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  December 31, 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                                 (Zip code)
    executive offices)

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 January 26, 2001
-----------------------                 ----------------------------------

Common Stock, Par Value                              6,228,720

<PAGE>

CHEM INTERNATIONAL, INC.
--------------------------------------------------------------------------------
INDEX
--------------------------------------------------------------------------------

Part I: Financial Information

Item 1: Consolidated Financial Statements

     Independent Auditor's Review Report ............................... 1

     Consolidated  Balance  Sheet as of  December  31,  2000
     [Unaudited] ........................................................2...  3

     Consolidated Statements of Operations for the three and
     six months ended December 31, 2000 and 1999 [Unaudited] ............4

     Consolidated  Statement of Stockholders' Equity for the
     six months ended December 31, 2000 [Unaudited] .....................5

     Consolidated  Statements  of Cash  Flows for six months
     ended December 31, 2000 and 1999 [Unaudited] .......................6...  7

     Notes to Consolidated Financial Statements [Unaudited] .............8... 13

Item 2:  Management's  Discussion  and Analysis of Financial
         Condition and Results of Operations ............................14...16

Part II: Other Information ..............................................17

Signature ...............................................................18


                                   ..........

<PAGE>

                     Independent Accountants' Review Report

We have reviewed the accompanying  condensed  consolidated balance sheet of Chem
International,  Inc. and  Subsidiaries  as of December 31, 2000, and the related
condensed  consolidated  statements  of  operations  and cash  flows for the six
months  ended  December  31,  2000.  These  condensed   consolidated   financial
statements are the responsibility of the company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the accompanying accepted accounting principles.

                               /s/ Amper, Politziner & Mattia P.A.

February 9, 2001

<PAGE>

CHEM INTERNATIONAL, INC.
------------------------

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2000
[UNAUDITED]
--------------------------------------------------------------------------------

Assets:
Current Assets:
  Cash and Cash Equivalents                                          $   420,901
  Accounts Receivable - Net
                                                                       1,655,828
  Deferred Income Taxes                                                  275,000
  Inventories                                                          4,311,539
  Prepaid Expenses and Other Current Assets                              210,632
  Refundable Federal Income Taxes                                        632,352
                                                                     -----------
   Total Current Assets                                                7,506,252
                                                                     -----------
Property and Equipment - Net                                           2,501,511
                                                                     -----------
Other Assets:
   Security Deposits and Other Assets                                    126,762
                                                                     -----------
   Total Assets                                                      $10,134,525
                                                                     ===========

See accompanying notes to consolidated financial statements.


                                       2
<PAGE>

CHEM INTERNATIONAL, INC.
------------------------

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2000
[UNAUDITED]
--------------------------------------------------------------------------------

Liabilities and Stockholders' Equity:
Current Liabilities:
   Accounts Payable                                                $  2,054,150
   Notes Payable                                                        892,077
   Accrued Expenses and Other Current Liabilities                       312,584
   Accrued Expenses - Related Party                                     135,000
   Capital Lease Obligation                                              24,553
                                                                   ------------
   Total Current Liabilities                                          3,418,364
                                                                   ------------
Non-Current Liabilities:
   Notes Payable                                                          9,895
   Capital Lease Obligation                                              30,392
                                                                   ------------
   Total Non-Current Liabilities                                         40,287
                                                                   ------------
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                                                    596,943
                                                                   ------------
                                                                      6,704,705
   Less Treasury Stock at cost, 25,800 shares                           (28,831)
                                                                   ------------
   Total Stockholders' Equity                                         6,675,874
                                                                   ------------
   Total Liabilities and Stockholders' Equity                      $ 10,134,525
                                                                   ============

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

CHEM INTERNATIONAL, INC.
------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                          Three months ended          Six months ended
                                          ------------------          ----------------
                                            December 31,                December 31,
                                            ------------                ------------

                                       2000            1999           2000          1999
                                       ----            ----           ----          ----
<S>                                 <C>            <C>            <C>            <C>
Sales                               $ 3,063,629    $ 4,941,907    $ 5,492,089    $ 8,374,030

Cost of Sales                         2,906,997      4,164,588      5,132,648      7,181,056
                                    -----------    -----------    -----------    -----------

Gross Profit                            156,632        777,319        359,441      1,192,974

Selling and Administrative
Expenses                              1,010,216        766,798      1,732,836      1,507,564
                                    -----------    -----------    -----------    -----------

Operating Income/[Loss]                (853,584)        10,521     (1,373,395)      (314,590)
                                    -----------    -----------    -----------    -----------

Other Income [Expense]:
Administrative Fee Income                50,000             --         50,000             --
Interest Expense-Related Party               --        (18,807)            --        (37,614)
Interest Expense                        (28,055)       (54,342)       (48,247)       (71,642)
Interest and Investment Income            2,208          1,621         18,445          1,751
                                    -----------    -----------    -----------    -----------

Total Other Income[Expense]              24,153        (71,528)        20,198       (107,505)
                                    -----------    -----------    -----------    -----------

[Loss] Before Income Taxes             (829,431)       (61,007)    (1,353,197)      (422,095)

Federal and State Income Tax
Expense [Benefit]                      (208,835)        34,580       (405,715)        14,134
                                    -----------    -----------    -----------    -----------

Net [Loss]                          $  (620,596)   $   (95,587)   $  (947,482)   $  (436,229)
                                    ===========    ===========    ===========    ===========

Net [Loss] Per Common  Share
Basic and Diluted                   $      (.11)   $      (.02)   $      (.17)   $      (.08)
                                    ===========    ===========    ===========    ===========


Average Common Shares Outstanding     6,228,720      5,178,300      5,703,510      5,178,300
                                    ===========    ===========    ===========    ===========
</TABLE>


See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

CHEM INTERNATIONAL, INC.
------------------------

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE SIX MONTHS
ENDED DECEMBER 31, 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 six
months ended
December 31 ,2000           --        --      --             --       (947,482)       --        --      (947,482)
                   -----------  --------    ----    -----------    -----------   -------  --------   -----------

Balance-
December 31, 2000    6,228,720  $ 12,457    $ --    $ 6,095,305    $   596,943    25,800  $(28,831)  $ 6,675,874
                   ===========  ========    ====    ===========    ===========   =======  ========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

CHEM INTERNATIONAL, INC.
------------------------

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

                                                           Six months ended
                                                           ----------------
                                                             December 31,
                                                             ------------
                                                          2000         1999
                                                          ----         ----
Operating Activities:
  Net [Loss]                                          $  (947,482)  $  (436,229)
                                                      -----------   -----------
  Adjustments to Reconcile Net [Loss] to Net Cash
   [Used for] Operating Activities:
   Depreciation and Amortization                          169,503       161,682
   Amortization of Discount on Note Payable                    --        11,364
   Deferred Income Taxes                                    5,000        13,000
   Bad Debt Expense                                        18,000        25,184
  Changes in Assets and Liabilities:
 [Increase] Decrease in:
   Accounts Receivable                                   (251,700)     (748,624)
   Inventories                                         (1,074,861)   (1,324,905)
   Refundable Federal Income Taxes                       (416,000)       (6,321)
   Prepaid Expenses and Other Current Assets             (100,492)     (105,601)
   Security Deposits and Other Assets                      (2,567)       (4,731)
 [Decrease] Increase in:
   Accounts Payable                                       697,516     2,626,441
   Federal and State Income Taxes Payable                      --            --
   Accrued Expenses and Other Liabilities                 226,133        59,262
                                                      -----------   -----------
Total Adjustments                                        (729,468)      706,751
                                                      -----------   -----------
Net Cash - Operating Activities                        (1,676,950)      270,522
                                                      -----------   -----------
Investing Activities:
  Purchase of Property and Equipment                      (53,967)      (63,677)
                                                      -----------   -----------
Net Cash-Investing Activities                             (53,967)      (63,677)
                                                      -----------   -----------
Financing Activities:
  Proceeds from Notes Payable                             494,932       853,776
  Repayment of Notes Payable                             (166,123)     (831,545)
                                                      -----------   -----------
Net Cash-Financing Activities                             328,809        22,231
                                                      -----------   -----------

Net Increase/[Decrease] in Cash and Cash Equivalents   (1,402,108)      229,076
 Cash and Cash Equivalents - Beginning of Periods       1,823,009       299,030
                                                      -----------   -----------
Cash and Cash Equivalents - End of Periods            $   420,901   $   528,106
                                                      ===========   ===========

See accompanying notes to consolidated financial statements.


                                       6
<PAGE>

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

                                                           Six months ended
                                                           ----------------
                                                             December 31,
                                                             ------------
                                                           2000        1999
                                                           ----        ----

 Supplemental Disclosures of Cash Flow Information:
Cash paid during the periods for:
 Interest                                                $48,247     $93,012
 Income Taxes                                            $ 4,800     $ 5,160

See accompanying notes to consolidated financial statements.


                                       7
<PAGE>

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

[1] Business

Effective  January 5, 2001 the Company amended its corporate charter and changed
its name to "Integrated  Health  Technologies,  Inc. and began trading using the
NASDAQ  symbol  IHTC for its common  stock and the symbol  IHTCW for its Class A
redeemable warrants.

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 million dollars on
hand for shipment in the third quarter of fiscal 2001. The Company believes that
anticipated  sales coupled with the purchase  orders and the remaining  balances
available  under  the  revolving  lines 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.  Inter-company  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 six months ended  December 31, 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:

Buildings and 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 $169,503 and $161,682 for the six months ended December 31, 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.


                                       8
<PAGE>

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

[3] Summary of Significant Accounting Policies (Continued)

Revenue Recognition - The Company recognizes manufacturing revenue upon shipment
of the product and service revenue when services are rendered.

Advertising - Costs  incurred for producing and  communicating  advertising  are
expensed when incurred.  Advertising expense was $65,999 and $52,278 for the six
months ended December 31, 2000 and 1999 respectively.

[4] Inventories

Inventories consist of the following at December 31, 2000:

Raw Materials                                                         $2,481,019
Work-in-Process                                                        1,189,030
Finished Goods                                                           641,490
                                                                      ----------

Total                                                                 $4,311,539
                                                                      ==========

[5] Property and Equipment

Property and equipment comprise the following at December 31, 2000:

Land and Building                                                     $1,250,000
Leasehold Improvements                                                 1,157,960
Machinery and Equipment                                                2,602,189
Machinery and Equipment Under Capital Leases                             156,561
Transportation Equipment                                                  60,569
                                                                      ----------
Total                                                                  5,227,279
Less: Accumulated Depreciation and Amortization                        2,725,768
                                                                      ----------

Total                                                                 $2,501,511
                                                                      ==========

[6] Notes Payable

Notes Payable:
   Bio Merieux Vitek, Inc. (a)                                        $   28,267
   Medallion Business Credit, LLC (b)                                    598,610
   Summit Business Capital Corp. (c)                                     265,331
   Merchant Financial Corporation (d)                                      9,764
                                                                      ----------

  Totals                                                                 901,972
  Less: Current Portion                                                  892,077
                                                                      ----------

Non-current Portion                                                   $    9,895
                                                                      ==========

(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,


                                       9
<PAGE>

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

[6] Notes Payable (Continued)

     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 December 31, 2000 the interest rate was 12.5%.

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

(d)  Under the terms of a revolving  credit note which  expires on December  21,
     2002, the Company may borrow up to $1,000,000 at 4% above the prime lending
     rate.  The  loan  is  collateralized  by  the  inventory,  receivables  and
     equipment of IHT Health Products,  Inc. a subsidiary of Chem International,
     Inc. The note has been  guaranteed by the Company's  principal  stockholder
     and by the Corporate Guarantee of Chem International,  Inc. At December 31,
     2000 the interest rate was 13.5%.

The loan agreements with Medallion  Business Credit,  LLC and Merchant Financial
Corporation  contain certain financial  covenants relating to the maintenance of
specified  liquidity,  and tangible net worth.  At December 31, 2000 the Company
was in compliance with its tangible net worth and working capital covenants.

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

December 31,
------------
   2001                                      $892,077
   2002                                         9,895
   2003                                            --
   2004                                            --
   2005                                            --
                                             --------

Totals                                       $901,972
                                             ========

[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
December  31, 2000 had a cost of $156,561  accumulated  depreciation  of $76,327
with a net book value of $80,234.

The future minimum lease payments under capital leases and the net present value
of the future minimum lease payments at December 31, 2000 are as follows:

Total Minimum Lease Payments                $ 151,916
Amount Representing Interest                  (96,971)
                                            ---------

Present Value of Net Minimum Lease Payment     54,945
Current Portion                               (24,553)
                                            ---------

   Long-Term Capital Lease Obligation       $  30,392
                                            =========

[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 December 31, 2000 the
Company's uninsured cash balances totaled  approximately  $360,000.  The Company
does not require collateral in relation to cash credit risk.


                                       10
<PAGE>

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

[8] Significant Risks and Uncertainties (Continued)

[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 December 31, 2000 is $110,389.

[9] Major Customer

For the six months ended December 31, 2000 and 1999,  approximately  69% and 57%
of revenues were derived from one customer. The loss of this customer would have
an adverse effect on the Company's operations.  In addition,  for the six months
ended  December 31, 2000 and 1999,  an aggregate of  approximately  13% and 16%,
respectively,  of  revenues  were  derived  from two other  customers;  no other
customers  accounted for more than 10% of consolidated  sales for the six months
ended  December  31, 2000 and 1999.  Accounts  receivable  from these  customers
comprised approximately 46% and 47% of total accounts receivable at December 31,
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 expired on December 31, 2000,
provided for a minimum  annual rental of $60,000 plus payment of all real estate
taxes.  Rent and real estate tax expense for the six months  ended  December 31,
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.  December 31,
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
six months  ended  December  31,  2000 and 1999 on this lease was  approximately
$221,000 and $227,000 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.


                                       11
<PAGE>

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

[10] Commitments and Contingencies (Continued)

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

                                                         Related
                                           Lease       Party Lease
December 31 ,                            Commitment     Commitment        Total
-------------                            ----------     ----------        -----

   2001                                   $ 66,022     $  323,559     $  389,581
   2002                                     41,277        323,559        364,836
   2003                                     12,289        323,559        335,848
   2004                                         --        323,559        323,559
   2005                                         --        323,559        323,559
   Thereafter                                   --      3,019,886      3,019,886
                                          --------     ----------     ----------
   Total                                  $119,588     $4,637,681     $4,757,269
                                          ========     ==========     ==========

Total rent expense,  including real estate taxes and  maintenance  charges,  was
approximately  $245,000 and $250,000 for the six and three months ended December
31, 2000 and 1999,  respectively.  Rent expense is stated net of sublease income
of  approximately  $2,200 and $2,900 for the six months ended  December 31, 2000
and 1999, respectively.

[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 December 31, 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, 2001.

[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.


                                       12
<PAGE>

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

[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 six months ended  December 31, 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.

[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 has adopted SFAS No. 133 in the fiscal
year  ending  June  30,  2001,  and it does not 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.

On December 19, 2000, the Company granted 497,333  incentive stock options for a
term of ten years  commencing on December 19, 2000 to its officers and employees
at the exercise  price of $.75 per share and 120,480  stock  options at $.83 per
share for a term of five years commencing on December 19, 2000.

[D]  Non-Statutory  Stock  Options-On  December  19, 2000,  the Company  granted
171,667 non-statutory stock options to officers,  directors,  and members of its
Scientific  Advisory Board at the exercise price of $.75 for a term of ten years
commencing on December 19, 2000 and 179,520  non-statutory stock options at $.83
for a term of five years commencing on December 19, 2000.


                                       13
<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.

Six months ended December 31, 2000 Compared to the six months ended December 31,
1999

Results of Operations

The  Company's  net losses for the six months  ended  December 31, 2000 and 1999
were  $(947,482)  and  $(436,229).  This  increase in net loss of  approximately
$500,000 is  primarily  the result of a $1,000,000  increase in  operating  loss
resulting  from a  corresponding  decrease  in  gross  profit  of  approximately
$800,000 and an  approximate  $400,000  increase in federal income tax benefits.
The decrease in gross profit is due to decreased sales.

Sales for the six months ended  December 31, 2000 and 1999 were  $5,492,089  and
$8,374,030, respectively, a decrease of approximately $3,000,000 or 34%. For the
six months ended  December 31, 2000 the Company had sales to one  customer,  who
accounted  for 69% of net  sales  in  2000  and 57% in  1999.  The  loss of this
customer would have an adverse affect on the Company's operations.

Retail and mail order sales for the six months  ended  December 31, 2000 totaled
$252,202 as compared to $331,611 for the six months  ended  December 31, 2000, a
decrease of 24%. The Company has been experiencing a decline in mail order sales
due to  increased  competition  and has decided to close the retail store in the
coming quarter.

Sales under the Roche Vitamins,  Inc. distribution agreement were $1,134,609 for
the six months  ended  December 31, 2000 as compared to  $1,188,092  for the six
months ended December 31, 1999, a decrease of $53,483 or 5%.

On July 1, 2000, the Company began offering solid dosage product development and
technical  services  through  its  subsidiary,  Integrated  Health  Ideas,  Inc.
Consulting revenues for the six months ended December 31, 2000 totaled $207,532.

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 four
months ended December 31, 2000 totaled $1,148,185.

Cost of sales decreased to $5,132,648 for the six months ended December 31, 2000
as compared to $7,181,056  for the six months ended  December 31, 1999.  Cost of
sales  increased  as a  percentage  of  sales  to 93% for the six  months  ended
December  31, 2000 from 86% for the six months  ended  December  31,  1999.  The
increase  in cost of  sales is due to  manufacturing  inefficiencies  and  lower
margin sales.

Selling and  administrative  expenses for the six months ended December 31, 2000
were $1,732,836  versus  $1,507,564 for the same period a year ago. The increase
of $225,272 was primarily  attributable  to an increase in officers  salaries of
$28,081,  an increase in insurance  expense of $24,335,  an increase in employee
benefits of $18,598,  a decrease in consulting fees of $197,036,  an increase in
travel and  entertainment  of $106,318  and an  increase  in office  salaries of
$131,526 due to the commencement of the IHT Health Products,  Inc.  distribution
business.

Other income [expense] was $20,198 for the six months ended December 31, 2000 as
compared to $(107,505)  for the six months ended December 31, 1999. The decrease
of  $127,703 is the result of a decrease  in  interest  expense of  $61,009,  an
increase  in  interest  and  investment  income of  $16,694,  and an increase in
administrative fee income of $50,000.


                                       14
<PAGE>

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

Three months ended December 31, 2000 Compared to the three months ended December
31, 1999

Results of Operations

The Company's  net losses for the three months ended  December 31, 2000 and 1999
were  $(620,596)  and  $(95,587),  respectively.  This  increase  in net loss of
approximately  $(525,000)  is  primarily  the result of a decrease in  operating
income of $850,000 due to a decrease in gross profit of approximately  $600,000,
an approximate $250,000 increase in selling and administrative  expenses, and an
approximate $250,000 increase in federal income tax benefits.

Sales for the three months ended December 31, 2000 and 1999 were  $3,063,629 and
$4,941,907  respectively,  a decrease of $1,878,278 or 38%. For the three months
ended  December 31, 2000 the Company had sales to one customer who accounted for
43% of net sales in 2000 and 54% in 1999.

Retail and mail order sales for the three months ended December 31, 2000 totaled
$115,334 as compared to $155,200 for the three months ended December 31, 1999, a
decrease of $39,866 or 26% due to increased competition.

Sales under the Roche Vitamins, Inc. distribution agreement totaled $601,984 for
the three months  ended  December 31, 2000 as compared to $600,581 for the three
months ended December 31, 1999, an increase of $1,403.

Sales through its IHT Health Products,  Inc. subsidiary totaled $690,787 for the
three months ended December 31, 2000,  and sales through its  Integrated  Health
Ideas, Inc. subsidiary totaled $96,596.

Cost of sales  decreased to $2,906,997  for the three months ended  December 31,
2000 as compared to  $4,164,588  for the three months  ended  December 31, 1999.
Cost of sales  increased as a percentage  of sales to 95% as compared to 84% for
the three months ended  December 31, 1999.  The increase in cost of sales is due
to manufacturing inefficiencies.

Selling and administrative expenses for the three months ended December 31, 2000
were  $1,010,216 as compared to $766,798 for the three months ended December 31,
1999.  The increase of $243,418  was  primarily  attributable  to an increase in
advertising of $11,920,  an increase in officer salaries of $56,110, an increase
in travel and  entertainment  of $51,331,  an increase in  insurance  expense of
$24,335,  a decrease  in  consulting  fees of $95,249  and an increase in office
salaries of $97,374 due to the  commencement  of the IHT Health  Products,  Inc.
distribution business.

Other income  [expense] was $24,153 for the three months ended December 31, 2000
as compared to  $(71,528)  for the three months  ended  December  31, 1999.  The
decrease of $95,681 is the result of a decrease in interest  expense of $45,094,
an increase in investment income of $587 and an increase in  administrative  fee
income of $50,000.

Liquidity and Capital Resources

At December 31, 2000 the Company's working capital was $4,087,888, a decrease of
$1,371,895 over working capital at June 30, 2000. Cash and cash equivalents were
$420,901 at December 31, 2000, a decrease of $1,402,108  from June 30, 2000. The
Company  utilized  $1,676,950  and provided  $270,522 for operations for the six
months ended December 31, 2000 and 1999, respectively.

The primary reasons for the increase in cash utilized for operations for the six
months ended December 31, 2000 are an increase in  inventories of  approximately
$1,075,000 and an increase in accounts  payable of approximately  $700,000.  The
Company  currently has purchase  orders of  approximately  $2 million dollars on
hand for shipment in the third quarter of fiscal 2001. The Company believes that
anticipated  sales coupled with the purchase  orders and the remaining  balances
available  under the two revolving  lines of credit will meet the cash needs for
operations.


                                       15
<PAGE>

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

Liquidity and Capital Resources-Continued

The Company  utilized  $53,967 and $63,677 in investing  activities  for the six
months ended December 31, 2000 and 1999, respectively. The Company generated net
cash of $328,809 and $22,231 from debt  financing  activities for the six months
ended December 31, 2000 and 1999, respectively.

The Company has two revolving  lines of credit.  One of the lines provides for 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 December 31, 2000
the balance due under the revolving line of credit was $598,610. The second line
of credit also  provided for a  $1,000,000  revolving  line of credit  agreement
which bears interest at 4% above the prime interest rate and expires on December
21, 2002. At December 31, 2000 the balance due under the second line was $9,764.

The  Company's  total annual  commitment  at December 31, 2000 for the next five
years  of  $1,737,383   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 years ending June 30, 2001 and 2002.


                                       16
<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


                                       17
<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:   February 9, 2001                By:/s/ Seymour Flug
                                           -------------------------------------
                                           Seymour Flug,
                                           President and Chief Executive Officer


Date:   February 9, 2001                By:/s/ Eric Friedman
                                           -------------------------------------
                                           Eric Friedman,
                                           Chief Financial Officer


                                       18