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 March 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 executive offices)                         (Zip code)

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

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

                                  Yes _X_   No ____

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

         Class                                     Outstanding as of May 8, 2000
   -----------------                               -----------------------------
Common Stock, Par Value                                     5,152,500



<PAGE>

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

INDEX
--------------------------------------------------------------------------------


Part I: Financial Information

Item 1: Consolidated Financial Statements

     Independent Accountants' Review Report ........................... 1

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

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

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

     Consolidated Statements of Cash Flows for nine months ended
     March 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   balance   sheets  of  Chem
International,  Inc.  and  Subsidiaries  as of March 31,  2000,  and the related
condensed  statements of  operations  for the three months and nine months ended
March 31, 2000, and condensed  statements of cash flows for the three months and
nine  months  ended  March  31,  2000.   These  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  financial  statements for them to be in conformity
with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the balance sheet as of June 30, 1999, and the related statements of
operations,  stockholders'  equity,  and cash flows for the year then ended (not
presented  herein);  and in our report dated  August 31,  1999,  we expressed an
unqualified  opinion  on  those  financial  statements.   In  our  opinion,  the
information set forth in the  accompanying  condensed  balance sheet as of March
31, 2000, is fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.





     AMPER, POLITZINER & MATTIA P.A.

     May 8, 2000

     Edison, New Jersey



<PAGE>

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

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

Assets:
Current Assets:
   Cash and Cash Equivalents                                         $ 2,209,992
   Accounts Receivable - Net                                           1,677,266
   Deferred Income Taxes                                                 182,000
   Inventories                                                         4,638,519
   Prepaid Expenses and Other Current Assets                             176,220
   Refundable Federal Income Taxes                                         6,352
                                                                     -----------

   Total Current Assets                                                8,890,349
                                                                     -----------

Property and Equipment - Net                                           1,408,767
                                                                     -----------

Other Assets:
   Security Deposits and Other Assets                                    101,094
                                                                     -----------

   Total Assets                                                      $10,400,210
                                                                     ===========


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

                                       2

<PAGE>

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

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

Liabilities and Stockholders' Equity:
Current Liabilities:
   Accounts Payable                                                  $ 2,526,927
   Notes Payable                                                         532,560
   Accrued Expenses and Other Current Liabilities                        261,382
   Accrued Expenses - Related Party                                      115,000
   Capital Lease Obligations                                              44,281
                                                                     -----------

   Total Current Liabilities                                           3,480,150
                                                                     -----------

Non-Current Liabilities:
   Notes Payable                                                          20,834
   Capital Lease Obligations                                              20,165
                                                                     -----------

   Total Non-Current Liabilities                                          40,999
                                                                     -----------

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

   Retained Earnings                                                  2 ,021,299
                                                                     -----------

   Total Stockholders' Equity                                          6,879,061
                                                                     -----------

   Total Liabilities and Stockholders' Equity                        $10,400,210
                                                                     ===========

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

                                       3

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                Three months ended                    Nine months ended
                                                  March 31, 2000                        March 31, 2000

                                             1999               2000               1999                2000
                                         ------------       ------------       ------------       ------------
<S>                                      <C>                <C>                <C>                <C>
Sales                                    $  2,930,006       $  6,676,871       $  7,993,500       $ 15,050,901

Cost of Sales                               2,772,837          5,669,622          7,683,041         12,850,678
                                         ------------       ------------       ------------       ------------

Gross Profit                                  157,169          1,007,249            310,459          2,200,223

Selling and Administrative Expenses           615,287            842,419          2,299,586          2,349,983
                                         ------------       ------------       ------------       ------------

Operating Income [Loss]                      (458,118)           164,830         (1,989,127)          (149,760)
                                         ------------       ------------       ------------       ------------

Other Income [Expense]:
Gain on Sale of Fixed Assets                       --              6,344                 --              6,344
Interest Expense- Related Party               (18,806)           (36,212)           (56,420)           (73,826)
Interest Expense                              (16,780)           (30,050)           (45,185)          (101,692)
Gain on Settlement of Lawsuit                      --          5,352,271                 --          5,352,271
Interest and Investment Income                    119             15,842                467             17,593
                                         ------------       ------------       ------------       ------------

Total Other [Expense] Income-Net              (35,467)         5,308,195           (101,138)         5,200,690
                                         ------------       ------------       ------------       ------------


Income [Loss] Before Income Taxes            (493,585)         5,473,025         (2,090,265)         5,050,930

Federal and State Income
Tax Expense [Benefit]                         (14,683)         1,416,227           (230,462)         1,430,361
                                         ------------       ------------       ------------       ------------

Net Income [Loss]                        $   (478,902)      $  4,056,798       $ (1,859,803)      $  3,620,569
                                         ============       ============       ============       ============

Net Income [Loss] Per
Common Share:

Basic                                    $       (.09)      $        .78       $       (.36)      $        .70
                                         ============       ============       ============       ============

Diluted                                  $       (.09)      $        .66       $       (.36)      $        .66
                                         ============       ============       ============       ============

Weighted Average Common
Shares Outstanding                          5,178,300          5,178,300          5,178,300          5,178,300
                                         ------------       ------------       ------------       ------------

Dilutive Potential Common Shares:
Warrants and Options                               --          3,985,175                 --          3,985,175
                                         ------------       ------------       ------------       ------------

Adjusted Weigthted Average
Common Shares                               5,178,300          9,163,475          5,178,300          9,163,475
                                         ============       ============       ============       ============

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.
</TABLE>

                                       4

<PAGE>

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

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS
ENDED MARCH 31, 2000.
[UNAUDITED]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                        Common Stock                                Additional        Retained             Total
                                ---------------------------        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 Income for the nine months
ended March 31, 2000                    --               --                 --               --        3,620,569         3,620,569
                                ----------      -----------      -------------      -----------      -----------       -----------

Balance -March 31, 2000          5,178,300      $    10,357      $          --      $ 4,847,405      $ 2,021,299       $ 6,879,061
                                ==========      ===========      =============      ===========      ===========       ===========

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.
</TABLE>

                                       5

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                        Nine months ended
                                                                             March 31,
                                                                  -------------------------------
                                                                    2 0 0 0             1 9 9 9
                                                                  -----------         -----------
<S>                                                               <C>                 <C>
Operating Activities:
   Net Income [Loss]                                              $ 3,620,569         $(1,859,803)
                                                                  -----------         -----------
   Adjustments to Reconcile Net  Income [Loss] to Net Cash
      Provided by [Used for] Operating Activities:
      Depreciation and Amortization                                   250,173             302,084
      Amortization of Discount on Note Payable                         38,826              17,045
      Deferred Income Taxes                                            62,000             (52,000)
      Writeoff of Goodwill                                                 --             275,891
      Bad Debt Expense                                                 31,184               7,500

Changes in Assets and Liabilities:
   [Increase] Decrease in:
      Accounts Receivable                                             294,770           1,271,004
      Inventories                                                  (1,159,892)           (313,952)
      Refundable Federal Income Taxes                                  35,293            (196,645)
      Prepaid Expenses and Other Current Assets                       (81,432)            (24,325)
      Security Deposits and Other Assets                               (2,749)             (3,433)

   [Decrease] Increase in:
      Accounts Payable                                              1,372,116            (321,216)
      Federal and State Income Taxes Payable                          162,257             (40,000)
       Accrued Expenses and Other Liabilities                        (207,565)            224,007
                                                                  -----------         -----------
Total Adjustments                                                     794,981           1,145,960
                                                                  -----------         -----------
Net Cash - Operating Activities                                     4,415,550            (713,843)
                                                                  -----------         -----------

 Investing Activities:
   Purchase of Property and Equipment                                (120,672)           (224,184)
   Loans to Stockholders'                                               4,711             (27,033)
                                                                  -----------         -----------
Net Cash-Investing Activities                                        (115,961)           (251,217)
                                                                  -----------         -----------

Financing Activities:
   Proceeds from Notes Payable                                        901,972             670,000
   Repayment of Notes Payable                                      (3,290,599)           (527,237)
                                                                  -----------         -----------
   Net Cash-Financing Activities                                   (2,388,627)            142,763
                                                                  -----------         -----------
Net Increase/[Decrease] in Cash and Cash Equivalents                1,910,962            (822,297)
Cash and Cash Equivalents - Beginning of Periods                      299,030             956,403
                                                                  -----------         -----------
   Cash and Cash Equivalents - End of Periods                     $ 2,209,992         $   134,106
                                                                  ===========         ===========

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.
</TABLE>

                                       6

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                           Nine  months ended
                                                                                March 31,
                                                                        2 0 0 0         1 9 9 9
                                                                      ----------      ----------
<S>                                                                   <C>             <C>
Supplemental Disclosures of Cash Flow Information:
  Cash paid during the periods for:
   Interest                                                           $  157,693      $   71,435
   Income Taxes                                                       $1,205,160      $   51,067


Supplemental Schedule of Investing and Financial Activities:
  Note payable issued in payment of accounts payable, trade           $1,500,000
  Proceeds from lawsuit used in payment of note payable               $1,333,333
</TABLE>


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

                                       7

<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 nine  months  ended  March 31, 2000 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  $250,173  and $296,091 for the nine months ended March 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.

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


                                       8

<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 $149,680 and $232,917 for the
nine months ended March 31, 2000 and 1999 respectively.

[3] Inventories

Inventories consist of the following at March 31, 2000:

Raw Materials                                                         $2,628,849
Work-in-Process                                                        1,178,412
Finished Goods                                                           831,258
                                                                      ----------

Total                                                                 $4,638,519
                                                                      ==========

[4] Property and Equipment

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

Leasehold Improvements                                                $1,157,960
Machinery and Equipment                                                2,522,804
Machinery and Equipment Under Capital Leases                             134,061
Transportation Equipment                                                  60,569
                                                                      ----------

Total                                                                  3,875,394
Less: Accumulated Depreciation and Amortization                        2,466,627
                                                                      ----------

    Total                                                             $1,408,767
                                                                      ==========

[5] Notes Payable

Notes payable are summarized as follows at March 31, 2000:

Notes Payable:
   Bio Merieux Vitek, Inc. (a)                                        $   38,169
   Medallion Business Credit, LLC (b)                                    515,225
                                                                      ----------

Totals                                                                   553,394
   Less: Current Portion                                                 532,560
                                                                      ----------


    Noncurrent Portion                                                $   20,834
                                                                      ==========

(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.

                                       9

<PAGE>

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

[5] Notes Payable (Continued)

(b) Under the terms of a  revolving  credit  note which  expires on  November 5,
2001,  the Company  may borrow up to  $1,000,000  at 3% above the prime  lending
rate. The loan is collateralized by the inventory,  receivables and equipment of
Chem International, Inc., and Chem's two operating subsidiaries,  Manhattan Drug
Company,  Inc. and Vitamin  Factory,  Inc. The note has been  guaranteed  by the
Company's principal stockholder. At March 31, 2000 the interest rate was 12%.

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

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

March 31,
---------
  2001                  $532,560
  2002                    19,150
  2003                     1,684
  2004                        --
  2005                        --
                        --------
Totals                  $553,394
                        ========

[6] Capital Lease

The  Company  acquired  capsule  equipment  and  warehouse  equipment  under the
provisions  of two long-term  leases.  The leases expire in March 2001 and March
2003, respectively.  The equipment under the capital leases as of March 31, 2000
had a cost of $134,061 accumulated depreciation of $59,480 with a net book value
of $74,581.

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

Total Minimum Lease Payments                                          $ 129,416
Amount Representing Interest                                            (64,970)
                                                                      ---------

Present Value of Net Minimum Lease Payment                               64,446
Current Portion                                                         (44,281)
                                                                      ---------

   Long-Term Capital Lease Obligation                                 $  20,165
                                                                      =========

[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 March 31, 2000 the
Company's uninsured cash balances totaled approximately $2,780,000.  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 March 31, 2000 is $368,750.

                                       10

<PAGE>

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

[8] Major Customer

For the nine months ended March 31, 2000 and 1999,  approximately 50% and 45% 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 nine months
ended  March 31,  2000 and 1999,  an  aggregate  of  approximately  27% and 14%,
respectively,  of  revenues  were  derived  from two other  customers;  no other
customers  accounted for more than 10% of consolidated sales for the nine months
ended  March  31,  2000 and  1999.  Accounts  receivable  from  these  customers
comprised  approximately  67% and 59% of total accounts  receivable at March 31,
2000 and 1999, 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 June 30,  2000,  provides  for a minimum
annual  rental of $60,000 plus payment of all real estate  taxes.  Rent and real
estate tax  expense  for the nine  months  ended March 31, 2000 and 1999 on this
lease was  approximately  $79,000  and  $56,000,  respectively.  Unpaid  rent of
$115,000 due to Gerob at March 31, 2000 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 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.  Rent expense for the nine months ended March 31,
2000  and  1999  on  this  lease  was   approximately   $341,000  and  $345,000,
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 2002.

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

                                                       Related
                                       Lease         Party Lease
March 31,                            Commitment       Commitment         Total
---------                            ----------      -----------        --------
  2001                                $ 47,077         $346,000         $393,077
  2002                                  38,703          269,110          307,813
  2003                                  12,267               --           12,267
  2004                                      --               --               --
  2005                                      --               --               --
Thereafter                                  --               --               --
                                      --------         --------         --------
Total                                 $ 98,047         $615,110         $713,157
                                      ========         ========         ========

Total rent expense,  including real estate taxes and  maintenance  charges,  was
approximately $426,000 and $401,000 for the nine months ended March 31, 2000 and
1999,   respectively.   Rent  expense  is  stated  net  of  sublease  income  of
approximately  $8,450 and $17,000  for the nine months  ended March 31, 2000 and
1999, respectively.

                                       11


<PAGE>

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

[9] Commitments and Contingencies (Continued)

[B] Employment  Agreements - Effective  July 1, 1999,  the Company  entered into
three year employment  agreements with its four executive officers which provide
for aggregate  annual salaries of $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 March 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.

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. As
of March 31,  2000 the company had  settled  with two of its  suppliers  and has
recorded  $5,352,271 as other income it its consolidated  income  statement.  On
April  13,  2000  the  company  received  $792,000  in  settlement  with a third
supplier.  The company  believes that this settlement  concludes the majority of
the settlement proceeds. [See Note 13.]

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

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

[G] Joint  Venture-On  March 24, 2000,  the Company  formed a joint venture with
NuCyclye Therapy, Inc. to be called Bioscience, LLC. Bioscience will develop and
market high performance nutritional formulations based on plant derived minerals
through NuCycle's patented hyperaccumulation  technology. The Joint Venture will
use the equity method of accounting.

[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 months ended March 31, 2000 and 1999, by the Company was
$9,900 and $9,900, respectively.

                                       12

<PAGE>

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

[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] Subsequent Events

Litigation- On April 13, 2000, the Company  entered into a settlement  Agreement
with a major  supplier in connection  with a  multidistrict  consolidated  class
action brought on behalf of direct purchasers of vitamin products,  in which the
plaintiffs have alleged violations of Section 1 of the Sherman Antitrust Act and
other  wrongful  anti-competitive  conduct in violation  of various  federal and
state laws.

In exchange for the Company's release and agreement to opt out of any settlement
or litigation  pertaining to the pending class action lawsuit and to release the
supplier from any and all claims it may have  concerning  the pricing,  selling,
discounting, marketing or distributing of vitamin products, the Company received
a $792,000 cash payment.

In the event  that the  plaintiffs  in the  class  action  receive a  percentage
distribution  under the class  settlement  agreement in excess of the percentage
agreed to in the  Settlement  Agreement,  the  Company  will be  entitled  to an
additional payment to increase the Company's net recovery to the same percentage
as that received by the other plaintiffs in the class action suit.

The  Company  intends  to use the  proceeds  from the  settlement  to reduce its
outstanding debt and to use the excess for working capital.  [See Note 9D.]

                                       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.

Nine months  ended March 31,  2000  Compared to the Nine months  ended March 31,
1999

Results of Operations

The Company's net income for the nine months ended March 31, 2000 was $3,620,569
as  compared  to a net  loss  for  the  nine  months  ended  March  31,  1999 of
$(1,859,803).  This  increase  in net  income  of  approximately  $5,500,000  is
primarily the result of a $1,839,000 increase in operating income resulting from
a  corresponding  increase  in gross  profit  of  approximately  $1,900,000,  an
increase in other income of approximately  $5,300,000 due to the settlement of a
Class  Action  Lawsuit  and an increase  in Federal  and State  income  taxes of
approximately $1,600,000.

Sales for the nine months  ended March 31,  2000 and 1999 were  $15,050,901  and
$7,993,500,  respectively,  an increase of approximately  $7,000,000 or 88%. For
the nine months ended March 31, 2000 the Company had sales to one customer,  who
accounted  for 50% of net  sales  in  2000  and 45% in  1999.  The  loss of this
customer would have an adverse affect on the Company's operations.

Retail and mail order  sales for the nine months  ended  March 31, 2000  totaled
$499,117 as compared to $517,224  for the nine months  ended March 31,  2000,  a
decrease of 4%. The Company has been  experiencing a decline in mail order sales
due to increased competition and a decrease in advertising expenses.

Sales under the Roche Vitamins,  Inc. distribution agreement were $1,957,175 for
the nine months  ended March 31,  2000 as  compared to  $1,109,567  for the nine
months ended March 31, 1999, an increase of $847,608 or 76%.

Cost of sales  increased to $12,850,678 for the nine months ended March 31, 2000
as compared to  $7,683,041  for the nine months  ended March 31,  2000.  Cost of
sales  decreased as a percentage of sales to 85% for the nine months ended March
31, 2000 from 96% for the nine months ended March 31, 1999. The decrease in cost
of sales is due to greater manufacturing efficiencies and higher margin sales.

Selling and  administrative  expenses  for the nine months  ended March 31, 2000
were $2,349,983  versus  $2,299,586 for the same period a year ago. The increase
of $50,397 was  primarily  attributable  to a decrease  in  goodwill  expense of
$275,891 due to the write off in 1998, a decrease in advertising of $83,237,  an
increase  in office  salaries of  $41,676,  a decrease  in officers  salaries of
$68,374,  an increase  in freight  out of $61,515 and an increase in  consulting
fees of $266,353 due to the hiring of an independent sales and marketing firm to
help launch a new private label line.

Other income  (expense) was  $5,200,690 for the nine months ended March 31, 2000
as compared to $(101,138) for the nine months ended March 31, 1999. The increase
of  $5,301,828  is primarily  the result of the proceeds  received of $5,352,271
from the settlement of a Class Action Lawsuit against two bulk vitamin  material
suppliers.

Three months  ended March 31, 2000  Compared to the Three months ended March 31,
1999

The  Company's  net  income  for the  three  months  ended  March  31,  2000 was
$4,056,798  as compared to a net loss of  $(478,902)  for the three months ended
March 31,  1999.  This  increase in net income of  approximately  $4,535,000  is
primarily the result of an increase in operating income of $622,948, an increase
in other income of $5,343,662  due to a settlement of a Class Action Lawsuit and
an increase in Federal and State income taxes of $1,430,910.

Sales for the three  months  ended March 31, 2000 and 1999 were  $6,676,871  and
$2,930,006,  respectively,  an increase  of  $3,746,865  or 128%.  For the three
months ended March 31, 2000 the Company had sales to one customer who  accounted
for

                                       14


<PAGE>

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

Results of Operations - Continued

41% of net sales in 2000 and 54% in 1999.

Retail and mail order sales for the three  months  ended March 31, 2000  totaled
$167,506 as compared to $149,729 for the three  months ended March 31, 2000,  an
increase of $17,777 or 12%.

Sales under the Roche Vitamins, Inc. distribution agreement totaled $769,083 for
the three  months  ended March 31,  2000 as  compared to $454,790  for the three
months ended March 31, 1999, an increase of $314,293 or 69%.

Cost of sales  increased to $5,669,622 for the three months ended March 31, 2000
as compared to  $2,772,837  for the three months  ended March 31, 1999.  Cost of
sales decreased as a percentage of sales to 85% as compared to 95% for the three
months  ended March 31,  1999.  The  decrease in cost of sales is due to greater
manufacturing efficiencies and higher margin sales.

Selling and  administrative  expenses  for the three months ended March 31, 2000
were $842,419 as compared to $615,287 for the three months ended March 31, 1999.
The increase of $227,132 was  primarily  attributable  to an increase in freight
out of $31,674,  an increase in  advertising  of $98,755,  a decrease in officer
salaries of $13,414,  an increase in consulting fees of $45,997,  an increase in
office  salaries  of $17,497 and an  increase  in  entertainment  and lodging of
$35,533

Other income  [expense] was $5,308,195 for the three months ended March 31, 2000
as compared to $(35,467) for the three months ended March 31, 1999. The increase
of  $5,343,662  is  primarily  the result of the  settlement  of a Class  Action
Lawsuit in the amount of $5,352,271.

Liquidity and Capital Resources

At March 31, 2000 the Company's  working capital was $5,410,199,  an increase of
$2,912,738 over working capital at June 30, 1999. Cash and cash equivalents were
$2,209,992 at March 31, 2000, an increase of $1,910,962  from June 30, 1999. The
Company  generated  $4,415,550 and utilized $713,843 for operations for the nine
months ended March 31, 2000 and 1999, respectively.

The primary  reasons for the cash generated from  operations for the nine months
ended March 31, 2000 are an increase in net income of  approximately  $3,600,000
an  increase  in  inventories  of  approximately  $1,000,000  and an increase in
accounts  payable of  approximately  $1,300,000  The Company  believes  that the
anticipated  sales for the  fourth  quarter  of fiscal  2000 and the  litigation
settlement of an additional $792,000 will meet the cash needs for operations.

The Company utilized $115,961 and $251,217 in investing  activities for the nine
months  ended March 31, 2000 and 1999,  respectively.  The Company  utilized net
cash of $2,388,627 and generated $142,763 from debt financing activities for the
nine months ended March 31, 2000 and 1999, respectively.

The Company has a  $1,000,000  revolving  line of credit  agreement  which bears
interest at 3.0% above the prime  interest rate and expires on November 5, 2001.
At March  31,  2000 the  balance  due  under the  revolving  line of credit  was
$515,225.

On January 20, 2000 the Company entered into a Settlement Agreement with a major
supplier in  connection  with a  multidistrict  consolidated  class  action.  In
exchange for the Company's release and agreement to opt out of any settlement or
litigation pertaining to the pending class action lawsuit, the Company agreed to
a settlement  of 4.9 million  dollars.  The  settlement  proceeds were offset by
$1,333,333,  the amount due under a secured  promissory  note dated November 17,
1999.

On March 20, 2000 the Company entered into its second  Settlement  Agreement and
received a payment  of  $475,000  in  settlement  of the  second  portion of the
multidistrict consolidated class action suit.

                                       15

<PAGE>

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

Liquidity and Capital Resources - Continued

The Company's total annual  commitment at March 31, 2000 for the next five years
of $713,157  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 April 13, 2000 the Company settled the last major portion of its Class Action
Lawsuit for  approximately  $792,000  bringing the total amount of settlement to
approximately $6.2 million.

On April 13, 2000, the Company announced a stock repurchase  program whereby the
Company may repurchase up to 500,000 shares of its outstanding  common stock. As
of May 8, 2000 the company has  repurchased  25,800  shares of its common  stock
under the program at an average price of $1.12.






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

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

                                       18