<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                                 Washington, DC

                                    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, 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: 0-28748
                                                 -------

                           CLOSURE MEDICAL CORPORATION
                           ---------------------------
             (Exact name of registrant as specified in its charter)


          Delaware                                     56-1959623
          --------                                     ----------
(State or other jurisdiction                        (I.R.S. Employer
     of incorporation or                           Identification No.)
        organization)

           5250 Greens Dairy Road, Raleigh, North Carolina 27616
           -----------------------------------------------------
            (Address of principal executive offices) (Zip Code)

                               (919) 876-7800
                               --------------
            (Registrant's telephone number, including area code)

         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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

             Class                                Outstanding at August 10, 2001
             -----                                ------------------------------

Common Stock, par value $0.01 per share                       13,490,736

<PAGE>

                           CLOSURE MEDICAL CORPORATION

                                      INDEX

<TABLE>
<CAPTION>

                                                                                    Page Number
                                                                                    -----------
<S>                                                                                 <C>
PART I:     FINANCIAL INFORMATION

         Item 1.  Condensed Financial Statements

             Balance Sheets as of June 30, 2001 (unaudited) and December 31, 2000.........3

             Statements of Operations (unaudited) for the three months ended June 30,
                2001 and 2000 and for the six months ended June 30, 2001 and  2000........4

             Statements of Cash Flows (unaudited) for the six months ended June 30,
                2001 and 2000.............................................................5

             Notes to Condensed Financial Statements (unaudited)..........................6

         Item 2.  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations...................................................8

         Item 3.  Quantitative and Qualitative Disclosure about Market Risk..............13



PART II:     OTHER INFORMATION

         Item 4.  Submission of Matters to a Vote of Security Holders....................14

         Item 6.  Exhibits and Reports on Form 8-K.......................................14
</TABLE>

                                       2
<PAGE>

                          PART I- FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS

                           CLOSURE MEDICAL CORPORATION
                                 BALANCE SHEETS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                        JUNE 30,        DECEMBER 31,
                                                                          2001             2000
                                                                          ----             ----
                                                                      (unaudited)
<S>                                                                   <C>               <C>
Assets
Cash and cash equivalents                                               $  1,772         $  1,382
Short-term investments                                                     7,763            7,544
Restricted investments                                                     2,176            2,906
Accounts receivable                                                        1,406            1,322
Inventories                                                                  757              596
Prepaid expenses                                                             210              308
                                                                        --------         --------
   Total current assets                                                   14,084           14,058
Furniture, fixtures and equipment, net                                     6,391            6,598
Intangible assets, net                                                     1,745            1,483
                                                                        --------         --------
   Total assets                                                         $ 22,220         $ 22,139
                                                                        ========         ========


Liabilities and Stockholders' Equity
Accounts payable                                                        $  1,341         $  1,160
Accrued expenses                                                           1,087            1,525
Deferred revenue                                                             950            1,102
Capital lease obligations                                                    363              322
Short-term debt                                                            1,236            1,487
                                                                        --------         --------
   Total current liabilities                                               4,977            5,596
Deferred revenue                                                           2,112            2,304
Capital lease obligations less current portion                               136              332
                                                                        --------         --------
   Total liabilities                                                       7,225            8,232
                                                                        --------         --------

Commitments and contingencies                                               --               --

Preferred Stock, $.01 par value.  Authorized 2,000 shares; none
   issued or outstanding                                                    --               --
Common Stock, $.01 par value.  Authorized 35,000 shares;
   13,469 and 13,428 shares issued and outstanding, respectively             135              134
Additional paid-in capital                                                48,093           47,716
Accumulated deficit                                                      (33,233)         (33,943)
                                                                        --------         --------
   Total stockholders' equity                                             14,995           13,907
                                                                        --------         --------
   Total liabilities and stockholders' equity                           $ 22,220         $ 22,139
                                                                        ========         ========
</TABLE>

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

                                       3
<PAGE>

                           CLOSURE MEDICAL CORPORATION
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED            SIX MONTHS ENDED
                                                            JUNE 30,     JUNE 30,       JUNE 30,       JUNE 30,
                                                              2001        2000*           2001          2000*
                                                              ----        -----           ----          -----
<S>                                                        <C>           <C>            <C>           <C>
Product sales                                              $  4,227      $  3,072       $  7,965      $  5,738
License and product development revenues                        181           156            360           312
                                                           --------      --------       --------      --------
     Total revenues                                           4,408         3,228          8,325         6,050
Cost of products sold                                         1,166           981          2,334         1,797
                                                           --------      --------       --------      --------
      Gross profit                                            3,242         2,247          5,991         4,253
                                                           --------      --------       --------      --------
Research, development and regulatory affairs expenses         1,455         1,600          2,735         3,066
General and administrative expenses                           1,444         1,257          2,773         2,381
                                                           --------      --------       --------      --------
      Total operating expenses                                2,899         2,857          5,508         5,447
                                                           --------      --------       --------      --------
Income (loss) from operations                                   343          (610)           483        (1,194)
Interest income, net                                            108           122            237           244
                                                           --------      --------       --------      --------
Income (loss) before income taxes                               451          (488)           720          (950)
Provision for income taxes                                       10          --               10          --
                                                           --------      --------       --------      --------
Income (loss) before cumulative effect of accounting
    change                                                      441          (488)           710          (950)
Cumulative effect of accounting change                         --            --             --          (2,656)
                                                           --------      --------       --------      --------
Net income (loss)                                          $    441      $   (488)      $    710      $ (3,606)
                                                           ========      ========       ========      ========

Shares used in computation of net income (loss)
  per common share:

     Basic                                                   13,450        13,380         13,445        13,367
                                                           ========      ========       ========      ========
     Diluted                                                 13,722        13,380         13,722        13,367
                                                           ========      ========       ========      ========

Net income (loss) per common share- basic
  and diluted                                              $   0.03      $  (0.04)      $   0.05      $  (0.27)
                                                           ========      ========       ========      ========
</TABLE>

*    As amended, see the Company's Annual Report on Form 10-K for the year ended
     December 31, 2000.

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

                                       4
<PAGE>

                           CLOSURE MEDICAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                            SIX MONTHS ENDED
                                                                        JUNE 30,          JUNE 30,
                                                                          2001              2000
                                                                          ----              ----
<S>                                                                    <C>               <C>
Cash flows from operating activities:

Net income (loss)                                                       $    710         $ (3,606)
Adjustments to reconcile net income (loss) to net cash
   provided (used) by operating activities:
Cumulative effect of accounting change                                      --              2,656
Depreciation and amortization expense                                        504              458
Amortization of deferred compensation on stock options                      --                 73
Loss on disposals of fixed assets                                           --                 12
Change in accounts receivable                                                (84)            (457)
Change in inventories                                                       (161)            (102)
Change in prepaid expenses                                                    98              112
Change in accounts payable and accrued expenses                             (257)             409
Change in deferred revenue                                                  (344)            (550)
                                                                        --------         --------
Net cash provided (used) by operating activities                             466             (995)
                                                                        --------         --------

Cash flows from investing activities:

Purchases of furniture, fixtures and equipment                              (288)            (170)
Investment in intangible assets                                             (271)            (206)
Purchases of investments                                                  (4,125)          (2,750)
Proceeds from the sale of investments                                      4,636            3,902
                                                                        --------         --------
Net cash provided (used) by investing activities                             (48)             776
                                                                        --------         --------

Cash flows from financing activities:

Repayment of debt                                                           (251)            (313)
Net proceeds from sale of common stock                                       378              363
Payments under capital lease obligations                                    (155)            (135)
                                                                        --------         --------
Net cash used by financing activities                                        (28)             (85)
                                                                        --------         --------
Increase (decrease) in cash and cash equivalents                             390             (304)
Cash and cash equivalents at beginning of period                           1,382              508
                                                                        --------         --------
Cash and cash equivalents at end of period                              $  1,772         $    204
                                                                        ========         ========
</TABLE>

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

                                       5
<PAGE>

                           CLOSURE MEDICAL CORPORATION
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

1.  Organization

Closure Medical Corporation (the "Company" or "Closure") develops, manufactures
and commercializes medical tissue adhesive products based on its proprietary
medical-grade cyanoacrylate technology to be used for human and veterinary wound
closure. From May 10, 1990 to February 29, 1996, the business of the Company was
conducted by its predecessor, Tri-Point Medical L.P. The Company was
incorporated in Delaware on February 20, 1996.

2.  Significant Accounting Policies

The significant accounting policies followed by the Company for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. These unaudited financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X, and in management's
opinion, all adjustments of a normal recurring nature necessary for a fair
presentation have been included. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 2000
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000.

The results of operations for the three and six month periods ended June 30,
2001 are not necessarily indicative of the results to be expected for the entire
fiscal year ending December 31, 2001.

In fiscal 2000, the Company adopted SEC Staff Accounting Bulletin No. 101 ("SAB
101"). The effect of applying this change in accounting principle was a
cumulative charge of $2,656,000, or ($0.20) per share, in the first quarter
ended March 31, 2000. This cumulative change in accounting principle reflected
the reversal of license fees and milestone payments that had been recognized in
prior years. Under the new accounting method applied retroactively to January 1,
2000, these payments are recorded as deferred revenue to be recognized over the
remaining term of the related agreement.

In July 2001, the Financial Accounting Standards Board ("FASB") issued FASB
Statements Nos. 141 ("SFAS 141"), "Business Combinations" and 142 ("SFAS 142"),
"Goodwill and Other Intangible Assets". SFAS 141 eliminates pooling-of-interests
accounting prospectively and provides guidance on purchase accounting related to
the recognition of intangible assets and accounting for negative goodwill. SFAS
142 changes the accounting for goodwill from an amortization method to an
impairment only approach. SFAS 141 and SFAS 142 are effective for all business
combinations completed after June 30, 2001. The Company intends to adopt SFAS
No. 142 as of January 1, 2002, as required, and as of July 1, 2001 for goodwill
and intangible assets acquired after June 30, 2001. The Company does not expect
that the adoption of SFAS Nos. 141 and 142 will have any impact on its financial
statements or results of operations.

3.  Income Taxes

During the three months ended June 30, 2001, the Company recorded a provision
for income taxes totaling $10,000, which represents alternative minimum taxes.
The Company utilized a portion of its net operating loss carryforwards to offset
the current year taxes. At June 30, 2001, the Company has provided a full
valuation allowance on all deferred tax assets, consisting primarily of net
operating loss and research and development carryforwards, because of
uncertainty regarding their realization.

                                       6
<PAGE>

                           CLOSURE MEDICAL CORPORATION
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

4.  Inventories

Inventories included the following (in thousands):

                             June 30,         December 31,
                              2001               2000
                              ----               ----

Packaging                     $270               $195
Raw materials                  106                 46
Work-in-process                376                301
Finished goods                   5                 54
                              ----               ----
                              $757               $596
                              ====               ====


5.       Net Income (Loss) Per Share

Basic net income (loss) per common share is computed using the weighted average
number of shares of common stock outstanding during the period.

Diluted net income (loss) per common share is computed using the weighted
average number of shares of common and common equivalent shares outstanding
during the period. Common equivalent shares consist of stock options using the
treasury stock method and are excluded from the computation if their effect is
antidilutive.

                                       7
<PAGE>

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

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION ACT OF 1995

The following discussion should be read in conjunction with the unaudited,
condensed financial statements and notes thereto included in Part I--Item 1 of
this Form 10-Q and the audited financial statements and notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000.

This report and the documents incorporated by reference herein contain "forward-
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended and Section 21E of the Securities Exchange Act of 1934, as
amended.  When used in this report and the documents incorporated herein by
reference, the words "anticipate," "believe," "estimate," and similar
expressions are generally intended to identify forward-looking statements.
These forward-looking statements include, among others, the statements in
Management's Discussion and Analysis about the following:

 .  the Company's expectations with respect to increases in operating expenses;

 .  expectations with respect to increases in research and development and
   general and administrative expenses in order to develop new products,
   manufacture commercial quantities of products and fund additional clinical
   trials;

 .  expectations with respect to the development, manufacturing and approval of
   new products;

 .  expectations with respect to incurring additional capital expenditures to
   expand its manufacturing capabilities;

 .  expectations with respect to generating revenue or maintaining profitability;

 .  the Company's ability to enter into additional marketing agreements and the
   ability of its existing marketing partners to successfully commercialize
   products incorporating the Company's technologies;

 .  the sufficiency of the Company's existing cash, cash equivalents and
   investments to finance its capital requirements for at least 12 months; and

 .  expectations with respect to future capital requirements.

There are important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements including,
but not limited to, the following:

 .  a decline in the level of demand for the Company's products;

 .  developments by competitors;

 .  the Company's inability to obtain regulatory clearances;

 .  general economic conditions and specifically, conditions in the health care
   industry;

 .  the Company's ability to protect its proprietary products, know-how and
   manufacturing processes;

 .  the Company's inability to obtain adequate supply of raw materials;

                                       8
<PAGE>

 .  the failure to enter into definitive marketing agreements;

 .  unanticipated cash requirements to support current operations or research and
   development; and

 .  the Company's ability to attract and retain key personnel.

These and other risks and uncertainties affecting the Company are discussed in
greater detail in this report and in other filings by the Company with the
Securities and Exchange Commission.

Overview

Since its inception in May 1990, the Company has been developing, manufacturing
and commercializing medical tissue adhesive products for use in wound closure in
humans and animals.  The Company's products are based on its proprietary
cyanoacrylate technology, and a substantial portion of the Company's historical
expenses have consisted of research and development and clinical trial expenses.
Through September 25, 1996, the effective date of the Company's initial public
offering, the Company had funded its operations with cash borrowed from
Sharpoint Development Corporation ("Sharpoint"), sales of Octyldent(R) and
Nexaband(R) products, and license and product development revenues from
marketing partners. On September 30, 1996, the Company completed its initial
public offering, issuing 2,550,000 shares of Common Stock and generating net
proceeds of approximately $17.9 million. On April 2, 1997, the Company completed
a follow-on public offering, issuing 1,025,000 shares of Common Stock and
generating net proceeds of approximately $12.0 million. After the Company
received its CE Mark and U.S. Food and Drug Administration ("FDA") approval in
August 1997 and August 1998, respectively, for DERMABOND Topical Skin Adhesive,
it began to fund a significant portion of it operations through sales of the
product.

Prior to 2001, the Company had been unprofitable since its inception and had
incurred net losses in each year, including a net loss of approximately $3.6
million for the year ended December 31, 2000.  The Company anticipates that its
recurring operating expenses will increase for the next several years, as it
expects its research and development and general and administrative expenses to
increase in order to develop new products, manufacture commercial quantities of
products and fund additional clinical trials.  The Company also expects to incur
additional capital expenditures to expand its manufacturing capabilities.  The
Company's ability to generate significant revenue and maintain profitability
will depend on its success in commercializing DERMABOND adhesive,
commercializing its line of over-the counter ("OTC") products including SOOTHE-
N-SEAL(TM) canker sore relief and LIQUIDERM(TM) liquid adhesive bandage,
expanding its manufacturing capabilities, obtaining regulatory approvals or
clearances for its products, developing and marketing new products, entering
into additional marketing agreements where appropriate and the ability of its
marketing partners to successfully commercialize products incorporating the
Company's technologies. There is no guarantee that the Company will continue to
sustain its current profitability or become increasingly profitable.

PRODUCTS

DERMABOND adhesive
------------------

DERMABOND adhesive, which is used to replace sutures, staples and adhesive
strips for closing certain topical incisions and lacerations, is the first such
product to be approved by the FDA for the U.S. market.  In March 1996, Closure
licensed exclusive worldwide marketing and distribution rights for DERMABOND
adhesive to Ethicon, Inc. ("Ethicon"), a subsidiary of Johnson & Johnson.  In
August 1998, the Company was granted approval from the FDA of its premarket
approval application to market DERMABOND adhesive in the United States.  In
August 1997, Closure received CE Mark approval allowing the Company to ship
DERMABOND adhesive to Ethicon to support its launch in European Union countries.
DERMABOND adhesive is currently marketed by Ethicon in the U.S. and
approximately 35 countries outside the U.S., including Japan.  In the first
quarter of 2001, the Company released its first DERMABOND adhesive line
extension which utilizes a "chisel tip" configuration allowing for a fine-line

                                       9
<PAGE>

application as compared to the broad-line application of the original "dome
tip".  In addition, the Company anticipates the release of an additional
DERMABOND adhesive line extension in the fourth quarter of 2001.

In July 1999, the Company was awarded its first United States Patent related to
DERMABOND adhesive.  The invention covered in this patent capitalizes on the
ability of the Company's adhesive technology to be manipulated in a manner that
enhances product performance by controlling the setting time and extending the
shelf-life of the material.  In September 2000, the Company was awarded its
first international patent related to the DERMABOND adhesive composition.  The
awards of these patents increase the Company's royalty revenue on sales of
DERMABOND adhesive in the United States and internationally under the supply and
distribution agreement with Ethicon.

SOOTHE-N-SEAL(TM) adhesive
--------------------------

In 1999, the Company was granted FDA clearance to market SOOTHE-N-SEAL(TM)
adhesive, which is the first cyanoacrylate adhesive approved by the FDA for the
OTC consumer market.  In a 155-patient multi-center clinical trial, SOOTHE-N-
SEAL(TM) adhesive was found to provide immediate and long-term pain relief
associated with oral ulcers, as well as providing a protective barrier that
shields the ulcer from irritation due to eating and drinking.  SOOTHE-N-SEAL(TM)
adhesive utilizes the same proprietary technology as the Company's professional
product, DERMABOND adhesive.  In December 2000, the Company entered into an
agreement providing Colgate Oral Pharmaceuticals, Inc. ("Colgate") with
exclusive worldwide supply, distribution and development rights to the Company's
SOOTHE-N-SEAL(TM) adhesive technology.  During the first quarter of 2001,
Colgate began the launch of SOOTHE-N-SEAL(TM) adhesive to both professionals and
consumers. SOOTHE-N-SEAL(TM) adhesive is currently available in national retail
stores such as Wal-Mart, Eckerd Drug and Rite-Aid with plans to expand
distribution to consumer outlets such as Walgreens, American Stores, Kmart,
Target and Albertsons within the next several months.

LIQUIDERM(TM) adhesive
----------------------

In January 2001, the Company received FDA clearance to market LIQUIDERM(TM)
adhesive, which is the first and only cyanoacrylate medical device approved by
the FDA for the OTC adhesive bandage market.  The approval is based in part on
the findings of a multi-center, 162-patient clinical trial which demonstrated
the effectiveness of Closure's proprietary nonabsorbable formulation as compared
to traditional adhesive bandages when applied to minor cuts and abrasions.  In
the clinical trial, it was found that LIQUIDERM(TM) adhesive speeds wound
healing, provides a superior barrier to bacteria that cause infections versus
traditional adhesive bandages, stops bleeding and can help to reduce the pain
associated with minor cuts and abrasions.  The Company has entered into an
agreement providing Johnson & Johnson Consumer Products Company ("CPC") with
worldwide supply, distribution and development rights to its LIQUIDERM(TM)
adhesive technology.  The agreement includes rights to its LIQUIDERM(TM)
adhesive and future OTC products, except for SOOTHE-N-SEAL(TM) adhesive.  The
Company anticipates shipping LIQUIDERM(TM) adhesive to CPC during the fourth
quarter of 2001 to provide for CPC's consumer launch of the product in the first
quarter 2002.

NEXABAND(R) adhesive
--------------------

The Company has two topical tissue adhesive products, sold since 1990, under the
NEXABAND(R) trade name and used in veterinary wound closure and wound care.  In
July 2001, the Company entered into an agreement providing Abbott Laboratories
("Abbott") with worldwide supply, distribution and development rights to the
NEXABAND(R) product line.  In accordance with the agreement, Abbott has been
granted immediate worldwide distribution rights of NEXABAND(R) adhesives
excluding the United States and Canada.  Upon the expiration of the Company's
prior distribution arrangement in the second quarter of 2002, Abbott can begin
the distribution of NEXABAND(R) products in the United States and Canada.

                                       10
<PAGE>

PRODUCTS IN DEVELOPMENT

The Company is currently developing additional nonabsorbable and absorbable
tissue adhesive products. These future products require further development,
clinical trials and regulatory clearance or approval prior to commercialization.

Nonabsorbable
-------------

The Company is currently developing a liquid occlusive dressing to treat partial
thickness wounds such as skin tears and pressure, diabetic and venous ulcers.
The transparent formulation permits wound assessment and is being developed to
adhere directly to the wound bed tissue, allowing the product to conform to
various wound sizes and shapes, flex with the skin and provide a barrier to
infection.  The Company has completed necessary animal research and expects to
complete its 10-patient human pilot clinical study for bedsores during the third
quarter of 2001 and has started a 10-patient human pilot clinical study for the
treatment of skin tears.  Assuming positive outcomes from the two pilot studies,
the Company anticipates the initiation of a definitive, multi-center clinical
study allowing for FDA approval through the 510K premarket clearance process.

In February 2001, the Company entered into a Cooperative Research and
Development Agreement with Walter Reed Army Medical Center ("WRAMC") and the
Uniformed Services University of the Health Sciences to conduct animal research
related to the development of a novel, minimally invasive treatment for
emphysema ("Endobronchial LVR").  Currently, surgeons perform lung volume
reduction surgery through open chest surgery which involves removing the
diseased lung and allowing healthier lung tissue to expand into the vacated
space.  The Company is developing a unique and proprietary medical adhesive to
be used in the Endobronchial LVR to achieve bronchial occlusion without the need
for open chest surgery.  Once occluded, dysfunctional lung tissue would collapse
and make room for healthier lung tissue to expand.  In a recently completed
feasibility study at WRAMC, the adhesive was placed in the lungs of 10 goats
using a bronchoscope and a small catheter.  All 10 goats achieved lung volume
reduction.  The next phase of animal research will focus on optimizing the
Endobronchial LVR procedure and formulation prior to entering human clinical
trials.

Absorbable
----------

In 1998, Closure established its Internal Adhesives Division ("IAD"), which has
dedicated scientists with extensive device development experience in order to
develop its absorbable/degradable adhesive products.  The IAD has created
several biocompatible cyanoacrylate formulations that have potential to be used
for internal tissue bonding applications.  The IAD is currently performing
synthesis, formulation design, development of analytical methods and in-vitro
testing in order to establish the characteristics of the unique biocompatible
cyanoacrylate formulations.  Through collaborations with leading research
institutions, the formulations are being evaluated using in-vivo models to
assess potential surgical use in a broad range of soft and hard tissue
applications.  Any future absorbable products will require further development,
clinical trials and regulatory clearance or approval prior to commercialization.

Results of Operations

Total revenues for the three months ended June 30, 2001 were $4.4 million
compared to $3.2 million for the corresponding period of 2000.  For the six
months ended June 30, 2001 and 2000, total revenues were $8.3 million and $6.1
million, respectively, which included license and product development revenue of
$360,000 and $312,000, respectively.  Product sales were $4.2 million for the
three months ended June 30, 2001, compared to $3.1 million for the three months
ended June 30, 2000.  For the six months ended June 30, 2001, product sales were
$8.0 million compared to $5.7 million for the same period of 2000.  The increase
is primarily the result of increased sales of DERMABOND adhesive, as well as
continued product launch sales of SOOTHE-N-SEAL(TM) adhesive.

                                       11
<PAGE>

Cost of products sold was $1.2 million for the three months ended June 30, 2001
compared to $981,000 for the same period of 2000.  For the six months ended June
30, 2001, cost of products sold was $2.3 million compared to $1.8 million for
the same period of 2000.  Cost of products sold as a percentage of product sales
decreased to 28% for the three months ended June 30, 2001 compared to 32% during
the same period of 2000.  In addition, cost of products sold as a percentage of
product sales decreased to 29% for the six months ended June 30, 2001 compared
to 31% for the six months ended June 30, 2000.  These decreases were a result of
increased production utilizing additional manufacturing capacity. The Company
expects gross margin percentages for the third quarter of 2001 to be consistent
with those experienced in previous quarters. However, in the fourth quarter of
2001, the overall product mix will include a greater percentage of lower gross
margin consumer products primarily as a result of initial shipments of
LIQUIDERM(TM) adhesive as well as SOOTHE-N-SEAL(TM) adhesive sample production.
This shift in product mix is expected to decrease overall gross margin
percentages below historical levels, which the Company anticipates to continue
until production volumes increase and related efficiencies can be achieved.

Operating expenses were $2.9 million for both the three months ended June 30,
2001 and June 30, 2000.  For the six months ended June 30, 2001 and 2000,
operating expenses were $5.5 million and $5.4 million, respectively.  Although
operating expenses remained consistent for the three and six-month periods ended
June 30, 2001 and 2000, research, development and regulatory affairs expenses
decreased during the 2001 period primarily due to decreased clinical trial
expenses related to LIQUIDERM(TM) adhesive and reduced outside professional
services whereas general and administrative expenses increased during the 2001
period due to greater professional services expenses.

Interest expense was $36,000 for the three months ended June 30, 2001, compared
to $62,000 for the three months ended June 30, 2000.  For the six months ended
June 30, 2001, interest expense decreased to $82,000 from $120,000 for the six
months ended June 30, 2000.  This decrease was primarily the result of the
continued reduction of the Company's term loan balance and capital lease
obligations through monthly principal payments as well as the decline in
interest rates.

Investment and interest income was $144,000 for the three months ended June 30,
2001, compared to $184,000 for the same period of 2000.  For the six months
ended June 30, 2001 and 2000, investment and interest income was $319,000 and
$364,000, respectively.  This decrease is primarily attributable to lower
investment yields as a result of market interest rate changes during 2001 and
reduced investment balances.

Liquidity and Capital Resources

The Company has financed its operations to date primarily through the sale of
equity securities, borrowings from Sharpoint and other lenders, license and
product development revenues and product sales.  Through June 30, 2001, the
Company has raised approximately $30.0 million from equity financings.  During
1997 and 1998, the Company entered into and received approximately $4.5 million
from a new lease line and term loan.  In June 2001, the remaining term loan
balance of approximately $1.2 million and the Company's $3.0 million line of
credit were renewed for one year under terms similar to the existing agreements.
The term loan agreement requires the Company to maintain no less than fifty
percent of the outstanding principal balance of the loan, approximately $600,000
at June 30, 2001, in an investment account of the lender whereas the line of
credit agreement requires the Company to secure $1.5 million in an investment
account of the lender at all times.  As of June 30, 2001, there were no
borrowings against the line of credit.

Cash provided by operating activities was $466,000 for the six months ended June
30, 2001, compared to cash used by operating activities of $995,000 during the
same period of 2000, primarily due to increased sales and earnings during the
2001 period versus a loss in the 2000 period.

Net cash used by investing activities was $48,000 for the six months ended June
30, 2001 compared to net cash provided by investing activities of $776,000 for
the same period in 2000.  The change in net cash flow

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<PAGE>

from investing activities between periods was due to reduced net sales of
investments coupled with the increased investment in long-term equipment and
intangible assets.

Net cash used by financing activities was $28,000 and $85,000 for the six months
ended June 30, 2001 and June 30, 2000, respectively.  The Company's primary
financing activities during the six months ended June 30, 2001 and June 30, 2000
were the repayments of its term loan and capital lease obligations offset by
proceeds from the sale of common stock under the Company's stock option and
other benefit plans.

The Company believes that existing cash, cash equivalents and investments, which
totaled approximately $11.7 million at June 30, 2001, will be sufficient to
finance its capital requirements for at least 12 months.  In June 2001, the
Company renewed for a period of one year its $3.0 million line of credit for
working capital purposes.  The Company anticipates that its recurring operating
expenses will increase for the next several years, as it expects its research
and development and general and administrative expenses to increase in order to
develop new products, manufacture in commercial quantities and fund additional
clinical trials.  The Company also expects to incur additional capital
expenditures to expand its manufacturing capabilities.

The Company's future capital requirements, however, will depend on numerous
factors, including (i) the Company's ability to manufacture and successfully
commercialize its lead product, DERMABOND adhesive and other products, (ii) the
progress of its research and product development programs for future
nonabsorbable and absorbable products, including clinical studies, (iii) the
effectiveness of product commercialization activities and marketing agreements
for the Company's future products, including additional scale-up of
manufacturing capability in anticipation of product commercialization and
development and progress of sales and marketing efforts, (iv) the ability of the
Company to maintain existing marketing agreements, including its agreements with
Ethicon for DERMABOND adhesive, Colgate for SOOTHE-N-SEAL(TM) adhesive and CPC
for LIQUIDERM(TM) adhesive, and establish and maintain new marketing agreements,
(v) the costs involved in preparing, filing, prosecuting, defending and
enforcing intellectual property rights and complying with regulatory
requirements, (vi) the effect of competing technological and market
developments, (vii) timely receipt of regulatory clearances and approvals and
(viii) general economic conditions. The Company may be required to seek
additional capital to finance its operations in the future. If the Company's
currently available funds and internally generated cash flow are not sufficient
to satisfy its financing needs, the Company will be required to seek additional
funding through bank borrowings, additional public or private sales of its
securities, including equity securities, or through other arrangements with
marketing partners. Other than the Company's capital lease obligations, term
loan, and working capital line of credit, the Company has no credit facility or
other committed sources of capital. There can be no assurance that additional
funds, if required, will be available to the Company on favorable terms, if at
all.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Sensitivity

The Company is subject to interest rate risk on its investment portfolio which
consists primarily of high quality short-term money market funds, commercial
paper and corporate bonds with an average maturity of less than one year. The
Company mitigates default risk by investing in what it believes are safe and
high credit quality securities and by monitoring the credit rating of investment
issuers. The portfolio includes only marketable securities with active secondary
or resale markets to ensure portfolio liquidity and there are limitations
regarding average and individual duration of investments. These available-for-
sale securities are subject to interest rate risk and will decrease in value if
market interest rates increase. The Company does not use interest rate
derivative instruments to manage exposure to interest rate changes.  At June 30,
2001, the Company's total portfolio consisted of approximately $11.7 million of
cash, cash equivalents and investments, the majority of which had average
maturities within one year. Additionally, the Company generally has the ability
to hold fixed income investments to maturity. Therefore, the Company does not

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<PAGE>

expect its results of operations or cash flows to be materially affected due to
a sudden change in interest rates.

Foreign Currency Exchange Risk

The Company's international sales and related royalties of DERMABOND adhesive
are based on sales in foreign currencies, but payable in U.S. dollars, and thus
may be adversely affected by fluctuations in currency exchange rates.
Additionally, fluctuations in currency exchange rates may adversely affect
demand for the Company's products by increasing the price of the Company's
products in the currency of the countries in which the products are sold.


                           PART II- OTHER INFORMATION


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

The Annual Meeting of Stockholders of the Company (the "Meeting") was held on
June 19, 2001.  At the Meeting, the following nominees were re-elected as
directors for the Company to serve until the Annual Meeting of Stockholders of
the Company in 2004 and until their successors shall have been elected and
qualified and received the votes set forth after their names below:

Name of Nominee         For       Withheld
---------------         ---       --------
Ronald A. Ahrens     12,638,171   263,482
Richard W. Miller    12,638,171   263,482
Rolf D. Schmidt      12,638,171   263,482

The terms of office of the following directors continued after the Meeting in
accordance with the Company's Certificate of Incorporation: Randy H. Thurman,
Robert V. Toni, Dennis C. Carey and F. William Schmidt.

Also at the Meeting, the stockholders of the Company approved and ratified the
selection by the Board of Directors of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending December 31, 2001.
The results of the voting on such matters were as follows:

      For          Against    Abstentions or Broker Non-Votes
      ---          -------    -------------------------------
  12,885,757       13,399                 2,497


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

    (a)   Exhibits.

                    None

    (b)   Reports on Form 8-K.

          A Form 8-K was filed on June 22, 2001 disclosing the Licensing,
          Distribution and Supply Agreement between the Company and Johnson &
          Johnson Consumer Companies, Inc.

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<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.


                                 CLOSURE MEDICAL CORPORATION



Date: August 13, 2001            By: /s/ Robert V. Toni
                                     ------------------------------------------
                                     Robert V. Toni
                                     President and Chief Executive Officer

Date: August 13, 2001            By: /s/  Benny Ward
                                     ------------------------------------------
                                     Benny Ward
                                     Vice President of Finance and Chief
                                       Financial Officer

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