UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q


(X)      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934.

         For the quarterly period ended       JUNE 30, 2001
                                              --------------
                                                    OR

(  )     THE TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934.


         For the transition period from ______________ to ______________


                         Commission File Number 01-21617

                             THE QUIGLEY CORPORATION
                             -----------------------
             (Exact name of registrant as specified in its charter)


          Nevada                                           23-2577138
--------------------------------------------------------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

              (MAILING ADDRESS: PO Box 1349, Doylestown, PA 18901.)

          KELLS BUILDING, 621 SHADY RETREAT ROAD, DOYLESTOWN,   PA 18901
--------------------------------------------------------------------------------
          (Address of principle executive offices)            (Zip Code)



       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (215) 345-0919
       ------------------------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. [X] Yes [ ] No

Indicate  the  number of shares  outstanding  of each of the  issuer's  class of
Common  Stock,  as  of  the  latest  practicable  date.  The  number  of  shares
outstanding of each of the registrant's  classes of Common Stock, as of July 31,
2001, was 10,675,153 all of one class of $.0005 par value Common Stock.






                                TABLE OF CONTENTS




                                                                       PAGE NO.
     PART I - FINANCIAL INFORMATION


Item 1.       Consolidated Financial Statements                         3-13

Item 2.       Management's Discussion and Analysis of
              Financial Condition and Results of Operations            14-17

Item 3.       Quantitative and Qualitative Disclosure About
              Market Risk                                                 17



    PART II - OTHER INFORMATION


Item 1.       Legal Proceedings                                        17-18

Item 2.       Changes in Securities                                       18

Item 3.       Defaults Upon Senior Securities                             18

Item 4.       Submission of Matters to a
              Vote of Security Holders                                 18-19

Item 5.       Other Information                                           19

Item 6.       Exhibits and Reports on Form 8-K                            19

Signatures                                                                20


                                       2




                             THE QUIGLEY CORPORATION
                           CONSOLIDATED BALANCE SHEETS



                     ASSETS                                                  June 30, 2001    December 31, 2000
                                                                              (unaudited)
                                                                             --------------   -----------------
CURRENT ASSETS:

    Cash and cash equivalents                                               $  8,695,171    $ 11,365,843
    Accounts receivable (less doubtful accounts of $480,385 and $536,297)      1,359,887       4,062,703
    Inventory                                                                  7,337,274       6,917,889
    Prepaid expenses and other current assets                                  2,673,756       1,123,275
                                                                            ------------    ------------
       TOTAL CURRENT ASSETS                                                   20,066,088      23,469,710
                                                                            ------------    ------------

PROPERTY, PLANT AND EQUIPMENT - NET                                            2,339,273       2,139,727
                                                                            ------------    ------------

OTHER ASSETS:

    Patent rights - Less accumulated amortization                                 65,821         109,702
    Excess of cost over net assets acquired                                      435,717         329,166
    Other assets                                                                  53,042           7,296
                                                                            ------------    ------------
       TOTAL OTHER ASSETS                                                        554,580         446,164
                                                                            ------------    ------------

TOTAL ASSETS                                                                $ 22,959,941    $ 26,055,601
                                                                            ============    ============


                 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

    Accounts payable                                                        $    316,059    $    763,527
    Accrued royalties and sales commissions                                      994,939       1,449,642
    Accrued advertising                                                          413,263       1,737,873
    Other current liabilities                                                  1,169,145         896,541
                                                                            ------------    ------------
       TOTAL CURRENT LIABILITIES                                               2,893,406       4,847,583
                                                                            ------------    ------------

COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST IN CONSOLIDATED AFFILIATES                                     165,575         237,326
                                                                            ------------    ------------
                                                                            ------------    ------------

STOCKHOLDERS' EQUITY:

    Common stock, $.0005 par value; authorized 50,000,000;
     Issued: 15,321,206 and 15,271,206 shares                                      7,661           7,636
    Additional paid-in-capital                                                28,915,613      28,871,887
    Retained earnings                                                         16,165,845      17,249,197
    Less: Treasury stock, 4,646,053 and 4,616,053 shares, at cost            (25,188,159)    (25,158,028)
                                                                            ------------    ------------
       TOTAL STOCKHOLDERS' EQUITY                                             19,900,960      20,970,692
                                                                            ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $ 22,959,941    $ 26,055,601
                                                                            ============    ============

                                     See accompanying notes to financial statements

                                       3



                             THE QUIGLEY CORPORATION
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)



                                                                       Three Months Ended                 Six Months Ended
                                                                  June 30, 2001  June 30, 2000    June 30, 2001    June 30, 2000
                                                                  -------------  -------------    -------------   -----------------

SALES:
  Sales                                                           $  3,381,951    $  1,300,111    $  8,580,488    $  7,914,897
  Co-operative advertising promotions                                   42,100         479,962         436,763       1,687,862
                                                                  ------------    ------------    ------------    ------------

NET SALES                                                            3,339,851         820,149       8,143,725       6,227,035

SETTLED LITIGATION                                                   1,273,864            --         1,273,864            --
                                                                  ------------    ------------    ------------    ------------

TOTAL REVENUE                                                        4,613,715         820,149       9,417,589       6,227,035
                                                                  ------------    ------------    ------------    ------------

COST OF SALES                                                        1,732,349         409,227       3,517,281       2,684,155
                                                                  ------------    ------------    ------------    ------------

GROSS PROFIT                                                         2,881,366         410,922       5,900,308       3,542,880
                                                                  ------------    ------------    ------------    ------------


OPERATING EXPENSES:
  Sales and marketing                                                1,095,547         423,314       2,634,992       5,895,070
  Administration                                                     2,381,700       1,543,447       4,168,866       3,066,112
  Research and development                                             275,499         254,280         523,032         490,414
                                                                  ------------    ------------    ------------    ------------

TOTAL OPERATING EXPENSES                                             3,752,746       2,221,041       7,326,890       9,451,596
                                                                  ------------    ------------    ------------    ------------

LOSS FROM OPERATIONS                                                  (871,380)     (1,810,119)     (1,426,582)     (5,908,716)

INTEREST AND OTHER INCOME                                              119,307         157,829         271,478         332,988
                                                                  ------------    ------------    ------------    ------------

LOSS BEFORE TAXES                                                     (752,073)     (1,652,290)     (1,155,104)     (5,575,728)
                                                                  ------------    ------------    ------------    ------------

INCOME TAXES EXPENSE (BENEFIT)                                            --              --              --              --

MINORITY INTEREST IN LOSS
  OF CONSOLIDATED AFFILIATE                                             71,630            --            71,752            --
                                                                  ------------    ------------    ------------    ------------    ------------    ------------

NET LOSS                                                          ($   680,443)   ($ 1,652,290)   ($ 1,083,352)   ($ 5,575,728)
                                                                  ============    ============    ============    ============


LOSS PER COMMON SHARE:

  Basic                                                           ($      0.06)   ($      0.16)   ($      0.10)   ($      0.53)
                                                                  ============    ============    ============    ============

  Diluted                                                         ($      0.06)   ($      0.16)   ($      0.10)   ($      0.53)
                                                                  ============    ============    ============    ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

  Basic                                                             10,675,153      10,556,279      10,675,153      10,453,005
                                                                  ============    ============    ============    ============

  Diluted                                                           10,675,153      10,556,279      10,675,153      10,453,005
                                                                  ============    ============    ============    ============

                                           See accompanying notes to financial statements

                                                                 4




                             THE QUIGLEY CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                      Six Months Ended
                                               June 30, 2001 June 30, 2000
                                               ------------- -------------


NET CASH FLOWS USED IN OPERATING ACTIVITIES     ($ 2,204,065)   ($ 5,485,450)
                                                ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                              (307,983)       (291,027)
  Net cost of assets acquired                       (128,493)           --
                                                ------------    ------------

  NET CASH FLOWS FROM INVESTING ACTIVITIES          (436,476)       (291,027)
                                                ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repurchase of Common Stock                         (30,131)           --
                                                ------------    ------------
  NET CASH FLOWS USED IN FINANCING ACTIVITIES        (30,131)           --
                                                ------------    ------------

  NET DECREASE IN CASH                            (2,670,672)     (5,776,477)

CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD      11,365,843      13,990,475
                                                ------------    ------------

CASH & CASH EQUIVALENTS, END OF PERIOD          $  8,695,171    $  8,213,998
                                                ============    ============



                 See accompanying notes to financial statements

                                       5




                             THE QUIGLEY CORPORATION
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND BUSINESS

The Quigley  Corporation (the "Company"),  organized under the laws of the state
of Nevada, is engaged in the development, manufacturing, and marketing of health
and homeopathic  products and are being offered to the general  public.  For the
fiscal periods  presented,  the Company's  proprietary  "Cold-Eeze(R)"  products
contribute the majority of revenues.

Darius  International Inc., a wholly owned subsidiary of The Quigley Corporation
was formed in January 2000 to introduce new products to the marketplace  through
a network of independent  distributors.  Darius is a direct selling organization
specializing  in  proprietary  health and  wellness  products,  which  commenced
shipping product to customers in the third quarter of 2000.

Effective  July 1,  2000,  The  Quigley  Corporation  acquired  a 60%  ownership
position of Caribbean Pacific Natural Products,  Inc. an Orlando,  Florida-based
company.  Caribbean  Pacific Natural  Products,  Inc. is a leading developer and
marketer of  all-natural  sun and skincare  products for luxury  resorts,  theme
parks and spas.

The  formation  of Darius  International  Inc.,  and the  majority  ownership in
Caribbean Pacific Natural Products, Inc., provide diversification to the Company
in both the method of product  distribution  and the  broader  range of products
available to the marketplace.

In January 2001,  the Company  formed an Ethical  Pharmaceutical  Unit under the
direction of the Quigley  Pharma Inc's  Executive Vice President and chairman of
its Medical Advisory  Committee.  The launch of Quigley Pharma Inc., follows the
Patent Office of The United States Commerce Department confirming the assignment
to the Company of a Patent  Application  filing for the "Method and  Composition
for the Topical  Treatment  of Diabetic  Neuropathy".  Establishing  a dedicated
pharmaceutical  subsidiary  will  enable  the  Company  to  diversify  into  the
prescription  drug market and to ensure safe and effective  distribution of this
important new product for the relief of diabetes-related pain.

Cold Remedy Products
--------------------

Cold-Eeze(R),  a zinc  gluconate  glycine  formulation  (ZIGG(TM)),  is  sold in
lozenge,  bubble gum and  sugar-free  tablet  forms.  In May 1992,  the  Company
entered into an exclusive agreement for worldwide representation, manufacturing,
marketing  and  distribution   rights  to  a  zinc  gluconate   glycine  lozenge
formulation  which was patented in the United States,  United  Kingdom,  Sweden,
France, Italy, Canada,  Germany, and pending in Japan. This product is presently
being marketed by the Company and also through independent brokers and marketers
in the United  States  under the trade names  Cold-Eeze(R),  Cold-Eeze(R)  Sugar
Free,  and  Cold-Eeze(R)   Bubble  Gum  and  in  Canada  under  the  trade  name
Zigg-Eeze(TM).

In 1996,  the Company also acquired  exclusive  license for a United States ZINC
GLUCONATE  USE PATENT NUMBER RI 33,465 from the patent  holder.  This use patent
gives the Company  exclusive  rights to both the USE and FORMULATION  patents on
zinc gluconate for reducing the duration and severity of common cold symptoms.

In two double blind studies  Cold-Eeze(R)  has been shown to reduce the severity
and duration of common cold  symptoms by nearly half.  The results of the latest
randomized  double-blind  placebo-controlled  study  of  the  common  cold  were
published in 1996 in the ANNALS OF INTERNAL  MEDICINE - VOL. 125 NO 2.  Research
is continuing on this product in order to maximize its full potential use by the
general public.

In the last half of 1998,  the  Company  launched  Cold-Eeze(R)  in a sugar free
version of the product to benefit  diabetics and other consumers  concerned with
their sugar intake.  Late in the fourth quarter of 1998, the Company  launched a
bubble gum version of Cold-Eeze(R).

The business of the Company is subject to federal and state laws and regulations
adopted  for  the  health  and  safety  of  users  of  the  Company's  products.
Cold-Eeze(R)  is a homeopathic  remedy that is subject to regulations by various
federal,  state  and  local  agencies,  including  the FDA  and the  Homeopathic
Pharmacopoeia of the United States.

The Company competes with suppliers varying in range and size in the cold remedy
products  arena.  Cold-Eeze(R),  which  has  been  clinically  proven,  offers a
significant  advantage over other suppliers in the over-the-counter  cold remedy
market.  The  management  of the  Company  believes  there  should  be no future
impediment on the ability to compete in the marketplace now,

                                       6



or in the immediate future, since factors concerning the product, such as price,
product quality,  availability,  reliability,  credit terms,  name  recognition,
delivery  and  support  are all  properly  positioned.  The  Company has several
Broker,   Distributor  and  Representative   Agreements,   both  nationally  and
internationally and the product is distributed through numerous  independent and
chain drug and discount stores throughout the United States.

The  Company  continues  to  use  the  resources  of  independent  national  and
international brokers complementing its own personnel to represent the Company's
over-the-counter products, thereby saving capital and other ongoing expenditures
that would otherwise be incurred.

Health And Wellness Products
----------------------------

At the very end of 1998, the first product of the Bodymate(TM) line was launched
in a test market to enter the  nutrition  and weight  management  industry.  The
unique  proprietary  delivery system and  naturalness of this product,  with the
main  ingredients  of garcinia  cambogia  and  chromium  polynicotinate,  offers
instant satisfaction and gratification to those attempting to lose weight. It is
believed that the ingredients in this product may block an enzyme  necessary for
the  formation  of fats from  carbohydrates,  and affects the  appetite to bring
about a feeling of fullness.

Darius  International,  Inc., a wholly owned  subsidiary,  was formed in January
2000 for the purpose of introducing  new products to the  marketplace  through a
network of independent  distributors.  Darius is a direct  selling  organization
specializing in proprietary health and wellness products.  The products marketed
and sold by Darius International are designed to improve the human condition, be
it in the area of joint  health,  immunity,  energy,  pain,  weight  loss or the
common cold. The products currently available from Darius include:  Bodymate(TM)
Metabolizer,   Bodymate(TM)  Gluco-Eeze,   Ultra-Eeze,   Vita-Eeze,   Beta-Eeze,
Cold-Eezer(R) Plus,  Cold-Eezer(R)  Cinnamon Gum, Dermaloe first aid antiseptic,
Pain  Goes  pain  spray,  Ardor  dietary  supplement  and a wide  array  of food
supplements and vitamins.

Sun-care and Skincare Products
------------------------------

Caribbean Pacific Natural Products, Inc., is a leading developer and marketer of
all-natural sun and skincare products for luxury resorts, theme parks and spas.

These products are all-natural, eco-safe, and organic, meaning that the need for
petro-chemical,  synthetic,  and chemical additives used by most competitors has
been  eliminated.  All-natural  ingredients  such as aloe  vera,  rose  hip oil,
squalane,  Vitamin E, tea tree oil and other  natural oils and extracts are used
instead of many synthetic  preservatives,  fillers and softeners  which may have
side-effects.

Caribbean Pacific currently has three distinct product lines:  Virgin Sol, Coral
Sol and Sport Sol and is  currently  developing  a spa line called  Sabate and a
dry-grip golf product.

Caribbean  Pacific  markets a line of natural  protectors,  or "Sol Cremes" that
provide dual protection against the damaging effects of the sun. This product is
available in differing Sun  Protection  Factors  (SPF).  Caribbean  Pacific also
markets a sunscreen  product called  "Karibbean  Kidz"  especially for children,
again containing all natural ingredients found in nature.

Additionally,  Caribbean  Pacific  markets  various  products  rich in essential
nutrients  and  vitamins  necessary  for the skin.  Products  available  in this
category  are:  Black Pearl Ultra Oil,  Diamond Rose Dry Tanning Oil and Emerald
Rose Tanning Oil.

Caribbean Pacific has developed an effective  combination of natural ingredients
for moisture that include the Aloe Rose Body Creme, a moisturizing  lotion,  and
the Tea  Tree  Burn  Relief,  which  cools  the  skin to  sooth  the  discomfort
associated with burns, insect bites and itching.

Caribbean  Pacific  also  has  the  capability  to  make  available   customized
merchandise,  such as beach bags,  beach towels etc., which complement the range
of sun-care and skincare products, which it currently markets.


                                       7





NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated Balance Sheet at June 30, 2001, the consolidated  Statements of
Operations  for the three and  six-months  periods ended June 30, 2001 and 2000,
and the consolidated  Statements of Cash Flows for the six-months  periods ended
June 30, 2001 and 2000,  have been  prepared  without  audit.  In the opinion of
management,  all  adjustments  necessary  to  present  fairly  the  consolidated
financial  position,  consolidated  results of operations and consolidated  cash
flows, for the periods indicated, have been made.

Darius International Inc., a wholly owned subsidiary of The Quigley Corporation,
was formed in January 2000 to  implement  alternative  methods of marketing  and
distribution for existing and new product lines.

During  July 2000,  the  Company  acquired a 60 percent  ownership  position  of
Caribbean  Pacific Natural  Products,  Inc., a leading developer and marketer of
all-natural sun and skincare products for luxury resorts,  theme parks and spas.
This  acquisition  is accounted  for by the purchase  method of  accounting  and
accordingly,   the  operating  results  have  been  included  in  the  Company's
consolidated  Statements  of  Operations  from  the  date of  acquisition.  This
majority  ownership  position  required  a  cash  investment  that  approximated
$812,000  and  the  provision  for a $1  million  line  of  credit,  secured  by
inventory, accounts receivable and all other assets of Caribbean Pacific Natural
Products.  The net assets of Caribbean  Pacific Natural  Products,  Inc., at the
acquisition  date  principally  consisted of a product license and  distribution
rights with no  recorded  value,  inventory  and fixed  assets of  $312,915  and
$510,000  of  working  capital  with a  contribution  to  minority  interest  of
$329,166.

The  40  percent  ownership  position  representing  the  minority  interest  of
Caribbean  Pacific  Natural  Products,  Inc.,  is reflected in the  consolidated
Statements of Operations  for their  portion of (losses),  and the  consolidated
Balance Sheet for their ownership portion of accumulated (losses),  share of net
assets and capital stock at acquisition date.

On January 2, 2001,  the Company  acquired  certain  assets and assumed  certain
liabilities  of a privately  held company  involved in the direct  marketing and
distribution of health and wellness  products.  This  acquisition  required cash
payments that will approximate $242,000 and 50,000 shares of the Company's stock
issued to the former owners of the assets acquired.  These cash payments require
an initial payment of $100,000,  with the balance to be paid as percent of sales
attained  until the total  price of  $242,000  is  accomplished.  The net assets
acquired at acquisition  principally  consisted of intangibles  with no recorded
value,   inventory  and  fixed  assets  of  $421,000  and  liabilities   assumed
approximating  $299,000.  Also required are  continuous  payments for the use of
product  formulations;  consulting;  confidentiality  and non-compete  fees that
total up to 12% on net sales collected  until $540,000 is paid,  which such fees
become  5% on net  sales  collected  for the  continuous  applications  of these
arrangements.  This  acquisition  is  accounted  for by the  purchase  method of
accounting  and  accordingly,  the  operating  results have been included in the
Company's  consolidated  Statements of Operations  from the date of acquisition.
The  excess  of  cost  over  net  assets   acquired  is  being  amortized  on  a
straight-line basis over a period of 15 years.

All inter-company transactions and balances have been eliminated.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted. It is suggested that these financial  statements
be read in conjunction with the financial  statements and accompanying notes for
the fiscal year ended December 31, 2000, in the Company's Form 10-K.

Revenues for 2000 have been  re-classed  to reflect the changes  required by the
Emerging Issues Task Force ("EITF") that issued EITF No. 00-14,  "Accounting for
Coupons, Rebates and Discounts" that addressed accounting for sales incentives.

CONCENTRATION OF RISKS

Financial  instruments  that  potentially  subject  the  Company to  significant
concentrations of credit risk consist principally of cash, investments and trade
accounts receivable.

The Company  maintains  cash and cash  equivalents  with three  major  financial
institutions.  Since the  Company  maintains  amounts  in  excess of  guarantees
provided by the Federal Depository Insurance  Corporation,  the Company performs
periodic  evaluations  of  the  relative  credit  standing  of  these  financial
institutions and limits the amount of credit exposure with any one institution.

                                       8




The Company currently uses three separate  suppliers to produce  Cold-Eeze(R) in
lozenge,  bubble gum, and sugar free tablet form. The  Bodymate(TM)  product and
the  Cold-Eeze(R)  lozenge are manufactured by a third party  manufacturer  that
produces exclusively for the Company. The majority of the Company's revenues are
currently generated from the sale of the Cold-Eeze(R) lozenge product. The other
forms are manufactured by third parties that produce a variety of other products
for other customers. Should these relationships terminate or discontinue for any
reason,  the Company has formulated a contingency  plan in order to prevent such
discontinuance  from  materially  affecting the Company's  operations.  Any such
termination  may,  however,  result in a temporary delay in production until the
replacement facility is able to meet the Company's production requirements.

Raw material used in the  production  of the product is available  from numerous
sources. Currently, it is being procured from a single vendor in order to secure
purchasing economies. In a situation where this one vendor is not able to supply
the  contract  manufacturer  with  the  ingredients,  other  sources  have  been
identified.

COUPONS, REBATES AND DISCOUNTS

In May 2000,  the Emerging  Issues Task Force  ("EITF")  issued EITF No.  00-14,
"Accounting for Coupons,  Rebates and Discounts"  that addressed  accounting for
sales  incentives.  The Task Force  concluded  that in accounting for cash sales
incentives,  a  manufacturer  should  recognize  the incentive as a reduction of
revenue  on the later date of the  manufacturer's  sale or the date the offer is
made to the public.  The reduction of revenues  should be measured  based on the
estimated  amount of  incentives to be claimed by the ultimate  customers.  This
pronouncement was adopted in the first quarter of 2001.

ROYALTIES

The Company  includes  royalties  and founders  commissions  incurred as cost of
products sold based on agreement terms.

ADVERTISING

Advertising costs are generally expensed within the period to which they relate.
Advertising  costs incurred for the six months ended June 30, 2001 and 2000 were
$1,180,102 and $6,552,571,  respectively. Included in prepaid expenses and other
current assets were $494,000 and $419,000 at June 30, 2001 and December 31, 2000
respectively, relating to prepaid advertising and promotion expenses.

RESEARCH AND DEVELOPMENT

Research and  development  costs are charged to operations in the year incurred.
Expenditures  for the six months ended June 30, 2001 and 2000 were  $523,032 and
$490,414,  respectively.  Included in Research and  Development  is the expenses
incurred as part of the costs  related to the  application  for a pharmacy  drug
license in the United Kingdom.

INCOME TAXES

The  Company  utilizes  an asset  and  liability  approach  which  requires  the
recognition  of  deferred  tax  assets  and   liabilities  for  the  future  tax
consequences  of events that have been  recognized  in the  Company's  financial
statements or tax returns.  In estimating future tax  consequences,  the Company
generally  considers all expected future events other than enactments of changes
in the tax law or rates. See Note 5 for disclosure related to this Standard.

BUSINESS SEGMENTS AND RELATED INFORMATION

Statement of Financial  Accounting Standard ("SFAS") No. 131,  "Disclosure about
Segments of an Enterprise and Related Information," requires public companies to
report certain  information  about  operating  segments  within their  financial
statements. See Note 3 for disclosure related to this Standard.

NOTE 3 - SEGMENT INFORMATION

The basis for presenting  segment  results  generally is consistent with overall
Company   reporting.   The  primary   difference   relates  to  presentation  of
partially-owned  operations,  which  are  presented  as if  owned  100%  in  the
operating segments. The adjustment to ownership basis is included in Corporate &
Other.  In the third  quarter of 2000,  the Company  qualified for the Financial
Accounting  Standard Board Statement No. 131,  "Disclosure  About Segments of an
Enterprise and Related  Information"  which establishes  standards for reporting
information about a company's operating segments.

                                       9


The Company  has divided its  operations  into three  reportable  segments:  The
Quigley  Corporation,  whose main product is  Cold-Eeze(R),  a proprietary  zinc
gluconate glycine lozenge in the OTC cold remedy category; Darius International,
Inc.,  whose business is the sale and direct  marketing of a range of health and
wellness  products  and  Caribbean  Pacific  Natural  Products,  Inc., a leading
developer  and  marketer of  all-natural  sun and skin care  products for luxury
resorts, theme parks and spas.

Financial information by business segment follows:

-----------------------------------------------------------------------------------------------------------------------------

                                          OTC        Direct Marketing      Sun and
  As of and for the three             Cold Remedy       Health and         Skincare            Corporate
months ended June 30, 2001              Products         Wellness          Products            and Other             Total
-----------------------------------------------------------------------------------------------------------------------------
Net Sales
  Customers                            $1,006,549       $1,585,461         $747,841                 -             $3,339,851
  Inter-segment                          (115,673)        (117,790)          -                    $233,463            -
Settled litigation                      1,273,864           -                -                      -              1,273,864
Segment operating profit (loss)          (700,090)         (98,958)        (199,009)               126,677          (871,380)


-----------------------------------------------------------------------------------------------------------------------------

                                          OTC        Direct Marketing      Sun and
   As of and for the six              Cold Remedy       Health and         Skincare            Corporate
months ended June 30, 2001              Products         Wellness          Products            and Other             Total
-----------------------------------------------------------------------------------------------------------------------------

Net Sales
  Customers                            $4,391,126       $2,360,979       $1,391,620                 -             $8,143,725
  Inter-segment                          (116,385)         176,412           -                    ($60,027)           -
Settled litigation                      1,273,864          -                 -                      -              1,273,864
Segment operating profit (loss)        (1,051,104)        (291,881)        (201,027)               117,430        (1,426,582)
Total Assets                          $23,453,032       $1,147,363       $1,392,623            ($3,033,077)      $22,959,941

-----------------------------------------------------------------------------------------------------------------------------
                                          OTC        Direct Marketing      Sun and
  As of and for the three            Cold Remedy       Health and          Skincare             Corporate
months ended June 30, 2000             Products         Wellness           Products             and Other             Total
-----------------------------------------------------------------------------------------------------------------------------
Net Sales
  Customers                              $820,149          -                 -                    -                  $820,149
  Inter-segment                            47,727          -                 -                 ($47,727)               -
Segment operating profit (loss)        (1,586,688)      ($204,340)           -                 (19,091)            (1,810,119)

-----------------------------------------------------------------------------------------------------------------------------

                                          OTC        Direct Marketing      Sun and
  As of and for the six               Cold Remedy       Health and         Skincare            Corporate
months ended June 30, 2000              Products         Wellness          Products            and Other             Total
-----------------------------------------------------------------------------------------------------------------------------
Net Sales
  Customers                            $6,227,035          -                 -                   -                $6,227,035
  Inter-segment                            47,727          -                 -                ($47,727)               -
Segment operating profit (loss)        (5,606,691)      ($282,934)           -                 (19,091)           (5,908,716)
Total Assets                          $23,909,715        $157,457            -               ($433,820)          $23,633,352

-----------------------------------------------------------------------------------------------------------------------------

                                       10




NOTE 4 - TRANSACTIONS AFFECTING STOCKHOLDERS' EQUITY

Since the inception of the stock  buy-back  program in January  1998,  the Board
subsequently  increased  the  authorization  on  five  occasions,  for  a  total
authorized  buy-back of 5,000,000  shares or  approximately  38% of the previous
shares  outstanding.  Such shares are  reflected  as treasury  stock and will be
available  for general  corporate  purposes.  From the  initiation  of the plan,
4,159,191  shares have been  repurchased  at a cost of $24,042,801 or an average
cost of $5.78 per share.  There were 30,000 shares  repurchased during the first
three months of 2001.

As a result of the  litigation  relating to the case against  Nutritional  Foods
Corporation,  in March of 1998, a subsequent  order of the Court of Common Pleas
of Bucks County  modified the decree of January 23, 1997 to provide for a return
to treasury of 604,928  shares to the  Company.  As payment for legal  services,
118,066 of these  shares  were  reissued  with a market  value of  approximately
$1,145,358.  This value, the cost of reacquiring  these shares,  then became the
value of the net treasury stock ($2.35 per share)  represented by 486,862 shares
returned to treasury.

At June 30,  2001,  there were  4,042,400  unexercised  and vested  options  and
warrants of the Company's stock available for exercise with an additional 75,000
options awarded which are subject to vesting requirements.

NOTE 5 - INCOME TAXES

Certain  exercises  of options and  warrants,  and  restricted  stock issued for
services that became unrestricted during various periods, resulted in reductions
to   taxes    currently    payable    and   a    corresponding    increase    to
additional-paid-in-capital totaling $14,660,288 for the years ended December 31,
1999,  1998, and 1997.  The tax benefit  effect of option and warrant  exercises
during 1999, 2000 and 2001 to date was $928,206,  however, this benefit is being
deferred because of a net operating loss carry-forward for tax purposes ("NOLs")
that  occurred  during the fourth  quarter of 1999 from a  cumulative  effect of
deducting a total value of $42,800,364 attributed to these options, warrants and
unrestricted  stock deductions from taxable income during the tax years 1997 and
1998. The net operating loss carry-forwards arising from the option, warrant and
stock activities  approximate $10.0 million for federal purposes,  of which $3.5
million will expire in 2019,  $6.5  million in 2020 and $14.2  million for state
purposes,  of which $9.7 million will expire in 2009,  $4.5 million in 2010. The
six months  periods ended June 30, 2001 and 2000 losses are reflected at 39% for
both the increase in deferred  taxes and the  valuation  allowance.  The overall
effective  tax rate for 2001 and 2000 was 0% since  profits for tax purposes are
not available.

NOTE 6 - EARNINGS PER SHARE

Basic earnings per share ("EPS")  excludes  dilution and is computed by dividing
income available to Common Stockholders by the weighted average number of common
shares  outstanding for the period.  Diluted EPS reflects the potential dilution
that could occur if  securities  or other  contracts  to issue Common Stock were
exercised or  converted  into Common Stock or resulted in the issuance of Common
Stock that then shared in the earnings of the entity.  Diluted EPS also utilizes
the treasury stock method that prescribes a theoretical  buy-back of shares from
the  theoretical  proceeds of all options and  warrants  outstanding  during the
period.  Since  there is a large  number of options  and  warrants  outstanding,
fluctuations  in the actual  market price can have a varying of results for each
period  presented.  For the periods presented that reflect losses, no effect was
given for options and warrants because the result would be anti-dilutive.

A  reconciliation  of the applicable  numerators and  denominators of the income
statement periods presented is as follows  (millions,  except earnings per share
amounts):


                    Three Months Ended             Six Months Ended              Three Months Ended        Six Months Ended
                       June 30, 2001                 June 30, 2001                 June 30, 2000              June 30, 2000
                       Loss    Shares      EPS       Loss   Shares      EPS        Loss   Shares      EPS     Loss   Shares    EPS
                    ----------------------------------------------------------------------------------------------------------------

Basic EPS            ($0.7)      10.7     ($0.06)   ($1.1)    10.7     ($0.10)    ($1.7)    10.6     ($0.16)  ($5.6)  10.5   ($0.53)
Dilutives:
Options/Warrants        -          -                   -        -                    -        -                        -        -
                    ----------------------------------------------------------------------------------------------------------------

Diluted EPS           ($0.7)     10.7     ($0.06)   ($1.1)    10.7     ($0.10)    ($1.7)    10.6     ($0.16)  ($5.6)  10.5   ($0.53)
                    ================================================================================================================


                                       11




NOTE 7 - RELATED PARTY TRANSACTIONS

In the ordinary  course of business,  the Company has sales  brokerage and other
arrangements with entities whose major stockholders are also stockholders of The
Quigley  Corporation,  or are  related  to major  stockholders  of the  Company.
Commissions and other items paid or payable under such arrangements  amounted to
approximately  $69,000 and $145,000,  respectively,  for the six-months  periods
ended June 30, 2001 and 2000.

The Company is in the process of acquiring licenses in certain countries through
related party entities. For the six-months periods ended June 30, 2001 and 2000,
fees  amounting  to $150,470  and  $121,338,  respectively,  have been paid to a
related entity to assist with the regulatory aspects of obtaining such licenses.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

The Company  maintains certain royalty and founders  commission  agreements with
the  developers,  licensors,  founders,  and  consultants  for the  Cold-Eeze(R)
products. These payments are 13% of sales collected less certain deductions.  Of
this  percentage,  a three  percent  royalty  on sales  collected  less  certain
deductions  is payable to the patent holder whose  agreement  expires in 2002, a
three percent royalty of sales  collected less certain  deductions is payable to
the developer of the product formulation  together with a two percent consulting
fee based on an  agreement  that  expires  in 2007.  Additionally,  a  founders'
commission is payable  totaling 5% of sales  collected less certain  deductions,
which is shared by two of the officers whose agreements expire in 2005.

Also, required for the acquisition of certain assets of a privately held company
involved  in the  direct  marketing  and  distribution  of health  and  wellness
products  are  continuous   payments  for  the  use  of  product   formulations;
consulting;  confidentiality  and  non-compete  fees that total up to 12% on net
sales collected  until $540,000 is paid,  which such fees become 5% on net sales
collected for the continuous applications of these arrangements.

The Company has remaining  contractual  commitments  for  advertising  and other
purchases amounting to approximately $225,000.

The Company is subject to legal  proceedings and claims noted in Part II, "Other
Information",  Item I, "Legal  Proceedings," and claims which have arisen in the
ordinary  course of its business.  Although  there can be no assurance as to the
ultimate  disposition  of these  matters,  it is the  opinion  of the  Company's
management based upon the information  available at this time, that the expected
outcome of these  matters,  individually  or in the  aggregate,  will not have a
material adverse effect on the financial position, results of operations or cash
flows of the Company.


NOTE 9 - SETTLED LITIGATION

The Quigley  Corporation filed a patent infringement suit against Gel Tech, LLC,
the developer of Zicam(TM),  and Gum Tech International,  Inc., its distributor,
in November  1999.  Subsequent  motions by the  defendants to dismiss  Quigley's
lawsuit were denied by the court.

The suit was tried in the United States District Court for the Eastern  District
of Pennsylvania.  On June 6, 2001, the Company agreed to a minimum settlement in
excess of $1.6 million in its patent infringement suit against Gel Tech, LLC and
Gum Tech International, Inc.

Under the agreement,  Gum Tech will pay The Quigley Corporation $1,137,500 for a
limited  license  for  Quigley's  patent  on the use of zinc  gluconate  for the
treatment of the  duration  and  symptoms of the common  cold.  Gum Tech is also
required to pay The Quigley  Corporation an ongoing  royalty of 5.5 percent from
April 1, 2001 through March 5, 2002 on all Zicam cold relief sales. In addition,
Gum Tech has  guaranteed  to pay  Quigley  a  minimum  of  $500,000  in  ongoing
royalties regardless of sales through March 5, 2002.

To ensure compliance with the settlement terms, The United States District Court
for the  Eastern  District of  Pennsylvania  will  retain  jurisdiction  for any
disputes arising from a violation of the agreement and order.

                                       12





NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS

SFAS 141

In July 2001, the Financial Accounting Standards Board issued SFAS 141, BUSINESS
COMBINATIONS,  which is required for all business  combinations  initiated after
June 30, 2001. The standard eliminates the use of the pooling-of-interest method
and improves the accounting and reporting for business combinations. The Company
does not expect that the new standard will have a material effect on the results
of operations or cash flows.

SFAS 142

Also in July 2001,  the FASB  issued  SFAS 142,  GOODWILL  AND OTHER  INTANGIBLE
ASSETS. This standard requires that goodwill no longer be amortized to earnings,
but  instead be  reviewed  for  impairment.  This  change is expected to provide
investors with greater information  regarding the economic value of goodwill and
its impact on earnings.  The Company will be required to adopt this  standard in
fiscal  2003,  however  early  adoption  in fiscal 2002 will be  permitted.  The
Company  has not yet  determined  the  impact  to its  financial  statements  of
adoption of this standard.










                                       13




ITEM 2: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

In addition to  historical  information,  this Report  contains  forward-looking
statements.  These  forward-looking  statements are subject to certain risks and
uncertainties  that could cause actual results to differ  materially  from those
reflected in these forward-looking  statements.  Factors that might cause such a
difference  include,  but are not limited to management of growth,  competition,
pricing pressures on the Company's product, industry growth and general economic
conditions.  Readers  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking  statements,  which reflect management's opinions only as of the
date hereof.  The Company undertakes no obligation to revise or publicly release
the results of any revision to these forward-looking  statements. The Company is
subject to a variety of  additional  risk  factors  more fully  described in the
Company's  Annual  Report on Form 10-K filed with the  Securities  and  Exchange
Commission.

OVERVIEW

Revenues  for the  three  and six  months  periods  ended  June  30,  2001  were
$4,613,715  and  $9,417,589  as  compared  to $820,149  and  $6,227,035  for the
comparable 2000 periods. Revenues for the six months ended June 30, 2001 include
an amount of $1,273,864 in the  settlement of a lawsuit  following the filing by
the Quigley Corporation of a patent infringement suit against Gel Tech, LLC, the
developer of Zicam(TM),  and Gum Tech International,  Inc., its distributor,  in
November 1999.  Under the agreement,  Gum Tech will pay The Quigley  Corporation
$1,137,500  for a  limited  license  for  Quigley's  patent  on the  use of zinc
gluconate for the treatment of the duration and symptoms of the common cold. Gum
Tech is also required to pay The Quigley  Corporation an ongoing  royalty of 5.5
percent from April 1, 2001 through March 5, 2002 on all Zicam cold relief sales.
In  addition,  Gum Tech has  guaranteed  to pay Quigley a minimum of $500,000 in
ongoing  royalties  regardless of sales  through March 5, 2002.  Legal and other
expenses  associated  with this lawsuit in the six months  period ended June 30,
2001 approximated $480,000.

Darius  International,  Inc.,  and Caribbean  Pacific  Natural  Products,  Inc.,
contributed combined revenues of $2,333,302 and $3,752,599 for the three and six
months  periods  ended June 30, 2001 with zero in the  comparable  2000 periods.
Darius  International  commenced shipments to customers during the third quarter
of 2000 and the Company  acquired a 60% ownership in Caribbean  Pacific  Natural
Products, Inc., effective July 1, 2000.

Recent  national  marketing  data  indicates an improvement in purchasing of the
Cold-Eeze(R) product by the consumer.  Additionally,  there are indications that
previous  overstocking by customers has been  considerably  reduced through June
30, 2001.

Cold-Eeze(R)  now has more  visibility  as the original  clinically  proven zinc
product on the  market,  effective  in reducing  the  severity  and  duration of
symptoms of the common cold due to many zinc  products  exiting the  marketplace
during 2000 and 2001. The Company continues to strongly support  Cold-Eeze(R) as
the original clinically proven zinc product on the market, effective in reducing
the severity and duration of symptoms of the common cold, and also to counteract
media efforts to discredit its effectiveness.

During  1998 and  continuing  until the end of the first  quarter  of 2000,  the
Company  invested  substantially  in the radio and television  media in order to
inform  the  consumer  as to the  benefits  of  using  Cold-Eeze(R)  and also to
counteract  any  misconceptions  present  in  the  marketplace  relating  to the
product's  effectiveness  in  treating  the  symptoms of the common  cold.  This
investment was further  necessary to establish brand awareness for  Cold-Eeze(R)
and also to promote  new  product  introductions  of  Cold-Eeze(R)  sugar  free,
Cold-Eeze(R) bubble gum and Bodymate(TM).

The advertising cost approximated $1.2 million for the six months ended June 30,
2001 as compared with  approximately  $6.6 million for the comparable  period in
2000, substantially  contributing to the loss of ($5,575,728) for the six months
ended June 30, 2000. The loss for the six months periods ended June 30, 2001 and
2000 are not tax effected for the potential  benefit,  which cannot be reflected
until the Company returns to profitability.

The  Company  continues  to use the  resources  of a contract  manufacturer  and
independent national and international brokers to represent and compliment sales
of the Company's Cold-Eeze(R) products, thereby saving capital and other ongoing
expenditures that would otherwise be incurred.

The Company currently uses three separate  suppliers to produce  Cold-Eeze(R) in
lozenge,  bubble gum, and sugar free tablet form.  Other products of the Company
and its subsidiaries are manufactured by third parties that produce a variety of
other  products for other  customers.  Should these  relationships  terminate or
discontinue  for any reason,  the Company has  formulated a contingency  plan in
order to prevent such  discontinuance  from  materially  affecting the Company's
operations. Any such

                                       14




termination  may,  however,  result in a temporary delay in production until the
replacement facility is able to meet the Company's production requirements.

Raw material  used in the  production  of certain  products are  available  from
numerous sources. Currently,  certain materials are being procured from a single
source vendor in order to secure purchasing economies.  In a situation where one
vendor is not able to supply the  contract  manufacturer  with the  ingredients,
other sources have been identified. All manufacturing sites have the capacity to
respond quickly to market requirements.


EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
------------------------------------------

TIME-BASED AND VOLUME-BASED SALES INCENTIVE OFFERS

In March 2001, the Emerging Issues Task Force reached a final consensus on Issue
No. 00-22, "Accounting for `Points' and Certain Other Time-Based or Volume-Based
Sales Incentive Offers, and Offers for Free Products or Services to be Delivered
in the Future" that addresses,  among other issues, the accounting  requirements
of a vendor for an offer to a customer to rebate or refund a specified amount of
cash that is redeemable  only if the customer  completes a specified  cumulative
level of revenue  transactions  or remains a customer for a specified  period of
time.  This Issue was effective for quarters ending after February 15, 2001. The
adoption  of this  Issue  did not have any  impact  on the  Company's  financial
position or results of operations.

SFAS 141

In July 2001, the Financial Accounting Standards Board issued SFAS 141, BUSINESS
COMBINATIONS,  which is required for all business  combinations  initiated after
June 30, 2001. The standard eliminates the use of the pooling-of-interest method
and improves the accounting and reporting for business combinations. The Company
does not expect that the new standard will have a material effect on the results
of operations or cash flows.

SFAS 142

Also in July 2001,  the FASB  issued  SFAS 142,  GOODWILL  AND OTHER  INTANGIBLE
ASSETS. This standard requires that goodwill no longer be amortized to earnings,
but  instead be  reviewed  for  impairment.  This  change is expected to provide
investors with greater information  regarding the economic value of goodwill and
its impact on earnings.  The Company will be required to adopt this  standard in
fiscal  2003,  however  early  adoption  in fiscal 2002 will be  permitted.  The
Company  has not yet  determined  the  impact  to its  financial  statements  of
adoption of this standard.


RESULTS OF OPERATIONS
---------------------

Three months ended June 30, 2001 compared to three months ended June 30, 2000
-----------------------------------------------------------------------------

For the three  months  ended June 30,  2001,  the Company  reported  revenues of
$4,613,715  and a net loss of ($680,443) as compared to revenues of $820,149 and
a net loss of  ($1,652,290),  for the  comparable  period  ended June 30,  2000.
Revenues for the 2001 period  includes an amount of $1,273,864 in the settlement
of a  lawsuit  following  the  filing  by the  Quigley  Corporation  of a patent
infringement  suit against Gel Tech,  LLC, the developer of  Zicam(TM),  and Gum
Tech  International,   Inc.,  its  distributor,  in  November  1999.  Under  the
agreement,  Gum Tech will pay The Quigley  Corporation  $1,137,500 for a limited
license for Quigley's  patent on the use of zinc  gluconate for the treatment of
the duration and symptoms of the common cold.  Gum Tech is also  required to pay
The Quigley  Corporation  an ongoing  royalty of 5.5 percent  from April 1, 2001
through March 5, 2002 on all Zicam cold relief sales. In addition,  Gum Tech has
guaranteed to pay Quigley a minimum of $500,000 in ongoing royalties  regardless
of sales through March 5, 2002.

Sales of Cold-Eeze(R) during the second quarter of 2001 were lower than the same
period of 2000  principally  due to the  unpredictable  nature of second quarter
demand as the cold season comes to a conclusion.  Recent national marketing data
indicates  an  improvement  in  purchasing  of the  Cold-Eeze(R)  product by the
consumer.

As a result of the  acquisition of a 60% position in Caribbean  Pacific  Natural
Products, Inc., effective July 1, 2000 and the commencement of product shipments
from Darius  International,  Inc., in July 2000, these two entities  contributed
$2,333,302 to revenues for the second  quarter ended June 30, 2001,  compared to
zero in the comparable 2000 period.

                                       15



Cost  of  Sales  as  a  percentage  of  sales  before  co-operative  advertising
promotions  for the three months ended June 30, 2001 was 51.2% compared to 31.5%
for the comparable period ended June 30, 2000. The increase in the cost of sales
percentage  in 2001 is as a result  of the  significantly  higher  cost of sales
associated with the Darius segment of the business. During the second quarter of
2001, Darius sales contributed 46.9% to consolidated sales.

For the  three  months  ended  June 30,  2001,  total  operating  expenses  were
$3,752,746 compared to $2,221,041 for the comparable period ended June 30, 2000.
The increased  expenditure in 2001 reflects the costs  associated with Caribbean
Pacific  Natural  Products  and  Darius   International,   totaling  $1,411,624.
Additionally, legal and other expenses associated with the Gum Tech, LLC lawsuit
in the three month period were $465,000.

The advertising cost  approximated  $140,000 for the three months ended June 30,
2001 as compared with approximately $600,000 for the comparable period in 2000.

During the three  months ended June 30, 2001,  the major  operating  expenses of
delivery,  salaries,  brokerage commissions,  promotion,  advertising, and legal
costs  accounted for $2,422,836  (65%) of total operating  costs.  The remaining
items for this period were of a  semi-fixed  nature in that they do not strictly
follow sales trends.  These expense categories for the comparable period in 2000
accounted for $1,159,399 (52%) of total operating costs.

Six months ended June 30, 2001 compared to six months ended June 30, 2000
-------------------------------------------------------------------------

For the six  months  ended June 30,  2001,  the  Company  reported  revenues  of
$9,417,589 and a net loss of  ($1,083,352) as compared to revenues of $6,227,035
and a net loss of ($5,575,728),  for the comparable  period ended June 30, 2000.
The periods  reflect a reduction in  Cold-Eeze(R)  sales in the six months ended
June 30, 2001,  however recent national  marketing data indicates an improvement
in purchasing of the Cold-Eeze(R) product by the consumer.  Additionally,  there
are signs that previous  overstocking by customers has been considerably reduced
through June 30, 2001.

Revenues for the first six months of 2001 include an amount of $1,273,864 in the
settlement  of a lawsuit  following the filing by the Quigley  Corporation  of a
patent infringement suit against Gel Tech, LLC, the developer of Zicam(TM),  and
Gum Tech  International,  Inc., its  distributor,  in November  1999.  Under the
agreement,  Gum Tech will pay The Quigley  Corporation  $1,137,500 for a limited
license for Quigley's  patent on the use of zinc  gluconate for the treatment of
the duration and symptoms of the common cold.  Gum Tech is also  required to pay
The Quigley  Corporation  an ongoing  royalty of 5.5 percent  from April 1, 2001
through March 5, 2002 on all Zicam cold relief sales. In addition,  Gum Tech has
guaranteed to pay Quigley a minimum of $500,000 in ongoing royalties  regardless
of sales through March 5, 2002.

As a result of the  acquisition of a 60% position in Caribbean  Pacific  Natural
Products, Inc., effective July 1, 2000 and the commencement of product shipments
from Darius  International,  Inc., in July 2000, these two entities  contributed
$3,752,599 to revenues for the six months ended June 30, 2001,  compared to zero
in the comparable 2000 period.

Cost  of  Sales  as  a  percentage  of  sales  before  co-operative  advertising
promotions  for the six months  ended June 30, 2001 was 41.0%  compared to 33.9%
for the comparable period ended June 30, 2000. The increase in the cost of sales
percentage  in 2001 is as a  result  of the  significantly  higher  cost of sale
associated with the Darius segment of the business. During the six months period
ended June 30, 2001 Darius sales contributed 27.5% to consolidated sales.

For the six months ended June 30, 2001, total operating expenses were $7,326,890
compared to  $9,451,596  for the  comparable  period  ended June 30,  2000.  The
increased  expenditure  in 2001  reflects the costs  associated  with  Caribbean
Pacific  Natural  Products  and  Darius   International,   totaling  $2,376,858.
Additionally, legal and other expenses associated with the Gum Tech, LLC lawsuit
in the six months period ended June 30, 2001 were approximately $480,000.

The advertising cost  approximated  $1,200,000 for the six months ended June 30,
2001 as compared with  approximately  $6.6 million for the comparable  period in
2000, substantially  contributing to the loss of ($5,575,728) for the six months
ended June 30, 2000.

During the six months  ended June 30,  2001,  the major  operating  expenses  of
delivery,  salaries,  brokerage commissions,  promotion,  advertising, and legal
costs  accounted for $4,688,378  (64%) of total operating  costs.  The remaining
items for this period were of a  semi-fixed  nature in that they do not strictly
follow sales trends.  These expense categories for the comparable period in 2000
accounted for $7,249,191 (77%) of total operating costs.

                                       16




LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The total  assets of the  Company at June 30,  2001 and  December  31, 2000 were
$22,959,941  and  $26,055,601,   respectively.   Working  capital  decreased  to
$17,172,682 from $18,622,127 during the period. The significant  movement within
total assets represents the reduction in accounts receivable of $2,702,816, cash
and cash equivalents decreased by $2,670,672, prepaid expenses and other current
assets increased by $1,550,481,  inventory increased by $419,385. From a working
capital  perspective,   accounts  payable  decreased  by  $447,468  and  accrued
royalties and sales commissions  decreased over the period by $454,703 while the
advertising  accrual  decreased by  $1,324,610.  Total cash balances at June 30,
2001 were $8,695,171, as compared to $11,365,843 at December 31, 2000.

The Company believes that its increased marketing efforts and national publicity
concerning the Cold-Eeze(R) products, the Company's manufacturing  availability,
newly available  products,  further growth in international  sales together with
its current working capital should provide an internal source of capital to fund
the  Company's  business  operations.  In addition to  anticipated  funding from
operations,  the  Company  may raise  capital  through  the  issuance  of equity
securities to finance anticipated growth.

Notwithstanding  current period negative cash flows from operations,  management
believes  amounts  of cash on hand as  well  as  those  current  assets  readily
convertible  to  cash  will  provide   adequate   liquidity  to  support  future
operations.  Any challenge to the Company's  patent rights could have a material
adverse effect on future liquidity of the Company;  however,  the Company is not
aware of any condition that would make such an event probable.

CAPITAL EXPENDITURES
--------------------

Since the Company's and its subsidiary's products of Darius International, Inc.,
and Caribbean Pacific Natural  Products,  Inc., are manufactured for the Company
by outside sources,  capital  expenditures  during the remainder of 2001 are not
anticipated to be material.


ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

                           PART II. OTHER INFORMATION
                           ---------------------------

ITEM 1. LEGAL PROCEEDINGS


                               SETTLED LITIGATION

The Quigley  Corporation filed a patent infringement suit against Gel Tech, LLC,
the developer of Zicam(TM),  and Gum Tech International,  Inc., its distributor,
in November  1999.  Subsequent  motions by the  defendants to dismiss  Quigley's
lawsuit were denied by the court.

The suit was tried in the United States District Court for the Eastern  District
of Pennsylvania.  On June 6, 2001, the Company agreed to a minimum settlement in
excess of $1.6 million in its patent infringement suit against Gel Tech, LLC and
Gum Tech International, Inc.

Under the agreement,  Gum Tech will pay The Quigley Corporation $1,137,500 for a
limited  license  for  Quigley's  patent  on the use of zinc  gluconate  for the
treatment of the  duration  and  symptoms of the common  cold.  Gum Tech is also
required to pay The Quigley  Corporation an ongoing  royalty of 5.5 percent from
April 1, 2001 through March 5, 2002 on all Zicam cold relief sales. In addition,
Gum Tech has  guaranteed  to pay  Quigley  a  minimum  of  $500,000  in  ongoing
royalties regardless of sales through March 5, 2002.

To ensure compliance with the settlement terms, The United States District Court
for the  Eastern  District of  Pennsylvania  will  retain  jurisdiction  for any
disputes arising from a violation of the agreement and order.

                                       17




ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

            The  annual  meeting  of the  Company  was held on May 4,  2001 with
10,675,153 shares eligible to vote. The presence of a quorum was reached and the
following proposals were approved by the stockholders:

            (i)    To elect a Board of  Directors  to serve for the ensuing year
                   until the next Annual Meeting of Stockholders and until their
                   respective successors have been duly elected and qualified.

            (ii)   To increase the total stock  subject to the 1997 Stock Option
                   Plan.

            (iii)  To ratify the  appointment of  PricewaterhouseCoopers  LLP as
                   independent auditors for the year ending December 31, 2001.

                                       18

For proposals (i), (ii), and (iii) above, the votes were cast as follows:


----------------------------------------------------------------------------------------------------------------------------------

     Proposal                             Position                               For       Against        Witheld      Abstentions
----------------------------------------------------------------------------------------------------------------------------------
(i) By nominee:
    Guy J. Quigley             Chairman of the Board, President, CEO           8,940,341       -          408,832           -
    Charles A. Phillips        Executive Vice President, COO and Director      8,962,341       -          386,832           -
    George J. Longo            Vice President, CFO and Director                8,962,341       -          386,832           -
    Eric H. Kaytes             Vice President, CIO and Director                8,962,341       -          386,832           -
    Jacqueline F. Lewis        Director                                        8,962,141       -          387,032           -
    Rounsevelle W. Schaum      Director                                        8,962,141       -          387,032           -

----------------------------------------------------------------------------------------------------------------------------------
(ii)                                                                           4,971,112     638,392         -           209,566
----------------------------------------------------------------------------------------------------------------------------------
(iii)                                                                          9,295,401      27,019         -            26,753
----------------------------------------------------------------------------------------------------------------------------------


ITEM 5. OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

None

(b)  Reports on Form 8-K

     There were no Current  Reports on Form 8-K filed  during the quarter  ended
     June 30, 2001.


                                       19





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.


                                   THE QUIGLEY CORPORATION



                                   By:  /s/ George J. Longo
                                        -------------------
                                            George J. Longo
                                        Vice President, Chief Financial Officer

Date: August 6, 2001