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, 1999        Commission File Number 000-28876

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

             Delaware                                            13-3035216
  (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 of 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 November 8, 1999
       -----                                 ----------------------------------
Common Stock, Par Value                                5,178,300



<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, 1999 [Unaudited] ......    1 ... 2

         Consolidated Statements of Operations for the three months
         ended September 30, 1999 and 1998 [Unaudited] ........................    3

         Consolidated Statement of Stockholders' Equity for the
         three months ended September 30, 1999 [Unaudited] ....................    4

         Consolidated Statements of Cash Flows for three months ended
         September 30, 1999 and 1998 [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, 1999.
[UNAUDITED]
--------------------------------------------------------------------------------

Assets:
Current Assets:
   Cash and Cash Equivalents                                          $  255,302
   Accounts Receivable - Net                                           1,292,061
   Deferred Income Taxes                                                 262,000
   Inventories                                                         3,212,740
   Prepaid Expenses and Other Current Assets                             157,941
   Refundable Federal Income Taxes                                        47,966
                                                                      ----------
   Total Current Assets                                                5,228,010
                                                                      ----------
Property and Equipment - Net                                           1,468,565
                                                                      ----------
Other Assets:
   Security Deposits and Other Assets                                    111,531
                                                                      ----------
   Total Assets                                                       $6,808,106
                                                                      ==========



The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.

                                       1


<PAGE>


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

CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1999.
[UNAUDITED]
--------------------------------------------------------------------------------


Liabilities and Stockholders' Equity:
Current Liabilities:
   Accounts Payable                                                 $ 1,957,948
   Notes Payable                                                        550,357
   Accrued Expenses and Other Current Liabilities                       389,052
   Accrued Expenses - Related Party                                      90,000
   Capital Lease Obligation                                              38,130
                                                                    -----------

   Total Current Liabilities                                          3,025,487
                                                                    -----------

Non-Current Liabilities:
   Notes Payable                                                        127,488
   Notes Payable - Related Party                                        716,856
   Capital Lease Obligation                                              20,425
                                                                    -----------

   Total Non-Current Liabilities                                        864,769
                                                                    -----------

Commitments and Contingencies [9]                                            --
                                                                    -----------
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, 5,178,300 Shares Issued and Outstanding           10,357

   Additional Paid-in Capital                                         4,847,405

   [Deficit]                                                         (1,939,912)
                                                                    -----------

   Total Stockholders' Equity                                         2,917,850
                                                                    -----------

   Total Liabilities and Stockholders' Equity                       $ 6,808,106
                                                                    ===========


The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.


                                       2


<PAGE>



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

CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
--------------------------------------------------------------------------------


                                                       Three months ended
                                                           September 30,
                                                     --------------------------
                                                        1999           1998
                                                     -----------    -----------

Sales                                                $ 3,432,123    $ 2,223,732

Cost of Sales                                          3,016,468      2,132,595
                                                     -----------    -----------

Gross Profit                                             415,655         91,137

Selling and Administrative Expenses                      740,766        682,940
                                                     -----------    -----------

Operating [Loss]                                        (325,111)      (591,803)
                                                     -----------    -----------

Other [Expense] Income:
Interest Expense- Related Party                          (18,807)       (18,807)
Interest Expense                                         (17,300)       (12,543)
Interest and Investment Income                               130            217
                                                     -----------    -----------

Total Other [Expense]                                    (35,977)       (31,133)
                                                     -----------    -----------

[Loss] Before Income Taxes                              (361,088)      (622,936)

Federal and State Income Tax Expense [Benefit]           (20,446)      (200,185)
                                                     -----------    -----------

Net [Loss]                                           $  (340,642)   $  (422,751)
                                                     ===========    ===========

Net [Loss] Per Common  Share
Basic and Diluted                                    $      (.07)   $      (.08)
                                                     ===========    ===========

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


The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.


                                       3


<PAGE>


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

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1999
[UNAUDITED]
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                             Additional     Retained          Total
                                            Common Stock         Preferred    Paid in       Earnings/     Stockholders'
                                          Shares      Par Value    Stock     Capital        (Deficit)        Equity
                                       -----------   -----------   ------   -----------    -----------    -----------
<S>                                      <C>         <C>           <C>      <C>            <C>            <C>
Balance - July 1, 1999                   5,178,300   $    10,357   $   --    $ 4,847,405    $(1,599,270)   $ 3,258,492

Net  [Loss]  for  the  three  months
ended September 30, 1999
                                                --            --       --            --       (340,642)      (340,642)
                                       -----------   -----------   ------   -----------    -----------    -----------
Balance - September 30, 1999             5,178,300   $    10,357   $   --   $ 4,847,405    $(1,939,912)   $ 2,917,850
                                       ===========   ===========   ======   ===========    ===========    ===========
</TABLE>


The Accompanying Notes are an Integral Part of These Financial Statements.




                                       4


<PAGE>


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

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

                                                         Three months ended
                                                            September 30,
                                                     --------------------------
                                                        1999           1998
                                                     -----------    -----------
Operating Activities:
   Net [Loss]                                        $  (340,642)   $  (422,751)
                                                     -----------    -----------
   Adjustments to Reconcile Net [Loss] to Net Cash
      [Used for] Operating Activities:
      Depreciation and Amortization                       78,995         96,451
      Amortization of Discount on Note Payable             5,682          5,682
      Deferred Income Taxes                              (18,000)       (18,000)
      Bad Debt Expense                                     6,000          2,500
Changes in Assets and Liabilities:
   [Increase] Decrease in:
      Accounts Receivable                                705,159      1,709,557
      Inventories                                        265,887       (225,710)
      Refundable Federal Income Taxes                     (6,321)      (200,000)
      Prepaid Expenses and Other Current Assets          (63,153)        24,784
      Security Deposits and Other Assets                  (5,648)        (2,060)
   [Decrease] Increase in:
      Accounts Payable                                  (696,863)    (1,587,938)
      Federal and State Income Taxes Payable                  --        (40,000)
      Accrued Expenses and Other Liabilities              57,362         68,698
                                                     -----------    -----------
Total Adjustments                                        329,100       (166,036)
                                                     -----------    -----------
Net Cash - Operating Activities                          (11,542)      (588,787)
                                                     -----------    -----------
Investing Activities:
   Purchase of Property and Equipment                     (9,292)       (82,280)
   Loans to Stockholders'                                 (2,827)       (14,101)
                                                     -----------    -----------
Net Cash-Investing Activities                            (12,119)       (96,381)
                                                     -----------    -----------
Financing Activities:
   Proceeds from Notes Payable                                --        520,000
   Repayment of Notes Payable                            (20,067)      (486,477)
                                                     -----------    -----------
   Net Cash-Financing Activities                         (20,067)        33,523
                                                     -----------    -----------
   Net [Decrease] in Cash and Cash Equivalents           (43,728)      (651,645)
Cash and Cash Equivalents - Beginning of Periods         299,030        956,403
                                                     -----------    -----------
Cash and Cash Equivalents - End of Periods           $   255,302    $   304,758
                                                     ===========    ===========


The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.


                                       5


<PAGE>


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

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

                                                           Three months ended
                                                              September 30,
                                                          1999            1998
                                                          ----            ----
Supplemental Disclosures of Cash Flow Information:
Cash paid during the periods for:
 Interest                                                $17,300         $25,593


 Income Taxes                                            $ 3,080         $50,425




The  Accompanying  Notes are an Integral  Part of These  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 customers  are located  primarily  throughout  the United
States and Europe.

[2] 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, 1999.  The results of  operations  for
the three months ended September 30, 1999 are not necessarily  indicative of the
results for the entire fiscal year ending June 30, 2000.

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

Inventories - The inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method.

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 $78,995 and $93,453 for the three  months ended  September  30, 1999
and 1998,  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.

Impairment  - Certain  long-term  assets of the  Company's  principal  operating
business  subsidiary are reviewed at least annually as to whether their carrying
value has become  impaired,  pursuant to guidance  established  in  Statement of
Financial  Accounting Standards ["SFAS"] No. 121, "Accounting for the Impairment
of Long-Lived  Assets and for Long-Lived  Assets to Be Disposed Of."  Management
considers  assets to be  impaired  if the  carrying  value  exceeds  the  future
projected cash flows from related operations  [undiscounted and without interest
charges].  If impairment is deemed to exist,  the assets will be written down to
fair value which  represents  the projected  discounted  cash flows from related
operations.   Management  also  re-evaluates  the  periods  of  amortization  to
determine whether subsequent events and circumstances  warrant revised estimates
of useful lives. As of September 30, 1999, management expects these assets to be
fully recoverable.


                                       7


<PAGE>


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


[2] Summary of Significant Accounting Policies (Continued)

Advertising - Costs  incurred for producing and  communicating  advertising  are
expensed  when  incurred.  Advertising  expense  was $37,376 and $89,334 for the
three months ended September 30, 1999 and 1998 respectively.

[3] Inventories

Inventories consist of the following at September 30, 1999:

Raw Materials                                                         $1,906,138
Work-in-Process                                                          523,888
Finished Goods                                                           782,714
                                                                      ----------
Total                                                                 $3,212,740
                                                                      ==========

[4] Property and Equipment

Property and equipment comprise the following at September 30, 1999:

Leasehold Improvements                                                $1,157,960
Machinery and Equipment                                                2,464,357
Machinery and Equipment Under Capital Leases                             109,545
Transportation Equipment                                                  32,152
                                                                      ----------
Total                                                                  3,764,014
Less: Accumulated Depreciation and Amortization                        2,295,449
                                                                      ----------
    Total                                                             $1,468,565
                                                                      ==========

[5] Notes Payable

Notes payable are summarized as follows at September 30, 1999:

                                                         Related Party
                                          Notes Payable  Notes Payable    Total
                                          -------------  -------------    -----
Notes Payable:
   Bio Merieux Vitek, Inc. (a)              $   47,512   $       --   $   47,512

   Chairman of the Board (b)                        --      716,856      716,856

   First Union National Bank:
      Revolving Line-of-Credit (c)             500,000           --      500,000

      Equipment Term Loan (d)                  130,333           --      130,333
                                            ----------   ----------   ----------
   Totals                                      677,845      716,856    1,394,701

   Less: Current Portion                       550,357           --      550,357
                                            ----------   ----------   ----------

      Noncurrent Portion                    $  127,488   $  716,856   $  844,344
                                            ==========   ==========   ==========


(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.


                                       8


<PAGE>


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

[5] Notes Payable (Continued)

(b) Three year  non-collateralized  7% promissory note for $750,000 with related
party providing for quarterly  payments of $13,125  representing  interest only.
The note matures on March 12, 2001. As additional consideration for the loan and
in the light of the below market  interest rate and  uncollateralized  nature of
the loan, the Corporation issued a Class C Warrant to purchase 150,000 shares of
common  stock at an  aggregate  purchase  price of $1.75 per share.  The note is
recorded net of $68,182, which represents the fair value of the Class C Warrant.
The  amortization at September 30, 1999 was $5,682 and is classified as interest
expense in the Company's financial statements.  The warrant is exercisable for a
four year period  commencing one year after the issuance of the note and expires
on March 12, 2003.

(c) Under the terms of a  revolving  line of credit  which  expires  on July 31,
2000,  the Company may borrow up to 500,000 at 1% above the bank's prime lending
rate. The loan is collateralized  by the assets of Manhattan Drug Company,  Inc.
The  loan  has  been  guaranteed  by the  Company's  principal  stockholder.  As
additional  collateral  the Chairman of the Board of the Company has granted the
bank a security  interest  in his  security  account  maintained  by First Union
Brokerage Services. At September 30, 1999 the interest rate was 9.25%.

(d) Under the terms of a five year  equipment  term loan,  which expires on June
30, 2003, the Company borrowed  $138,833 at 1.5% above the bank's prime interest
rate.  The term loan  provides for monthly  payments of $2,834 for principal and
monthly  payments  for  interest.  The loan is  collateralized  by the assets of
Manhattan  Drug  Company,  Inc. The loan has been  guaranteed  by the  Company's
principal stockholder. At September 30, 1999, the interest rate was 9.75%.

The loan  agreement with First Union  National Bank contains  certain  financial
covenants relating to the maintenance of specified liquidity, debt to equity and
debt coverage  ratios and requires  that the  Company's  president and principal
stockholder  maintain a minimum stock ownership  percentage of the Company.  The
Company was not in  compliance  with its debt coverage  ratio on a  consolidated
basis at September 30, 1999.

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


                                                  Related Party
September 30,                   Notes Payable      Notes Payable          Total
-------------                   -------------      -------------          -----
  2000                          $  550,397         $       --         $  550,397
  2001                              52,069            716,856            768,925
  2002                              47,086                 --             47,086
  2003                              28,333                 --             28,333
                                ----------         ----------         ----------
Totals                          $  677,885         $  716,856         $1,394,701
                                ==========         ==========         ==========


[6] Capital Lease

The Company  acquired  equipment under the provision of a long-term  lease.  The
lease  expires  in March  2001.  The  equipment  under the  capital  lease as of
September 30, 1999 had a cost of $109,545  accumulated  depreciation  of $47,512
with a net book value of $62,033.




                                       9


<PAGE>


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

[6] Capital Lease (Continued)

The future minimum lease payments under capital leases and the net present value
of the future minimum lease payments at September 30, 1999 are as follows:

Total Minimum Lease Payments                                          $ 104,900
Amount Representing Interest                                            (46,345)
                                                                      ---------

Present Value of Net Minimum Lease Payment                               58,555
Current Portion                                                         (38,130)
                                                                      ---------
   Long-Term Capital Lease Obligation                                 $  20,425
                                                                      =========

[7] 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, 1999 the
Company's uninsured cash balances totaled  approximately  $315,000.  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, 1999 is $356,750.

[8] Major Customer

For the three months ended  September 30, 1999 and 1998,  approximately  61% and
44% 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 three
months ended September 30, 1999 and 1998, an aggregate of  approximately  4% and
19%, respectively,  of revenues were derived from two other customers;  no other
customers accounted for more than 10% of consolidated sales for the three months
ended  September 30, 1999 and 1998.  Accounts  receivable  from these  customers
comprised  approximately  47% and 67% of total accounts  receivable at September
30, 1999 and 1998, respectively.

[9] Commitments and Contingencies

[A] Leases

Related Party Leases - Certain  manufacturing  and office  facilities are leased
from Gerob Realty  Partnership  ["Gerob"] whose partners are stockholders of the
Company.  The lease, which expires on December 31, 1999,  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, 1999 and 1998 on
this lease was approximately $26,000 and $20,000,  respectively.  Unpaid rent of
$90,000 due to Gerob at  September  30, 1999 has been  separately  disclosed  as
accrued expenses on the consolidated balance sheet.

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 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.  Rent expense for the three months ended September
30,  1999  and 1998 on this  lease  was  approximately  $116,000  and  $117,000,
respectively.




                                       10


<PAGE>


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

[9] Commitments and Contingencies (Continued)

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 2001.

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

                                                        Related
                                       Lease          Party Lease
September 30,                         Commitment       Commitment        Total
-------------                         ----------       ----------        -----
  2000                                $ 35,505         $259,500         $295,005
  2001                                  28,072          346,000          374,072
  2002                                  19,553          182,609          202,162
  2003                                      --               --               --
  2004                                      --               --               --
Thereafter                                  --               --               --
                                      --------         --------         --------
Total                                 $ 83,130         $788,109         $871,239
                                      ========         ========         ========

Total rent expense,  including real estate taxes and  maintenance  charges,  was
approximately  $141,000 and $137,000  for the three months ended  September  30,
1999 and 1998,  respectively.  Rent expense is stated net of sublease  income of
approximately  $1,300 and $4,000 for the three months ended  September  30, 1999
and 1998, 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 $485,000 for the year ending June 30, 2000 and
$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, 1999.

[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.

The Company is a participant  in a Class Action  Lawsuit  against  several major
bulk vitamin  material  suppliers.  The suit seeks to recover damages  resulting
from price fixing  charges  filled  against the  suppliers by the United  States
Government.  There are  approximately  1,000 corporate buyers that are involved.
The Company is unable to predict the ultimate financial recovery.

[F]  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.


                                       11


<PAGE>


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

[9] Commitments and Contingencies (Continued)

[G]  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.

[10] Related Party Transactions

During the year ended June 30,  1997,  the  Company  entered  into a  consulting
agreement with the brother of the Company's  president on a month to month basis
for $1,100 per month.  The total  consulting  expense  recorded  per this verbal
agreement  for the nine moths ended  September 30, 1999 and 1998, by the Company
was $3,300 and $3,300, respectively.

[11] 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.

[12] 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.

[13] Year 2000 Issue

The Company has spent approximately $55,000 through September 30, 1999 to modify
its computer  information  systems  enabling  proper  processing of transactions
relating  to the year 2000  ("Y2K")  and  beyond.  The  Company  installed a new
network  system in  October  of 1998 at a cost of  approximately  $20,000  whose
hardware and software is Y2K compliant. The Company has also spent approximately
$35,000 to provide the  necessary  upgrades and  modifications  to the Company's
existing  manufacturing  program  to insure  Y2K  compliance.  The new  software
program is installed and running.  The Company's suppliers and venders have been
contacted,  and most have responded with there intent to be Y2K compliant by the
year 2000. At this time,  the Company  believes based on their  responses,  that
there will be no disruption of their business.


                                       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,  1999  Compared to the Three  months  ended
September 30, 1998

Results of Operations

The Company's net losses for the three months ended  September 30, 1999 and 1998
were  $(340,642)  and  $(422,751),  respectively.  This  decrease in net loss of
approximately  $80,000  is  primarily  the  result  of a  $270,000  decrease  in
operating  loss  resulting  from a  corresponding  increase  in gross  profit of
approximately  $325,000  and a decrease  in the  federal  income tax  benefit of
approximately  $180,000.  The increase in gross profit is due to increased sales
and better manufacturing efficiencies.

Sales for the three months ended September 30, 1999 and 1998 were $3,432,123 and
$2,223,732,  respectively,  an increase of approximately  $1,200,000 or 54%. For
the  three  months  ended  September  30,  1999,  the  Company  had sales to one
customer,  who accounted for 61% of net sales in 1999 and 44% in 1998.  The loss
of this customer would have an adverse affect on the Company's operations.

Retail and mail order sales for the first  quarter of 1999  totaled  $176,411 as
compared  to $198,119  for the first  quarter of 1998,  a decrease  of 11%.  The
Company has been  experiencing  a decline in mail order  sales due to  increased
competition.

On February 17, 1997,  the Company  signed a  distribution  agreement with Roche
Vitamins,  Inc. to service  and supply  Roche  products  to a select  segment of
Roche's food, nutrition and cosmetic accounts. The agreement has initial term of
two years and shall be renewable for an additional  term of one year.  Sales for
the quarter  ended  September 30, 1999 were $587,511 as compared to $310,021 for
the quarter ended September 29, 1998, an increase of of 90%.

Cost of sales  increased to $3,016,468 for the first quarter of 1999 as compared
to  $2,132,595  for the first  quarter  of 1998.  Cost of sales  decreased  as a
percentage  of sales to 88% for the first quarter of 1999 from 96% for the first
quarter of 1998.  The decrease in cost of sales is due to greater  manufacturing
efficiencies and higher margin sales.

Selling and  administrative  expenses for three months ended  September 30, 1999
were  $740,766  versus  $682,940 for the same period a year ago. The increase of
$57,826 was primarily  attributable to a decrease in advertising of $51,958,  an
increase in office  salaries of $16,193  and an increase in  consulting  fees of
$99,898 due to the hiring of an  independent  sales and  marketing  firm to help
launch a new private label line.

Other income  [expense]  was $(35,977) for the first quarter of 1999 as compared
to $(31,133) for the first  quarter of 1998.  This increase in expense of $4,844
is primarily the result of an increase in interest expense of $4,757.

Liquidity and Capital Resources

At September 30, 1999,the Company's working capital was $2,202,523 a decrease of
$294,938 over working capital at June 30, 1999. Cash and cash  equivalents  were
$255,302 at September  30, 1999 a decrease of $43,728  from June 30,  1999.  The
company  utilized $11,542 and $588,787 for operations for the three months ended
September 30, 1999 and 1998, respectively.  The primary reasons for the decrease
in cash  utilized for  operations  are (a) a decrease in accounts  receivable of
approximately  $700,000, (b) a decrease in inventories of approximately $265,000
and (c) a decrease in accounts  payable of approximately  $700,000.  The Company
believes that the  anticipated  sales for the second quarter of fiscal 2000 will
meet the cash needs for operation in the next nine months. The Company has drawn
down its entire line of credit and  consequently  will be looking for additional
sources of financing to meet liquidity needs.



                                       13


<PAGE>


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

Liquidity and Capital Resources (Continued)

The Company utilized  $12,119 and $96,381 in investing  activities for the three
months ended  September 30, 1999 and 1998,  respectively.  The Company  utilized
$20,067 and  generated  net cash of $33,523 from  financing  activities  for the
three months ended September 30, 1999 and 1998, respectively.

The Company has a $500,000  revolving line of credit agreement with a bank which
bears  interest at 1.0% above the bank's prime  lending rate and expires on July
31, 2000.  At  September  30, 1999 the balance due under the  revolving  line of
credit was $500,000. The Company has additionally secured an equipment term loan
with  interest at 1.5% above the bank's prime lending rate. At the September 30,
1999 the balance due under the equipment loan was $130,333.

The  Company's  total annual  commitment at September 30, 1999 for the next five
years  of  $1,394,701   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 $485,000  for the year  ending  June 30, 2000 and  $495,000  for the
years ending June 30, 2001 and 2002.

Recent Developments

On  September  23, 1999 the Company was notified by the Nasdaq  SmallCap  Market
that its shares of common  stock have  failed to maintain a minimum bid price of
greater  than or equal to  $1.00  per  share  over the last  thirty  consecutive
trading days, as required under Marketplace Rule 4310(c)(4).

The Company has ninety (90) calendar  days, or until December 23, 1999 to regain
compliance with this Rule. If at anytime before December 23, 1999, the bid price
of a share of the Company's Common Stock is equal to or greater than $1.00 for a
minimum of ten  consecutive  trading days,  Nasdaq will  determine if compliance
with the bid price  deficiency  has been  achieved.  If the Company is unable to
demonstrate  compliance  with this  requirement  before  December 23, 1999,  its
securities will be delisted at the opening of business on December 27, 1999.

Impact of Inflation

The Company  does not believe  that  inflation  has  significantly  affected its
results of operations.


                                       14


<PAGE>


Part II: Other Information

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


Item1:            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, 1999              By: /s/ Seymour Flug
                                          ----------------------------
                                          Seymour Flug,
                                          President and Chief Executive Officer

Date:   November 8, 1999              By: /s/ Eric Friedman
                                          ----------------------------
                                          Eric Friedman,
                                          Chief Financial Officer