UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington D. C. 20549

                                     ------


                                   FORM 10-QSB

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


For the quarter ended September 30, 2000        Commission File Number 000-28876

                            CHEM INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                            22-2407475
  (State or other jurisdiction of                             (I.R.S. Employer
  incorporation or organization)                             Identification No.)

         201 Route 22
      Hillside, New Jersey                                              07205
(Address of principal executive offices)                              (Zip code)

Registrant's telephone number, including area code:      (973) 926-0816

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  and  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 as of October 27, 2000
Common Stock, Par Value                                   6,228,720


<PAGE>


CHEM INTERNATIONAL, INC.

INDEX


<TABLE>
<CAPTION>
<S>                                                                                                             <C>
Part I: Financial Information

Item 1: Consolidated Financial Statements

        Consolidated Balance Sheet as of September 30, 2000 [Unaudited] ....................................... 1 - 2

        Consolidated Statements of Operations for the three months
        ended September 30, 2000 and 1999 [Unaudited] ......................................................... 3

        Consolidated Statement of Stockholders' Equity for the three months
        ended September 30, 2000 [Unaudited] .................................................................. 4

        Consolidated Statements of Cash Flows for three months ended
        September 30, 2000 and 1999 [Unaudited] ............................................................... 5-6

        Notes to Consolidated Financial Statements [Unaudited] ................................................ 7-12

Item 2: Management's Discussion and Analysis of Financial Condition
         and Results of Operations ............................................................................ 13-14

Part II: Other Information .................................................................................... 15

Signature ..................................................................................................... 16
</TABLE>


                                 . . . . . . . .


<PAGE>


CHEM INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2000
[UNAUDITED]
--------------------------------------------------------------------------------

Assets:
Current Assets:
   Cash and Cash Equivalents                              $  730,003
   Accounts Receivable - Net                               1,411,724
   Deferred Income Taxes                                     320,000
   Inventories                                             4,078,726
   Prepaid Expenses and Other Current Assets                 136,244
   Refundable Federal Income Taxes                           376,352
                                                          ----------

   Total Current Assets                                    7,053,049
                                                          ----------

Property and Equipment - Net                               2,574,313
                                                          ----------

Other Assets:
   Security Deposits and Other Assets                        120,885
                                                          ----------

   Total Assets                                           $9,748,247
                                                          ==========


See accompanying notes to consolidated financial statements.


                                       1
<PAGE>


CHEM INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2000
[UNAUDITED]
--------------------------------------------------------------------------------

Liabilities and Stockholders' Equity:
Current Liabilities:
   Accounts Payable                                                 $ 1,061,762
   Notes Payable                                                      1,013,850
   Accrued Expenses and Other Current Liabilities                       165,252
   Accrued Expenses - Related Party                                     135,000
   Capital Lease Obligation                                              30,797
                                                                    -----------

   Total Current Liabilities                                          2,406,661
                                                                    -----------

Non-Current Liabilities:
   Notes Payable                                                         11,497
   Capital Lease Obligation                                              33,619
                                                                    -----------

   Total Non-Current Liabilities                                         45,116
                                                                    -----------
Commitments and Contingencies [10]                                         --
                                                                    -----------

Stockholders' Equity:
   Preferred Stock - Authorized 1,000,000 Shares,
     $ .002 Par Value, No Shares Issued                                    --

   Common Stock - Authorized 25,000,000 Shares,
     $ .002 Par Value, 6,228,720 Shares Issued and Outstanding           12,457

   Additional Paid-in Capital                                         6,095,305

   Retained Earnings                                                  1,217,539
                                                                    -----------
                                                                      7,325,301
   Less Treasury Stock at cost, 25,800 shares                           (28,831)
                                                                    -----------

   Total Stockholders' Equity                                         7,296,470
                                                                    -----------

   Total Liabilities and Stockholders' Equity                       $ 9,748,247
                                                                    ===========


See accompanying notes to consolidated financial statements.


                                       2
<PAGE>


CHEM INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]

                                                        Three months ended
                                                        ------------------
                                                           September 30,
                                                           -------------

                                                       2000             1999
                                                       ----             ----

Sales                                              $ 2,428,460      $ 3,432,123

Cost of Sales                                        2,225,651        3,016,468
                                                   -----------      -----------

Gross Profit                                           202,809          415,655

Selling and Administrative Expenses                    722,620          740,766
                                                   -----------      -----------

Operating [Loss]                                      (519,811)        (325,111)
                                                   -----------      -----------

Other Income [Expense]:
Interest Expense-Related Party                            --            (18,807)
Interest Expense                                       (20,192)         (17,300)
Interest and Investment Income                          16,237              130
                                                   -----------      -----------



Total Other [Expense]                                   (3,955)         (35,977)
                                                   -----------      -----------

[Loss] Before Income Taxes                            (523,766)        (361,088)

Federal and State Income Tax [Benefit]                (196,880)         (20,446)
                                                   -----------      -----------

Net [Loss]                                         $  (326,886)     $  (340,642)
                                                   ===========      ===========

Net [Loss] Per Common  Share
Basic and Diluted                                  $      (.06)     $      (.07)
                                                   ===========      ===========

Average Common Shares Outstanding                    5,178,300        5,178,300
                                                   ===========      ===========


See accompanying notes to consolidated financial statements.


                                       3
<PAGE>


CHEM INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2000
[UNAUDITED]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                             Additional                                                    Total
                             Common Stock       Preferred       Paid-in      Retained          Treasury Stock      Stockholders'
                             ------------       ---------       -------      --------          --------------      -------------
                          Shares     Par Value      Stock       Capital      Earnings        Shares        Cost           Equity
                          ------     ---------      -----       -------      --------        ------        ----           ------

<S>                    <C>         <C>           <C>        <C>           <C>                <C>      <C>            <C>
Balance-
July 1, 2000           5,178,300   $    10,357   $     --   $ 4,847,405   $ 1,544,425        25,800   $ (28,831)     $ 6.373,356


Common Stock
Issued for
Purchase of Land
and Building           1,050,420         2,100         --     1,247,900            --            --          --        1,250,000


Net [Loss]
for  the three
months ended
September 30,2000             --            --         --            --      (326,886)           --          --         (326,886)
                     -----------   -----------   --------   -----------   -----------      --------   ---------      -----------


Balance-
September 30, 2000     6,228,720   $    12,457   $     --   $ 6,095,305   $ 1,217,539        25,800   $ (28,831)     $ 7,296,470
                     ===========   ===========   ========   ===========   ===========      ========   =========      ===========
</TABLE>



See accompanying notes to consolidated financial statements.


                                       4
<PAGE>


CHEM INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                  Three months ended
                                                                  ------------------
                                                                     September 30,
                                                                     -------------
                                                                   2000            1999
                                                                   ----            ----
<S>                                                         <C>             <C>
Operating Activities:
  Net [Loss]                                                $  (326,886)    $  (340,642)
                                                            -----------     -----------
  Adjustments to Reconcile Net [Loss] to Net Cash
    [Used for] Operating Activities:
    Depreciation and Amortization                                75,069          78,995
    Amortization of Discount on Note Payable                         --           5,682
    Deferred Income Taxes                                       (40,000)        (18,000)
    Bad Debt Expense                                              9,000           6,000
  Changes in Assets and Liabilities:
  [Increase] Decrease in:
    Accounts Receivable                                           1,404         705,159
    Inventories                                                (842,048)        265,887
    Refundable Federal Income Taxes                            (160,000)         (6,321)
    Prepaid Expenses and Other Current Assets                   (26,104)        (63,153)
    Security Deposits and Other Assets                            3,310          (8,475)
  [Decrease] Increase in:
    Accounts Payable                                           (294,872)       (696,863)
    Federal and State Income Taxes Payable                           --              --
    Accrued Expenses and Other Liabilities                       78,801          57,362
                                                            -----------     -----------
Total Adjustments                                            (1,195,440)        326,273
                                                            -----------     -----------
Net Cash - Operating Activities                              (1,522,326)        (14,369)
                                                            -----------     -----------

Investing Activities:
  Purchase of Property and Equipment                            (32,335)         (9,292)
                                                            -----------     -----------
Net Cash-Investing Activities                                   (32,335)         (9,292)
                                                            -----------     -----------

Financing Activities:
  Proceeds from Notes Payable                                   477,373              --
  Repayment of Notes Payable                                    (15,718)        (20,067)
                                                            -----------     -----------
Net Cash-Financing Activities                                   461,655         (20,067)
                                                            -----------     -----------

Net Increase/[Decrease] in Cash and Cash Equivalents         (1,093,006)        (43,728)
 Cash and Cash Equivalents - Beginning of Periods             1,823,009         299,030
                                                            -----------     -----------
Cash and Cash Equivalents - End of Periods                  $   730,003     $   255,302
                                                            ===========     ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                       5
<PAGE>


CHEM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]


                                                          Three months ended
                                                          ------------------
                                                             September 30,
                                                             -------------
                                                           2000        1999
                                                           ----        ----
Supplemental Disclosures of Cash Flow Information:
  Cash paid during the periods for:
   Interest                                               $16,180     $17,300
   Income Taxes                                           $ 2,080     $ 3,080


See accompanying notes to consolidated financial statements.


                                       6
<PAGE>


CHEM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
--------------------------------------------------------------------------------

[1]  Business

Chem   International,   Inc.  [the  "Company"]  is  engaged   primarily  in  the
manufacturing,  marketing  and sales of vitamins,  nutritional  supplements  and
herbal products.  Its manufacturing  customers are located primarily  throughout
the United States and Europe.

[2]  Liquidity

The  Company  anticipates  operating  losses  during the 2001 fiscal  year.  The
Company currently has purchases orders of approximately  $2.2 million dollars on
hand for shipment in the second and third  quarters of fiscal 2001.  The Company
believes  that  anticipated  sales  coupled  with the  purchase  orders  and the
remaining  balance  available  under the revolving line of credit will meet cash
needs for operations.

[3]  Summary of Significant Accounting Policies

Principles of Consolidation - The accompanying consolidated financial statements
include  the  accounts of the  Company  and its  subsidiaries,  all of which are
wholly-owned.  Intercompany  transactions  and balances have been  eliminated in
consolidation.

Basis of Reporting - The accompanying  unaudited  interim  financial  statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information and with the instructions to Form 10-QSB and
Item  310(b) of  Regulation  S-B.  Accordingly,  they do not  include all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial  statements.  In the opinion of management,  such interim
statements include all adjustments,  which are considered  necessary in order to
make the interim financial statements not misleading. It is suggested that these
financial  statements be read in conjunction  with the financial  statements and
notes thereto,  together with management's  discussion and analysis of financial
condition and results of operations, contained in the Company's annual report to
stockholders  incorporated  by reference in the Company's  annual report on Form
10-KSB for the fiscal year ended June 30, 2000.  The results of  operations  for
the three months ended September 30, 2000 are not necessarily  indicative of the
results for the entire fiscal year ending June 30, 2001.

Cash and Cash  Equivalents - Cash  equivalents  are comprised of certain  highly
liquid investments with a maturity of three months or less when purchased.

Inventories  - Inventory is valued by the  first-in,  first-out  method,  at the
lower of cost or market.

Depreciation - The Company follows the general policy of  depreciating  the cost
of property and equipment over the following estimated useful lives:

Leasehold Improvements                                    15 Years
Machinery and Equipment                                    7 Years
Machinery and Equipment Under Capital Leases               7 Years
Transportation Equipment                                   5 Years

Machinery  and  equipment  are  depreciated  using  accelerated   methods  while
leasehold  improvements  are amortized on a  straight-line  basis.  Depreciation
expense was $75,069 and $78,995 for the three  months ended  September  30, 2000
and 1999,  respectively.  Amortization  of  equipment  under  capital  leases is
included with the depreciation expense.

Estimates - The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  or  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Revenue Recognition - The Company generally  recognizes revenue upon shipment of
the product.

Advertising - Costs  incurred for producing and  communicating  advertising  are
expensed  when  incurred.  Advertising  expense  was $39,177 and $37,376 for the
three months ended September 30, 2000 and 1999 respectively.


                                       7
<PAGE>


CHEM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2
[UNAUDITED]
--------------------------------------------------------------------------------

[4]  Inventories

Inventories consist of the following at September 30, 2000:

Raw Materials                                                         $2,554,335
Work-in-Process                                                          821,631
Finished Goods                                                           702,760
                                                                      ----------

Total                                                                 $4,078,726
                                                                      ==========


[5]  Property and Equipment

Property and equipment comprise the following at September 30, 2000:

Land and Building                                                     $1,250,000
Leasehold Improvements                                                 1,157,960
Machinery and Equipment                                                2,580,557
Machinery and Equipment Under Capital Leases                             156,561
Transportation Equipment                                                  60,569
                                                                      ----------
Total                                                                  5,205,647
Less: Accumulated Depreciation and Amortization                        2,631,334
                                                                      ----------

Total                                                                 $2,574,313
                                                                      ==========

[6]  Notes Payable

Notes Payable:
    Bio Merieux Vitek, Inc. (a)                                       $   29,717
    Medallion Business Credit, LLC (b                                    558,215
    Summit Business Capital Corp. (c)                                    437,415
                                                                      ----------

   Totals                                                              1,025,347
   Less: Current Portion                                               1,013,850
                                                                      ----------

Non-current Portion                                                   $   11,497
                                                                      ==========

(a)  Five year 10%  equipment  note dated  April 1, 1997  providing  for monthly
     payments of $1,698 for principal and interest.  The note is  collateralized
     by laboratory equipment.

(b)  Under the terms of a  revolving  credit  note which  expires on November 5,
     2001, the Company may borrow up to $1,000,000 at 3% above the prime lending
     rate.  The  loan  is  collateralized  by  the  inventory,  receivables  and
     equipment  of  Chem   International,   Inc.,   and  Chem's  two   operating
     subsidiaries,  Manhattan Drug Company,  Inc. and Vitamin Factory,  Inc. The
     note  has  been  guaranteed  by the  Company's  principal  stockholder.  At
     September 30, 2000 the interest rate was 12.5%.

     The loan agreement with Medallion  Business  Credit,  LLC contains  certain
     financial covenants relating to the maintenance of specified liquidity, and
     tangible  net worth.  At September  30, 2000 the Company was in  compliance
     with its tangible net worth and working capital covenants.


                                       8
<PAGE>


CHEM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3
[UNAUDITED]
--------------------------------------------------------------------------------

[6]  Notes Payable (Continued)

(c)  Non-Interest  bearing  Promissory  Note dated August 30, 2000 providing for
     ten consecutive monthly installments for the purchase of inventory.

The following are maturities of long-term debt for each of the next five years:


September 30,
   2001                                                               $1,013,850
   2002                                                                   11,497
   2003                                                                       --
   2004                                                                       --
   2005                                                                       --
                                                                      ----------

Totals                                                                $1,025,347
                                                                      ==========


[7] Capital Lease

The  Company  acquired  capsule,  warehouse,  and  office  equipment  under  the
provisions of three  long-term  leases.  The leases expire in March 2001,  March
2003, and July 2003, respectively.  The equipment under the capital leases as of
September 30, 2000 had a cost of $156,561  accumulated  depreciation  of $71,405
with a net book value of $85,156.

The future minimum lease payments under capital leases and the net present value
of the future minimum lease payments at September 30, 2000 are as follows:

Total Minimum Lease Payments                                          $ 151,916
Amount Representing Interest                                            (87,500)
                                                                      ---------

Present Value of Net Minimum Lease Payment                               64,416
Current Portion                                                         (30,797)
                                                                      ---------

   Long-Term Capital Lease Obligation                                 $  33,619
                                                                      =========


[8]  Significant Risks and Uncertainties

[A]  Concentrations  of Credit Risk - Cash - The Company  maintains  balances at
several financial institutions.  Accounts at each institution are insured by the
Federal Deposit Insurance  Corporation up to $100,000. At September 30, 2000 the
Company's uninsured cash balances totaled  approximately  $725,000.  The Company
does not require collateral in relation to cash credit risk.

[B] Concentrations of Credit Risk - Receivables - The Company routinely assesses
the financial strength of its customers and, based upon factors  surrounding the
credit  risk  of its  customers,  establishes  an  allowance  for  uncollectible
accounts and, as a  consequence,  believes that its accounts  receivable  credit
risk exposure  beyond such  allowances is limited.  The Company does not require
collateral in relation to its trade accounts  receivable credit risk. The amount
of the allowance for uncollectible accounts at September 30, 2000 is $299,000.


                                       9
<PAGE>


CHEM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4
[UNAUDITED]
--------------------------------------------------------------------------------

[9]  Major Customer

For the three months ended  September 30, 2000 and 1999,  approximately  41% and
61% of revenues were derived from one customer.  The loss of this customer would
have an adverse effect on the Company's operations. No other customers accounted
for more than 10% of consolidated sales for the three months ended September 30,
2000 and 1999. Accounts receivable from these customers comprised  approximately
46% and 47% of total  accounts  receivable  at  September  30,  2000  and  1999,
respectively.

[10] Commitments and Contingencies

[A]  Leases

Related Party Leases - Certain  manufacturing  and office facilities were leased
from Morristown  Holding,  Inc. (formerly Gerob Realty Partnership) whose owners
are stockholders of the Company.  The lease, which expires on December 31, 2000,
provides for a minimum  annual rental of $60,000 plus payment of all real estate
taxes. Rent and real estate tax expense for the three months ended September 30,
2000 and 1999 on this lease was approximately $20,000 and $41,000, respectively.
Unpaid rent of $135,000 due to Morristown  Holding Company,  Inc.  September 30,
2000 has been  separately  disclosed  as accrued  expenses  on the  consolidated
balance sheet.  On August 30, 2000 the Company  acquired the  manufacturing  and
office  facility.  The Company  issued  1,050,420  shares of its common stock in
exchange for the property.

Other warehouse and office facilities are leased from Vitamin Realty Associates,
L.L.C.,  a  limited  liability  company,  which is 90%  owned  by the  Company's
Chairman of the Board and principal  stockholder  and certain family members and
10% owned by the Company's Chief Financial  Officer.  The lease was effective on
January 10, 1997 and provides for a minimum  annual  rental of $346,000  through
January 10, 2002 plus  increases  in real estate  taxes and  building  operating
expenses.  At its  option,  the  Company has the right to renew the lease for an
additional  five year period.  On April 28, 2000 the lease was amended  reducing
the square footage and extending the lease to May 31, 2015. Rent expense for the
three months ended  September 30, 2000 and 1999 on this lease was  approximately
$108,000 and $116,000 respectively.

Other Lease Commitments - The Company leases warehouse equipment for a five year
period providing for an annual rental of $15,847 and office equipment for a five
year period providing for an annual rental of $8,365.

The Company leases automobiles under  non-cancelable  operating lease agreements
which expire through 2003.

The minimum rental commitment for long-term non-cancelable leases is as follows:

                                            Related
                                            -------
                          Lease            Party Lease
                          -----            -----------
September 30,            Commitment        Commitment           Total
-------------            ----------        -----------          -----
  2001                   $   70,015        $  323,559        $  393,574
  2002                       47,330           323,559           370,889
  2003                       19,541           323,559           343,100
  2004                           --           323,559           323,559
  2005                           --           323,559           323,559
  Thereafter                     --         3,100,775         3,100,775
                         ----------        ----------        ----------
  Total                  $  136,886        $4,718,570        $4,855,456
                         ==========        ==========        ==========


Total rent expense,  including real estate taxes and  maintenance  charges,  was
approximately $128,00 and $141,000 for the three months ended September 30, 2000
and 1999,  respectively.  Rent  expense  is  stated  net of  sublease  income of
approximately  $1,050 and $1,300 for the three months ended  September  30, 2000
and 1999, respectively.


                                       10
<PAGE>


CHEM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5
[UNAUDITED]
--------------------------------------------------------------------------------

[10] Commitments and Contingencies (Continued)

[B] Employment  Agreements - Effective  July 1, 1999,  the Company  entered into
three year employment  agreements with its four executive officers which provide
for aggregate annual salaries of $495,000 for the years ending June 30, 2001 and
2002, respectively. These agreements are subject to annual increases equal to at
least the increase in the consumer price index for the Northeastern area.

[C]  Investment in and Royalties  Receivable  from Martin Health Care  products,
Inc. - On February  10,  1998,  the  Company  signed an  exclusive  manufacturer
agreement  with Martin  Health Care  Products,  Inc. to provide to Martin Health
Care certain  products for a ten year period.  In connection with the agreement,
the Company also agreed to forgive from Martin Health Care outstanding  invoices
totaling  $22,000.  In return for the  forgiveness,  Martin agreed to pay to the
Company a  royalty  on sales of  certain  products  and to issue to the  Company
15,000 shares of common stock in Martin health Care  Products,  Inc. The Company
has  recorded  the cost for the  common  stock at $1,000  and has  recorded  the
royalties as a  non-current  asset in the amount of $21,000.  No royalties  have
been paid as of September 30, 2000.

[D]  Litigation  - The  Company  is unable to  predict  its  ultimate  financial
exposure  with  respect  to its prior sale of  certain  products  which may have
contained  allegedly  contaminated  Tryptophan  which  is the  subject  numerous
lawsuits against unrelated manufacturers, distributors, suppliers, importers and
retailers of that product.  However,  management does not presently  believe the
outcome of these actions will have a material adverse effect on the Company.


[E]  Development  and Supply  Agreement - On April 9, 1998, the Company signed a
development and supply agreement with Herbalife  International of America,  Inc.
["Herbalife"]  whereby the Company will develop,  manufacture and supply certain
nutritional products to Herbalife through December 31, 2000.

[F]  Manufacturing  Agreement  - On February  14,  1998,  the  Company  signed a
manufacturing  agreement with Pilon International,  PLC, a company that supplies
Zepter  International,   a  world-wide  direct  sales  distributor  of  consumer
products.  The Company will manufacture and develop dietary  supplements through
the year 2001.

[G] Consulting  Agreements- The Company entered into a consulting agreement with
a  financial  public  relations  firm to provide  financial  communications  and
investor  relations.  The agreement is for a 12-month  period and provides for a
yearly  retainer  of  $54,000.  In  addition  the  Company  has  issued  to  the
consultants options to purchase 75,000 shares of its common stock at an exercise
price of $1.10 and 75,000 shares at an exercise price of $1.75.

[11] Related Party Transactions

During the year ended June 30,  1997,  the  Company  entered  into a  consulting
agreement with the brother of the Company's  chairman of the board on a month to
month basis for $1,100 per month. The total consulting expense recorded per this
verbal  agreement for the three months ended September 30, 2000 and 1999, by the
Company was $6,600 and $6,600, respectively.

[12] Fair Value of Financial Instruments

Generally  accepted  accounting  principles require disclosing the fair value of
financial  instruments to the extent practicable for financial instruments which
are  recognized  or  unrecognized  in the balance  sheet.  The fair value of the
financial instruments disclosed herein is not necessarily  representative of the
amount  that  could be  realized  or  settled,  nor does the fair  value  amount
consider the tax  consequences  of realization  or settlement.  In assessing the
fair value of financial  instruments,  the Company uses a variety of methods and
assumptions,  which  are  based on  estimates  of  market  conditions  and risks
existing  at  the  time.  For  certain  instruments,  including  cash  and  cash
equivalents,  accounts  receivable,  notes  receivable,  accounts  payable,  and
accrued  expenses,  it was estimated that the carrying amount  approximated fair
value because of the short maturities of these instruments.  Short-term debt and
long-term debt  including  long-term debt to a related party is based on current
rates at which the Company could borrow funds with similar remaining  maturities
and approximates fair value.


                                       11
<PAGE>


CHEM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6
[UNAUDITED]

[13] New Accounting Pronouncements

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities".  Statement No. 133 establishes  accounting
and reporting  standards for derivative  instruments and for hedging activities.
It  requires  that an entity  recognize  all  derivatives  as  either  assets or
liabilities  and measure them at fair value.  Under certain  circumstances,  the
gains or losses from  derivatives may be offset against those from the items the
derivatives  hedge  against.  The Company  will adopt SFAS No. 133 in the fiscal
year  ending  June 30,  2001.  SFAS No. 133 is not  expected  to have a material
impact on the financial statements.

[14] Equity Transactions

[A] Purchase of Manufacturing  Facility-On August 30, 2000 the Company issued to
Morristown  Holding Company 1,050,420 shares of its common stock in exchange for
the manufacturing and office facility it had been renting [See Note 10A].

[B] Consultant Agreement/Stock Options-In connection with a consulting agreement
dated July 18, 2000 the Company has issued  75,000  options on its common  stock
exercisable at $1.10 per share and 75,000 options exercisable at $1.75 per share
[ See Note 9G]. Should the Company not choose to renew the consulting  agreement
the  consultants  have  agreed to give back  50,000  of the $1.75  options.  The
options are exercisable for five years from the date the agreement was signed.

[C]  Incentive  Stock  Options-On  July 1,  2000  the  Company  granted  200,000
incentive stock options for a term of ten years to its employees at the exercise
price of $1.00 per share.


                                       12
<PAGE>


Item 2.

CHEM INTERNATIONAL, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

The  following  discussion  should be read in  conjunction  with the  historical
information of the Company and notes thereto.

Three months ended  September 30, 2000 Compared to three months ended  September
30, 1999

Results of Operations

The Company's net losses for the three months ended  September 30, 2000 and 1999
were  $(326,886)  and  $(340,642).  This  decrease in net loss of  approximately
$14,000 is  primarily  the  result of a  $200,000  increase  in  operating  loss
resulting  from a  corresponding  decrease  in  gross  profit  of  approximately
$200,000 and an  approximate  $186,000  increase in federal income tax benefits.
The decrease in gross profit is due to decreased sales.

Sales for the three months ended September 30, 2000 and 1999 were $2,428,460 and
$3,432,123, respectively, a decrease of approximately $1,000,000 or 29%. For the
three months ended September 30, 2000 the Company had sales to one customer, who
accounted  for 41% of net  sales  in  2000  and 61% in  1999.  The  loss of this
customer would have an adverse affect on the Company's operations.

Retail  and mail order  sales for the three  months  ended  September  30,  2000
totaled  $136,868 as compared to $176,411 for the three  months ended  September
30, 2000, a decrease of 22%. The Company has been experiencing a decline in mail
order sales due to increased competition.

Sales under the Roche Vitamins,  Inc.  distribution  agreement were $532,625 for
the three months ended  September 30, 2000 as compared to $587,511 for the three
months ended September 30, 1999, a decrease of $54,886 or 9%.

On  August  31,  2000,  the  Company  began  the  distribution  and sale of fine
chemicals  through a new  subsidiary,  IHT Health  Products,  Inc. Sales for the
month ended September 30, 2000 totaled $457,398.

Cost of sales  decreased to $2,225,651 for the three months ended  September 30,
2000 as compared to  $3,016,468  for the three months ended  September 30, 1999.
Cost of sales  increased  as a  percentage  of sales to 92% for the three months
ended September 30, 2000 from 88% for the three months ended September 30, 1999.
The increase in cost of sales is due to manufacturing  inefficiencies  and lower
margin sales.

Selling and  administrative  expenses for the three months ended  September  30,
2000 were $722,620  versus $740,766 for the same period a year ago. The decrease
of $18,146 was  primarily  attributable  to a decrease  in officers  salaries of
$28,029,  a decrease in consulting  fees of $101,787,  an increase in travel and
entertainment  of $33,569 and an  increase in office  salaries of $35,493 due to
the commencement of the IHT Health Products, Inc. distribution business.

Other income  [expense]  was $(3,955) for the three months ended  September  30,
2000 as compared to $(35,977) for the three months ended September 30, 1999. The
decrease of $32,022 is the result of a decrease  in interest  expense of $15,915
and an increase in interest and investment income of $16,107.

Liquidity and Capital Resources

At September 30, 2000 the Company's  working capital was $4,646,388,  a decrease
of $813,395  over working  capital at June 30, 2000.  Cash and cash  equivalents
were  $730,003 at September  30, 2000,  a decrease of  $1,093,006  from June 30,
2000. The Company  utilized  $1,522,326 and $14,369 for operations for the three
months ended September 30, 2000 and 1999, respectively.


                                       13
<PAGE>


CHEM INTERNATIONAL, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Liquidity and Capital Resources - Continued

The primary  reasons for the increase in cash  utilized for  operations  for the
three  months  ended  September  30,  2000 are an  increase  in  inventories  of
approximately  $842,000  and an increase in  accounts  payable of  approximately
$295,000.  The Company  currently  has  purchase  orders of  approximately  $2.2
million  dollars on hand for shipment in the second and third quarters of fiscal
2001.  The Company  believes  that  anticipated  sales coupled with the purchase
orders and the remaining  balance  available  under the revolving line of credit
will meet the cash needs for operations.

The Company utilized  $29,025 and $12,119 in investing  activities for the three
months ended September 30, 2000 and 1999,  respectively.  The Company  generated
net cash of $461,655 and utilized $20,067 from debt financing activities for the
three months ended September 30, 2000 and 1999, respectively.

The Company has a  $1,000,000  revolving  line of credit  agreement  which bears
interest at 3.0% above the prime  interest rate and expires on November 5, 2001.
At  September  30, 2000 the balance due under the  revolving  line of credit was
$558,215.

The  Company's  total annual  commitment at September 30, 2000 for the next five
years  of  $1,754,681   consists  of  obligations  under  operating  leases  for
facilities  and lease  agreements  for the  rental of  warehouse  equipment  and
automobiles.

Effective  July  1,  1999,  the  Company  entered  into  three  year  employment
agreements  with four  executive  officers  which provide for  aggregate  annual
salaries of $495,000 for the year sending June 30, 2001 and 2002.


                                       14
<PAGE>


Part II: Other Information

CHEM INTERNATIONAL, INC.

Item 1: Legal Proceeding

          None

Item 2: Changes in Securities

          None

Item 3: Defaults Upon Senior Securities

          None

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

          None

Item 5: Other Information

          None

Item 6: Exhibits and Reports on Form 8K

          None


                                       15
<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.


                              CHEM INTERNATIONAL, INC.

Date: November 8, 2000             By:/s/ Seymour Flug
                                      ----------------------------------------
                                      Seymour Flug,
                                      President and Chief Executive Officer

Date: November 8, 2000             By:/s/ Eric Friedman
                                      ----------------------------------------
                                      Eric Friedman,
                                      Chief Financial Officer


                                       16