  that  the  retention
incentive payment to Mr. Jehlik will be reduced to the extent necessary to avoid
any excise tax liability he may incur as a result of payments or benefits.

     Termination. The retention agreement continues until terminated as provided
in the retention agreement.

     Employment  at  Will  Status  Continues.  The  retention  agreement  is not
intended  to effect  the  employment  relationship  between  Mr.  Jehlik and the
Company.

     On May 2,  2005,  the Board of  Directors  approved  a  retention  plan for
certain of its key  employees,  that  include  the terms  described  below.  The
Company's  directors and named  executive  officers are not  participants in the
plan. The plan has three tiers of benefits, with four employees participating at
Tier  1,  three   employees   participating   at  Tier  2,  and  five  employees
participating at Tier 3.


<PAGE>





     Success  Bonus.  Under the terms of the retention  plan,  participants  are
entitled to receive cash  success  bonuses in the event of a sale of the Company
(as defined in the retention  plan).  The success bonus consists of a percentage
of the  participant's  annual  base  salary  and  annual  target  bonus.  Tier 1
participants  will be eligible to receive success bonuses of up to three-fourths
(nine months) of annual base salary and annual target bonus, Tier 2 participants
will be eligible to receive  success bonuses of up to one-third (four months) of
annual base salary and annual  target  bonus,  and Tier 3  participants  will be
eligible to receive  success  bonuses of up to one-sixth  (two months) of annual
base salary and annual target  bonus.  The success bonus is payable in two equal
installments, one-half on the closing of any sale of the Company and one-half on
the  six  month  anniversary  of  the  sale  of  the  Company,  subject  to  the
participant's  continued  employment  with the Company or any successor  through
that date,  or earlier if a  participant  is  terminated  by the  Company or any
successor  other  than for cause or by the  participant  with good  grounds  (as
defined in the retention  plan).  If, prior to the six month  anniversary of the
sale  of the  Company,  a  participant's  employment  with  the  Company  or any
successor is terminated by the Company or any successor for cause or voluntarily
by the  participant  for other than good reason,  such  participant  will not be
entitled to the unpaid portion of the success bonus.

     Acceleration of Option Vesting.  If a sale of the Company occurs, all stock
options  granted to  participants  will  become  fully  vested  and  exercisable
immediately subject to the participant's  continued  employment with the Company
or any successor through the date of sale.

     Severance. Under the terms of the retention plan, participants are entitled
to  receive  cash  severance  payments  in the  event of a  severance  event.  A
severance  event occurs when,  within twelve  months the sale of the Company,  a
participant's  employment with the Company or any successor is terminated (i) by
the Company or any successor for other than cause or (ii) by the participant for
good  grounds.  Tier 1 and  Tier 2  participants  will be  eligible  to  receive
severance  payments of up to  three-fourths  (nine months) of annual base salary
and annual  target  bonus and Tier 2  participants  will be  eligible to receive
success  bonuses of up to  one-fourth  (three  months) of annual base salary and
annual target bonus. Tier 1 and Tier 2 participants also will be eligible to use
a  Company-provided  vehicle for a period of six months  following the severance
event. The severance payments are payable in nine equal monthly installments for
Tier I and Tier 2 participants  and three equal monthly  installments for Tier 3
participants,  beginning  on the last  business day of the month  following  the
month in which the severance event occurs.  If a  participant's  employment with
the Company or any  successor is  terminated by the Company or any successor for
cause, because of the death of the participant or voluntarily by the participant
for other than good grounds,  such  participant  will not be entitled to receive
severance  payments or the use of the  Company-provided  vehicle.  A participant
will forfeit any unpaid portion of the severance  payments  otherwise payable to
the  participant  and the use of  Company-provided  vehicle  if the  participant
breaches  the  confidentiality  and  non-competition   covenants  to  which  the
participant is subject under the retention plan.




<PAGE>





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

Overview

The Company formulates, manufactures and sells chemically-complex, transferable,
multi-layer  coatings for use in many diversified  markets,  such as holographic
packaging  and   authentication   seals,   furniture   and  building   products,
pharmaceutical  products and transaction  cards (including  credit cards,  debit
cards, ATM cards and access cards), and intaglio printing.

The Company's  cost of goods sold  reflects all direct  product costs and direct
labor, quality control, shipping and receiving, maintenance, process engineering
and plant  management,  but excludes  depreciation  and  amortization.  Selling,
general  and   administrative   expenses   are   primarily   composed  of  sales
representatives'   salaries   and  related   expenses,   commissions   to  sales
representatives, advertising costs, management compensation, and corporate audit
and legal  expense.  Research  and  development  expenses  include  salaries  of
technical personnel and experimental materials.

Results of Operations

The following  table sets forth,  certain items from the Company's  consolidated
financial statements as a percentage of net sales for the periods presented:

                                                Three Months     Six Months
                                                  Ended             Ended
                                                 June 30,          June 30,
                                               -------------    --------------
                                                2005    2004    2005   2004
                                                ----    ----    ----   ----
                                                (Unaudited)     (Unaudited)

Net sales ..................................   100.0%  100.0%  100.0%  100.0%
                                               ------  ------  ------  ------
Cost of goods sold
 (excluding depreciation and
 amortization shown below) .................    65.4    67.5    64.0    64.9
Selling, general and administrative ........    17.2    18.8    17.2    18.5
Research and development ...................     3.2     4.1     3.1     3.5
Depreciation and amortization ..............     5.3     5.2     5.2     5.9
Transaction expenses .......................     2.0      --     1.0      --
                                               -----    -----   -----   -----
Total operating expenses ...................    93.1    95.6    90.5    92.8
                                               -----    -----   -----   -----
Operating income ...........................     6.9     4.4     9.5     7.2
Interest expense ...........................     1.3     1.5     1.2     1.5
Rental (income), net .......................    (0.2)   (0.2)   (0.2)   (0.2)
Interest rate swap valuation
 (benefit) provision .......................     0.2    (0.8)   (0.1)   (0.2)
Foreign currency exchange
 loss (gain) ...............................     2.2    (0.3)    1.7    (0.1)
                                               -----    -----   -----   -----
Income before taxes ........................     3.5     4.2     6.9     6.2
Provision for income taxes .................     1.3     1.3     2.5     1.9
                                               -----    -----   -----   -----
Net income .................................    2.2%     2.9%    4.4%    4.3%
                                               =====    =====   =====   =====



<PAGE>







Quarter Ended June 30, 2005 Compared to Quarter Ended June 30, 2004

Net sales for the quarter ended June 30, 2005,  increased  14.8 percent to $22.2
million,  up from $19.4  million for the quarter  ended June 30, 2004.  The Euro
appreciated in value 3.6 percent  compared to the U.S.  dollar,  and as a result
sales increased  approximately  $185,000 in the second quarter of 2005, compared
to the second quarter of 2004. Holographic products sales increased 46.2 percent
to $6.5 million for the quarter  ended June 30,  2005,  compared to $4.5 million
for the quarter ended June 30, 2004. This increase was primarily due to sales of
a  new  holographic  product,   HoloMag,   which  favorably  affected  sales  by
approximately $1.7 million. Printed products sales in the second quarter of 2005
increased  19.9  percent to $7.3  million,  up from $6.1  million for the second
quarter of 2004,  primarily due to an increase in market share domestically as a
result of a major competitor withdrawing from the market. Pharmaceutical product
sales for these  periods  increased  36.4  percent  to $3.5  million,  from $2.6
million,  primarily due to increased  penetration  on a global  basis.  Security
products  (magnetic  stripes,  signature  panels and tipping products for credit
cards, intaglio-printed products and gift cards) sales decreased 39.6 percent to
$2.0 million, down from $3.3 million. This decrease was primarily a result of an
earlier  startup of gift cards in 2004,  as compared to the same period in 2005.
Sales of simulated metal and other pigmented  products  decreased 1.7 percent to
$2.8 million for the quarter ended June 30, 2005, down from $2.9 million for the
quarter  ended  June  30,  2004,   primarily  due  to  soft  European  sales  of
approximately $138,000,  which were partially offset by currency gains in Europe
of $79,000.

Cost of goods sold for the quarter ended June 30, 2005,  increased  11.4 percent
to $14.5  million,  up from $13.1  million for the quarter  ended June 30, 2004.
This increase was primarily due to the impact of higher sales as discussed above
of $1.9 million,  which was offset by better  margins  resulting from changes in
the sales mix of $0.5 million. Cost of goods sold for the quarter ended June 30,
2005, decreased as a percentage of net sales to 65.4 percent,  from 67.5 percent
for the quarter ended June 30, 2004, primarily due to higher margins as a result
of changes in the sales mix.

Selling,  general,  and  administrative  expenses for the quarter ended June 30,
2005,  increased  5.8  percent to $3.8  million,  up from $3.6  million  for the
quarter  ended June 30, 2004.  This  increase was  primarily  due to  additional
staffing  expenses  and the  strength  of the Euro  against  the U.S.  dollar of
$35,000.  Selling,  general,  and administrative  expenses for the quarter ended
June 30, 2005, decreased as a percentage of net sales to 17.3 percent, down from
18.8 percent for the quarter ended June 30, 2004, primarily due to higher sales.

Research and development expenses for the quarter ended June 30, 2005, decreased
10.2  percent to $709,000  from  $789,000  for the quarter  ended June 30, 2004.
Research and development expenses for the quarter ended June 30, 2005, decreased
as a percentage  of net sales to 3.2  percent,  from 4.1 percent for the quarter
ended  June 30,  2004.  This  decrease  in expense as a percent of net sales was
primarily due to higher sales.


<PAGE>






Depreciation  and  amortization  expenses  for the quarter  ended June 30, 2005,
increased 15.1 percent to $1.2 million,  from $1.0 million for the quarter ended
June  30,  2004.  This  increase  was  primarily  due to  capital  expenditures.
Depreciation  and  amortization  expenses as a percentage of net sales stayed at
5.3 percent for the quarter ended June 30, 2005 and 2004.

Transaction  expenses  incurred  in  connection  with the  possible  sale of the
Company for the quarter ended June 30, 2005 were $434,000.

Operating income for the quarter ended June 30, 2005,  increased 78.0 percent to
$1.5 million, up from $857,000 for the quarter ended June 30, 2004. The increase
in operating income is primarily a result of the reasons noted above.  Operating
income for the quarter  ended June 30, 2005,  increased  as a percentage  of net
sales to 6.9 percent,  up from 4.4 percent for the quarter  ended June 30, 2004.
This increase is a result of the reasons noted above.

Interest  expense for the quarter ended June 30, 2005,  decreased 6.7 percent to
$269,000,  from $288,000 for the quarter ended June 30, 2004.  This decrease was
due to the reduction in indebtedness from scheduled principal payments.

Interest  income for the quarter  ended June 30, 2005,  increased to $4,000 from
$308 for the quarter ended June 30, 2004. This increase was primarily related to
interest received on overnight investments.

Rental (income), net for the quarter ended June 30, 2005, decreased 13.0 percent
to $35,000,  from $40,000 for the quarter ended June 30, 2004.  This decrease in
rental  income is primarily  due to the tenant in the adjacent  Chicago  Heights
facility gradually reducing occupied space under the lease agreement.

Interest rate swap valuation  (benefit) provision for the quarter ended June 30,
2005,  decreased  to a provision  of $34,000,  from a benefit of $163,000 in the
quarter  ended June 30,  2004.  This  decrease  represents  the  decrease in the
positive value of the swap agreement.  It is the Company's  intention to utilize
this swap until its  maturity.  This will result in the Company  reversing  this
provision as principal payments are made. Interest rate swap valuation provision
for the quarter  ended June 30, 2005,  decreased  as a percentage  of sales to a
provision of 0.2 percent from a benefit of (0.8)  percent for the quarter  ended
June 30, 2004. This decrease is a result of the reasons noted above.

There was a foreign  currency  exchange  loss of $488,000 for the quarter  ended
June 30, 2005,  compared to a gain of ($52,000)  for the quarter  ended June 30,
2004. This was a result of the weakening of the Euro against the U.S. dollar.

Income  taxes for the  quarter  ended June 30,  2005,  increased  7.3 percent to
$276,000,  up from $257,000 for the quarter ended June 30, 2004. The increase in
income taxes were primarily  caused by the increase in taxable income due to the
reasons described above.

Net income  decreased  12.2  percent to $498,000  in the quarter  ended June 30,
2005,  from  $567,000 in the quarter  ended June 30, 2004.  This decrease in net
income is primarily due to the decrease in taxable income noted previously.


<PAGE>






Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2003

Net sales for the six months  ended June 30,  2005,  increased  12.5  percent to
$45.2 million, up from $40.2 million for the six months ended June 30, 2004. The
Euro  appreciated  in value 4.8 percent  compared to the U.S.  dollar,  and as a
result  sales  increased  approximately  $511,000  in the  first  half of  2005.
Holographic  product sales  increased  27.4 percent to $10.9 million for the six
months  ended June 30,  2005,  compared to $8.6 million for the six months ended
June 30, 2004.  This increase was  primarily  due to sales of a new  holographic
product,  HoloMag, which favorably affected sales by approximately $2.0 million.
Printed product sales for these periods increased 15.5 percent to $16.0 million,
up from $13.9  million,  primarily  due to a continued  increase in market share
domestically  as a result of a major  competitor  withdrawing  from the  market.
Pharmaceutical  product sales for these periods  increased  29.7 percent to $7.5
million,  up from  $5.8  million.  This  increase  is  primarily  the  result of
continued  penetration on a global basis.  Security  products  (magnetic stripe,
signature  panels  and  tipping  products  for  credit  cards,  intaglio-printed
products and gift cards) sales decreased 15.1 percent to $4.7 million, down from
$5.5  million in the first half of 2004.  This  decrease  was  primarily  due to
earlier start up of the gift card business in 2004,  and a spillover of the tail
end gift card business in late 2003 to early 2004.  Sales of simulated metal and
other  pigmented  products  decreased  5.5  percent to $6.1  million for the six
months ended June 30, 2005,  from $6.4 million for the six months ended June 30,
2004 in the first six months of 2004.  This  decrease is  primarily  due to soft
European sales of $421,000, offset by the strength of the Euro of $227,000.

Cost of goods  sold for the six  months  ended  June 30,  2005,  increased  11.0
percent to $29.0  million,  up from $26.1  million for the six months ended June
30, 2004.  This  increase was  primarily  due to higher sales and the  resultant
higher costs of sales of $3.3 million  offset by better  margins  resulting from
changes in the sales mix of $0.4 million.  Cost of goods sold for the six months
ended June 30, 2005,  decreased as a percent of net sales to 64.0 percent,  from
64.9 percent for the six months ended June 30, 2004. This decrease in percentage
was primarily due to better margins as a result of changes in the sales mix.

Selling,  general, and administrative expenses for the six months ended June 30,
2005,  increased 4.1 percent to $7.8  million,  up from $7.5 million for the six
months ended June 30, 2004.  This  increase was primarily due to the strength of
the Euro against the U.S. dollar,  plus additional  staffing expenses.  Selling,
general,  and  administrative  expenses  for the six months ended June 30, 2005,
decreased as a percent of net sales to 17.2 percent,  down from 18.6 percent for
the six months ended June 30, 2004.  This decrease in  percentage  was primarily
due to higher sales.

Research  and  development  expenses  for the six months  ended  June 30,  2005,
increased 1.1 percent to $1.4  million,  up from $1.3 million for the six months
ended  June 30,  2004,  primarily  due to the impact of an  increase  in cost of
living expenses.  Research and development expense for the six months ended June
30, 2005, decreased as a percentage of net sales, to 3.1 percent,  down from 3.5
percent for the six months  ended June 30, 2004.  This  decrease in expense as a
percentage of net sales was primarily due to higher sales.



<PAGE>







Depreciation and  amortization  expenses for the six months ended June 30, 2005,
decreased 0.5 percent to $2.3 million, down from $2.4 million for the six months
ended June 30, 2004.  Depreciation and  amortization  expense for the six months
ended June 30, 2005, decreased as a percentage of net sales, to 5.2 percent from
5.9 percent for the six months ended June 30, 2004,  primarily due to the higher
sales volume.

Transaction  expenses  incurred  in  connection  with the  possible  sale of the
Company for the six months ended June 30, 2005 were $434,000.

Operating income for the six months ended June 30, 2005,  increased 49.4 percent
to $4.3  million,  up from $2.9  million for the six months ended June 30, 2004.
The increase in operating  income is primarily  due to the reasons  noted above.
Operating  income  for the six  months  ended  June  30,  2005,  increased  as a
percentage  of net sales to 9.5 percent,  up from 7.2 percent for the six months
ended June 30, 2004. This increase is primarily due to the reasons noted above.

Interest  expense for the six months ended June 30, 2005,  decreased 6.7 percent
to $548,000,  down from  $587,000  for the six months ended June 30, 2004.  This
decrease was  primarily  due to less  interest  paid due to scheduled  principal
payments.

Interest income for the six months ended June 30, 2005, increased to $9,200 from
$850 for the six months ended June 30, 2004. This increase was primarily related
to interest received on overnight investments.

Rental  (income),  net for the six months  ended  June 30,  2005 and for the six
months ended June 30, 2004,  remained the same at $68,000.  This represents rent
from the tenant in the adjacent  Chicago  Heights  facility  gradually  reducing
occupied  space under the lease  agreement to vacate the space by September  30,
2005.

Interest rate swap valuation  (benefit)  provision for the six months ended June
30,  2005,  decreased  to a (benefit) of $32,000 from a (benefit) of $96,000 for
the six months ended June 30, 2004. This decrease represents the decrease in the
positive value of the swap  agreement.  The Company will reverse this reserve as
principal payments are made.  Interest rate swap valuation provision for the six
months ended June 30, 2005,  increased as a percentage  of sales to a benefit of
(0.1) percent, from a benefit of (0.2) percent for the six months ended June 30,
2004. This decrease is due to the reasons noted above.

There was a foreign currency  exchange loss of $766,000 for the six months ended
June 30, 2005, compared to a gain of ($27,000) for the six months ended June 30,
2003. This was a result of the weakening of the Euro against the U.S. dollar.

Income taxes for the six months ended June 30, 2005,  increased  44.2 percent to
$1.1 million,  up from $0.8 million for the six months ended June 30, 2004.  The
increase in income taxes were primarily caused by the increase in pretax income.

Net income  increased  16.1 percent for the six months  ended June 30, 2005,  to
$2.0 million,  up from $1.7 million for the six months ended June 30, 2004. This
increase in net income is primarily due to the reasons noted above.



<PAGE>






Liquidity and Capital Resources

The  Company's  cash flow  provided  from  operations  decreased  by  $38,000 to
$1,892,000  in 2005  from  $1,930,000  in  2004,  primarily  due to  changes  in
operating assets and liabilities as net income and depreciation and amortization
increased  $323,000.  Working capital increased by $2.5 million during the first
six months of 2005 as  compared to $2.0  million  during the first six months of
2004. The primary reasons for this decrease are a decrease in current portion of
debt of $0.6  million  due to the  repayment  and  permanent  funding of the new
Chicago Heights  facility,  a decrease in accounts payable accrued  compensation
and benefits and other accrued  expenses of $2.9 million,  offset by an increase
of $0.1  million in  customer  receivables,  a decrease in  inventories  of $0.5
million, an increase in deferred income tax assets of $11,000, and a decrease of
$0.3 million in cash.

Our German  business  has  generated  cumulative  tax net  operating  loss carry
forwards  (NOLs)  totaling 6.8 million  Euros at June 30,  2005.  These NOLs are
being carried  forward to offset future taxable  income in Germany.  The Company
has recorded  cumulative deferred tax assets of $3.8 million as of June 30, 2005
relating to the benefit of these NOLs.  At present  time the unused NOLs have no
expiration date. Although  realization of the deferred tax asset is not assured,
the  Company  has  concluded  that it is more likely than not that the tax asset
will be realized, and accordingly no valuation allowance has been provided. This
is principally  based upon a prudent and feasible business strategy which shifts
production  to the  Company's  plant in Germany.  During the first six months of
operations for 2005, the German operations  generated a taxable profit excluding
currency losses. If the Company concludes that as a result of actions planned or
taken, that the operating results in Germany can not maintain profitability,  or
if there are  changes to the German tax law,  the Company may need to adjust the
value of the Company's deferred tax assets resulting in a reduction to income in
the period in which such determination is made.

At June 30, 2005,  the Company had  available  $12.1 million under the revolving
credit  agreement  maintained  with the Company's  primary bank. This agreement,
which matures April 1, 2006, is  collateralized  by the Company's trade accounts
receivables  and  inventories.  The Company  expects to renew its loan revolving
credit  agreements in the normal course prior to the maturity  date. The Company
believes  that  the net  cash  provided  by  operating  activities  and  amounts
available  under the revolving  credit  agreement are  sufficient to finance the
Company's  growth and future capital  requirements.  The Company had no material
commitments to purchase capital assets as of June 30, 2005.

Euro Conversion

Member countries of the European Union have  established  fixed conversion rates
between their existing currencies ("legacy currencies") and one common currency,
the Euro. Since January 1, 2002, the new Euro-denominated notes and coins are in
circulation  and legacy  currencies  have been withdrawn from  circulation.  The
Company has a manufacturing facility located in a member country (Germany),  and
the  conversion  to the Euro has  eliminated  currency  exchange  rate  risk for
transactions  among  the  member  countries,  which  for the  Company  primarily
consists  of payments  to  suppliers.  In  addition,  because  the Company  uses
foreign-denominated  debt to meet its financial  requirements  and to reduce its
foreign currency risks,  certain of these financial  instruments are denominated
in Euro to  finance  European  activities.  The  Company  addressed  all  issues
involved with converting to the new currency,  and the conversion did not have a
significant  impact on its  financial  position,  results of  operations or cash
flows.  At June 30, 2005,  the Company had total assets of $25.5 million and net
assets of $8.0 million invested in Europe.



<PAGE>






Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The following  methods and  assumptions  were used to estimate the fair value of
each  class  of  financial  instruments  held by the  Company  for  which  it is
practicable  to estimate  that value.  The carrying  amount of cash  equivalents
approximates   their  fair  value  because  of  the  short   maturity  of  those
instruments.  The estimated fair value of accounts  receivable  approximated its
carrying  value at June 30, 2005 and  December  31, 2004 based upon  analysis of
their  collectability  and net realizable value. The estimated fair value of the
Company's  long-term debt  approximated  its carrying value at June 30, 2005 and
December  31,  2004,  based upon market  prices for the same or similar  type of
financial  instrument.  The  Company  minimizes  its  exposure  to the impact of
fluctuation  in foreign  exchange  rates in  situations  for  certain  sales for
products  sold in Europe but  manufactured  in the U.S.  through the movement of
production  of those  products to Europe.  There are no other  activities of the
Company where  management  believes  exchange rates have a material  impact with
respect to the underlying transactions. In January 2003, the Company renewed its
main loan agreements.  The two main domestic loans,  Term Loan A and Term Loan B
were renewed at a floating prime rate of interest with a one-time option to lock
the interest  rate at LIBOR plus 1.5%.  The Company  executed two interest  rate
swap  agreements  to fix  the  interest  rate  on Term  Loan A at  4.82%  on the
principal  balance  of  $2,303,840,  and Term  Loan B at 4.43% on the  principal
balance of $4,606,324 on April 4, 2003. The swap agreements terminate on January
31, 2008. These derivatives do not qualify for hedge accounting and accordingly,
the Company will record these derivative  instruments and the associated  assets
or liabilities at their fair values with the related gains or losses recorded as
other income or expense in the  consolidated  statements of income.  The Company
does not use derivative  financial  instruments to address currency or commodity
pricing risks.

Item 4.  CONTROLS AND PROCEDURES

The Company  maintains  disclosure  controls and procedures that are designed to
provide  reasonable  assurances  that  information  required to be  disclosed in
reports  filed with the SEC pursuant to the  Securities  Exchange Act of 1934 is
recorded,  processed,  summarized and reported within the time periods specified
in  the  rules  and  forms  of the  Commission  and  that  such  information  is
accumulated and communicated to the Company's Chief Executive  Officer (CEO) and
Chief  Financial  Officer  (CFO),  as  appropriate,  to allow  timely  decisions
regarding required disclosures. Under the supervision and with the participation
of the Company's management, including the CEO and CFO, the Company conducted an
evaluation of the overall effectiveness of the Company's disclosure controls and
procedures,  as such term is defined under Rule 13a-15(e)  promulgated under the
Securities Exchange Act of 1934, as amended, as of the end of the period covered
by this report.  Based on their evaluation,  our principal executive officer and
principal  financial  officer have  concluded  that the  Company's  controls and
procedures were effective as of June 30, 2005. There were no significant changes
in our internal  controls or in other  factors that could  significantly  affect
these controls in the first half of 2005.


<PAGE>





The  evaluation of the Company's  disclosure  controls and procedures by the CEO
and the CFO  included  a review of the  controls'  objectives  and  design,  the
operation of the  controls,  and the effect of the  controls on the  information
presented in this Quarterly Report. The Company's management,  including the CEO
and CFO, does not expect that  disclosure  controls and  procedures  can or will
prevent or detect all errors and all fraud,  if any,  because there are inherent
limitations  to the  effectiveness  of any  system of  disclosure  controls  and
procedures,  including the possibility of human error and the  circumvention  or
overriding of the controls and procedures.  As a result,  a control  system,  no
matter  how well  designed  and  operated,  can  provide  only  reasonable,  not
absolute,  assurance  that the  objectives of the control  system are met. Also,
projections  of any  evaluation  of the  disclosure  controls and  procedures to
future  periods  are  subject  to the risk  that  the  disclosure  controls  and
procedures may become inadequate  because of changes in conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.

Item 5.  OTHER INFORMATION, COMMON STOCK REPURCHASES

The following  chart  summarizes  Common Stock  repurchases for the three months
ended June 30, 2005:

                                                              (c)        (d)
                                                             Total     Maxiumum
                                                             number    number
                                           (a)               shares of of shares
                                          Total              purchased that may
                                          number      (b)    as        yet be
                                          of       Average   part of   purchased
                                          shares   price     publicly  under
For the three months ended                repur-   paid per  announced plans or
  June 30, 2005                           chased   share     plan      programs


April 1, 2005 to April 30, 2005....          126   $26.55          -          -
May 1, 2005 to May 31, 2005 .......           59   $20.17          -          -
June 1, 2005 to June 30, 2005 .....            -      -            -          -
                                         -------   -------  ---------- --------
Total..............................          185   $24.52          -          -
                                         =======   =======  ========== ========

                           Part II - Other Information

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

a.      Exhibits

31.1    Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act
        of 2002.

31.2    Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act
        of 2002.

32.1    Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act
        of 2002.

32.2    Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act
        of 2002.

a.       Report on Form 8-K

In addition to those  reports  previously  disclosed by the Company,  during the
fiscal first  quarter of 2005 and through the date of this  filing,  the Company
filed:

-       a Report on Form 8-K dated May 2, 2005,  reporting  on Item 1.01
        (Entry  into a  Material  Definitive  Agreement),  Item 2.02 (Results
        of Operations and Financial Condition), Item 8.01 (Other Events) and
        Item 9.01(Financial Statements and Exhibits); and

-       a Report on Form 8-K dated August 15, 2005, reporting on Item 2.02
        (Results of Operations and Financial  Condition),  and Item 8.01 (Other
        Events) and Item 9.01 (Financial Statements and Exhibits).

In accordance with General  Instruction B of Form 8-K, the Reports  submitted to
the  Securities  and  Exchange  Commission  under Item 2.02 of Form 8-Ks are not
deemed to be "filed" for purposes of Section 18 of the  Securities  Exchange Act
of 1934 (the  "Exchange  Act"),  and are not subject to the  liabilities of that
section. We are not incorporating,  and will not incorporate by reference,  such
Reports into any filing under the Securities Act of 1933 or the Exchange Act.


<PAGE>






                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized, on August 15, 2005.


                                CFC INTERNATIONAL, INC.


                                ---------------------------------------------
                                Dennis W. Lakomy
                                Executive Vice President,
                                Chief Financial Officer,
                                Secretary, and Treasurer
                                (Principal Financial Officer)