QUIGLEY CORP, SB-2/A, 1997-09-25

QUIGLEY CORP
SB-2/A, 1997-09-25
SUGAR & CONFECTIONERY PRODUCTS

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As filed with the Securities and Exchange Commission on September 24, 1997
Registration No. 333-31241

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------

AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------

THE QUIGLEY CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>

<S> <C> <C>
Nevada 5149 23-2577138
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or organization) Code Number) Identification Number)
</TABLE>

The Landmark Building
10 South Clinton Street
Doylestown, PA 18901
(215) 345-0919
------------------------------------

(Address, including zip code, and telephone
number, including area code, of Registrant's
principal executive offices)

Guy Quigley
President and Chief Executive Officer
The Quigley Corporation
10 South Clinton Street
P.O. Box 1349
Doylestown, PA 18901
(215) 345-0919
(Name, address and telephone number of agent for service of process)

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

Copies to:

Robert H. Friedman, Esq.
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200

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

Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.

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

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /

<PAGE>

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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<PAGE>
PROSPECTUS

THE QUIGLEY CORPORATION

5,480,000 SHARES OF COMMON STOCK

This Prospectus relates to the reoffer and resale by certain selling
shareholders (the "Selling Shareholders") of shares (the "Shares") of the Common
Stock, $.0005 par value (the "Common Stock"), of The Quigley Corporation, a
Nevada corporation (the "Company") that are issuable by the Company to the
Selling Shareholders upon the exercise of certain warrants to purchase Common
Stock.

The Company will not receive any proceeds from the sale of the Shares
by the Selling Shareholders, but will receive amounts upon the exercise of
warrants which amounts will be used for working capital and other corporate
purposes. The Company has agreed to bear certain expenses (other than selling
commissions and fees and expenses of counsel and other advisors to the Selling
Shareholders) in connection with the registration and sale of the Shares being
offered by the Selling Shareholders. See "Use of Proceeds."

The Selling Shareholders have advised the Company that the resale of
their Shares may be effected from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions or otherwise at market
prices prevailing at the time of the sale or at prices otherwise negotiated. The
Selling Shareholders may effect such transactions by selling the Shares to or
through broker-dealers who may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agent or to whom they sell
as principal, or both (which compensation as to a particular broker-dealer may
be in excess of customary commissions). Any broker-dealer acquiring the Shares
from the Selling Shareholders may sell such securities in its normal market
making activities, through other brokers on a principal or agency basis, in
negotiated transactions, to its customers or through a combination of such
methods. See "Plan of Distribution."

The Company's Common Stock is traded on the Nasdaq Small-Cap Market
("Nasdaq") under the symbol ("QGLY"). On September 22, 1997, the closing bid
price of the Common Stock on Nasdaq was $16.56 per share. Prior to July 7,
1997, the Company's Common Stock was traded on the National Association of
Securities Dealers, Inc.'s OTC Electronic Bulletin Board under the symbol
("QGLY").

- --------------------------------------------------------------------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK AND SHOULD ONLY BE MADE BY INVESTORS
WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS" AT PAGE 6 HEREOF.
- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

CERTAIN MATTERS DISCUSSED IN THIS REGISTRATION STATEMENT ARE FORWARD-LOOKING
STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED.

THE DATE OF THIS PROSPECTUS IS [ ], 1997

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
regional offices: 7 World Trade Center, Suite 1300, New York, New York 10048,
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60606-2511 upon
payment of the fees prescribed by the Commission. Such material may also be
accessed electronically by means of the Commission's home page on the internet
at http//www.sec.gov.

The Company has also filed with the Commission a Form SB-2 Registration
Statement (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Shares offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement.

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<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE
FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS
PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS
ENTIRETY. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS HAS
BEEN ADJUSTED TO REFLECT A TWO-FOR-ONE STOCK SPLIT OF THE COMMON STOCK EFFECTED
ON JANUARY 15, 1997. CERTAIN OF THE INFORMATION CONTAINED IN THIS SUMMARY AND
ELSEWHERE IN THIS PROSPECTUS, INCLUDING INFORMATION UNDER "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND
RELATED STRATEGY AND FINANCING, ARE FORWARD-LOOKING STATEMENTS. FOR A DISCUSSION
OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THE FORWARD-LOOKING STATEMENTS, SEE "RISK FACTORS" AND "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

THE COMPANY

The Quigley Corporation (hereinafter referred to as "the Company") is a
Nevada corporation which was organized on August 24, 1989 and commenced business
operations in October 1989.

The Company's initial business was the marketing and distribution of a
line of nutritious health supplements called Nutri-Bars. Since June 1996, the
Company has concentrated its business operations exclusively on the
manufacturing, marketing and development of its proprietary Cold-Eeze(R) and
Cold-Eezer Plus cold- remedy lozenge products and on development of various
product extensions. The Company's lozenge products are based upon a proprietary
zinc gluconate formula, which in a clinical study conducted by The Cleveland
Clinic, has been shown to reduce the severity and duration of the common cold
symptoms. The Quigley Corporation acquired world-wide manufacturing and
distribution rights to this formulation in 1992 from Dr. John Godfrey and
commenced national marketing in 1996. The Company markets its Cold-Eeze(R)
products through manufacturer's representatives, networK marketing, commercial
dealerships and other sources of marketing and promotion including television
direct marketing.

The Company's principal office is located at the Landmark Building, 10
South Clinton Street, Doylestown, PA (and its alternative mailing address is
P.O. Box 1349, Doylestown, PA 18901). The telephone number is (215) 345-0919.

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<PAGE>
THE OFFERING

Securities Offered......................... Up to 5,480,000 shares of Common
Stock that are issuable by the
Company to the Selling Shareholders
upon the exercise of certain
warrants to be sold by the Selling
Shareholders. See "Description of
Securities."

Common Stock Outstanding Prior to
the Offering............................ 12,146,264 shares

Common Stock to be Outstanding After
the Offering........................... 17,626,264 shares

Use of Proceeds........................... None of the proceeds from the sale
of the Common Stock registered
hereunder will accrue to the
Company. See "Use of Proceeds."

Risk Factors.............................. The Securities offered hereby
involve a high degree of risk
including without limitation:
history of losses; going concern
report, government regulation;
competition; dependence on sales of
principal product; dependence on
third-party manufacturing and
suppliers; seasonality of business
and quarterly fluctuations. See
"Risk Factors."

Nasdaq Symbol- Common Stock.............. QGLY

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<PAGE>

SUMMARY FINANCIAL INFORMATION

The summary financial information set forth below is derived from the
financial statements of the Company appearing elsewhere in this Prospectus. This
information should be read in conjunction with such financial statements,
including the notes thereto.

YEAR ENDED THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, DECEMBER 31, JUNE 30
----------------------------- ---------------------------- ------------------------------
1995 1996 1995 1996 1996 1997
---- ---- ---- ---- ---- ----

STATEMENT OF
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C>
Net sales........... $501,903 $1,049,561 $ 147,718 $4,091,653 $174,928 $26,265,742
Gross Profit........ 390,069 765,594 129,743 2,717,326 121,076 18,151,546
Net Income (Loss)... (152,556) (694,269) (4,347) 1,951,489 (172,452) 7,547,170
Net Income (Loss)
per share ......... $(.05) $(.17) __ $.14 $(.02) $.47
Weighted average
shares outstanding. 6,722,828 9,539,528 10,562,828 13,881,028 8,397,050 16,199,522
</TABLE>

AS OF JUNE 30, 1997
-------------------

BALANCE SHEET DATA:
Total assets........................ 18,425,977
Working capital..................... 11,653,317
Total liabilities................... 5,691,365
Shareholders' equity................ 12,734,612

(1) On January 2, 1997, the Company changed its fiscal year end from September
30 to December 31. Accordingly, the Summary Financial Information includes
results of operations for the three month period ended December 31, 1995
and 1996.

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<PAGE>
RISK FACTORS

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. EACH
PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
INHERENT IN, AND AFFECTING THE BUSINESS OF, THE COMPANY BEFORE MAKING AN
INVESTMENT DECISION.

LIMITED OPERATING HISTORY; WORKING CAPITAL DEFICIENCIES; HISTORY OF
LOSSES. The Company was organized in August of 1989 and has generated limited
revenues from the sale of its cold-remedy products through the end of the fiscal
year ended September 30, 1996. As of June 30, 1997, the Company had working
capital of approximately $11.6 million, however, the Company has a history of
limited working capital and for the fiscal years ended September 30, 1995 and
1996, the Company had working capital of approximately $270,000 and $911,000,
respectively. In addition, although the Company had net income of approximately
$1,951,000 and $7,547,000 for the three months ended December 31, 1996 and the
six months ended June 30, 1997, respectively, it incurred net losses of $153,000
and $694,000 for the fiscal years ended September 30, 1995 and 1996. There can
be no assurance that the Company will generate sufficient revenues to meet
expenses or to operate profitably in the future. If the Company is unable to
generate sufficient cash flow from its operations it would have to seek
additional borrowings, effect debt or equity offerings or otherwise raise
capital. There can be no assurance that any such financing will be available to
the Company, or if available, that the terms will be acceptable to the Company.

GOING CONCERN REPORT. The Company's independent certified public
accountant has included an explanatory paragraph in his report on the Company's
financial statements for the fiscal years ended September 30, 1995 and 1996
included herein which states that such financial statements have been prepared
based on the assumption that the Company will continue as a going concern and
that the Company's losses from operations since inception raise substantial
doubt about the ability of the Company to continue as a going concern. See
Financial Statements.

GOVERNMENT REGULATION. The manufacturing, processing, formulation,
packaging, labeling and advertising of the Company's cold-relief products are
subject to regulation by one or more federal agencies, including the United
States Food and Drug Administration ("FDA"), the Federal Trade Commission
("FTC"), the Consumer Product Safety Commission, the United States Department of
Agriculture, the United States Postal Service, the United States Environmental
Protection Agency and the Occupational Safety and Health Administration. In
particular, the FDA regulates the safety, labeling and distribution of dietary
supplements, including vitamins, minerals and herbs, food additives, food
supplements, over-the-counter and prescription drugs and cosmetics. In addition,
the FTC has overlapping jurisdiction with the FDA to regulate the promotion and
advertising of vitamins, over-the-counter drugs, cosmetics and foods.

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<PAGE>
Since the Company does not engage in the manufacturing process of its
cold-relief products, it is not subject to many of these regulations. In
addition, the Company's cold-relief product is a homeopathic remedy which is
regulated by the Homeopathic Pharmacopoeia of the United States ("HPUS"). HPUS
sets the standards for source, composition and preparation of homeopathic
remedies which are officially recognized in the Federal Food, Drug and Cosmetics
Act of 1938.

The Company's business is also regulated by various agencies of the
states and localities in which the Company's products are sold and governmental
regulations in foreign countries where the Company plans to commence or expand
sales may prevent or delay entry into a market or prevent or delay the
introduction, or require the reformulation, of certain of the Company's
products.

In addition, the Company cannot predict whether new domestic or foreign
legislation regulating its activities will be enacted. Such new legislation
could have a material adverse effect on the Company. Failure to comply with any
applicable requirements can result in sanctions being imposed on the Company or
the manufacturers of its products, including warning letters, fines, product
recalls and seizures.

COMPETITION. Management of the Company believes that the Company's
cold-relief product, which has been clinically proven to reduce the severity and
duration of the common cold symptoms, offers a significant advantage over other
suppliers in the over-the-counter cold remedy market. Competition consists of
numerous suppliers of cold remedy products. This market is highly competitive,
and some companies with which the Company competes are substantially larger and
have significantly greater resources than the Company. The Company believes that
its ability to compete depends on a number of factors, including price, product
quality, availability and reliability and name recognition. There can be no
assurance that the Company will be able to compete successfully in the future.

MANAGING GROWTH. The Company is currently experiencing a period of
rapid growth and expansion which has placed, and could continue to place, a
significant strain on the Company's management, customer service and support
operations, sales and administrative personnel and other resources. The
Company's ability to manage its planned growth requires the Company to continue
to expand its operating, management, information and financial systems, all of
which may increase its operating expenses. If the Company fails to achieve its
growth as planned or is unsuccessful in managing its anticipated growth, there
could be a material adverse effect on the Company. In addition, the loss of a
significant customer or a number of customers, or a significant reduction in
purchase volume by or financial difficulty of such customers, for any reason,
could have a material adverse effect on the Company. See "Business -- Outlook."

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<PAGE>
DEPENDENCE ON KEY PERSONNEL. The Company's future success depends in
large part on the continued service of its key personnel. In particular, the
loss of the services of Guy Quigley, its Chairman of the Board, President and
Chief Executive Officer could have a material adverse effect on the operations
of the Company. The Company has an employment agreement with Mr. Quigley which
expires on May 31, 2005. The Company's future success and growth also depends on
its ability to continue to attract, motivate and retain highly qualified
employees. There can be no assurance that the Company will be able to attract,
motivate and retain such persons.

DEPENDENCE UPON SALES OF PRINCIPAL PRODUCT. The Company's future
performance will depend, almost entirely, on the continued customer acceptance
of the Company's principal product, Cold-Eeze(R). For the three months ended
December 31, 1996 and the six months ended June 30, 1997, substantially all of
the Company's revenues have been generated by sales of Cold-Eeze(R) or product
extensions of Cold-Eeze(R). The Company anticipates that substantially all of
its revenues for the foreseeable future will be generated by sales of
Cold-Eeze(R), both overseas and in the U.S. There can be no assurance that the
Company's Cold-Eeze(R) products will continue to receive market acceptance. The
inability to successfully commercialize Cold-Eeze(R), for any reason, would have
a material adverse effect on the Company's financial condition, prospects, and
ability to continue operations. See "Business."

DEPENDENCE ON THIRD-PARTY MANUFACTURING AND SUPPLIER. The Company does
not own or lease any manufacturing facilities, does not manufacture the
Cold-Eeze(R) product or any of its ingredients, and purchases all ingredients
from a single unaffiliated supplier. The Company has entered into a contract
with a single manufacturer to supply its zinc gluconate products. Should this
relationship terminate, the Company believes that the contingency plans which it
has formulated would prevent such termination from materially affecting the
Company's operations. Any such termination may, however, result in a temporary
delay in production until a replacement facility with available production time
is located. In addition, the terms on which suppliers and manufacturers will be
available could have a material effect on the success of the Company. See
"Business - Customers and Suppliers."

UNCERTAINTY OF PATENT PROTECTION; UNCERTAINTY OF PROTECTION OF
PROPRIETARY TECHNOLOGY. The strength of the Company's patent position may play
an important role in its long-term success. The Company currently owns no
patents. However, the Company has been granted an exclusive agreement for
worldwide representation, manufacturing, marketing and distribution rights to a
zinc/gluconate/glycine lozenge formulation developed by Dr. John C. Godfrey,
Ph.D. The zinc/gluconate/glycine lozenge formulation developed by Dr. John C.
Godfrey, Ph.D has been patented in the United States, Germany, France, Italy,
Sweden, Canada and Great Britain and a patent is pending in Japan. The Company
also has an exclusive license from George Eby Research for a United States use
patent for zinc gluconate. There can be no assurance that these

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<PAGE>
patents will be effective to protect the Company's product from duplication by
others. In addition, there can be no assurance that the Company or the patent
holder will be able to afford the expense of any litigation which may be
necessary to enforce its rights under any patent. Moreover, although the Company
believes that its product does not and will not infringe upon the patents or
violate the proprietary rights of others, it is possible that such infringement
or violation has or may occur. In the event that the Company's product is
determined to infringe upon the patents or proprietary rights of others, the
Company could be required to modify its product or obtain an additional license
for the manufacture and/or sale of the product, or could be prohibited from
selling the product. There can be no assurance that, in such an event, the
Company would be able to do so in a timely manner, upon acceptable terms and
conditions, or at all, and the failure to do any of the foregoing could have a
material adverse effect upon the Company. Furthermore, there can be no assurance
that the Company or the patent holders will have the financial or other
resources necessary to enforce or defend a patent infringement or proprietary
rights violation action. In addition, if the Company's product is deemed to
infringe upon the patents or proprietary rights of others, the Company could,
under certain circumstances, become liable for damages, which could also have a
material adverse effect on the Company. See "Business - Patents."

The Company also relies substantially upon its proprietary
technologies, utilizing non-disclosure agreements with its employees, suppliers,
consultants and customers to establish and protect the ideas, concepts and
documentation of its proprietary technology and know-how. Such methods, however,
may not afford complete protection, and there can be no assurance that third
parties will not independently develop such know-how or obtain access to the
Company's know-how, ideas, concepts and documentation, which could have a
material adverse effect on the Company.

SEASONALITY OF BUSINESS; QUARTERLY FLUCTUATIONS. A substantial portion
of the Company's business is highly seasonal, causing significant variations in
operating results from quarter to quarter. The consumer market for the Company's
cold-relief products tends to be highly seasonal. It is anticipated that a major
portion of the Company's will come in the first and fourth quarters since the
primary cold season is from September to March. There can be no assurance that
the Company can maintain sufficient flexibility with respect to its working
capital needs and its ability to manufacture products to be able to minimize the
adverse effects of an unanticipated shortfall in or greater than expected demand
for its products. Failure to predict accurately and respond to consumer demand
may cause the Company to produce excess inventory. Conversely, if the product
achieves greater success than anticipated for any given quarter, the Company may
not have sufficient inventory to meet customer demand. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

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<PAGE>
POTENTIAL PRODUCT LIABILITY EXPOSURE. The Company's business exposes it
to an inherent risk of potential product liability claims, including claims for
serious bodily injury or death, which could lead to substantial damage awards.
The Company currently maintains product liability insurance in the amount of and
with a maximum payout of $10 million. A successful claim brought against the
Company in excess of, or outside of, its insurance coverage could have a
material adverse effect on the Company's results of operations and financial
condition. Claims against the Company, regardless of their merit or eventual
outcome, may also have a material adverse effect on the consumer demand for the
Company's products.

CONTROL BY PRINCIPAL SHAREHOLDER. Guy Quigley, the Chairman of the
Board and President of the Company, through his beneficial ownership has the
power to vote approximately 30.9% of the Common Stock. Mr. Quigley and the other
executive officers and directors of the Company collectively beneficially own
approximately 42.5% of the Company's Stock. These individuals have significant
influence over the outcome of all matters submitted to shareholders for
approval, including election of directors of the Company, thereby enabling them
to control all major decisions of the Company. In addition, such concentration
of ownership may have the effect of preventing a change of control of the
Company. See "Security Ownership of Certain Beneficial Owners and Management".

VOLATILITY OF THE COMPANY'S COMMON STOCK PRICES. The market price of
the Company's Common Stock has experienced significant volatility, with per
share bids ranging from a low of approximately $2.09 to a high of approximately
$15.50 (after giving effect to a 2 for 1 stock split) over the nine month period
from October 1, 1996 to June 30, 1997. Announcements of technological
innovations for new commercial products of the Company or its competitors,
developments concerning propriety rights or governmental regulation or general
conditions in the market for the Company's cold-relief products may have a
significant effect on the Company's business and on the market price of the
Company's securities. Sales of a substantial number of shares by existing
security holders could also have an adverse effect on the market price of the
Company's securities.

SHARES ELIGIBLE FOR FUTURE SALE. The sale, or availability for sale, of
substantial amounts of Common Stock in the public market pursuant to Rule 144 or
otherwise could adversely affect the market price of the Common Stock and could
impair the Company's ability to raise additional capital through the sale of its
equity securities.

NO CASH DIVIDENDS. The Company has not paid cash dividends on its
Common Stock since its inception. The Company currently intends to retain
earnings, if any, for use in the business and does not anticipate paying any
dividends to its shareholders in the foreseeable future.

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<PAGE>

RIGHTS OF COMMON STOCK SUBORDINATE TO PREFERRED STOCK. The Articles of
Incorporation of the Company authorizes the issuance of a maximum of 1,000,000
shares of preferred stock, par value $.001 per share. No shares of preferred
stock are currently outstanding. If shares of preferred stock are issued in the
future, the terms of a series of preferred stock may be set by the Company's
Board of Directors without approval by the holders of the Common Stock of the
Company. Such terms could include, among others, preferences as to dividends and
distributions on liquidation as well as separate class voting rights. The rights
of the holders of the Company's Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future.

BARRIERS TO TAKEOVER. The Company's Articles of Incorporation and
By-Laws contain certain provisions which may deter, discourage, or make more
difficult the assumption of control of the Company by another corporation or
person through a tender offer, merger, proxy contest or similar transaction or
series of transactions. These provisions include an unusually large number of
authorized shares (150,000,000) and the prohibition of cumulative voting. In
addition, the future issuance of preferred stock by the Company could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of the outstanding voting
stock of the Company. The overall effect of these provisions may be to deter a
future tender offer or other takeover attempt that some shareholders might view
to be in their best interest as the offer might include a premium over the
market price of the Company's capital stock at the time. In addition, these
provisions may have the effect of assisting the Company's current management in
retaining its position and place it in a better position to resist changes which
some shareholders may want it to make if dissatisfied with the conduct of the
Company's business. See "Description of Securities -- Nevada Law and Corporate
Provisions Affecting Shareholders."

LIMITATIONS ON LIABILITY OF DIRECTORS AND OFFICERS. Section 78.751 of
the Nevada General Corporation Law ("NGCL") allows the Company to indemnify any
person who is or was made a party to, or is or was threatened to be made a party
to, any pending, completed, or threatened action, suit or proceeding by reason
of the fact that he or she is or was a director, officer, employee or agent of
the Company or is or was serving at the request of the Company as a director,
officer, employee or agent of any corporation, partnership, joint venture, trust
or other enterprise. The NGCL permits the Company to advance expenses to an
indemnified party in connection with defending any such proceeding, upon receipt
of an undertaking by the indemnified party to repay those amounts if it is later
determined that the party is not entitled to indemnification.

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<PAGE>
successful, might otherwise benefit the Company and its shareholders. In
addition, to the extent that the Company expends funds to indemnify directors
and officers, funds will be unavailable for operational purposes. See
"Description of Securities -- Nevada Law and Corporate Provisions Affecting
Shareholders."

USE OF PROCEEDS

No net proceeds will be realized by the Company from the sale of the
Shares offered hereby by the Selling Shareholders. The Company will, however,
receive the exercise price of the warrants held by the Selling Shareholders, if
and when exercised. Such proceeds will be used by the Company for working
capital and other corporate purposes.

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<PAGE>
PRICE RANGE OF COMMON STOCK

Prior to July 7, 1997, the Company's Common Stock, $.0005 par value,
traded on the National Association of Security Dealers, Inc.'s OTC Electronic
Bulletin Board under the trading symbol QGLY. The following table sets forth the
average range of bid and ask quotations for the Company's Common Stock as
reported by the NASD Bulletin Board for each full quarterly period within the
two most recent fiscal years (1). Since July 7, 1997, the Company's Common Stock
has been quoted on the Nasdaq Small-Cap Market under the trading symbol QGLY.

FISCAL YEAR ENDED SEPTEMBER 30, 1995 (2) (3)

BY QUARTER COMMON STOCK

QUARTER DATE HIGH LOW

1st December 31, 1994 $1.25 $1.00

2nd March 31, 1995 $1.25 $1.00

3rd June 30, 1995 $1.25 $1.00

4th September 30, 1995 $1.25 $1.00

FISCAL YEAR ENDED SEPTEMBER 30, 1996 (2) (3)

BY QUARTER COMMON STOCK

QUARTER DATE HIGH LOW

1st December 31, 1995 $ 1.38 $0.88

2nd March 31, 1996 $ 1.38 $0.88

3rd June 30, 1996 $ 2.25 $0.63

4th September 30, 1996 $6.63 $1.75

INTERIM PERIOD ENDED DECEMBER 31, 1996 (3)

DATE HIGH LOW

December 31, 1996 $ 10.44 $ 2.09

-13-

<PAGE>

FISCAL YEAR ENDING DECEMBER 31, 1997 (3)

BY QUARTER COMMON STOCK
------------
QUARTER DATE HIGH LOW

1st March 31, 1997 $ 15.50 $ 9.03

2nd June 30, 1997 $ 12.50 $ 7.69

(1) Prior to July 7, 1997, trading transactions in the Company's
securities occurred in the over-the-counter market and, accordingly, an
"established public trading market" for such securities currently
exists and has existed for more than the past sixty business days. Bid
and asked quotations at fixed prices have appeared regularly in the
established quotation systems on at least one-half of such business
days. All prices indicated herein are as reported to the Company by
broker-dealer(s) making a market in its securities. The aforesaid
securities are not traded or quoted on any automated quotation system.
The over-the-counter market quotes indicated above reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions.

(2) Prices have been adjusted to reflect the ten-for-one reverse split
of Common Stock in December 1995.

(3) Prices have been adjusted to reflect the two-for-one split of
Common Stock in January 1997.

As of June 30, 1997 there were approximately 373 holders of record of
Company's Common Stock, including brokerage firms, clearing houses, and/or
depository firms holding the Company's securities for their respective clients.
The exact number of beneficial owners of the Company's securities is not known.

-14-

<PAGE>
DIVIDEND POLICY

The Company has never paid any cash dividends on the Common Stock and
it is currently the intention of the Company not to pay cash dividends on its
Common Stock in the foreseeable future. Management intends to reinvest earnings,
if any, in the development and expansion of the Company's business. Any future
declaration of cash dividends will be at the discretion of the Board of
Directors and will depend upon the earnings, capital requirements and financial
position of the Company, general economic conditions and other pertinent
factors.

SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

YEAR ENDED THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, DECEMBER 31, JUNE 30,
---------------------------- ----------------------------- ------------------
1995 1996 1995 1996 1996 1997
---- ---- ---- ---- ---- ----

STATEMENT OF
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C>
Net sales............. $501,903 $1,049,561 147,718 $4,091,653 $174,928 $26,265,742
Gross Profit.......... 390,069 765,594 129,743 2,717,326 121,076 18,151,546
Net Income (Loss)..... (152,556) (694,269) (4,347) 1,951,489 (172,452) 7,547,170
Net Income (Loss)
per share ........... $(.05) $(.17) -- $.14 $(.02) $.47
Weighted average
shares outstanding... 6,722,828 9,539,528 10,562,828 13,881,028 8,397,050 16,199,522
</TABLE>

BALANCE SHEET DATA: AS OF JUNE 30, 1997
----------------------------

Total assets............................. 18,425,977
Working capital.......................... 11,653,317
Total liabilities........................ 5,691,365
Shareholders' equity..................... 12,734,612

-15-

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION

THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD- LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE COMPANY'S EXPANSION INTO NEW
MARKETS, COMPETITION, TECHNOLOGICAL ADVANCES AND AVAILABILITY OF MANAGERIAL
PERSONNEL.

OVERVIEW

During the fiscal year ended September 30, 1996, management of the
Company made a strategic marketing decision to change the focus and business
operations of the Company to the manufacture and marketing of the Company's
patented Cold-Eeze(R) cold relief lozenge product and the development and
marketing of brand extension products based upon the Company's proprietary zinc
gluconate glycine formula.

By commencing national distribution of a cold-relief product clinically
proven to reduce the severity and duration of the common cold symptoms, the
Company believes that it is offering a significant addition to the huge
over-the-counter cold remedy market. Through greatly increased sales and
expansion of manufacturing availability and by holding down operation, marketing
and distribution costs, the Company believes it will in the fiscal year ending
December 31, 1997 maintain a positive cash flow from operations. The Company
also intends to continue to utilize the financial and marketing resources of
independent national and international brokers and marketers to represent the
Company's Cold-Eeze(R) lozenge product and product extensions, thereby saving
the Company from the expenses and capital outlays which the Company would
otherwise be required to expend.

The Company had not generated significant revenues from its business
operations from its inception through the third quarter of the fiscal year ended
September 30, 1996. As a result of the release of the clinical study by The
Cleveland Clinic in July, 1996 citing positive results of the efficacy of the
Company's Cold-Eeze(R) formulation, and the resultant increased national
publicity concerning the Cold-Eeze(R) product, revenue from product sales
greatly increased during the fourth quarter ending September 30, 1996. For the
fiscal year ended September 30, 1996, the Company had a net loss of ($694,269)
on revenues of $1,049,561. The dramatic increase in purchase orders for the
Cold-Eeze(R) product resulted in a significant backlog in purchase orders by the
close of the fiscal year ended September 30, 1996.

Based upon continuing strong consumer demand for the Cold- Eeze(R)
product, the Company in September, 1996 initiated a program designed to increase
manufacturing availability in several stages.

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<PAGE>
As a result of this program, the Company will have the ability to manufacture
and ship in excess of $1.5 million of the Cold-Eeze(R) product by the end of
January, 1997, with additional manufacturing availability coming on-line shortly
thereafter.

As of December 26, 1996, the Company had a purchase order backlog of
approximately $7.5 million of Cold-Eeze(R) product, and was, during the months
of November, 1996 and December, 1996, manufacturing and shipping Cold-Eeze(R)
product at the rate of approximately $500,000 per week. These sales levels are
significantly higher than any previous sales results of the Company and
management expects that these sales levels will continue for the immediate
future and therefore will have a materially positive effect on the Company's
results for the fiscal year ending December 31, 1997.

Although the Company expects that sales levels will be highest during
the peak cold season from September through March, near-term sales levels should
continue to increase as the Company ships its backlog of orders and distributors
and retailers order increasing quantities of the Cold-Eeze(R) product to fill
their distribution pipeline and meet increasing consumer demand for the product.
In addition, new marketing plans are under way as well as negotiating sales
distribution agreements for the Southern Hemisphere, which has a cold season
that is opposite of North America to help counteract the current seasonality for
the product.

The Company expects that it will during the fiscal year ending December
31, 1997 utilize its increased manufacturing availability to manufacture
sufficient product for international distribution of Cold-Eeze(R). Although the
Company has begun to establish an international network of independent
distributors, the current inability to meet domestic demand for the Cold-Eeze(R)
product and the time needed for international product registration has delayed
the introduction of the Cold-Eeze(R) product outside the United States.

The management of the Company currently believes that the expected
significant increases in revenues, and related profits generated, for the
remainder of 1997, should provide an internal source of capital to fund the
Company's business operations, and as needed, short term funding with commercial
banks. Management is not aware of any trend, events or uncertainties that have,
or are reasonably likely, or expected to have, a material negative impact upon
the Company's short term or long term liquidity.

The Company believes that it has developed an effective, proprietary
cold remedy product which is beginning to meet with widespread consumer
acceptance. Future results of the Company's operations, however, will be
dependent upon a number of factors, including competitive and financial
pressures associated with national distribution of an over-the-counter cold
remedy. Future revenues, costs, margins and profits will continue to be
influenced by the Company's ability to increase its manufacturing, marketing

-17-

<PAGE>
and distribution capabilities in order to compete on the national and
international level.

On January 2, 1997, the Company changed its fiscal year end from
September 30 to December 31. Accordingly, the comparison of results of
operations includes a discussion of the three month period ended December 31,
1996 and 1995.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1996 AND 1997

For the three and six months ended June 30, 1997, the Company reported
revenues of $4,083,756 and $26,265,742, respectively, and a net income of
$1,057,365 and $7,547,170, respectively, as compared with revenues of $69,496
and $174,928 and a net loss of ($95,162) and ($172,452) for the comparable
periods ended June 30, 1996. This substantial increase in revenue and profits is
primarily due to the publication of a clinical trial study in a medical journal,
proving the effectiveness of Cold-Eeze(R) as a remedy for the common cold
symptoms. Also, contributing to this substantial increase was the Company's
national marketing program, national exposure in the media, such as the ABC
network news program, "20/20", in January 1997, and the substantial increase in
the manufacturing availability for the product during this period.

The current gross profit rate of 70.0% and 69.1% for the three and six
month periods ended June 30, 1997, should remain as a relative constant going
forward, especially for the immediate future. This is comparable to the 69.9%
and 69.2% gross profit rate for the periods ended June 30, 1996.

Operating expenses, such as delivery, brokerage commissions, promotion,
and advertising costs, increased significantly over the prior comparable period
due to the national marketing efforts and the relationship of revenue dollar
volume increases of the Cold- Eeze(R) product. These expenses accounted for
approximately $651,881 and $3,081,831 of the total operating costs of $1,081,528
and $5,467,226 for the three and six month periods ended June 30, 1997 as
compared to total operating costs of $143,705 and $293,528 for the comparable
three and six month periods ended June 30, 1996. Accordingly, until other income
tax strategies currently being reviewed are implemented in the future, the
effective tax rate for the Company should approximate 40.5%.

Total assets of $18,425,977, working capital of $11,653,317 and
shareholder's equity of $12,734,612 at June 30, 1997, increased dramatically as
compared to $6,281,184, $3,723,275 and $4,777,073, respectively at December 31,
1996. This occurred primarily from significant sales and net income volume
increases which thereby increased cash and cash equivalents $4,112,070,
inventories $7,065,918 and accounts payable and other accrued expenses
$3,889,871. The occurrence of common stock related transactions,

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<PAGE>

as compared to the comparable reporting period, totaling $670,369 also
contributed to the balance sheet increases.

BY REASON OF THE COMPANY'S CHANGE OF FISCAL YEAR END FROM SEPTEMBER 30
TO DECEMBER 31, THE FOLLOWING COMPARISON IS PROVIDED:

THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1995.

For the three months ended December 31, 1996, the Company reported
revenues of $4,091,653 and a net income of $1,951,489, as compared with revenues
of $147,718 and a net loss of ($4,347) for the comparable period ended December
31, 1995. This substantial increase in revenue and profits is primarily due to
the Company's national marketing program coupled with the publication of a
recent clinical trial study in a medical journal, proving the effectiveness of
Cold-Eeze(R) as a remedy for the common cold symptoms. Prior to the release of
this study, financial information reported does not really compare to the
financial relationships that are present in the three-months period ended
December 31, 1996.

Operating expenses, such as delivery, brokerage commissions, promotion,
and advertising costs, increased significantly over the prior comparable period
due to the national marketing efforts of the Cold-Eeze(R) product. These
expenses accounted for approximately $585,202 of the total operating costs of
$802,823 for the three months ended December 31, 1996 as compared to total
operating costs of $134,090 for the prior comparable period.

Total assets of $6,335,373, working capital of $3,777,464 and
shareholders' equity of $4,831,262 for the period ended December 31, 1996,
increased dramatically from the prior comparable period. This occurred primarily
from significant sales increases which thereby increased accounts receivable by
$1,593,746 and inventories by $242,393. Also, issuance of common stock related
transactions totaling $1,815,795 contributed to the balance sheet increases.

YEAR ENDED SEPTEMBER 30, 1996 COMPARED WITH YEAR ENDED SEPTEMBER 30, 1995

For the year ended September 30, 1996, the Company reported revenues of
$1,049,561 and a net loss of ($694,269), as compared with revenues of $501,903
and a net loss of ($152,556) for the comparable period ended September 30, 1995.
This substantial increase in revenue is primarily attributable to gradual market
acceptance of the Cold-Eeze(R) lozenge products. The gradual market acceptance
of the Cold-Eeze(R) product resulted from a national marketing program commenced
in the fourth quarter for the year ended September 30, 1996 and the release of
the results of The Cleveland Clinic Study in July, 1996. Sales in 1995 were
$501,903, most of which resulted following the Company's marketing shift from
health food bars to cold-relief products.

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<PAGE>

Cost of Goods sold, as a percentage of net sales, increased to 27.1%
for the year ended September 30, 1996 from 22.3% for the year ended September
30, 1995. The slight increase was similarly caused by the Company's change in
its product mix toward developing and marketing the Cold-Eeze(R) products
instead of health food bars. During the year ended September 30, 1996, operating
expenses similarly increased to $1,493,794 from $552,696 in the year ended
September 30, 1995. This was primarily a result of increased costs associated
with a national marketing program and the increased sales volume from the
Cold-Eeze(R) product during the year ended September 30, 1996.

During the year ended September 30, 1996, the Company's major operating
expenses included $558,281 for salaries and $570,752 for advertising which
collectively accounted for $1,129,033 or approximately 75.6% of the Company's
operating expenses. Other operating costs for this period maintained their fixed
attributes, in that they did not follow sales volume but maintained a relative
constant dollar value for the year ended September 30, 1995. During the year
ended September 30, 1995, these expenses included $106,660 for salaries and
$93,931 for advertising. If these two categories of expenses maintained the same
relationship to net sales from the year ended September 30, 1995, then the net
loss for the year ended September 30, 1996 would have changed to basically a
break even.

For future periods, a normal profitable relationship should develop for
all costs and operating expenses as they relate to sales. However, this will not
occur until certain break even sales volume levels are achieved to absorb
certain fixed costs of the Company. The pricing structure of the Company's
product is designed to render the Company profitable after base line sales
volume levels are attained.

The total assets of the Company at September 30, 1996 and September 30,
1995 were $1,368,301 and $437,076 respectively. Working capital increased to
$910,970 from $287,281 for the respective periods. These significant increases
are due primarily to increased sales volume, the acquisition of the use patent,
and funds or paid in capital generated from the sale, exercise or exchange for
services of the Company's Common Stock, options, and warrants.

At September 30, 1996, the Company's backlog was approximately $2
million as compared to no backlog at September 30, 1995. The backlog increase
was attributable to a growth in sales of the Company's Cold-Eeze(R) lozenge
products.

YEAR ENDED SEPTEMBER 30, 1995 COMPARED WITH YEAR ENDED SEPTEMBER 30, 1994

For the year ended September 30, 1995, the Company reported revenues of
$501,903 and a net loss of ($152,556), as compared with revenues of $76,907 and
a loss of ($73,784) for the comparable period ended September 30, 1994. This
dramatic change in revenue

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<PAGE>

is primarily attributable to the Company's initial marketing efforts of its
cold-relief products, through the "QVC" television shopping network, which
represents approximately $261,000 or 52% of the total revenues for the year
ended September 30, 1995, and growing interest of the product by consumers in
the marketplace.

Cost of goods sold, as a percentage of net sales, decreased to 22.3%
for the year ended September 30, 1995 from 34.8% for the year ended September
30, 1994. The occurred because the Company's change in its product mix toward
developing and marketing the Cold- Eeze(R) products primarily through QVC, which
carried a lower cost of sales than health food and other cold-relief products.
During the fiscal year ended September 30, 1995, the health food bars accounted
for approximately 1% of total net sales as opposed to approximately 27% in the
fiscal year ended September 30, 1994.

During the fiscal year ended September 30, 1995, operating expenses
increased to $552,696 from $180,015 in the year ended September 30, 1994.
However, as a percentage of net sales, operating costs decreased to 110.1% in
the year ended September 30, 1995 from 234.1% in the fiscal year ended September
30, 1994. Even though total operating costs were lower as a percentage of net
sales, certain expenses increased in the fiscal year ended September 30, 1995
causing a greater loss from operations to be reported. During the fiscal year
ended September 30, 1995, advertising and professional expenses increased to
$93,931 and $69,325, respectively, compared to $3,056 and ($8,081), respectively
for the year ended September 30, 1994.

The Company had working capital of $287,281 for its fiscal year ended
September 30, 1995, as compared to a working capital deficiency of ($59,998) for
its fiscal year ended September 30, 1994. This improvement in working capital
was due primarily to a significant increase in revenues to $501,903 in the year
ended September 30, 1995 from $76,907 in the year ended September 30, 1994,
combined with additional capital obtained by the Company through sale of Common
Stock.

As of September 30, 1995, the Company did not have any current material
commitments for capital expenditures.

LIQUIDITY AND CAPITAL RESOURCES

The Company had working capital of $11,653,317 at June 30, 1997 and
$3,377,464 at December 31, 1996. The increase in working capital is due to sales
and net income volume increases. Total cash balances at June 30, 1997 were
$6,568,043, as compared to $2,455,973 at December 31, 1996.

The Company believes that its increased marketing efforts and increased
national publicity concerning the Cold-Eeze(R) product, together with the
Company's increased manufacturing availability, will result in significantly
increased revenues in the year ending December 31, 1997. These revenues will
provide an internal source of capital to fund the Company's business operations.
In addition

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<PAGE>
to anticipated earnings from operations, the Company may continue to raise
capital through the issuance of equity securities or short term borrowing with
commercial banks to finance anticipated growth.

Management is not aware of any trends, events or uncertainties that
have or are reasonably likely or expected to have a material negative impact
upon the Company's (a) short term or long term liquidity, (b) net sales or
revenues or income from continuing operations and (c) the Company's business
operations may not be considered to be cyclical and/or seasonable in nature. Any
challenge to the Company's rights under certain patents could have a material
adverse effect on future liquidity of the Company, however, the Company is not
aware of any condition which would make such an event probable.

Management believes that its present cash balances and future cash
provided by operating activities will be sufficient to support current working
capital requirements and planned expansion through the year ending December 31,
1997. However, should the Company's business expand significantly, additional
external sources of financing would be required. While the Company believes that
such financing would be available to it, there can be no assurance in this
regard.

PLAN OF OPERATIONS AND CAPITAL REQUIREMENTS

Since the Cold-Eeze(R) lozenge product is manufactured for the Company
by outside sources, capital expenditures for the year ending December 31, 1997
are not anticipated to be material.

There are significant royalty agreements between the Company and the
patent holders of the Company's cold-relief product. The Company has entered
into royalty agreements with Godfrey Science & Design, Inc. and George Eby
Research that require payments of 3% of gross sales and with Guy J. Quigley and
Charles A. Phillips who share a royalty of 5% of gross sales (in a ratio of
3.75% and 1.25%, respectively). Additionally, Dr. John C. Godfrey and Dr. Nancy
J. Godfrey receive a consulting fee of 2% of gross sales. All such royalty and
consulting arrangements are subject to certain adjustments, and payments are
required by the Company only after funds are remitted from such sales. See,
Description of Business- Royalty and Employment Agreements.

The agreements expire as follows: the agreement with George Eby
Research expires on March 5, 2002; the agreements with each of Godfrey Science &
Design, Dr. John C. Godfrey, and Dr. Nancy J. Godfrey expire on May 4, 2007; and
the agreements with Guy J. Quigley and Charles A. Phillips expire on May 31,
2005. All costs associated with the cold-relief product, including the royalty
and consulting agreements, have been built into the wholesale selling price of
the product, in order to render the operations profitable after a certain base
sales volume has been achieved.

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<PAGE>

FORWARD LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act, which are intended to be covered by the safe harbors created thereby.
Although the Company believes that the assumptions underlying the forward
looking statements contained herein are reasonable, any of the assumptions could
be inaccurate, and therefore, there can be no assurance that the forward-looking
statements included in this Prospectus will prove to be accurate. Factors that
could cause actual results to differ from the results specifically discussed in
the forward-looking statements include, but are not limited to, those discussed
in "Risk Factors." In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of information should
not be regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.

-23-

<PAGE>
BUSINESS

OVERVIEW

The Quigley Corporation (the "Company") is a Nevada corporation which
was organized on August 24, 1989 and commenced business operations in October,
1989. Since its inception, the Company has conducted research and development
into various types of health-related food supplements and homeopathic cold
remedies.

The Company's initial business was the marketing and distribution of a
line of nutritious health supplements (hereinafter "Nutri-Bars"). Beginning in
1995, the Company minimized its marketing of the Nutri-Bars and focused its
efforts on the development and marketing of the Company's patented Cold- Eeze(R)
zinc gluconate cold relief lozenge product.

Since June, 1996, the Company has concentrated its business operations
exclusively on the manufacturing, marketing and development of its proprietary
Cold-Eeze(R) and Cold-Eezer Plus cold- remedy lozenge products and on
development of various product extensions. The Company's lozenge products are
based upon a proprietary zinc gluconate formula which in a clinical study
conducted by The Cleveland Clinic has been shown to reduce the severity and
duration of the common cold symptoms. The Quigley Corporation acquired
world-wide manufacturing and distribution rights to this formulation in 1992
from Dr. John Godfrey and commenced national marketing in 1996.

THE COLD-EEZE(R) COLD REMEDY LOZENGE

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 developed by Dr. John C. Godfrey,
Ph.D., and 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 under the tradename Cold-Eeze(R) by the Company directly and also
through independent brokers and marketers, and is a featured product on the QVC
Cable TV shopping network.

In 1996, the Company also acquired an exclusive license to a zinc
gluconate use patent which had been patented by George Eby III, thereby assuring
the Company of exclusivity in the manufacturing and marketing of zinc gluconate
formulated cold relief products.

Under an FDA approved Investigational New Drug Application, filed by
Dartmouth College, a randomized double-blind placebo- controlled study
(randomized study), conducted at Dartmouth College Health Science, Hanover, New
Hampshire, concluded that the lozenge

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<PAGE>

formulation treatment, initiated within 48 hours of symptom onset, resulted in a
significant reduction in the total duration of the common cold symptoms.

On May 22, 1992, ZINC AND THE COMMON COLD, A CONTROLLED CLINICAL STUDY,
by Dr. Godfrey, et al., was published in England, in the "Journal of
International Medical Research", Volume 20, Number 3, Pages 234-246. According
to Dr. Godfrey (a) flavorings used in other Zinc lozenge products (citrate,
tartrate, separate, orotate, picolinate, mannitol or sorbitol) render the Zinc
inactive and unavailable to the patient's nasal passages, mouth and throat,
where cold symptoms have to be treated, (b) this new, patented pleasant-tasting
formulation delivers approximately 93% of the active Zinc to the mucosal
surfaces and (c) the patient has the same sequence of symptoms as in the absence
of treatment, but goes through the phases at an accelerated rate and with
reduced symptom severity.

On July 15, 1996, results of a new randomized double-blind
placebo-controlled study on the common cold, which commenced at the CLEVELAND
CLINIC FOUNDATION on October 3rd, 1994 was published. The study called "ZINC
GLUCONATE LOZENGES FOR TREATING THE COMMON COLD" was completed and published in
the ANNALS OF INTERNAL MEDICINE - VOL. 125 NO. 2. Using a 13.3mg lozenge (almost
half the strength of the lozenge used in our Dartmouth Study), the results still
showed a 42% reduction in the duration of the Common Cold symptoms.

The Company's executive offices are located at Landmark Building, PO
Box 1349, Doylestown, PA 18901. The telephone number of the Company is (215)
345-0919. The Company maintains a home page on the Internet at
http://www.quigleyco.com and can be reached by e-mail at [email protected].

CUSTOMERS AND SUPPLIERS

The Cold-Eeze(R) lozenge products are distributed through numerous
independent and chain drug and discount stores throughout the United States,
including Walgreen's, Revco, Osco/Sav-On, Thrift Drug, CVS, RiteAid, Eckerd,
PharMor, K-Mart, and wholesale distribution including, McKesson, Bergen
Brunswick, Foxmeyer, US Health Distributors. The Cold-Eezer Plus product is
marketed through an exclusive sales agreement with the QVC cable shopping
network. The Company is not dependent on any single customer.

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<PAGE>

The Company currently uses a single supplier to provide its zinc
gluconate products. The Company entered into an exclusive supply agreement
effective as of March 17, 1997, pursuant to which such supplier will exclusively
manufacture and package the Company's zinc gluconate lozenges for an initial
period expiring on March 16, 2000. The contract provides for a yearly renewal,
unless terminated by either party upon two (2) years written notice. Should this
relationship terminate, the Company believes that the contingency plans which it
has formulated would prevent such termination from materially affecting the
Company's operations. Any such termination may, however, result in a temporary
delay in production until a replacement facility with available production time
is located.

RESEARCH AND DEVELOPMENT

The Company's research and development costs for the year ended
September 31, 1996 and the year ended September 30, 1995 was $41,856 and
$70,711, respectively. The decrease in research and development costs is
attributable to the Company's completion of its research and development
projects with respect to the Cold- Eeze(R) product. The clinical study conducted
by The Cleveland Clinic was done at no cost to the Company. The Company will in
the fiscal year ending December 31, 1997 incur research and development
expenditures to develop extensions of the lozenge product, including potential
pediatric Cold-Eeze(R), along with chewing gum and mouthwash formulations of the
Cold-Eeze(R) product.

PATENTS

The Company currently owns no patents. However, the Company has been
granted an exclusive agreement for worldwide representation, manufacturing,
marketing and distribution rights to a zinc/gluconate/glycine lozenge
formulation developed by Dr. John C. Godfrey, Ph.D., and patented as follows:

UNITED STATES: No. 4 684 528 (August 4, 1987) AND
No. 4 758 439 (July 19, 1988)
GERMANY: No. 3,587,766 (March 2, 1994)
FRANCE & ITALY: No. EP 0 183 840 B1 (March 2, 1994)
SWEDEN. No. 0 183 840 (March 2, 1994)
CANADA: No. 1 243 952 (November 1, 1988)
GREAT BRITAIN: No. 2 179 536 (December 21, 1988)
JAPAN: Pending.

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

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<PAGE>
COMPETITION

The Company competes with other suppliers of cold remedy products.
These suppliers range widely in size. Some of the Company's competitors have
significantly greater financial, technical or marketing resources than the
Company. Many of the products offered by the Company's competitors only relieve
the symptoms of the common cold and management believes that its product, which
has been clinically proven to reduce the severity and duration of the common
cold symptoms, offers a significant advantage over many of its competitors in
the over-the-counter cold remedy market. The Company believes that its ability
to compete depends on a number of factors, including price, product quality,
availability and reliability, credit terms, name recognition, delivery time and
post-sale service and support.

REGULATORY MATTERS

The manufacturing, processing, formulation, packaging, labeling and
advertising of the Company's cold-relief products are subject to regulation by
one or more federal agencies, including the United States Food and Drug
Administration ("FDA"), the Federal Trade Commission ("FTC"), the Consumer
Product Safety Commission, the United States Department of Agriculture, the
United States Postal Service, the United States Environmental Protection Agency
and the Occupational Safety and Health Administration. In particular, the FDA
regulates the safety, labeling and distribution of dietary supplements,
including vitamins, minerals and herbs, food additives, food supplements,
over-the-counter and prescription drugs and cosmetics. In addition, the FTC has
overlapping jurisdiction with the FDA to regulate the promotion and advertising
of vitamins, over-the-counter drugs, cosmetics and foods.

Since the Company does not engage in the manufacturing process of its
cold-relief products, it is not subject to many of these regulations. In
addition, the Company's cold-relief product is a homeopathic remedy which is
regulated by the Homeopathic Pharmacopoeia of the United States ("HPUS"). HPUS
sets the standards for source, composition and preparation of homeopathic
remedies which are officially recognized in the Federal Food, Drug and Cosmetics
Act of 1938.

The Company cannot predict whether new domestic or foreign legislation
regulating its activities will be enacted. Regulatory and legislative changes
can affect the economics of the industry by

-27-

<PAGE>

requiring changes in operating practices or by influencing the demand for, and
the costs of providing the Company's products. Such new legislation could have a
material adverse effect on the Company. Failure to comply with any applicable
requirements can result in sanctions being imposed on the Company or the
manufacturers of its products, including warning letters, fines, product recalls
and seizures.

Management believes that the Company is in compliance with all such
laws, regulations and standards currently in effect including the Food, Drug and
Cosmetic Act of 1938 and HPUS. Management further believes that the cost of
compliance with such laws, regulations and standards has not and will not have a
material adverse effect on the Company.

-28-

<PAGE>
EMPLOYEES

The Company currently has nine (9) full-time employees, of whom all
were involved in an executive, marketing or administrative capacity. None of the
Company's employees is covered by a collective bargaining agreement or is a
member of a union. The Company considers its relationship with its employees to
be good.

PROPERTIES

The Company currently maintains its executive offices at the Landmark
Building, 10 South Clinton Street, Doylestown, PA (and its alternative mailing
address is P.O. Box 1349, Doylestown, PA 18901) where it occupies approximately
2,000 square feet of office space pursuant to a written 3-year lease agreement
with an unaffiliated landlord. The Company also occupies approximately 2,500
square feet of warehouse space under a one-year lease agreement with an
unaffiliated landlord. The monthly aggregate lease payments for both premises is
$ 2,470. The Company believes that its existing facilities are adequate for its
current needs and that additional facilities in its service area are available
to meet future needs.

LEGAL PROCEEDINGS

The Company is not presently a party to any material litigation nor, to
the knowledge of management, is any material litigation threatened.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Listed below are the names, ages and positions with the Company of all
Directors and Executive Officers of the Company as of June 30, 1997. Each
director's term is scheduled to expire at the next annual meeting of
shareholders and when his successor is duly elected:

Year
First
Name Age Position Elected
---- --- -------- -------

Guy J. Quigley 55 President, Chief 1989
Landmark Building Executive Officer
10 South Clinton Street and Director
Doylestown, PA 18901

Eric H. Kaytes 41 Vice President, 1989
Landmark Building Secretary,
10 South Clinton Street Treasurer and
Doylestown, PA 18901 Director

-29-

<PAGE>
Year
First
Name Age Position Elected
---- --- -------- -------

Charles A. Phillips 49 Vice President, 1989
Landmark Building Chief Operating
10 South Clinton Street Officer and
Doylestown, PA 18901 Director

George J. Longo, 51 Vice President, 1997
Landmark Building Chief Financial
10 South Clinton Street Officer and
Doylestown, PA 18901 Director

A. Jerene Robbins, M.D. 78 Director 1997
Landmark Building
10 South Clinton Street
Doylestown, PA 18901

Robert L. Pollack, 72 Chairman Medical 1993
Ph.D. Advisory Board,
Landmark Building Director of
10 South Clinton Street Research and
Doylestown, PA 18901 Development and
Director

GUY J. QUIGLEY is the Founder of the Company and has served as its Chairman of
the Board, President, and Chief Executive Officer since September 1989. Prior to
this date, Mr. Quigley, an accomplished author, established and operated various
manufacturing, sales, marketing and real estate companies located in the United
States, Europe and the African Continent.

CHARLES A. PHILLIPS has been Vice President, Chief Operations Officer and a
Director of the Company since September 1989. He is currently responsible for
overseeing the Company's relationships with its manufacturing partners. Before
his employment with the Company, Mr. Phillips founded and operated KEB
Enterprises, a gold and diamond mining operation that was based in Sierra Leone,
West Africa. In addition, Mr. Phillips, also served as a technical consultant
for Re-Tech, Inc., Horsham, Pennsylvania, where he was responsible for full
marketing and production of a prototype electrical device.

ERIC H. KAYTES currently serves as Vice President of Management Information
Systems, Secretary, Treasurer and is a Director of the Company. From 1989 until
January 1997, Mr. Kaytes also served as the Chief Financial Officer of the
Company. Prior to 1989 and concurrent with his responsibilities for the Company,
Mr. Kaytes has been an independent programmer and designer of computer software.

-30-

<PAGE>
GEORGE J. LONGO, assumed his duties as Vice President and Chief Financial
Officer for the Company in January 1997. Mr. Longo was also appointed as a
Director of the Company in March 1997. Before joining the Company, Mr. Longo
served as Chief Financial Officer of two privately held international
manufacturing firms and Manager of Corporate Accounting at RHONE-PAULENC RORER,
INC., being responsible for SEC and IRS Compliance, and was involved in
acquisition and general accounting issues. Prior to that, Mr.
Longo was with KPMG Peat Marwick.

A. JERENE ROBBINS, M.D., F.A.C.S., has served as a director of the Company since
June 1997. Dr. Robbins is currently the Director of Health Services of St.
Peters College, and a Member Emeritus of the Surgical Staff at Christ Hospital
in New Jersey. In addition to her private practice as a thoracic surgeon, Dr.
Robbins has served as attending surgeon at Flower & Fifth Avenue Hospital and
Metropolitan Hospital in New York and Christ Hospital and Jersey City Medical
Center in New Jersey. Dr. Robbins was appointed as Attending Thoracic Surgeon
and Consultant Geriatric Surgeon for B.S. Pollak Hospital, as well as to the
position of Superintendent.

ROBERT L. POLLACK, B.S., M.S., Ph.D. currently serves as the Chairman of the
Company's Medical Advisory Board, Director of Research and Development and a
Director. Dr. Pollack is a Professor Emeritus at Temple University School of
Medicine's Department of Biochemistry. Dr. Pollack is a biochemist, researcher,
nutritionist, microbiologist, editor and educator having lectured (both
nationally and internationally) on nutritional matters to the general public and
scientific audiences. In addition to publishing several papers in scientific
journals, Dr. Pollack has authored three books on the subject of nutrition and
is currently responsible for overseeing the Company's product development and
product quality efforts.

EXECUTIVE COMPENSATION

(a) CASH COMPENSATION

The following table sets forth information concerning all remuneration
paid or accrued by the Company for services rendered during the year ended
September 30, 1994, the year ended September 30, 1995 and the year ended
September 30, 1996 to the Company's chief executive officer and three most
compensated executive officers whose cash compensation exceeded $100,000.

-31-

Additional
Name and Principal Salary Compensation
Position Year ($)(1) ($)(2)
- ---------------------------------- ----------------------- ----------------------- -----------------------

<S> <C> <C> <C>
Guy J. Quigley 1996 125,000 235,956
Chairman of the 1995 62,400
Board, President, 1994 25,000
Chief Executive
Officer

Charles A. Phillips 1996 85,000 81,547
Vice President and 1995 38,050
Chief Operating 1994 25,000
Officer

All Executive 1996 221,300 329,343
Officers as a group 1995 103,850
(3 Persons) 1994 50,000
</TABLE>

- -----------------------
(1) Compensation paid pursuant to employee agreements.
(2) Additional payments, including stock awards in lieu of cash, for past
and current services.

(b) OUTSTANDING OPTIONS

As of September 30, 1996, Officers and/or Directors of the Company have
been issued an aggregate of 585,000 options to purchase shares of the Company's
Common Stock at various exercise prices. The following table sets forth
information as to all options to purchase the Company's Common Stock which were
granted, and held by each of the individuals listed on the remuneration table
and all directors and officers as a group:

<TABLE>
<CAPTION>
Options To
Purchase # of Percent of
Shares Exercise Date Total
Name Indicated Price Granted Expires Options
- ---- --------- ----- ------- ------- -------

<S> <C> <C> <C> <C> <C>
Guy J. Quigley 200,000 $ .50 12/95 12/00 3.4
300,000 1.75 7/96 6/01 5.1

Charles A. Phillips 150,000 $ .50 12/95 12/00 2.6
300,000 1.75 7/96 6/01 5.1

Eric H. Kaytes 60,000 $ .50 12/95 12/00 1.0
50,000 1.75 7/96 6/01 .8

Robert L. Pollack 60,000 $ .50 12/95 12/00 1.0
50,000 1.75 7/96 6/01 .8
</TABLE>

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

-32-

<PAGE>
ROYALTY AND EMPLOYMENT AGREEMENTS

The Cold-Eeze(R) product is manufactured for the Company by an
independent manufacturer and marketed by the Company in accordance with the
terms of the licensing agreement (between the Company and Godfrey Science &
Design, Inc. and John C. Godfrey, Ph.D; hereinafter "Dr. Godfrey"). The contract
is assignable by the Company with Dr. Godfrey's consent. Throughout the duration
of the agreement Dr. Godfrey is to receive a three percent (3%) royalty on all
gross sales (subsequent to the Company receiving payment upon such gross sales).

A separate consulting agreement between the parties referred to
directly above was similarly entered into on May 4, 1992 whereby Dr. John C.
Godfrey and Dr. Nancy J. Godfrey are to receive a consulting fee of two percent
(2%) of gross sales of the lozenge by the Company for his consulting services to
the Company with respect to such product.

Pursuant to the License Agreement entered into between the Company and
George Eby Research, the Company pays a royalty fee. Throughout the duration of
the agreement George Eby of George Eby Research is to receive a three percent
(3%) royalty on all gross sales (subsequent to the Company receiving payment
upon such gross sales).

An employment agreement between the Company and Guy J. Quigley was
entered into on June 1, 1995, whereby Guy J. Quigley, along with the normal
considerations of an Executive Employment Agreement, in consideration of the
acquisition of the cold therapy product, is to receive a royalty of five percent
(5%) of gross sales of the Lozenge by the Company for the termination of said
agreement on May 31, 2005.

An employment agreement between the Company and Charles A. Phillips was
entered into on June 1, 1995, whereby Charles A. Phillips, along with the normal
considerations of an Executive Employment Agreement, shall receive 25% (twenty
five per cent) of the royalty received by Guy J. Quigley, either directly from
Guy J. Quigley or, if requested, directly from the Company. Should Charles A.
Phillips make such request upon Company, the said 25% (twenty five per cent)
would be deducted from any royalties due to Guy J.
Quigley.

DIRECTOR'S COMPENSATION

The Company's directors are not compensated for attendance at meetings.
The Company currently does not plan to compensate its outside directors for
services rendered in their capacity as directors.

-33-

<PAGE>
CERTAIN TRANSACTIONS

For the year ended September 30, 1996, there have not been any material
transactions between the Company and any Director, Executive Officer, security
holder or any member of the immediate family of any of the aforementioned which
exceeded the sum of $60,000.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information concerning ownership of the
Company's Common Stock, as of June 30, 1997, by (i) each person who is known by
the Company to be the beneficial owner of more than five percent of the Common
Stock outstanding on such date, (ii) each of the Company's directors, (iii) each
of the executive officers named in the summary compensation table, and (iv) all
current directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>

Name and Address of Amount of Shares
Beneficial Owner(1) Beneficially Owned(2)(3) Percentage of Class
- ------------------------ ------------------------- --------------------

<S> <C> <C>
GUY J. QUIGLEY 3,841,854(4) 30.9

CHARLES A. PHILLIPS 1,482,992(5) 12.0

ERIC H. KAYTES 402,992(6) 3.4

GEORGE J. LONGO 125,000(7) 1.0

A. JERENE ROBBINS, M.D. 5,000(8) *

ROBERT L. POLLACK, Ph.D. 180,000(9) 1.5

ALL DIRECTORS AND
EXECUTIVE OFFICERS
AS A GROUP
(Six Persons)(9) 6,037,838(10) 44.7
</TABLE>

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

* Less than one percent

(1) Unless otherwise indicated, all addresses are c/o Quigley Corporation,
Landmark Building, 10 South Clinton Street, Doylestown, PA 18901.

(2) Includes shares issued pursuant to a two-for-one stock split on January
15, 1997.

-34-

<PAGE>

(3) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act ("Rule 13d-3") and unless otherwise indicated,
represents shares for which the beneficial owner has sole voting and
investment power. The percentage of class is calculated in accordance
with Rule 13d- 3 and includes options or other rights to subscribe
which are exercisable within sixty (60) days of June 30, 1997.

(4) Mr. Quigley's beneficial ownership includes (i) an aggregate of 820,000
shares beneficially owned by certain members of Mr. Quigley's immediate
family; (ii) warrants exercisable within sixty (60) days to purchase
200,000 shares of Common Stock at an exercise price of $.50 per share;
(iii) warrants exercisable within sixty (60) days to purchase 300,000
shares of Common Stock at an exercise price of $1.75 per share; (iv)
warrants exercisable within sixty (60) days to purchase 75,000 shares
of Common Stock at an exercise price of $2.50 per share; and (v)
warrants exercisable within sixty (60) days to purchase 140,000 shares
of Common Stock at an exercise price of $10.00 per share.

(5) Mr. Phillips's beneficial ownership includes (i) warrants exercisable
within sixty (60) days to purchase 150,000 shares of Common Stock at an
exercise price of $.50 per share; (ii) warrants exercisable within
sixty (60) days to purchase 300,000 shares of Common Stock at an
exercise price of $1.75 per share; (iii) warrants exercisable within
sixty (60) days to purchase 75,000 shares of Common Stock at an
exercise price of $2.50 per share; and (iv) warrants exercisable within
sixty (60) days to purchase 85,000 shares of Common Stock at an
exercise price of $10.00 per share.

(6) Mr. Kaytes's beneficial ownership includes (i) warrants exercisable
within sixty (60) days to purchase 60,000 shares of Common Stock at an
exercise price of $.50 per share; (ii) warrants exercisable within
sixty (60) days to purchase 50,000 shares of Common Stock at an
exercise price of $1.75 per share; (iii) warrants exercisable within
sixty (60) days to purchase 25,000 shares of Common Stock at an
exercise price of $2.50 per share; and (iv) warrants exercisable within
sixty (60) days to purchase 35,000 shares of Common Stock at an
exercise price of $10.00 per share.

(7) Mr. Longo's beneficial ownership includes (i) warrants exercisable
within sixty (60) days to purchase 50,000 shares of Common Stock at an
exercise price of $2.50 per share; and (ii) warrants exercisable within
sixty (60) days to purchase 75,000 shares of Common Stock at an
exercise price of $10.00 per share.

-35-

<PAGE>

(8) Dr. Robbins' beneficial ownership includes warrants exercisable within
60 days to purchase 5,000 shares of Common Stock at an exercise price
of $10.00 per share.

(9) Dr. Pollack's beneficial ownership includes (i) warrants exercisable
within sixty (60) days to purchase 60,000 shares of Common Stock at an
exercise price of $.50 per share; (ii) warrants exercisable within
sixty (60) days to purchase 50,000 shares of Common Stock at an
exercise price of $1.75 per share; and (iii) warrants exercisable
within sixty (60) days to purchase 25,000 shares of Common Stock at an
exercise price of $2.50 per share.

(10) Includes an aggregate of 1,760,000 shares of Common Stock issuable to
officers and directors of the Company upon exercise of warrants
exercisable within sixty (60) days to purchase an aggregate of
1,760,000 shares of Common Stock.

DESCRIPTION OF SECURITIES

The authorized capital stock of the Company is 51,000,000 shares,
consisting of 50,000,000 shares of Common Stock, $.0005 par value per share and
1,000,000 shares of preferred stock, $.001 par value per share ("Preferred
Stock"). As of September 22, 1997, there were 12,146,264 shares of Common Stock
outstanding. After the completion of this Offering and after giving effect to
the exercise of warrants into 5,480,000 shares, there will be 17,626,264 shares
of Common Stock outstanding. No shares of Preferred Stock are currently
outstanding.

COMMON STOCK

All outstanding shares of Common Stock are, and the shares offered
hereby will be, validly issued, fully paid and non-assessable. Subject to
preferences that may be applicable to any Preferred Stock outstanding at the
time, shareholders of Common Stock are entitled to share ratably in such
dividends and distributions as may from time to time be declared by the Board of
Directors of the Company from funds legally available therefor and upon
liquidation will be entitled to share ratably in any assets of the Company
legally available for distribution to holders of the Common Stock. The Company's
Articles of Incorporation, as amended, and By-Laws do not confer any preemptive,
subscription, redemption or conversion rights on the holders of Common Stock.
Holders of Common Stock are entitled to cast one vote for each share held of
record on each matter submitted to a vote of shareholders. There is no
cumulative voting, which means that holders of a majority of the voting power
may elect all of the directors.

-36-

<PAGE>
PREFERRED STOCK

The Company's authorized shares of Preferred Stock may be issued in one
or more series, and the Board of Directors is authorized, without further action
by the shareholders, to designate the rights, preferences, limitations and
restrictions of and upon shares of each series, including dividend, voting,
redemption and conversion rights. The Board of Directors also may designate par
value, preferences in liquidation and the number of shares constituting any
series. The Company believes that the availability of Preferred Stock issuable
in series will provide increased flexibility for structuring possible future
financings and acquisitions, if any, and in meeting other corporate needs. It is
not possible to state the actual effect of the authorization and issuance of any
series of Preferred Stock upon the rights of holders of Common Stock until the
Board of Directors determines the specific terms, rights and preferences of a
series of Preferred Stock. However, such effects might include, among other
things, restricting dividends on the Common Stock, diluting the voting power of
the Common Stock, or impairing liquidation rights of such shares without further
action by holders of the Common Stock. In addition, under various circumstances,
the issuance of Preferred Stock may have the effect of facilitating, as well as
impeding or discouraging, a merger, tender offer, proxy contest, the assumption
of control by a holder of a large block of the Company's securities or the
removal of incumbent management. Issuance of Preferred Stock could also
adversely effect the market price of the Common Stock. The Company has no
present plan to issue any shares of Preferred Stock.

REGISTRATION RIGHTS

Following this offering, no shareholders of the Company's Common Stock
will have rights to register those shares for sale to the public under the
Securities Act of 1933, as amended (the "Securities Act").

NEVADA LAW AND CORPORATE PROVISIONS AFFECTING SHAREHOLDERS

The Company's Certificate of Incorporation and By-laws contain certain
provisions which may deter, discourage, or make more difficult the assumption of
control of the Company by another corporation or person through a tender offer,
merger, proxy contest or similar transaction or series of transactions. These
provisions include an unusually large number of authorized shares of Common
Stock (50,000,000) the authorization of the Board of Directors to issue
Preferred Stock as described above and the prohibition of cumulative voting. The
overall effect of these provisions may be to deter a future tender offer or
other takeover attempt that some shareholders might view to be in their best
interest as the offer might include a premium over the market price of the
Company's

-37-

<PAGE>

capital stock at the time. In addition, these provisions may have the effect of
assisting the Company's current management in retaining its position and place
it in a better position to resist changes which some shareholders may want it to
make if dissatisfied with the conduct of the Company's business. See "Risk
Factors - Anti-Takeover Provisions."

Furthermore, Section 78.751 of the Nevada General Corporation Law
("NGCL") allows the Company to indemnify any person who is or was made a party
to, or is or was threatened to be made a party to, any pending, completed, or
threatened action, suit or proceeding by reason of the fact that he or she is or
was a director, officer, employee or agent of the Company or is or was serving
at the request of the Company as a director, officer, employee or agent of any
corporation, partnership, joint venture, trust or other enterprise. The NGCL
permits the Company to advance expenses to an indemnified party in connection
with defending any such proceeding, upon receipt of an undertaking by the
indemnified party to repay those amounts if it is later determined that the
party is not entitled to indemnification.

The foregoing provisions may reduce the likelihood of derivative
litigation against directors and officers and discourage or deter shareholders
from suing directors or officers for breaches of their duties to the Company,
even though such an action, if successful, might otherwise benefit the Company
and its shareholders. In addition, to the extent that the Company expends funds
to indemnify directors and officers, funds will be unavailable for operational
purposes. See "Risk Factors Indemnification of Officers and Directors."

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is American Stock
Transfer and Trust Company, New York, New York.

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<PAGE>
SELLING SHAREHOLDERS

The following table sets forth (i) the number of shares of Common Stock
beneficially owned by each Selling Shareholder as of September 22, 1997, (ii)
the number of Shares of Common Stock to be offered for resale by each Selling
Shareholder and (iii) the number and percentage of shares of Common Stock to be
beneficially owned by each Selling Shareholder after completion of the offering.
Except as set forth below, none of the Selling Shareholders has had a material
relationship with the Company during the past three years.

<TABLE>
<CAPTION>
No. of Shares
of Common Stock
Beneficially Owned No. of
at September 22, Shares Shares Beneficially Owned
Name 1997 Offered After Offering (1)
- ------------------ ---------------------- ------- ----------------------------------

<S> <C> <C> <C> <C>
Guy J. Quigley (2).................... 3,841,854 715,000(3) 3,126,854 18.2%

Wendy Quigley......................... 700,000 400,000(4) 300,000 1.7%

Kariba Holdings, Ltd.................. 665,000 430,000(5) 235,000 1.4%

Charles Phillips (6).................. 1,482,992 610,000(7) 872,992 5.1%

Robert Pollack (8).................... 180,000 135,000(9) 45,000 *

Eric Kaytes (10)...................... 402,992 170,000(11) 0 *

William J. Reilly..................... 811,533 340,000(12) 471,533 2.7%

Marielle T. Reilly.................... 125,000 100,000(13) 25,000 *

Marielle T. Reilly, Trustee........... 125,000 100,000(14) 25,000 *

Ted Karkus............................ 50,000 50,000(15) 0 *

George J. Longo (16) ................. 125,000 125,000(17) 0 *

Prophase Management, Inc.............. 250,000 250,000(18) 0 *

Thomas MacAniff....................... 607,183 260,000(19) 347,183 2.0%

Sands Brothers & Co., Ltd............. 175,000 175,000(20) 0 *

SBS Retained Annuity Trust............ 180,000 180,000(21) 0 *

MSS Retained Annuity Trust............ 180,000 180,000(21) 0 *

Mark G. Hollo......................... 337,500 337,500(22) 0 *

Scott Franklin........................ 4,600 4,600(21) 0 *

Bob Spiegel........................... 4,600 4,600(21) 0 *

Richard Sands......................... 4,600 4,600(21) 0 *

Rob Bonaventura....................... 4,600 4,600(21) 0 *

Sabin Danziger........................ 1,900 1,900(21) 0 *

Community Funds, Inc.................. 2,000 2,000(21) 0 *

Charles Robinson...................... 3,200 3,200(21) 0 *

Gordon Fallone........................ 3,300 3,300(21) 0 *

Hugh Marasa........................... 3,300 3,300(21) 0 *

James Brodie.......................... 2,900 2,900(21) 0 *
</TABLE>

-39-

<PAGE>
<TABLE>
<CAPTION>
No. of Shares
of Common Stock
Beneficially Owned No. of
at September 22, Shares Shares Beneficially Owned
Name 1997 Offered After Offering (1)
- ------------------ ---------------------- ------- ----------------------------------

<S> <C> <C> <C> <C>
Seth Potter........................... 11,000 11,000(23) 0 *

Alan Bluestine........................ 2,500 2,500(21) 0 *

BR/RA Trust........................... 175,000 175,000(21) 0 *

Aaron Scott........................... 44,500 44,500(24) 0 *

Matthew Russo......................... 8,500 8,500(25) 0 *

Brad Cohen............................ 1,000 1,000(26) 0 *

Diversified Corporate 350,000 350,000(27) 0 *
Consulting Group, LLC.................

Pacific Rim Pharmaceuticals........... 600,000 280,000(28) 320,000 1.9%

Frank M. Merlino...................... 10,000 10,000(29) 0 *

A. Jerene Robbins(30)................. 5,000 5,000(31) 0 *
</TABLE>

- -------------------------
* Less than 1%.

(1) Assumes that all Common Stock offered by the Selling Shareholders is
sold.

(2) Mr. Quigley is the Chairman of the Board, President and Chief Executive
Officer of the Company.

(3) Consists solely of Common Stock issuable to Mr. Quigley upon the
exercise of currently exercisable warrants to purchase (i) 200,000
shares of Common Stock at an exercise price of $.50 per share; (ii)
300,000 shares of Common Stock at an exercise price of $1.75 per share;
(iii) 75,000 shares of Common Stock at an exercise price of $2.50 per
share; and (iv) 140,000 shares of Common Stock at an exercise price of
$10.00 per share.

(4) Consists solely of Common Stock issuable to Ms. Quigley upon the
exercise of currently exercisable warrants to purchase (i) 200,000
shares of Common Stock at an exercise price of $.50 per share; and (ii)
200,000 shares of Common Stock at an exercise price of $1.75 per share.

(5) Consists solely of Common Stock issuable to Kariba Holdings upon the
exercise of currently exercisable warrants to purchase (i) 130,000
shares of Common Stock at an exercise price of $.50 per share; (ii)
300,000 shares of Common Stock at an exercise price of $1.75 per share.

(6) Mr. Phillips is the Vice President, Chief Operating Officer and a
Director of the Company.

(7) Consists solely of Common Stock issuable to Mr. Phillips upon the
exercise of currently exercisable warrants to purchase (i) 150,000
shares of Common Stock at an exercise price of $.50 per share; (ii)
300,000 shares of Common Stock at an exercise price of $1.75 per share;
(iii) 75,000 shares of Common Stock at an exercise price of $2.50 per
share; and (iv) 85,000 shares of Common Stock at an exercise price of
$10.00 per share.

(8) Mr. Pollack is the Director of Research and Development, the Chairman
of the Medical Advisory Board and a Director of the Company.

(9) Consists solely of Common Stock issuable to Mr. Pollack upon the
exercise of currently exercisable warrants to purchase (i) 60,000
shares of Common Stock at an exercise price of $.50 per share; (ii)
50,000 shares of Common Stock at

-40-

<PAGE>
an exercise price of $1.75 per share; and (iii) 25,000 shares of Common
Stock at an exercise price of $2.50 per share.

(10) Mr. Kaytes is the Vice President, Secretary, Treasurer and a Director
of the Company.

(11) Consists solely of Common Stock issuable to Mr. Kaytes upon the
exercise of currently exercisable warrants to purchase (i) 60,000
shares of Common Stock at an exercise price of $.50 per share; (ii)
50,000 shares of Common Stock at an exercise price of $1.75 per share;
(iii) 25,000 shares of Common Stock at an exercise price of $2.50 per
share; and (iv) 35,000 shares of Common Stock at an exercise price of
$10.00 per share.

(12) Consists solely of Common Stock issuable to Mr. Reilly upon the
exercise of currently exercisable warrants to purchase (i) 100,000
shares of Common Stock at an exercise price of $.50 per share; (ii)
140,000 shares of Common Stock at an exercise price of $1.75 per share;
(iii) 50,000 shares of Common Stock at an exercise price of $2.50 per
share; (iv) 50,000 shares of Common Stock at an exercise price of
$10.00 per share.

(13) Consists solely of Common Stock issuable to Ms. Reilly upon the
exercise of currently exercisable warrants to purchase 100,000 shares
of Common Stock at an exercise price of $.50 per share.

(14) Consists solely of Common Stock issuable to Ms. Reilly, Trustee upon
the exercise of currently exercisable warrants to purchase 100,000
shares of Common Stock at an exercise price of $1.75 per share.

(15) Consists solely of Common Stock issuable to Mr. Karkus upon the
exercise of currently exercisable warrants to purchase 50,000 shares of
Common Stock at an exercise price of $2.50 per share.

(16) Mr. Longo is the Chief Financial Officer and a Director of the Company.

(17) Consists solely of Common Stock issuable to Mr. Longo upon the exercise
of currently exercisable warrants to purchase (i) 50,000 shares of
Common Stock at an exercise price of $2.50 per share; and (ii) 75,000
shares of Common Stock at an exercise price of $10.00 per share.

(18) Consists solely of Common Stock issuable to Prophase Management upon
the exercise of currently exercisable warrants to purchase 200,000
shares of Common Stock at an exercise price of $1.75 per share; and
(ii) 50,000 shares of Common Stock at an exercise price of $10.00 per
share.

(19) Consists solely of Common Stock issuable to Mr. MacAniff upon the
exercise of currently exercisable warrants to purchase (i) 60,000
shares of Common Stock at an exercise price of $1.75 per share; and
(ii) 200,000 shares of Common Stock at an exercise price of $10.00 per
share.

(20) Consists solely of Common Stock issuable to Sands Brothers upon the
exercise of currently exercisable warrants to purchase 175,000 shares
of Common Stock at an exercise price of $10.00 per share.

(21) Consists solely of Common Stock issuable to the Selling Shareholder
upon the exercise of currently exercisable warrants to purchase shares
of Common Stock at an exercise price of $1.75 per share.

(22) Consists solely of Common Stock issuable to Mr. Hollo upon the exercise
of currently exercisable warrants to purchase (i) 175,000 shares of
Common Stock at an exercise price of $1.75 per share and (ii) 162,500
shares of Common Stock at an exercise price of $10.00 per share.

-41-

<PAGE>

(23) Consists solely of Common Stock issuable to Mr. Potter upon the
exercise of currently exercisable warrants to purchase (i) 9,500 shares
of Common Stock at an exercise price of $1.75 per share and (ii) 1,500
shares of Common Stock at an exercise price of $10.00 per share.

(24) Consists solely of Common Stock issuable to Mr. Scott upon the exercise
of currently exercisable warrants to purchase (i) 35,500 shares of
Common Stock at an exercise price of $1.75 per share and (ii) 9,000
shares of Common Stock at an exercise price of $10.00 per share.

(25) Consists solely of Common Stock issuable to Mr. Russo upon the exercise
of currently exercisable warrants to purchase (i) 7,000 shares of
Common Stock at an exercise price of $1.75 per share and (ii) 1,500
shares of Common Stock at an exercise price of $10.00 per share.

(26) Consists solely of Common Stock issuable to Mr. Cohen upon the exercise
of currently exercisable warrants to purchase (i) 500 shares of Common
Stock at an exercise price of $1.75 per share and (ii) 500 shares of
Common Stock at an exercise price of $10.00 per share.

(27) Consists solely of Common Stock issuable to Diversified Corporate
Consulting Group, LLC upon the exercise of currently exercisable
warrants to purchase 350,000 shares of Common Stock at an exercise
price of $1.75 per share.

(28) Consists solely of Common Stock issuable to Pacific Rim Pharmaceuticals
upon the exercise of currently exercisable options to purchase 280,000
shares of Common Stock at an exercise price of $.50 per share.

(29) Consists solely of Common Stock issuable to F. M. Merino upon the
exercise of currently exercisable warrants to purchase 10,000 shares of
Common Stock at an exercise price of $10.00 per share.

(30) Dr. Robbins is a Director of the Company.

(31) Consists solely of Common Stock issuable to Dr. Robbins upon the
exercise of currently exercisable warrants to purchase 5,000 shares of
Common Stock at an exercise price of $10.00 per share.

There is no assurance that the Selling Shareholders which hold warrants
to purchase Common Stock from the Company will exercise such warrants or that
such Selling Shareholder or any other Selling Shareholder will otherwise opt to
sell any of the Shares offered hereby. To the extent required, the specific
Shares to be sold, the names of the Selling Shareholders, other additional
shares of Common Stock beneficially owned by such Selling Shareholders, the
public offering price of the Shares to be sold, the names of any agent, dealer
or underwriter employed by such Selling Shareholders in connection with such
sale, and any applicable commission or discount with respect to a particular
offer will be set forth in an accompanying Prospectus Supplement.

The Shares covered by this Prospectus may be sold from time to time so
long as this Prospectus remains in effect; provided, however, that the Selling
Shareholders are first required to contact the Company's Corporate Secretary to
confirm that this Prospectus is in effect. The Company intends to distribute to
each Selling Shareholder a letter setting forth the procedures whereby

-42-

<PAGE>
such Selling Shareholder may use the Prospectus to sell the shares and under
what conditions the Prospectus may not be used. The Selling Shareholders expect
to sell the Shares at prices then attainable, less ordinary brokers' commissions
and dealers' discounts as applicable.

The Selling Shareholders and any broker or dealer to or through whom
any of the Shares are sold may be deemed to be underwriters within the meaning
of the Securities Act with respect to the Common Stock offered hereby, and any
profits realized by the Selling Shareholders or such brokers or dealers may be
deemed to be underwriting commissions. Brokers' commissions and dealers'
discounts, taxes and other selling expenses to be borne by the Selling
Shareholders are not expected to exceed normal selling expenses for sales
over-the-counter or otherwise, as the case may be. The registration of the
Shares under the Securities Act shall not be deemed an admission by the Selling
Shareholders or the Company that the Selling Shareholders are underwriters for
purposes of the Securities Act of any Shares offered under this Prospectus.

PLAN OF DISTRIBUTION

This Prospectus covers 5,480,000 shares of the Company's Common Stock.
All of the Shares offered hereby are being sold by the Selling Shareholders. The
securities covered by this Prospectus may be sold under Rule 144 instead of
under this Prospectus. The Company will realize no proceeds from the sale of the
Shares by the Selling Shareholders, but will receive amounts upon exercise of
the Warrants, which amounts will be used for working capital and general
corporate purposes.

The distribution of the Shares by the Selling Shareholders is not
subject to any underwriting agreement. The Selling Shareholders may sell the
Shares offered hereby from time to time in transactions on one or more
exchanges, in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices relating to prevailing
market prices or at negotiated prices. In addition, from time to time the
Selling Shareholders may engage in short sales, short sales against the box,
puts and calls and other transactions in securities of the Company or
derivatives thereof, and may sell and deliver the shares in connection
therewith.

From time to time the Selling Shareholders may pledge their Shares
pursuant to the margin provisions of its customer agreements with its brokers.
Upon a default by the Selling Shareholders, the broker may offer and sell the
pledged Shares.

Such transactions may be effected by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions

-43-

<PAGE>
from the Selling Shareholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of the
customary commissions). The Selling Shareholders and any broker-dealers that
participate with the Selling Shareholders in the distribution of the Shares may
be deemed to be underwriters within the meaning of Section 2(11) of the
Securities Act and any commissions received by them and any profit on the resale
of the Shares may be deemed to be underwriting commissions or discounts under
the Securities Act. The Selling Shareholders will pay any transaction costs
associated with effecting any sales that occur.

In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with by the Company and the Selling
Shareholders.

Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not simultaneously engage
in market-making activities with respect to the Company's Common Stock for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Shareholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including without limitation, Rules 10b-6, 10b-6A and
10b-7, which provisions may limit the timing of the purchases and sales of
shares of Common Stock by the Selling Shareholders.

The Selling Shareholders are not restricted as to the price or prices
at which it may sell their Shares. Sales of such Shares may have an adverse
effect on the market price of the Common Stock. Moreover, the Selling
Shareholders are not restricted as to the number of Shares that may be sold at
any time, and it is possible that a significant number of Shares could be sold
at the same time which may also have an adverse effect on the market price of
the Company's Common Stock.

The Company has agreed to pay all fees and expenses incident to the
registration of the Shares, except selling commissions and fees and expenses of
counsel or any other professionals or other advisors, if any, to the Selling
Shareholders.

This Prospectus also may be used, with the Company's consent, by donees
or other transferees of the Selling Shareholders, or by other persons acquiring
the Common Stock under circumstances

-44-

<PAGE>
requiring or making desirable the use of this Prospectus for the offer and sale
of such shares.

LEGAL MATTERS

The legality of the Shares offered hereby will be passed upon for the
Company by Olshan Grundman Frome & Rosenzweig LLP, New York, New York.

EXPERTS

The consolidated financial statements and schedules of the Company
incorporated by reference in this prospectus and elsewhere in this Registration
Statement as of September 30, 1995, and 1996 included in the Company's Form
10-KSB for the fiscal year ended September 30, 1996 have been audited by Nachum
Blumenfruct CPA, independent public accountant, as indicated in his report with
respect thereto, and are included herein in reliance upon the authority of Mr.
Blumenfruct as experts in giving said reports.

CHANGE OF ACCOUNTANTS

On January 29, 1997, the Company determined to change accountants to
Coopers & Lybrand LLP. The Company's prior auditor, Nachum Blumenfruct, CPA
resigned and on the same date, the Company engaged Coopers & Lybrand, LLP, to
audit its financial statements. The decision to change accountants was made with
the approval of the Company's Board of Directors and was a result of the
dramatic expansion of business operations since the close of the fiscal year
ended September 30, 1996.

The Company believes, and has been advised by Nachum Blumenfruct that
it concurs in such belief, that, the Company and Mr. Blumenfruct did not have
any disagreement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of Mr. Blumenfruct, would have caused him to make
reference in connection with his report on the Company's financial statements to
the subject matter of the disagreement.

No report of Mr. Blumenfruct on the Company's financial statements for
either of the past two fiscal years contained an adverse opinion, a disclaimer
or opinion or a qualification (other than a going concern qualification) or was
modified as to uncertainty, audit scope or accounting principles. During such
fiscal periods, there were no "reportable events" within the meaning of Item
304(a)(1) of Regulation S-K promulgated under the Securities Act.

-45-

<PAGE>
INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report..............................................F-2

Balance Sheets at September 30, 1996 and 1995.............................F-3

Statements of Operations for the years ended
September 30, 1994, 1995 and 1996.......................................F-4

Statements of Cash Flows for the years ended
September 30, 1994, 1995 and 1996.......................................F-5

Statement of Stockholders' Equity (Deficit)
for the years ended September 30, 1994, 1995 and 1996...................F-7

Notes to Audited Financial Statements.....................................F-9

Unaudited Balance Sheets at December 31, 1996
and September 31, 1996.................................................F-17

Unaudited Statement of Operations for
the three months ended December 31, 1995 and 1996......................F-18

Unaudited Statements of Cash Flows for
the three months ended December 31, 1995 and 1996......................F-19

Notes to Unaudited Financial Statements..................................F-20

Unaudited Balance Sheets at June 30, 1997................................F-22

Unaudited Statement of Operations for
the six months ended June 30, 1996 and 1997...........................F-23

Unaudited Statements of Cash Flows for
the six months ended June 30, 1996 and 1997...........................F-24

Notes to Unaudited Financial Statements..................................F-26

F-1

<PAGE>
N. BLUMENFRUCHT
CERTIFIED PUBLIC ACCOUNTANT
1040 EAST 22ND STREET
BROOKLYN, N.Y. 11210
------------

(718) 692-2743

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

The Board of Directors
The Quigley Corporation
Doylestown, Pennsylvania

I have audited the accompanying balance sheets of The Quigley
Corporation as of September 30, 1996 and 1995, and the related Statements of
Operations, Cash Flows and Stockholders' Equity for the periods ended September
30, 1996, 1995 and 1994. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.

I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of The Quigley
Corporation as of September 30, 1996 and 1995 and the results of its operations
and its Cash Flows and Stockholders' Equity for the periods ended September 30,
1996, 1995 and 1994, in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. However, the Company suffered
losses since inception, which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to this matter are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

As discussed in Note 1, effective October 1, 1993, the Company has
changed its method of accounting for income taxes in accordance with SFAS No.
109.

/s/ NACHUM BLUMENFRUCHT
-------------------
Nachum Blumenfrucht
Certified Public Accountant

Brooklyn, New York
December 12, 1996

F-2

<PAGE>

THE QUIGLEY CORPORATION
Balance Sheet

As of September 30,

ASSETS
------

<TABLE>
<CAPTION>
1996 1995
---- ----
CURRENT ASSETS
<S> <C> <C>
Cash $ 370,147 $132,739
Accounts receivable-Note 1 607,078 135,983
Interest receivable-Stockholders-Note 6 659 2,784
Inventory-Note 1 58,339 82,437
Due from attorney's escrow 0 9,000
Prepaid expenses-Note 5 0 4,468
------------ --------
TOTAL CURRENT ASSETS 1,036,223 367,411
------------ --------

FIXED AND OTHER ASSETS
Fixed Assets (net of acc. depreciation of $28,337 and
$14,010) - Note 1 65,314 36,884
Intangible Asset - Patent (net of acc. amortization of
$3,134 in 1996)- Note 1 206,866 0
Deposits- Note 1 3,377 3,310
Deferred taxes- Note 1 56,521 29,471
----------- --------

TOTAL FIXED AND OTHER ASSETS 332,078 69,665
----------- --------

TOTAL ASSETS $1,368,301 $437,076
========== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES
Accounts payable & accrued expenses-Note 7 $ 84,253 $ 75,677
Prepaid stock subscription-Note 8 41,000 0
Loans and note payable-Note 9 0 4,453
--------- --------

TOTAL CURRENT LIABILITIES 125,253 80,130
--------- ---------

NON CURRENT LIABILITIES
Auto loan payable-non current portion 0 13,706

Restricted stock sold under put option 420,000 common 0 44,100
shares-Note 10 --------- ---------

TOTAL LIABILITIES 125,253 137,936
--------- ---------

STOCKHOLDERS' EQUITY - Note 10
Common Stock, $.001 par value; authorized 25,000,000 4,769 3,361
shares, issued and outstanding, 4,769,764 shares in
1996 and 3,361,414 shares in 1995

Additional paid-in capital 4,129,256 2,466,632
Deficit (2,803,247) (2,108,978)
Less: Notes receivable stockholders - Note 6 (87,730) (61,875)
---------- -----------

TOTAL STOCKHOLDERS' EQUITY 1,243,048 299,140
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,368,301 $437,076
========== ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3

<PAGE>

THE QUIGLEY CORPORATION

Statement of Operations

<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------
1996 1995 1994
---- ---- ----
REVENUE
<S> <C> <C> <C>
Sales $1,049,561 $ 501,903 $ 76,907
Cost of Goods Sold 283,967 111,834 26,751
---------- --------- --------
Gross Profit 765,594 390,069 50,156

GENERAL AND ADMINISTRATIVE EXPENSES
Officer salaries & payroll taxes 558,281 106,660 50,000
Services rendered & R&D-Note 10 71,256 80,411 8,750
Administrative expenses-Note 12 42,906 39,305 26,949
Commissions, consulting & royalties 77,030 58,711 6,100
Travel, entertainment and shows 6,009 13,758 15,551
Depreciation and amortization 17,461 4,728 2,773
Utilities 11,013 9,498 9,722
Advertising and promotion 570,752 93,931 3,056
Professional 65,268 69,325 (8,081)
Rent 28,265 20,029 32,893
Interest 4,523 3,728 3,676
Insurance 19,878 25,697 5,390
Office and equipment rental 1,522 1,290 13,446
Wages and outside labor 10,901 18,156 0
Dues and subscriptions 1,777 1,420 0
Stock transfer and maintenance fees 4,462 3,600 5,700
Miscellaneous 2,490 2,449 4,090
----------- --------- ---------
Total General and administrative expenses 1,493,794 552,696 180,015
----------- --------- ---------
Loss before other income provision for income tax and
cumulative effective adjustment (728,200) (162,627) (129,859)
Interest Income 6,881 4,126 49
Sale of distribution rights-Note 11 0 0 32,500
------------- --------- ---------
Subtotal (721,319) (158,501) (97,310)
Less: Provision for Corporate Income Tax -(Credit)-
Note I (27,050) (5,945) 1,962
------------- ---------- ---------
Loss before cumulative adjustment (694,269) (152,556) (95,348)

Less: Cumulative Effect Adjustment - (Credit)- Note 1 -- -- 21,564
------------ --------- ---------

Net Loss $ (694,269) $(152,556) $ (73,784)
============= ========== =========

Loss per share:
Prior to cumulative effect adjust. (.17) (.05) (.04)
Cumulative effect adjustment -- -- .01
------------ --------- ---------

NET LOSS PER SHARE $ (.17) $ (.05) $(.03)
============= ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4

<PAGE>

THE QUIGLEY CORPORATION

Statement of Cash Flows

<TABLE>
<CAPTION>
Year Ended
SEPTEMBER 30,
-------------
1996 1995 1994
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:

<S> <C> <C> <C>
Net loss $ (694,269) $ (152,556) $(73,784)
Adjustments to reconcile net loss to net cash used by
operating activities Non-cash items included in loss:
Amortization and depreciation 17,461 4,728 2,773
Expenses incurred without cost credited to additional
paid in capital 0 0 40,000
Paid through the issuance of common stock 1,104,586 110,214 63,250
Allowance for deferred income taxes (27,050) (5,945) (23,526)

Change in assets and liabilities:
Accounts receivable (471,095) (135,983) 0
Inventory 24,098 (64,912) (8,318)
Due from attorney's escrow account 9,000 (9,000) 0
Prepaid expenses 4,468 (4,468) 8,474
Interest on notes receivable 2,125 (2,784) 0
Deposits (67) 2,765 (3,235)
Prepaid stock subscription 41,000 0 0
Accounts payable and accrued expenses 8,576 4,772 (24,242)
---------- ----------- --------

Cash provided by (used in) operations 18,833 (253,169) (18,608)
---------- ------------ --------

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of fixed and other assets (42,757) (35,725) (1,000)
Acquisition of patent rights (210,000) 0 0
----------- ------- ------
Total cash provided by (used in)
investing activities (252,757) (35,725) (1,000)
----------- -------- -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of restricted common stock 515,346 433,925 20,388
Less: shares issued for notes (25,855) (61,875) 0
Exercise and issuance of various options 0 38,042 0
Loan payable by shareholder 0 0 (4,800)
Officers loan payable (440) (10,800) 8,240
Automobile loan payable 17,719 17,719 0
--------- ------- ------
Total cash provided by (used in)
financing activities 471,332 417,011 23,828
--------- ------- ------

NET INCREASE (DECREASE) IN CASH 237,408 128,117 4,220
CASH AT BEGINNING OF PERIOD 132,739 4,622 402
--------- ------- -------

CASH AT END OF PERIOD $370,147 $132,739 $ 4,622
========= ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5

<PAGE>

THE QUIGLEY CORPORATION

Statement of Cash Flows (continued)

<TABLE>
<CAPTION>
Year Ended
SEPTEMBER 30,
-------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION

Expenses paid by issuance of common stock and options $1,104,586 $110,214 $63,250

Non cash investing & financing:
Conversion of put option into equity 44,100

Acquisition of patent rights 210,000

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6

<PAGE>

THE QUIGLEY CORPORATION

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

NOTE 10

Retained
Common Stock Issued Additional Earnings
Shares Amount Paid-In Capital (Deficit) Total
------ ------ --------------- --------- -----

<S> <C> <C> <C> <C> <C>
Balance at Sept. 30,
1993 2,445,525 $2,445 $1,761,729 $(1,882,638) $(118,464)

Sales of S registration
shares, net of
commission 28,550 29 16,359 16,388

Exercise of options by
officers
August 1994 300,000 300 20,700 21,000

Exercise of options-
August 1994 50,000 50 (50) 0

Issuance of stock in
settlement of accounts
payable balance- August
1994 25,667 26 3,474 3,500

Issuance of stock in
exchange of loan and
notes payable- August
and September 1994 60,000 60 29,940 30,000

Sale of shares- Sept.
1994 5,334 5 3,995 4,000

Issuance of stock for
services rendered -
September 1994 10,000 10 8,740 8,750

Services contributed by
officers credited to paid
in capital-Note 12 40,000 40,000

Net Loss for Period
Ended September 30,
1994 (73,784) (73,784)
---------------------------------------------------------------------------------------------------------
Balance at Sept. 30,
1994 2,925,076 2,925 1,884,887 (1,956,422) (68,610)

Issuance of stock for
services rendered Oct. 1,
1994-Sept. 30, 1995 88,171 88 110,126 110,214

Exercise of warrants Jan.
1995 21,134 21 38,021 38,042
---------------------------------------------------------------------------------------------------------
SUBTOTAL 3,034,381 $3,034 $2,033,034 $(1,956,422) $79,646

</TABLE>

The accompanying notes are an integral part of these financial statements.

F-7

<PAGE>

THE QUIGLEY CORPORATION

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - NOTE 10 (Continued)

Additional Retained Notes
Common Issued Paid-In Earnings Receivable-
Stock Shares Amount Capital (Deficit) Stockholders Total
------------ ------ ------- --------- ------------ -----

<S> <C> <C> <C> <C> <C> <C>
Balance 3,034,381 $3,034 $2,033,034 $(1,956,422) $ 79,646

Sale of 504 Stock- December 1994
for cash & notes-Net of expenses 159,700 160 185,715 185,875

Less: Shares issued for notes (61,875) (61,875)

Sale of Stock Oct. 1, 1994-Sept.
30, 1995 for cash 167,333 167 247,883 248,050

Net Loss for period ended
September 30, 1995 (152,556) (152,556)
------------------------------------------------------------------------------------------------
Balance at Sept. 30, 1995 3,361,414 3,361 2,466,632 (2,108,978) (61,875) 299,140

Conversion of put option to equity
January 1996 42,000 42 44,058 44,100

Shares issued to officers net of
prior compensation recognized 530,000 530 313,220 313,750

Issuance of stock for services
rendered Oct. 1, 1995 -Sept. 30,
1996 269,320 269 580,567 580,836

Issuance of stock for Patent rights-
Note 1 60,000 60 209,940 210,000

Stock issued to underwriter-June
1996 7,873 8 (8) 0

Exercise of warrants- Jan. 1996 2,070 2 2,068 2,070

Add: partial receipt of notes
receivable on shares sold in prior
period 9,145 9,145

Sale of Stock, options & exercise
of options- Oct. 1, 1995- Sept. 30,
1996 for cash & notes 497,087 497 512,779 513,276

Less: Shares issued for notes (35,000) (35,000)

Net Loss for period ended
September 30, 1996 (694,269) (694,269)
------------------------------------------------------------------------------------------------

BALANCE AT SEPT 30, 1996 4,769,764 $4,769 $4,129,256 $(2,803,247) (87,730) $1,243,048
========= ====== ========== ============ ======== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-8

<PAGE>
THE QUIGLEY CORPORATION

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

(a) ORGANIZATION AND OPERATIONS

The Quigley Corporation (the "Company") was organized under
the laws of the State of Nevada on August 24, 1989. The Company started business
October 1, 1989 and has been engaged in the business of marketing health
products . The products are fully developed and are being offered to the general
public. For the fiscal year ended September 30, 1996 the Company had revenues of
approximately $1,049,000 from the sale of these products. For the most recent
fiscal periods the Company has concentrated its efforts in the promotion of a
product known as "Cold-Eeze(TM)". Management believes that it can generate
enough revenue in the next twelve months to sustain -the Company. Management is
also pursuing additional capital through various methods.

(b) REVENUE

Revenue is recognized from product sales when the product is
shipped using the accrual basis of accounting.

The direct write off method of accounting for bad debts is
utilized and there is no allowance for doubtful accounts. For the current period
approximately $764 of bad debts was written off.

(d) INVENTORY

Inventory is stated at the lower of cost or market. Cost is
determined by the first in, first out method.

(e) FIXED ASSETS

Fixed assets are reflected on the accompanying statements at
cost less accumulated depreciation. A combination of the straight line and
accelerated methods of depreciation is used utilizing a life of five years for
machinery and equipment and a life of seven years for furniture and fixtures.

(f) PATENT

During the current fiscal period the Company reached an
agreement with an individual who had patent rights on the use of zinc gluconate
which is used in the formulation of the Company's products. The Company issued
60,000 of its common shares in return for the exclusive and sole right to this
license / patent. The stock issued had a fair value of $210,000 and is being
amortized over the remaining patent life which expires in March 2002. In
addition to the payment of stock , the Company has agreed to pay royalties to
the previous patentholder for the remaining term of the patent.

The Company is obligated under a licensing agreement to pay
Drs. John and Nancy Godfrey a total of 5% of all sales of the Cold-Eeze product.
This is comprised of a royalty fee of 3% and a consulting fee of 2%.

The Company is also obligated under a separate licensing
agreement with George Eby to pay him a 3% royalty fee of all sales collected for
the remaining term of the patent. The patent expires in March 2002.

The Company is obligated under an employment contract to its
two principal officers, Guy J. Quigley and Charles A. Phillips, whereby the
above-mentioned officers are to receive a combined royalty of 5% of gross sales
from the Cold-Eeze product. Amounts paid to the officers under the
aforementioned contract were included in officers compensation on the Statement
of Operations.

F-9

<PAGE>

THE QUIGLEY CORPORATION

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

(g) DEPOSITS

Deposits are comprised of rent security and the related
accrued interest.

(h) INCOME TAXES

Effective October 1, 1993 the Company changed its method of
accounting for income taxes to comply with SFAS No. 109, "Accounting for Income
Taxes." The Company has suffered net losses since inception and has a NOL carry
forward of approximately $1,500,000. Using an 15% income tax rate results in a
deferred tax asset of approximately $225,000. A valuation allowance of $168,479
was established to reduced deferred tax assets to amounts expected to be
realized. This resulted in a net deferred tax asset of $56,521. Of this $27,050
was derived from the current year's NOL (after provision for the valuation
allowance). This amount was credited to provision for Corporate Income Tax. Of
the total tax asset- $21,564 represented prior years tax benefits, before the
adoption by the Company of SFAS No.109. This credit was reported as a Cumulative
Effect Adjustment on the Statement of Operations for the period ended September
30, 1994.

(i) FISCAL YEAR

The Company's fiscal year ends September 30th.

(j) SERVICES CONTRIBUTED BY OFFICERS

Prior to October 1, 1994, the officers received no significant
remuneration. The Statement of Operations was charged an amount needed in order
to obtain an annual officers compensation expense of $50,000. For the fiscal
year ended Sept. 30, 1994 these charges totaled $40,000 and additional paid-in
capital was credited for such amounts. For the fiscal years ended September 30,
1996 and 1995 the officers received remuneration of approximately $555,000 and
$106,000 respectively. This includes common stock issued to the officers which
was shown at fair value at the time of issuance.

NOTE 2- MANAGEMENTS PLANS

It is managements contention that they will be able to
generate sufficient cash from sales to support its operations for the following
twelve month period. In addition the Company is contemplating various equity
offerings in the next fiscal year.

F-10

<PAGE>

THE QUIGLEY CORPORATION

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996

NOTE 3- LEASE COMMITMENTS

Operating Leases- The Company has a lease agreement on its
office space which expires in December 1998. There is no lease agreement on its
warehouse space and the Company occupies the premises on a month to month basis.
The following table represents the future minimum rent payments required on the
operating lease with terms in excess of one year as of September 30, 1996.

Fiscal Year Ended September 30,

1997 16,440
1998 18,213
1999 4,701
--------
$39,354

Capital Leases- in the most recent fiscal year the Company was
not obligated under any capital lease.

NOTE 4 - RELATED PARTY TRANSACTIONS

The Company had various transactions with the Ruyala
Corporation since inception. Ruyala is owned in its entirety by Wendy Quigley
(the wife of the Company's President, Guy Quigley). For part of the current
fiscal year officer compensation owing to Guy and Wendy Quigley was paid to the
Ruyala corporation and was charged to officers compensation on the Statement of
Operations.

NOTE 5- PREPAID EXPENSES & BANK LOAN PAYABLE

Prepaid expenses represents prepaid interest on an automobile
loan. The automobile loan was satisfied in its entirety in the current fiscal
period.

NOTE 6- NOTES RECEIVABLE-SHAREHOLDERS

Notes receivable include principal and interest due from
shareholders. The Company sold shares under a Section 504 registration and
received a note in the amount of $61,875 in 1995. The note was originally due
June 1, 1996 and bore interest at a rate of 6% per annum. The Board of Directors
authorized an extension on the due date of the note until July 1, 1997. The
balance as of September 30, 1996 was $53,389.

Additionally, certain option and warrant holders exercised
their options in September 1996. The full proceeds of the exercise were not
received in the current period. As of September 30, 1996 the balance owing to
the Company was $35,000.

The principal amount of the notes has been shown as a
reduction in shareholders equity pending the collection of such notes. The
interest receivable has been carried as a current asset on the balance sheet.

NOTE 7- ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses represent various short
term operating expenses of the Company including the purchase of merchandise.

F-11

<PAGE>

THE QUIGLEY CORPORATION

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996

NOTE 8- PREPAID STOCK SUBSCRIPTION

As of September 30, 1996 an investor deposited $41,000 for the
purchase of common shares which were issued in October 1996.

NOTE 9- LOANS AND NOTES PAYABLE

(a) As of September 30, 1995 loans payable represented an amount due to
officers of $440. The loan was satisfied in full during the current fiscal
period.

(b) The Company purchased an automobile and financed part of the
purchase through a bank loan. The total amount financed was $15,324 at an
approximate rate of 11% for a period of 60 months. As of September 30, 1995
approximately $17,700 was owed. The loan was satisfied in full in the current
period.

NOTE 10-CAPITALIZATION

In December 1995, the Company initiated a 1 for 10 reverse stock
split and changed the par value of its stock to $.001 per common share. All
shares referred to in the financial statements and notes to the financial
statements (unless specifically stated otherwise) refer to post split amounts.

(a) In August of 1994 an option holder exercised 250,000 options in
lieu of the $2,500 owed to him by the Company for advertising services rendered.
The Statement of Operations reflects a charge to advertising in the period where
incurred.

(b) In November 1992 , January and February 1993 the Company received a
total of $35,000 from an investor. The agreement provided that the investor was
to receive 12,000 (pre-split) restricted shares of the Company for each $1,000
invested up to an initial maximum of 1,800,000 (pre-split) restricted common
shares for a maximum, investment of $150,000.

The Company had granted the investor certain resale rights where
the investor could require the Company to repurchase the shares at increasing
prices ranging from $.0972 to $.105 per share. This option commenced 24 months
from January 1993 and expired 36 months from such date. As of September 30, 1995
the Company had issued 42,000 shares of stock to the investor.

Due to the potential exercise of the put option, the above
mentioned shares had been segregated from the stockholders' permanent equity and
had been included in the mezzanine section of the balance sheet in the amount of
$44,100 (the maximum repurchase price). In the current- fiscal period the put
option expired and the shares were moved to the permanent equity section.

(c) In June of 1994 the Company sold 28,550 shares in a Regulation "S"
sale of common shares of the Company. The shares were offered exclusively to
non-US persons. The shares were sold at $.07 a share for total gross proceeds of
$19,985. Commissions totaling $3,597 were deducted from these proceeds resulting
in a net amount of $16,388 being forwarded to the Company.

(d) In August 1994 various officers and / or their spouses exercised
options which were issued in 1992. A total of 300,000 shares were issued upon
the exercise of these options. The options exercised ranged in price from $.001
through $.10 per share. Total consideration was to have been $21,000. In lieu of
payment, the officers applied monies owed to them by the Company.

(e) In August 1994 Gary Quigley (a relative of the Company's President)
exercised 500,000 options out of the 1,000,000 granted to him in 1992. in lieu
of paying the exercise price Gary Quigley relinquished the remaining 500,000
options issued to him. The options were then cancelled by the Company.

F-12

<PAGE>

THE QUIGLEY CORPORATION

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996

NOTE 10- CAPITALIZATION (CONTINUED)

(f) In August 1994 the Company issued 36,000 restricted shares to Dr.
Robert Pollack in total repayment of a debt of $18,000 ($.50 per share). The
debt was incurred over a period of fifteen months and included $820 worth of
interest.

(g) In September 1994 the Company issued 24,000 restricted shares to
Dr. and Mrs. John Godfrey in full repayment of a loan owing to them in the
amount of $12,000 ($. 50 per share) .

(h) In August 1994, 667 restricted shares were issued to Robert Moore
in payment of a debt owed to him of $1,000 ($1.50 per share) for the
installation of some fixed assets The balance sheet account- fixed assets was
charged for this item in a prior period in the amount of $1,000.

(i) In September 1994 Mrs. Robert Pollack purchased 5,334 restricted
shares of the Company at $.75 for a total cash consideration of $4,000.

(j) In August 1994 the Company issued 10,000 restricted shares of
common stock to Dr. John Godfrey for services rendered. A charge in the amount
of $8,750 was made to services rendered on the Statement of Operations for the
fair value of the stock.

(k) During the period October 1, 1994 through September 30, 1995
various individuals purchased restricted stock from the Company. 167,333 shares
were sold for which the Company received consideration of $243,050 or an average
price of approximately $1.48 per share.

(l) In January 1995 warrants which were originally issued to the
underwriter were exercised by a third party who had the warrants transferred to
him. Total shares issued were 21,134 in consideration of an $38,042 exercise
price or a per share price of $1.80.

(m) In December 1994 and January 1995 the Company sold 159,700 shares
of stock under a Registration D private placement offering for total
consideration of $199,625. The Company paid commissions on the sale in the
amount of $13,750 which was charged against paid in capital. The Company
received an interest bearing note receivable in the amount of $61,875 from some
investors. This note is due June 1, 1997.

(n) During the period October 1, 1994 through September 30, 1995
various individuals were issued restricted shares in return for goods and
services rendered. The total number of shares issued was 88,171. The statement
of operations was charged a total of $110,214 or $1.25 per share for these
issuance. The various expenses categories charged were:

Services rendered\ R&D $ 70,711
Advertising & Promotion 19,813
Legal 7,500
Commissions 6,875
Purchases of goods 2,815
Office expense 2,500
--------
Total $110,214
========

The valuation was based on the fair value of the stock which approximated the
value of goods and services rendered.

(o) In December 1995 the Company initiated a 1 for 10 reverse stock
split and changed the par value of the stock to $.001 per common share. In
January 1996 all a, b, and c warrants exercising prices were reduced from $.25,
$.50 and $.75 to $.10, $.15 and $.20 respectively. All warrants of these classes
expired as of January 31, 1996.

F-13

<PAGE>

THE QUIGLEY CORPORATION

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 1996

NOTE 10- CAPITALIZATION (CONTINUED)

(p) During the period October 1, 1995 through September 30, 1996
various individuals were issued shares in return for goods and services
rendered. The total number of shares issued was 269,320. The statement of
operations was charged a total of $580,836 or an average of $2.16 per share for
these issuance. The various expenses categories charged were:

Services rendered\ R&D $ 41,836
Advertising & Promotion 434,000
Legal 105,000
--------
Total $580,836
========

(q) In addition, an underwriter was issued 7,873 shares for services
rendered. Additional paid in capital was charged for this transaction. The
valuation was based on the fair value of the stock at the time of issuance.

(r) For periods prior to October 1, 1994 officers compensation actually
received by officers was minimal. For those periods the Statement of Operations
was charged an amount needed in order to obtain an annual officers compensation
expense of $50,000. Additional paid in capital was credited for such amounts.
During the period October 1, 1995 through September 30, 1996, 530,000 shares
were issued to various officers for past service rendered. The fair value of
these shares was $463,750. This amount was reduced by $150,000 which represents
amounts charged in prior periods for compensation which was never actually paid
to the officers.

(s) In January and February 1996 20,700 of A warrants were exercised by
various individuals who received 2,070 shares for a total consideration of
$2,070.

(t) During the period October 1, 1995 through September 30, 1996
various individuals purchased shares, options and or exercised options in the
Company. The total shares issued was 497,087 and total consideration received
was $515,346. By agreement with the optionholders, 1,250,000 shares of common
stock underlying the purchase options were registered pursuant to Form S-8 in
August and October 1996.

(u) During the current period the Company entered into a marketing
agreement with Pacific Rim Pharmaceuticals for developing the Company's product
in the Far East. Pacific Rim Pharmaceutical was issued 300,000 common stock
Class D warrants exercisable at $1 and expiring in December 2000.

NOTE 11- INCOME

On June 21, 1993, the Company received a non refundable deposit in the
amount of $20,000 from a Canadian corporation (Cold-Eeze Canada Inc.) These
monies were a deposit toward a total of $250,000 for an option to acquire the
distribution rights for one of the Company's product.

In November 1993 Cold-Eeze Canada Inc. transferred their distribution
rights to Sunburst Resources. The Company and Sunburst had renegotiated the
original agreement to allow for distribution in the United States on a non
exclusive agreement. Sunburst agreed to pay $75,000 to the Company prior to
March 15, 1994. On January 15, 1994 the Company received the first installment
of $12,500. In January 1994 the Company terminated its agreement with Sunburst
as they had reneged on any further payments. The receipt of these monies was
shown as income from the sale of distribution rights on the Statement of
Operations in the period that negotiations ceased.

F-14

<PAGE>

THE QUIGLEY CORPORATION

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996

NOTE 12- EXPENSES

(a) Services contributed by officers was charged to officer's
compensation even though no monies were paid to those officers. Management's
estimate of the value of these costs are:

For year ended September 30,
1995 and 1996
---------------------------- 1994
----

Officer's Salary $0 $40,000

The corresponding expense was charged on the statement of operations and
additional paid-in capital was credited for such amounts.

(b) Administrative expenses are comprised mainly of office expense,
supplies and employee business expenses.

NOTE 13- COMMITMENTS AND CONTINGENCIES

The Company is obligated on a lease on its office which expires
December 1998. The current monthly rent is $1,370.

The Company is obligated under a licensing agreement to pay Drs. John
and Nancy Godfrey a total of 5% of all sales of the Cold-Eeze product. This is
comprised of a royalty fee of 3% and a consulting fee of 2%. These fees amounted
to $19,999 and $0 for Fiscal 1996 and Fiscal 1995.

The Company is also obligated under a separate licensing agreement with
George Eby to pay him a 3% royalty fee of all sales collected for the remaining
term of the patent. The patent expires in March 2002. No royalties were paid
under this agreement in Fiscal 1996 and Fiscal 1995.

The Company is obligated under an employment contract to its two
principal officers, Guy J. Quigley and Charles A. Phillips, whereby the
above-mentioned officers are to receive a combined royalty of 5% of gross sales
from the Cold-Eeze product. No royalties were paid under this agreement in
Fiscal 1996 and Fiscal 1995.

F-15

<PAGE>
THE QUIGLEY CORPORATION

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996

NOTE 14- STOCK OPTIONS AND WARRANTS

The following is a summary of stock warrants and options outstanding for the
dates listed:

THE QUIGLEY CORPORATION
SCHEDULE OF OUTSTANDING WARRANTS AND OPTIONS

Sale
Warrants Warrants Warrants Incentive
Security $1.00 $3.50 $.10,.15,.20 Options Options Options Warrants
Exercise Price Class D Class E Class A,B,C Various $1.00 $1.25-$1.50 Underwriters
- ----------------- ----------- ---------- ------------ ------------ ------------ ------------ -------------

Balance
<S> <C> <C> <C> <C> <C> <C> <C>
Oct. 1, 1994 0 0 634,030 1,710,000 0 0 84,536

Exercised
Oct. 1, 1994 -
Sept. 30, 1995 0 0 0 0 0 0 21,134
--------- --------- --------- ----------- ----------- --------- ------

Subtotal 0 0 634,030 1,710,000 0 0 63,402

Add:
New items issued 0 0 0 0 1,500,000 140,000 63,402
--------- --------- -------- ----------- --------- ------- ------

Balance
Sept. 30, 1995 0 0 634,030 1,710,000 1,500,000 140,000 63,402

Exercised
Oct. 1, 95 -
Sept. 30, '96 0 0 20,700 0 385,000 0 20,000

Expired
Oct. 1, 95 -
Sept. 30, '96 0 0 613,330 1,710,000 0 0 0
--------- --------- ------- --------- ----------- --------- --------

Subtotal 0 0 0 0 1,115,000 140,000 43,402

Add:
New items issued 800,000 850,000 0 0 0 0 0
------- ------- --------- ----------- ---------- -------- --------

Balance
Sept. 30, 1996 800,000 850,000 0 0 1,115,000 140,000 43,402
======= ======= ========= =========== ========= ======= ======
</TABLE>

During the current period the Company sold incentive stock options to
various salesman. The Company received a total of $960 from the sale of these
options. 140,000 options were issued in total and the exercise price ranges from
$1.25 to $1.50. The options expire in 1998 and are exercisable upon reaching
certain sales goals.

NOTE 15- SUBSEQUENT EVENTS

On October 1, 1996 the Company hired the investment banking firm, Sands
Brothers & Co. to assist in raising additional capital needed for expansion
purposes. The company is considering a private placement of common stock
pursuant to Regulation D. It is estimated that total funds raised will be in
range of $6,000,000 - $8,000,000.

F-16
<PAGE>
THE QUIGLEY CORPORATION
BALANCE SHEETS

(Unaudited)
December 31, September 30,
1996 1996

ASSETS
Current Assets:
Cash ........................................ $2,455,973 $ 370,147
Notes receivable ............................ 54,189 88,389
Accounts receivable, net .................... 2,200,824 607,078
Due from attorneys' escrow account .......... 260,000 --
Inventory ................................... 300,732 58,339
Other current assets ........................ 9,857 --
---------- ----------
TOTAL CURRENT ASSETS .................... 5,281,575 1,123,953
---------- ----------

EQUIPMENT - Less accumulated depreciation ......... 66,599 65,314
---------- ----------

OTHER ASSETS:
Patent rights - Less accumulated amortization 267,985 206,866
Deferred income taxes ....................... 715,825 56,521
Other assets ................................ 3,389 3,377
---------- ----------
TOTAL OTHER ASSETS ..................... 987,199 266,764
---------- ----------

TOTAL ASSETS ...................................... $6,335,373 $1,456,031
========== ==========

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:
Accounts payable ..................... $ 131,797 $ 63,139
Accrued expenses ..................... 749,996 21,114
Accrued income taxes ................. 622,318 --
Stock subscription payable ........... -- 41,000
----------- -----------
TOTAL CURRENT LIABILITIES............. 1,504,111 125,253

STOCKHOLDER'S EQUITY:
Common Stock, $.0005 par value;
authorized 25,000,000; issued and
outstanding 12,099,192 and 9,539,528
shares (Note 2) ...................... 6,049 4,769
Additional paid-in capital ........... 5,978,390 4,129,256
Deficit .............................. (851,758) (2,803,247)
Stock subscription receivable ........ (301,419) --
----------- -----------
TOTAL STOCKHOLDER'S EQUITY ..... 4,831,262 1,330,778
----------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.. $ 6,335,373 $ 1,456,031
=========== ===========

See accompanying notes to financial statements

F-17

<PAGE>

THE QUIGLEY CORPORATION
STATEMENTS OF OPERATIONS
(Unuadited)

Three months ended

December 31, December 31,
1996 1995
----------- -----------

NET SALES ................................... $4,091,653 $ 147,718
----------- -----------

COST OF SALES ............................... 1,374,327 17,975
----------- -----------

GROSS PROFIT ................................ 2,717,326 129,743
----------- -----------

OPERATING EXPENSES:
Sales and marketing ...................... 585,202 37,510
Administration ........................... 217,621 96,580
----------- -----------
TOTAL OPERATING EXPENSES..................... 802,823 134,090
----------- -----------

INCOME BEFORE TAXES ......................... 1,914,503 (4,347)
----------- -----------

INCOME TAXES (Note 4)........................ (36,986) --
----------- -----------

NET INCOME .................................. $1,951,489 ($ 4,347)
=========== ===========

Earnings per common share:

Primary (Notes 2 and 3)................... $ .14 --
==========

Fully diluted (Notes 2 and 3)............. $ .14 --
==========

Weighted average common shares outstanding:

Primary (Notes 2 and 3)................... 13,881,028 10,562,828

Fully diluted (Notes 2 and 3)............. 13,881,028 10,562,828

See accompanying notes to financial statements

F-18
<PAGE>
THE QUIGLEY CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)

Three months ended

December 31, December 31,
1996 1995

OPERATING ACTIVITIES:
Net income (loss) ................................ $1,951,489 $ (4,347)
---------- --------
Adjustments to reconcile net income
(loss) to net cash used by operating
activities:
Depreciation and amortization .............. 18,807 --
Deferred income taxes ...................... (659,304) --
(Increase) decrease in assets:
Notes receivable ...................... 34,200 (1,080)
Accounts receivable ................... (1,593,746) (76,317)
Inventory ............................. (242,393) 8,333
Other current assets .................. (9,857) 253
Increase (decrease) in liabilities:
Accounts payable ...................... 68,658 23,793
Accrued expenses ...................... 728,882 (1,002)
Accrued income taxes .................. 622,318 --
Stock subscription payable ............ (41,000) --
---------- --------
Total adjustments ................ (1,073,435) (46,020)
---------- --------

NET CASH PROVIDED BY OPERATING ACTIVITES ... 878,054 (50,367)
---------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................. (6,212) (2,760)
Patent rights and other assets ................... (75,011) --
---------- --------

NET CASH FLOWS FROM INVESTING ACTIVITIES ... (81,223) (2,760)
---------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued for services performed ....... 217,814 --
Common stock issued from exercise of options
and warrants ..................................... 1,590,000 --
Common stock issued from sale of stock and options 42,600 --
Due from attorneys' escrow account ............... (260,000)
Stock subscription receivable .................... (301,419)
---------- --------
NET CASH FLOWS FROM FINANCING ACTIVITIES ... 1,288,995 --
---------- --------

NET INCREASE (DECREASE) IN CASH ............ 2,085,826 (53,127)

CASH AT BEGINNING OF PERIOD ......................... 370,147 132,739
---------- --------

CASH AT END OF PERIOD ............................... $2,455,973 $ 79,612
========== ========

See accompanying notes to financial statements

F-19

<PAGE>
THE QUIGLEY CORPORATION
NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND GENERAL

The Quigley Corporation (the "Company"), organized under the laws of the state
of Nevada, is primarily engaged in the development and marketing of homeopathic
cold remedies. The products developed are being offered to the general public
through distributors, brokers, mail order, and are currently being featured on
the QVC Cable TV shopping network. For the fiscal periods presented, and for the
immediate future, the Company plans to continue concentrating its efforts in the
promotion of its major product "Cold-Eeze". This product is covered by patents
registered in the United States, United Kingdom, Sweden, France, Italy, Canada,
Germany and pending in Japan. Research is continuing on this product in order to
maximize its full potential use for the general public.

On July 15, 1996, results were published in the Annals of Internal Medicine -
Vol. 125 No 2, of a new randomized double-blind placebo-controlled study of the
common cold, which had commenced at the Cleveland Clinic Foundation, on October
3, 1994. This study had results that showed a 42% reduction in the duration of
the common cold.

The Company has exclusive worldwide use, manufacturing, marketing and
distribution rights for the zinc gluconate/glycine lozenge formulation, known as
"Cold-Eeze". The goal of the Company is to have consumers worldwide make
"Cold-Eeze" their preferred choice for relief from the common cold.

The Balance Sheet as of December 31, 1996, the Statements of Operations, and the
Statements of Cash Flows for the three month periods ended December 31, 1996 and
1995, have been prepared without audit. In the opinion of management, all
adjustments necessary to present fairly the financial position, results of
operations and cash flows, for the periods indicated, have been made. All
adjustments made were of a normal recurring nature.

NOTE 2 - TRANSACTIONS AFFECTING STOCKHOLDERS' EQUITY

On January 15, 1997, the Company split its common stock on a two-for-one basis.
Therefore, all share data such as, par value, earnings per share, options
exercised, warrants granted, cash received or to be received for outstanding
options and warrants are all on a post-split basis.

During the three month period ended December 31, 1995, there were no
transactions affecting stockholders equity.

From October 1, 1996 to December 31, 1996, there were 2,365,000 shares issued
through the exercise of stock options and warrants of the Company, shares
numbering 54,664 were issued for cash payment, and 140,000 were issued for
services rendered to the Company. The difference between the option payment
price, cash received, or fair market value for services rendered, resulted in an
increase to the additional paid-in-capital of the Company.

As of October 1, 1996, there were 5,810,000 unexercised options and warrants.
During the period ended December 31, 1996, 2,265,000 options and warrants were
exercised at various prices. In November of 1996, the Company issued 350,000
warrants to purchase the Companys' stock at $2.50 per share. At December 31,
1996, there were a total of 3,895,000 (of which 3,595,000 are currently
exercisable) of unexercised issued options and warrants of the Companys' stock.

F-20

<PAGE>
NOTE 2 - TRANSACTIONS AFFECTING STOCKHOLDERS' EQUITY (continued)

Of the shares issued through the exercise of stock options and warrants, monies
in the amount of $301,419, still owing to the Company, are classified as a
contra account in stockholders' equity.

In addition, the contract, as modified in November 1996, with Sands Brothers &
Co., Ltd., the Companys' investment banker, for the purpose of raising
additional capital needed for expansion, stipulates that "Sands" has the
conditional right to purchase, at $10 per share, 200,000 shares of the Companys'
stock, for every million dollars they identify for the Company in a private
placement of the Companys' stock pursuant to Regulation D. Current plans of the
Company is that the private placement is not to exceed $10 million.

NOTE 3 - EARNINGS PER SHARE

Earnings and net loss per share is based on the weighted average number of
common shares outstanding during the three months ended December 31, 1996 and
1995. During the period ended December 31, 1995, no effect has been given to
unexercised stock options or warrants because the effect would be antidilutive.

NOTE 4 - INCOME TAXES

Income taxes resulted in a credit for the period ended December 31, 1996 because
of an excess valuation account at September 30, 1996 that provided for deferred
taxes at a rate of 15% instead of the 40.5% used at December 31, 1996. Based
upon the expectations for the Company at September 30, 1996, a "qualification
for a going concern" was made in the audit report of the Company. Thereby
indicating the valuation account and rates used were determined to be adequate
at that time.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

In November 1996, the Company and George J. Longo entered into an employment
agreement for a period of five years. This agreement provides for, among other
things, that Mr. Longo, commencing in January 1997, is to serve as the Chief
Financial Officer for the Company, a starting base salary of $80,000 per annum,
and the granting of 50,000 warrants to purchase the Companys' stock at $2.50 per
share.

NOTE 6 - OTHER MATTERS

On January 2, 1997, the Board of Directors approved the change of the Comapnys'
fiscal year from September 30 to December 31 to reflect the fiscal year which
has been generally adopted by the pharmaceutical industry. The audited
statements for the transition period October 1, 1996 to December 31, 1996 will
be filed by the Company of Form 10-KSB for the calendar year ended December 31,
1997, and will be audited by Nachum Blumenfrucht, CPA.

On January 29, 1997, the Company engaged the independent accounting firm of
Coopers & Lybrand L.L.P. to audit the Companys' financial statements for the
calendar year 1997. The replacement of the previous certifying accountant,
Nachum Blumenfrucht, CPA, was made by approval of the Board of Directors of the
Company and with agreement of Mr. Blumenfrucht. This change was due to the
dramatic expansion of business operations undertaken by the Company since the
close of the prior fiscal year. There have been no disagreements with the former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, nor any reportable event
required to be disclosed.

F-21

<PAGE>
THE QUIGLEY CORPORATION
BALANCE SHEET

(Unaudited)
June 30, 1997
-------------
ASSETS
Current Assets:
Cash and cash equivalents ................................ $ 6,568,043
Accounts receivable, net ................................. 1,443,840
Inventory ................................................ 7,366,650
Prepaid income taxes ..................................... 594,807
Other current assets ..................................... 451,641
----------
TOTAL CURRENT ASSETS ................................. 16,424,981
----------

EQUIPMENT - Less accumulated depreciation ...................... 140,112
----------

OTHER ASSETS:
Patent rights - Less accumulated amortization ............ 432,357
Deferred income taxes (Note 4) ......................... 1,014,414
Other assets ............................................. 414,113
----------
TOTAL OTHER ASSETS .................................. 1,860,884
----------

TOTAL ASSETS ................................................... $18,425,977
==========

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:
Accounts payable ......................................... $ 1,261,107
Accrued payroll and payroll taxes ........................ 630,076
Accrued royalties and sales commissions .................. 1,158,532
Accrued expenses ......................................... 1,721,949
----------
TOTAL CURRENT LIABILITIES ........................... 4,771,664
----------

OTHER NON-CURRENT LIABILITIES .................................. 919,701
----------

STOCKHOLDER'S EQUITY:
Common Stock, $.0005 par value; authorized
50,000,000; issued 12,223,130;
outstanding 11,736,268 shares (Note 2) ............... 6,112
Additional paid-in capital ............................... 7,473,446
Retained earnings ........................................ 6,695,412
Less: Treasury stock, 486,862 shares at cost (Notes 2&3).. (1,145,358)
Stock subscription receivable (Note 2) .......... (295,000)
----------
TOTAL STOCKHOLDER'S EQUITY .......................... 12,734,612
----------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ................... $ 18,425,977
==========

See accompanying notes to financial statements

F-22
<PAGE>
THE QUIGLEY CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)

Three months ended Six months ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
---------- ----------- ----------- ----------

NET SALES ................ $4,083,736 $ 69,496 $26,265,742 $ 174,928
---------- ----------- ----------- ----------

COST OF SALES ............ 1,225,374 20,953 8,114,196 53,852
---------- ---------- ----------- ----------

GROSS PROFIT ............. 2,858,362 48,543 18,151,546 121,076
---------- ---------- ----------- ----------

OPERATING EXPENSES:
Sales and marketing ... 435,099 40,427 2,921,223 82,564
Administration ........ 646,429 103,278 2,546,003 210,964
---------- ---------- ----------- ----------

TOTAL OPERATING EXPENSES . 1,081,528 143,705 5,467,226 293,528
---------- ---------- ----------- ----------

INCOME BEFORE TAXES ...... 1,776,834 (95,162) 12,684,320 (172,452)
---------- ----------- ----------- ----------

INCOME TAXES (Note 4)..... 719,469 -- 5,137,150 --
---------- ----------- ----------- -----------

NET INCOME .............. $ 1,057,365 ($ 95,162) $ 7,547,170 ($ 172,452)
============ ========== =========== ==========

Earnings per common share:

Primary
(Notes 2 & 3) $.07 ($.01) $.47 ($.02)
============ ========== =========== ===========

Fully diluted
(Notes 2 & 3) $.07 ($.01) $.47 ($.02)
============ ========== =========== ===========

Weighted average common shares outstanding:

Primary
(Notes 2 & 3) 15,825,852 8,377,532 16,199,522 8,397,050

Fully diluted
(Notes 2 & 3) 15,825,852 8,377,532 16,199,522 8,397,050

See accompanying notes to financial statements

F-23
<PAGE>

THE QUIGLEY CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)

Six months ended
June 30, June 30,
1997 1996
------- -------

OPERATING ACTIVITIES:
Net income (loss) ....... ....................... $ 7,547,170 ($172,452)
----------- ---------
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation and amortization ................ 69,027 --
Deferred income taxes ........................ (298,589) --
(Increase) decrease in assets:
Accounts receivable ..................... 756,984 120,779
Prepaid income taxes .................... (594,807) --
Inventory ............................... (7,065,918) 13,854
Other current assets .................... (441,784) 506
Increase (decrease) in liabilities:
Accounts payable ........................ 1,129,310 (28,468)
Accrued payroll and payroll taxes ....... 630,076 --
Accrued royalties and sales commissions.. 527,887 --
Accrued expenses ........................ 1,602,598 (2,445)
Accrued income taxes .................... (622,318) --
Other non-current liabilities ........... 509,000 --
----------- ---------
Total adjustments .................. (3,798,534) 104,226
----------- ---------

NET CASH PROVIDED BY OPERATING ACTIVITIES ..... 3,748,636 (68,226)
----------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................. (78,516) (1,333)
Patent rights and other assets ................... (15,515) (24)
----------- ---------

NET CASH FLOWS FROM INVESTING ACTIVITIES ...... (94,031) (1,357)
----------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued from exercise of options
and warrants ................................... 60,850 --
Common stock issued from sale of stock ........... 76,007 77,980
Due from attorney's escrow account ............... 260,000 --
Stock subscription receivable .................... 60,608 (2,214)
----------- ---------

NET CASH FLOWS FROM FINANCING ACTIVITIES ...... 457,465 75,766
----------- ---------

NET INCREASE (DECREASE) IN CASH ............... 4,112,070 6,183

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ... 2,455,973 79,612
----------- ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD .......... $ 6,568,043 $ 85,795
=========== =========

See accompanying notes to financial statements

F-24
<PAGE>
THE QUIGLEY CORPORATION
STATEMENTS OF CASH FLOWS (continued)
(Unaudited)

Six months ended
June 30, June 30,
1997 1996
------- -------

Supplemental disclosure of cash flow information

Non cash investing and financing activities:

Capital expenditures $7,905 -----
Patent rights and other assets $615,701 -----
Common stock issued for services performed $1,358,263 -----
Treasury stock cost $1,145,358 -----

See accompanying notes to financial statements

F-25
<PAGE>
THE QUIGLEY CORPORATION
NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND GENERAL

The Quigley Corporation (the "Company"), organized under the laws of the state
of Nevada, is primarily engaged in the development, manufacturing, and marketing
of homeopathic cold remedies. The products developed are being offered to the
general public through distributors, brokers, mail order, and is regularly
featured on the QVC Cable TV shopping network. For the fiscal periods presented,
and for the immediate future, the Company plans to continue concentrating its
efforts in the promotion of its major proprietary "Cold-Eeze(R)" and Cold-Eezer
Plus products. These products are based upon a proprietary zinc gluconate
glycine formula which in a clinical study conducted by The Cleveland Clinic, has
been shown to reduce the severity and duration of the common cold symptoms. This
product is covered by patents registered in the United States, United Kingdom,
Sweden, France, Italy, Canada, Germany and pending in Japan. Research is
continuing on this product in order to maximize its full potential use for the
general public.

On July 15, 1996, results of this study were published in the Annals of Internal
Medicine - Vol. 125 No 2, of a new randomized double-blind placebo-controlled
study of the common cold, which had commenced at the Cleveland Clinic
Foundation, on October 3, 1994. This study had results that indicated a 42%
reduction in the duration and severity of the common cold symptoms.

The Company has exclusive worldwide representation, manufacturing, marketing and
distribution rights for the zinc gluconate glycine lozenge formulation, known as
"Cold-Eeze(R)", which is patented in the United States, United Kingdon, Sweden,
France, Italy, Canada, Germany, and pending in Japan. The goal of the Company is
to have consumers worldwide make "Cold-Eeze(R)" their preferred choice for
relief from the common cold.

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 which 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 a various range and size of suppliers in the cold
remedy products arena. Cold-Eeze(R) which has been clinically proven to reduce
the duration and severity of the common cold symptoms, 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 our
ability to compete in the marketplace now, 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 Balance Sheet as of June 30, 1997, the Statements of Operations for the
three and six months periods ended June 30, 1997 and 1996, and the Statements of
Cash Flows for the six months periods ended June 30, 1997 and 1996, have been
prepared without audit. In the opinion of management, all adjustments necessary
to present fairly the financial position, results of operations and cash flows,
for the periods indicated, have been made. All adjustments made were of a normal
recurring nature.

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 September 30, 1996, in the Company's Form 10-KSB/A, and
the transition quarter ended December 31, 1996, in the Company's Form 10-QSB.
The transition quarter reflects the Company's change from a fiscal year end of
September 30, to a calendar year end, and is reflective of the first quarter
results since the release of The Cleveland Clinic Study in July 1996.

F-26

<PAGE>

NOTE 2 - TRANSACTIONS AFFECTING STOCKHOLDER'S EQUITY

On January 15, 1997, the Company split its common stock on a two-for-one basis.
Therefore, all share data such as, par value, earnings per share, options and
warrants exercised, cash received or to be received for outstanding options and
warrants are all on a post-split basis.

From January 1, 1997 to June 30, 1997, there were 85,000 shares issued through
the exercise of stock options and warrants of the Company, shares numbering
17,884 were issued for cash payment, 264,120 were issued for services rendered
to the Company, and 729,928 shares were returned to the Company to be placed in
treasury. The difference between the option payment price and cash received or
fair market value for services rendered, resulted in an increase to the
additional paid-in-capital of the Company.

At June 30, 1997, there were a total of 5,935,000 of unexercised issued options
and warrants of the Company's stock.

Of the shares issued through the exercise of stock options and warrants, monies
in the amount of $295,000 still owed to the Company, are classified as a contra
account in stockholder's equity.

On October 1, 1996, the Company entered into an agreement with Sands Brothers &
Co., Ltd, ("Sands") to assist the Company raise additional capital and to
provide other investment banking services. For this service, Sands received
800,000 warrants at an exercise price of $1.75. Subsequently, this contract, was
modified in November 1996, and stipulated Sands had the conditional right to
purchase, at $10 per share, 200,000 shares of the Company's stock, for every
million dollars they identify for the Company in a private placement of the
Company's Stock pursuant to Regulation D. The Company desired that the private
placement was not to exceed $10 million. During the first quarter of 1997, the
Company decided not to pursue a private placement offering. Therefore, the
aforementioned possible additional warrants for Sands will not materialize.

However, in order to terminate this arrangement with Sands, the Company issued
to Sands 350,000 additional warrants to purchase the Company's stock at $10 per
share. Accordingly, a provision for loss of $700,000 ($417,000 net of taxes) for
a total of 1,150,000 warrants issued to Sands, and other expenses expected to be
incurred, was charged against earnings.

Also, the Company terminated a contract with a consulting firm that was
previously issued 350,000 options to purchase the Company's stock. A provision
of $91,000 ($54,000 net of taxes), was also charged against earnings

On March 27, 1997, the Company received a net return to treasury 486,862 shares
of its stock because of a favorable ruling from litigation commenced against
Nutritional Foods, Ltd. ("NFL"). The total shares recovered was 729,928. As
payment for legal services, 243,066 restricted shares were issued on March 27,
1997 with a discounted market value for these shares of $1,145,358. This
discounted value then became the cost of the net treasury stock ($2.35 per
share) returned to the Company.

NOTE 3 - EARNINGS PER SHARE

Earnings and net loss per share is based on the weighted average number of
common shares outstanding during the three months and six months periods ended
June 30, 1997 and 1996. Using the modified treasury stock method, increased the
weighted average number of common shares outstanding for the period ended June
30, 1997 by 4,310,723 shares, or a total number of weighted shares outstanding
of 16,199,522. During the period ended June 30, 1996, no effect has been given
to unexercised stock options or warrants because the effect would be
antidilutive.

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share", which simplifies
the calculation of basic EPS and diluted EPS. The effective date is for
accounting periods ending after December 15, 1997, with restatement for prior
periods presented after December 15, 1997.

F-27

<PAGE>
NOTE 4 - INCOME TAXES

Income taxes includes both deferred and currently payable taxes. Deferred income
taxes result from temporary differences which consist of a different tax base
for assets and liabilities than their reported amounts in the financial
statements. The deferred tax asset of $1,014,414 consists principally of future
tax deductions from the issuance of options, warrants and restricted stock. For
the three months and six months periods ended June 30, 1997 an effective tax
rate is provided for deferred and currently payable taxes at 40.5%. Since the
Company was in a Net Operating Loss position at June 30, 1996, no taxes were
provided for payment or recovery.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

The Company maintains certain royalty agreements with the founders and
developers, licensors, and consultants for the Cold-Eeze(R) product. The gross
royalty is 13% of sales collected before certain deductions. Representative
Agreements are in place for several Brokers and Distributors, both Nationally
and Internationally. These agreements are sales performance based. In addition
the Company has also issued incentive common stock purchase options to its
Brokers, Distributors and Representatives. Additionally, there are employment
agreements in place with certain officers of the Company that expire in 2005 or
earlier, and provide for among other things, a minimum annual base compensation.

On March 17, 1997, an agreement with the manufacturer of the Cold-Eeze(R)
product for the Company was entered for a period of three years. Also, the
Company has contractual commitments for advertising amounting to approximately
$2,600,000.

The Company is involved in certain legal actions and claims arising in the
ordinary course of business. It is the opinion of management (based on advice of
legal counsel) that such litigation and claims will be resolved without material
effect on the Company's financial position. Included in the results of
operations for the period ended June 30, 1997, are provisions for estimated
costs to litigate the settlement of certain agreements and infringements of the
Company's proprietary Cold-Eeze(R) product by certain competitors.

NOTE 6 - OTHER MATTERS

On January 2, 1997, the Board of Directors approved the change of the Company's
fiscal year from September 30 to December 31 to reflect the fiscal year which
has been generally adopted by the pharmaceutical industry. The audited
statements for the transition period October 1, 1996 to December 31, 1996, will
be audited by Nachum Blumenfrucht, CPA, and filed by the Company within Form
10-KSB for the calendar year ended December 31, 1997.

On January 29, 1997, the Company engaged the independent accounting firm of
Coopers & Lybrand L.L.P. to audit the Company's financial statements for the
calendar year 1997. The replacement of the previous certifying accountant,
Nachum Blumenfrucht, CPA, was made by approval of the Board of Directors of the
Company and with agreement of Mr. Blumenfrucht. This change was due to the
dramatic expansion of business operations undertaken by the Company since the
close of the prior fiscal year. There have been no disagreements with the former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, nor any reportable event
required to be disclosed.

F-28
<PAGE>

No dealer, salesman or any other person is authorized to give any information or
to make any representations in connection with this offering not contained in
this Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or any other person.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the Securities offered by this Prospectus
or an offer by any person in any jurisdiction where such an offer or
solicitation is not authorized or is unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that information herein is correct as of any time subsequent to
its date.

TABLE OF CONTENTS

PAGE
----

Available Information.......................................2
Prospectus Summary..........................................3
The Company.................................................3
Risk Factors................................................6
Use of Proceeds............................................12
Price Range of Common Stock ...............................13
Dividend Policy............................................15
Selected Financial Data....................................15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations...............................................16
Business...................................................24
Management.................................................29
Certain Transactions.......................................34
Security Ownership of Certain Beneficial
Owners and Management....................................34
Description of Securities..................................36
Selling Shareholders.......................................38
Plan of Distribution.......................................43
Legal Matters..............................................44
Experts....................................................44
Change of Accountants ..................................45
Index to Financial Statements.............................F-1

THE QUIGLEY CORPORATION

5,480,000 SHARES OF COMMON STOCK

PROSPECTUS

, 1997

<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's By-laws authorize indemnification of directors and
officers as follows:

ARTICLE V - INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES
AND AGENTS

Section 1. The corporation shall indemnify any person who was or is a
party or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 2. No officer, director or shareholder may become surety on
behalf of the corporation for any of its obligations under any circumstances
whatsoever.

See Item 9(e) below for information regarding the position of the
Commission with respect to the effect of any indemnification for liabilities
arising under the Securities Act of 1933, as amended.

Section 78.751 of the Nevada General Corporation Law provides as
follows:

"1. A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the right of
the corporation, by reason of the fact that he is or was a director,
officer, employee or agent

II-1

<PAGE>
of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of
NOLO CONTENDERE or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal
action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.

2. A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit if
he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of
the case, the person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.

3. To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections 1
and 2, or in defense of any claim, issue or matter therein, he must be
indemnified by the corporation against expenses, including attorneys'
fees actually and reasonably incurred by him in connection with the
defense.

II-2

<PAGE>
4. Any indemnification under subsections 1 and 2, unless
ordered by a court or advanced pursuant to subsection 5, must be made
by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be
made:

(a) By the shareholders;

(b) By the board of directors by majority vote of a
quorum consisting of directors who were not parties to the
act, suit or proceeding;

(c) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or

(d) If a quorum consisting of directors who were not parties
to the act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.

5. The articles of incorporation, the bylaws or an agreement
made by the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding,
upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court
of competent jurisdiction that he is not entitled to be indemnified by
the corporation. The provisions of this subsection do not affect any
rights to advancement of expenses to which corporate personnel other
than directors or officers may be entitled under any contract or
otherwise by law.

6. The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this section:

(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled
under the articles of incorporation or any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, for either an
action in his official capacity or an action in other capacity while
holding his office, except that indemnification, unless ordered by a
court pursuant to subsection 2 or for the advancement of expenses made
pursuant to subsection 5, may not be made to or on behalf of any
director or officer if a final adjudication establishes that his acts
or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.

II-3

<PAGE>
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses which will be paid
by the Company in connection with the securities being registered. With the
exception of the SEC registration fee, all amounts shown are estimates.

SEC registration fee......................................... $4,998.42
Legal fees and expenses (including Blue
Sky)......................................................... 25,000.00
Accounting Fees and Expenses................................. 5,000.00
Miscellaneous................................................ 501.58
-----------
Total...............................................$ 35,500.00
===========

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, the following securities were sold by the
Company without registration under the Securities Act. Except as otherwise
indicted, the securities were sold by the Company in reliance upon the exemption
provided by Section 4(2) of the Securities Act, among others, on the basis that
such transactions did not involve any public offering and the purchasers were
sophisticated with access to the kind of information registration would provide.

In December 1995, the Company initiated a 1 for 10 reverse stock split
and changed the par value of its stock to $.001 per common share. In January
1997, the Company initiated a 2 for 1 stock split and changed the par value of
its Common Stock to $.0005 per common share. All shares referred to below refer
to post split amounts.

(a) On August 24, 1994, the Company issued 72,000 restricted shares to
Dr. Robert Pollack in total repayment of a debt of $18,000. The debt was
incurred over a period of fifteen months and included $820 worth of interest.

(b) On August 24, 1994, 1,134 restricted shares were issued to Robert
Moore in payment of a debt owed to him of $1,000 for the installation of fixed
assets.

(c) On August 24, 1994, 50,000 restricted shares were issued to
Smith-Felver as payment for advertising services rendered to the Company.

(d) On September 26, 1994, the Company issued 20,000 restricted shares
of Common Stock to Dr. John Godfrey in satisfaction of $8,750 owed by the
Company to Dr. Godfrey. The amounts were owed for services rendered to the
Corporation.

II-4

<PAGE>

(e) On September 29, 1994, the Company issued 48,000 restricted shares
to Dr. and Mrs. John Godfrey in full repayment of a loan owing to them in the
amount of $12,000.

(f) On September 30, 1994, Ms. Lydia Pollack purchased 10,668
restricted shares of the Company for $4,000 in cash.

(g) During the period October 1, 1994 through September 30, 1995,
various individuals purchased an aggregate of 334,667 shares of restricted
Common Stock from the Company as follows:

NAME NUMBER OF SHARES PRICE
- ---- ---------------- -----

C. Witmer 10,000 $5,000
V. Taylor 2,000 1,000
J. Gennello 8,000 4,000
G. Eichhorn 6,000 3,000
S. Carey 3,000 1,500
K. McCullian 3,000 1,500
D. Wyeth 400 200
M. McCullian 10,000 5,000
T. Burke 4,000 2,000
D. Palmer 600 300
J. Krow 5,000 2,500
J. Hanson 4,000 2,000
G. Agular 3,000 1,500
C. Baldwin 6,000 3,000
E. Hesselson 2,000 1,000
E. Geyer 6,667 4,000
J. Gibbons 2,000 1,500
S. Macknin 5,000 2,500
J. Macknin 5,000 2,500
G. Snell 1,600 1,000
J. McIlhinney 4,000 2,000
M. Hanson 7,000 3,500
L. Snyder 1,000 500
R. Turner 206,000 181,000
P. Kaplan 20,000 10,000
R. Pollack 9,400 4,050

(h) During the period October 1, 1994 through September 30, 1995,
various individuals were issued an aggregate of 176,342 restricted shares in
return for goods and services rendered by the following individuals and
entities: Dr. Riley (70,000 shares), S. Novick (4,000 shares), J. Godfrey
(10,938 shares), M. Robbins (8,200 shares), R. Pollack (25,000 shares),
Smith-Felver (20,000 shares), Lenape Valley (6,000 shares), M. Moreni (4,000
shares), S. Marcolini (10,000 shares), C. Bistrack (1,700 shares), T. MacAniff
(12,000 shares), and Joel, Inc. (4,504 shares). The shares were issued in
satisfaction of $110,214 owed by the Company to such individuals and entities.

(i) In February 1995, the Company sold an aggregate of 319,400 shares
of Common Stock to accredited investors in a private

II-5

<PAGE>

placement. The Company total consideration of $199,625 from the sale and paid
commissions aggregating $13,750.

(j) On December 1, 1995, the Company entered into a marketing agreement
with Pacific Rim Pharmaceuticals for developing a market for the Company's
products in the Far East. Pacific Rim Pharmaceuticals was issued 300,000 options
to purchase Common Stock at a per share exercise price of $ .50.

(k) On December 1, 1995, William Reilly and Thomas MacAniff received
options to purchase 200,000 and 300,000 shares of the Common Stock of the
Company, respectively. The options have a per share exercise price of $.75 and
were granted for services rendered by Messrs. MacAniff and Reilly to the
Company.

(l) On December 15, 1995, the Company issued an aggregate of 1,200,000
shares of Common Stock to the following individuals in consideration for the
cancellation of accrued salaries, fees and expenses due to such individuals:

NAME: NUMBER OF SHARES:
- ----- -----------------

Guy Quigley 600,000
Charles Phillips 200,000
Eric Kaytes 40,000
Wendy Quigley 120,000
Robert L. Pollack 40,000
William Reilly 200,000

(m) On December 15, 1995, the Company issued an aggregate of 1,000,000
Class D warrants, each to purchase one share of the Company's Common Stock at a
per share exercise price of $.50. The warrants were granted to the following
individuals in consideration for services rendered to the Company by such
individuals:

NAME: NUMBER OF WARRANTS:
- ----- -------------------

Guy Quigley 200,000
Charles Phillips 150,000
Eric Kaytes 60,000
Wendy Quigley 200,000
Robert L. Pollack 60,000
William Reilly 100,000
Marielle Reilly 100,000
Kariba Holdings 130,000

(n) In April 1996, the Company sold 94,000 shares of Common Stock in a
private placement through Windsor Capital for gross proceeds of $58,750.

(o) In June 1996, the Company sold 40,000 shares of Common Stock to Mr.
Washburn in a private sale for total consideration of $25,000.

II-6

<PAGE>
(p) In June 1996, the Company issued 2,000 shares of Common Stock to
Anthony Calabreze in connection with a private sale for an aggregate purchase
price of $1,250,000.

(q) In June 1996 and September 1996, the Company issued an aggregate of
88,000 shares of Common Stock to A. Giordano in connection with the exercise of
warrants previously granted to Mr.
Giordano for underwriting services.

(r) In June 1996, the Company issued 600,000 shares of Common Stock to
Diversified Corporate Consultants in consideration of $300,000 and for future
public relations and capital placement services.

(s) In August 1996 the Company issued an aggregate of 30,000 shares of
Common Stock to A. Waterford Holdings in connection with the exercise of
previously granted options.

(t) On October 1, 1996, the Company granted Diversified Consultants
options to purchase an aggregate of 350,000 shares of Common Stock at a per
share exercise price of $1.75. The Options were granted in connection with the
execution of a marketing and shareholder relations agreement.

(u) On October 1, 1996, the Company granted Sands Brothers Ltd. options
to purchase an aggregate of 800,000 shares of Common Stock at a per share
exercise price of $1.75. The Options were granted in connection with entering
into an investment banking agreement.

(v) On July 1, 1996, the Company granted 1,700,000 Class E warrants,
each to purchase one share of the Company's Common Stock at a per share exercise
price of $1.75. The warrants were granted to the following individuals in
consideration for services rendered to the Company:

NAME: NUMBER OF WARRANTS:
- ------------ -------------------
Guy Quigley 300,000
Charles Phillips 300,000
Eric Kaytes 50,000
Wendy Quigley 200,000
Robert L. Pollack 50,000
William Reilly 140,000
Marielle Reilly 100,000
Thomas MacAniff 60,000
Prophase Management 200,000
Kariba Holdings 300,000

(w) On November 5, 1996, the Company granted 350,000 Class F warrants,
each to purchase one share of the Company's Common Stock at a per share exercise
price of $2.50. The warrants were granted to the following individuals in
consideration for services rendered to the Company:

II-7

<PAGE>

NAME: NUMBER OF WARRANTS:
- ------------ -------------------
Guy Quigley 75,000
Charles Phillips 75,000
George Longo 50,000
Eric Kaytes 25,000
Robert L. Pollack 25,000
William Reilly 50,000
Ted Karkus 50,000

(x) On May 6, 1997, the Company granted 650,000 Class G warrants, each
to purchase one share of the Company's Common Stock at a per share exercise
price of $10.00. The warrants were granted to the following individuals in
consideration for services rendered to the Company:

NAME: NUMBER OF WARRANTS:
- ------------ -------------------
Guy Quigley 140,000
Charles Phillips 85,000
George Longo 75,000
Eric Kaytes 35,000
Frank Merlino 10,000
William Reilly 50,000
Prophase Management 50,000
Thomas MacAniff 200,000
A. J. Robbins, MD 5,000

(y) On May 6, 1997, the Company issued 350,000 Class G warrants to
purchase shares of the Company's Common Stock at a per share exercise price of
$10.00. The warrants were issued as part of a settlement agreement with Sands
Brothers Ltd.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:
EXHIBIT NO.
*3.1 Articles of Incorporation of the Company (as amended).
*3.2 Certificate to Increase the Number of Authorized Shares of
the Company.
*3.3 Bylaws of the Company as currently in effect.
*5 Opinion of Olshan Grundman Frome & Rosenzweig LLP with
respect to legality of the Common Stock.
*10.1 Stock Option Plan for Consultants, Advisors and Non-
Employee Directors.
*10.2 Exclusive Representation and Distribution Agreement dated
May 4, 1992 between the Company and Godfrey Science &
Design, Inc. et al.
*10.3 Employment Agreement dated June 1, 1995 between the Company
and Guy J. Quigley.
*10.4 Exclusive Master Broker Wholesale Distributor and
Non-Exclusive National Chain Broker Agreement dated July 22,
1994 between the Company and Russell Mitchell.

II-8

<PAGE>
**10.5 United States Exclusive Supply Agreement dated March 17,
1997 (portions of this exhibit are omitted and were filed
separately with the Securities Exchange Commission pursuant
to the Company's application requesting confidential
treatment in accordance with Rule 406 of Regulation C as
promulgated under the Securities Act of 1933).
*23.1 Consent of Olshan Grundman Frome & Rosenzweig LLP, included
in Exhibit No. 5.

II-9

<PAGE>

*23.2 Consent of Nachum Blumenfruct, CPA.
*25.0 Power of Attorney, included on the signature page to this
Registration Statement.

- ---------------------------
* Previously filed.
** Filed herewith.

ITEM 28. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) File, during any period in which it offers or sales securities, a
post-effective amendment to this registration statement to;

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement;

(iii) Include any additional or changed material information on the
plan of distribution.

(2) For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement of the securities
offered, and in the offering of such securities at that time to be the initial
bona fide offering.

(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.

II-10

<PAGE>
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

II-11

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Doylestown, State of Pennsylvania, on this 24th day
of September, 1997.

THE QUIGLEY CORPORATION

/S/ GUY J. QUIGLEY
-------------------------------------------
Guy J. Quigley, Chief Executive Officer and
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/S/ GUY J. QUIGLEY Chairman of the September 24, 1997
- -------------------------- Board, President,
Guy J. Quigley Chief Executive
Officer and
Director

* Vice President, September 24, 1997
- -------------------------- Chief Financial
George J. Longo Officer and
Director (Principal
Financial and
Accounting Officer)

* Vice President, September 24, 1997
- -------------------------- Secretary,
Eric H. Kaytes Treasurer, and
Director

* Vice President, September 24, 1997
- -------------------------- Chief Operating
Charles A. Phillips Officer and
Director

- -------------------------- Director September 24, 1997
Dr. Robert L. Pollack

* Director September 24, 1997
- --------------------------
A. Jerene Robbins, M.D.

*BY: /S/ GUY QUIGLEY
---------------
GUY J. QUIGLEY
ATTORNEY-IN-FACT

II-12

CONFIDENTIAL PORTIONS OF THIS
DOCUMENT HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE
COMMISSION

UNITED STATES EXCLUSIVE SUPPLY AGREEMENT
----------------------------------------

This Agreement dated March 17, 1997, is made by and between The Quigley
Corporation, a Nevada corporation with offices at 10 South Clinton Street,
Doylestown, PA. 18901 (hereafter referred to as "Quigley"), and JOEL, Inc., a
Pennsylvania corporation with offices at 31 North Spruce Street, Elizabethtown,
PA. 17022 (hereafter referred to as "JOEL").

George Eby, III ("Eby") is the owner of a certain use patent for the
use of zinc gluconate to reduce the duration of the common cold (Patent RE
33,465). John Godfrey ("Godfrey") is the owner of certain patents for flavoring
for zinc supplements for oral use (Patent 4,684,528 and 4,758,439). Eby and
Godfrey granted to Quigley the exclusive worldwide right to manufacture,
distribute and sell zinc gluconate lozenges pursuant to certain license
agreements with Eby dated August 24, 1996 and a certain Exclusive Representation
and Distribution Agreement with Godfrey dated May 4, 1992.

JOEL has demonstrated that it is capable of producing the Product, as
defined herein, utilizing the product formulation. including the Patents, all as
more particularly set forth in Exhibit A hereto (collectively, the "Formula") .
(Lozenges produced pursuant to the Formula and any revision thereto, are
referred to herein individually as the "Lozenge" and collectively as the
"Product" or "Lozenges".) The Product is currently marketed and sold by Quigley
under the trademark COLD-EEZE (the "Trademark") . The Trademark is owned by
Quigley. Quigley also plans to market and sell the Lozenges in bulk, or in
packaging which may not use the Trademark.

Quigley desires JOEL to produce its total United States requirements
for the Product and JOEL desires to undertake this requirement of this Agreement
in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, Quigley and JOEL, in consideration of the mutual
covenants and conditions hereinafter set forth, and intending to be legally
bound, hereby agree as follows:

1. INCORPORATION OF RECITALS AND EXHIBITS. The above recitals and
each Exhibit identified in this Agreement are made a part of this Agreement by
such reference.

<PAGE>
2. SERVICES AND SPECIFICATIONS. JOEL shall manufacture the
Product in accordance with the Formula and in accordance with applicable laws,
rules and regulations, Good Manufacturing Practices are promulgated by the U.S.
Food and Drug Administration ("FDA") from time to time prevailing in the
industry (collectively, the "Specifications").

3. EXCLUSIVE UNITED STATES SUPPLY. To enable JOEL to manufacture
the Products pursuant to the terms and conditions of this Agreement, Quigley
grants to JOEL a United States exclusivity to manufacture the Product using the
Formula, which includes the Patents, as defined in the following sentence. The
Patents shall include the patents listed in Exhibit A, including without
limitation all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, and any other pending and future patents
necessary or useful to manufacture the Product (collectively called the
"Patents"). In the event that JOEL is unable to meet the manufacturing demands
of Quigley and with the written permission of Quigley, JOEL shall have the right
to appoint approved third parties to manufacture the Product in accordance with
the Formula; provided said approved third party executes a confidentiality
agreement as set forth in paragraph 10, JOEL shall have the responsibility of
such approved parties, as if JOEL was the manufacturer of the Product.

4. PRODUCTION. Because the Product is a new product, Quigley has
not yet accurately forecast the number of Lozenges that it will require for the
calendar year 1997. In addition, during calendar 1997, JOEL will be in the
process of transitioning other business and expanding its production
capabilities to exclusively produce the Product. For these reasons, JOEL cannot
guarantee that it will be able to supply all of Quigley's total requirements in
1997. Therefore, for the calendar year 1997, JOEL shall have met its obligations
under this Agreement if JOEL uses its best efforts to supply all of Quigley's
requirements.

Beginning in January of 1998, JOEL agrees to supply all of Quigley's
requirements for Product provided that throughout the term of this Agreement,
Quigley shall provide JOEL with estimated annual forecasts and quarterly rolling
forecasts which will allow JOEL to plan for Quigley's production and inventory
requirements. Quigley's forecasts shall be based on a good faith analysis of the
market for the Product as is ascertained from prior years sales. Quigley agrees
that JOEL shall have met its obligations under this Agreement if JOEL meets
Quigley's quarterly forecasts. Quigley shall provide its forecast for 1998 to
JOEL on or before December 1, 1997.

Pursuant to paragraph 3 of this Agreement, in order to meet Quigley's
requirements JOEL may contract with approved third parties to manufacture the
Product. Within the United States marketplace, Quigley shall not produce itself,
or acquire from an

-2-

<PAGE>
approved third party, any Product during the term of this Agreement.

5. ORDERS FOR PRODUCT: INVENTORY. Product shall be held in
inventory in JOEL's warehouse located at 500 North 15th Avenue, Lebanon,
Pennsylvania, pending receipt of orders and shipping instructions from Quigley.
Upon receipt of orders from Quigley, JOEL shall pack and ship Product in
accordance with such order and shipping instructions. All shipping costs shall
be borne by Quigley. JOEL shall provide Quigley with such shipping records
attached to a copy of the packing list/invoice identifying the customer, P/O
number, carrier and destination, along with any other relevant information
and/or documentation as Quigley shall reasonably request to determine compliance
with shipping instructions.

Within sixty (60) days of execution of this Agreement, JOEL shall
notify Quigley of the maximum number of units of Packaged Product, as defined in
paragraph 15 which it can store in inventory at its current warehouse. In no
event may Quigley require JOEL to maintain inventory in excess of such number.
Should it become necessary or desirable to maintain inventory levels in excess
of such number, JOEL shall, within such time period as is reasonable under the
circumstances, make arrangements for additional warehouse space, the costs of
which shall be borne by Quigley.

6. QUIGLEY'S RESPONSIBILITIES. Quigley shall be responsible for
all advertising, marketing, sales and delivery of the Product. Throughout the
term of this Agreement Quigley, at its sole cost and expense, shall use its best
efforts to diligently and continuously promote, develop and maintain a
substantial, permanent and expanding business for the Product.

7. PAYMENT. Quigley shall pay JOEL according to the payment
schedule set forth on Exhibit B. The parties acknowledge that the number of
Lozenges per package and the type of packaging required by Quigley may vary, as
more fully set forth in Exhibit B. The term "Unit" as used herein shall mean any
one of the Product items listed on Exhibit B. JOEL shall submit daily invoices
to Quigley identifying the number of Units of each Product items produced. In
the event JOEL contracts with approved third parties to produce the Product,
JOEL shall include on the daily invoices all Product items produced and shipped
by such parties during the preceding week. Payment for Product produced by
approved third parties shall be made by Quigley to JOEL in accordance with the
payment schedule set forth on Exhibit B. JOEL shall be responsible for paying
such approved third parties out of payments from Quigley. All invoices from JOEL
shall be due and payable by Quigley in full within thirty (30) business days
from the date of each invoice, subject to a two percent reduction for payments
made within ten (10) days.

-3-

<PAGE>
8. PRICE ADJUSTMENT . Within 60 days of execution of this
Agreement, JOEL shall provide Quigley with a detailed list of JOEL's current
cost for ingredients and other supplies, (the "Original Procurement Cost"). In
the event JOEL's actual costs increase with reference to the Original
Procurement Cost, then JOEL shall provide Quigley detailed data concerning its
actual costs of procuring the ingredients and other supplies. The per Unit price
payable to JOEL shall be increased by the total per Unit cost increase of all
ingredients and other supplies. Such price adjustment shall be effective with
respect to all invoices issued to Quigley thirty (30) days after notice of the
procurement cost change is received by Quigley. In addition, in the event JOEL's
total production costs increase by more than ten percent (10%) over JOEL's total
production costs as of the date of this Agreement, the parties shall negotiate,
in good faith, and mutually agree upon an increase in the price of the Product.
In the event that the parties cannot agree to such an increase, JOEL shall have
the right to seek arbitration and both parties will be subject to its findings.
In the event of a market driven decrease in Quigley's wholesale prices, Quigley
shall have the right to negotiate a reduced manufacturing cost from JOEL. In the
event that the parties cannot agree to such a decrease, Quigley shall have the
right to seek arbitration and both parties will be subject to its findings.

9. RISK OF LOSS; INSURANCE. Risk of loss to Product passes to
Quigley when the manufacturing process is completed. Quigley shall be
responsible for insuring all Product in the care, custody or control of JOEL and
any other suppliers of Product, against loss or damage from perils covered by an
"all risk" property insurance policy in the amount of the market value of such
Product. Additionally, Quigley shall carry and maintain, at all times and at
Quigley's sole cost and expense, (a) Commercial General Liability coverage,
including Product/Completed Operations, in the amounts of at least One Million
Dollars ($1,000,000.00) any one occurrence and Two Million Dollars
($2,000,000.00) Products/Completed Operation Aggregate. Two Million Dollars
($2,000,000.00) policy General Aggregate; (b) property coverage for
comprehensive perils to protect the interests of Quigley and JOEL as respects
property of Quigley in the care, custody and control of JOEL to a limit of at
least Ten Million Dollars ($10,000,000.00). JOEL and any other suppliers of
Product shall be named as an additional named insured in the policies described
in (a) and (b) above. Such policies shall be carried with insurance companies
acceptable to JOEL and each shall provide that its terms and conditions shall
not be altered, cancelled or changed until ten (10) days after termination or
cancellation of this Agreement. A certificate of such insurance coverage shall
be furnished to JOEL.

JOEL shall, at all times and at JOEL's sole cost and expense, carry and
maintain (a) Commercial General Liability coverage, including Product/Completed
Operations, in the amounts of at least

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<PAGE>
One Million Dollars ($1,000,000.00) any one occurrence and Two Million Dollars
($2,000,000.00) Products/Completed Operation Aggregate. Two Million Dollars
($2,000,000.00) policy General Aggregate; (b) property coverage for
comprehensive perils to protect the interests of Quigley and JOEL as respects
property of Quigley in the care, custody and control of JOEL to a limit of at
least Ten Million Dollars ($10,000,000.00) and (c) such statutory worker's
compensation insurance as is required by local law for JOEL's employees engaged
in providing services hereunder. Quigley shall be named as an "additional
insured" upon JOEL's Commercial General Liability policy described in (a) above
and as "loss Payee" under the JOEL Property policy described in (b) above. Such
policies shall be carried with insurance companies acceptable to Quigley and
each shall provide that its terms and conditions shall not be altered, cancelled
or changed until ten (10) days after termination or cancellation of this
Agreement. A certificate of such insurance coverage shall be furnished to
Quigley.

10. CONFIDENTIALITY. All business and technical information,
whether in written or oral form and including, but not limited to the Formula,
which Quigley may disclose to JOEL, or to any employee, agent or representative
of JOEL, shall be received and retained by JOEL and its employees, agents and
representatives as strictly confidential and, except as provided for herein, may
not be disclosed to any third party. JOEL shall only use such information in
connection with the production and packaging of Product, and shall not disclose
the same to any person not having a need to know. JOEL shall inform each of its
officers, employees or agents working with or otherwise having access to such
information of his or her obligation to maintain the confidentiality of
Quigley's confidential and proprietary information. Nothing in this paragraph
shall prohibit JOEL from disclosing such information to any approved third party
who is manufacturing the Product for JOEL, provided the approved third party has
entered into a written confidentiality agreement with Quigley.

All business and technical information, whether in written or oral form
and including, but not limited to, packaging, manufacturing processes, quality
control standards, coding systems and all business information such as supplier
lists, costs and the like, which JOEL may disclose to Quigley, or to any
employee, agent or representative of Quigley, shall be received and retained by
Quigley and its employees, agents and representatives as strictly confidential
and, except as provided for herein, may not be disclosed to any third party.
Quigley shall not disclose the same to any person not having a need to know.
Quigley shall inform each of its officers, employees or agents working with or
otherwise having access to such information of his or her obligation to maintain
the confidentiality of JOEL is confidential and proprietary information.

-5-

<PAGE>
Neither party shall have an obligation of confidentiality with respect
to information which:

(a) was publicly available at the time of receipt from
the disclosing party or subsequently becomes publicly available without
breach of an obligation assumed or duty owed by the nondisclosing
party; or

(b) was known and can be shown to have been known by the
nondisclosing party at the time of receipt from the disclosing party
and was not acquired on a confidential basis; or

(c) becomes known to the nondisclosing party on a
non-confidential basis through a third party whose own acquisition and
disclosure were independent of the nondisclosing party, not in breach
of any obligation hereunder and not on a confidential basis; or

(d) is required by law, after prior notice is given to
the disclosing party; or

(e) is approved for disclosure by the disclosing party in
writing.

11. RETURN OF DOCUMENTS, ETC. All originals and copies (in
whatever format) of written business and technical information and extracts
thereof identified or reasonably identifiable as confidential or proprietary to
Quigley or JOEL shall be and remain the exclusive property of the disclosing
party at all times, and shall be returned to the disclosing party upon the
termination of this Agreement or upon the disclosing party's request.

12. JOEL'S REPRESENTATIONS. JOEL represents and warrants that as
of the date the Product is produced and packed by JOEL, such Product will meet
the Specifications.

13. FORMULA OWNERSHIP. Quigley represents and warrants that it is
the owner of the worldwide manufacturing, distribution and marketing rights to
the Formula and has the authority to grant to JOEL the right to use the same in
the manufacture of the Product for Quigley. Quigley has taken, or shall take
such actions as are necessary to secure and protect the right to sell the
Product in the United States.

14. APPROVED THIRD PARTY MANUFACTURING. In accordance with
paragraph 3 of this Agreement, JOEL shall have the right to contract with
approved third parties to manufacture the Product for Quigley, contingent upon
approved third parties fulfilling paragraph 10 of this Agreement.

15. PACKAGING. JOEL shall be responsible for packaging the
Product, and Quigley agrees that JOEL may contract with approved

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<PAGE>
third party suppliers for such packaging. The packaging material used with the
Product, as well as every use of any Quigley trademarks, shall be subject to the
prior written approval of Quigley. Quigley hereby approves the packaging,
including the use of the Trademarks on such packaging, currently in use (the
"Packaged Product"). JOEL shall not adhere any label or other printed material
on Product which has not received prior written approval by Quigley. JOEL agrees
that it shall include such trademark and copyright notices on the Product
packaging as Quigley may designate.

16. INDEMNITY BY QUIGLEY. In the event of (i) consumer, customer,
governmental agency or other third party complaints, demands, claims or legal
actions alleging illness, injury, death or damage as a result of the consumption
or use of any Product except for any claim arising from JOEL's failure to
manufacture the Product according to the Specifications, (ii) claims or legal
action alleging patent or copyright infringement, violations of any patent
rights or copyrights or unfair competition or trade secrets or trademarks or
other rights of any approved third party which arise out of or relate to the
Product, Formula or packaging; or (iii) any other claim arising out of or
related to JOEL's production, storage or use of the Product or Formula, except
to the extent attributable to JOEL, Quigley shall indemnify, defend and hold
JOEL harmless from and against any and all liability, loss or damage (including
lost profits), cost or expense (including court costs and reasonable attorney's
fees), arising out of, resulting from or in any way connected with such
complaint, demand, claim, or legal action. Quigley shall assume full
responsibility for, and pay the expense of, the investigation, defense, legal
fees, settlement costs and payment of all such complaints, demands, claims and
legal actions, provided that JOEL may, at its expense, participate in any legal
action through counsel of its own choice. JOEL shall promptly notify Quigley of
any such complaint, demand, claim or legal action and cooperate in the defense
thereof.

17. INDEMNITY BY JOEL. In the event of consumer, customer,
governmental agency, or third party complaints, demands, claims or legal actions
alleging illness, injury, death or damage as a result of the consumption or use
of any Product arising from JOEL's failure to manufacture Product according to
Specifications, JOEL shall indemnify, defend and hold Quigley harmless from and
against any and all liability, loss or damage (including lost profits), cost or
expense (including court costs and reasonable attorney's fees), arising out of,
resulting from or in any way connected with such complaint, demand, or claim.
JOEL shall assume full responsibility for, and pay the expense of, the
investigation, defense, legal fees, settlement costs and payment of all such
complaints, demands, claims and legal actions, provided that Quigley may, at its
expense, participate in any legal action through counsel of its own choice.
Quigley shall promptly notify

-7-

<PAGE>
JOEL of any such complaint, demand, claim or legal action and cooperate fully in
the defense thereof.

18. BOOKS AND RECORDS. During the term of this Agreement, each
party shall prepare, maintain and retain complete and accurate books and records
relating to the respective party's obligation under this Agreement, including
the production, storage, packaging, marketing, sale, purchase and distribution
of the Product. All such books and records prepared, maintained or retained
pursuant to this Agreement shall be made available to the other party for
inspection upon reasonable notice and during regular business hours.

19. INSPECTION BY QUIGLEY . At any time while this Agreement
remains in effect, Quigley shall have the right to send one or more of its
authorized employees or representatives to observe and inspect, upon reasonable
notice and during scheduled business and manufacturing hours, the Product
manufacturing and packaging process, JOEL's plant and any other facilities
utilized in providing the services, including the inventory and storage of
Product.

20. TERM. This Agreement shall be effective as of the date set
forth in the first paragraph of this Agreement and shall continue in effect for
a period of three years, with yearly renewal thereafter, unless terminated by
either party upon two (2) years written notice.

21. TERMINATION RIGHT. Either party may also terminate this
Agreement in the following circumstances:

(a) Where the other party has failed to perform or meet
any material term or condition hereof and has failed to correct the
same within thirty (30) days after written notice of such failure by
the non-breaching party, or if the breach is incapable of cure within
thirty (30) days after notice, if the breaching party has not commenced
efforts to correct the same within the thirty (30) day period; or

(b) If the other party files a petition in bankruptcy or
is adjudicated a bankrupt, or if a petition in bankruptcy is filed
against it which is not dismissed within thirty (30) days, or if such
party becomes insolvent, or makes an assignment for the benefit of
creditors, or an arrangement pursuant to any bankruptcy law, or
discontinues its business or if a receiver is appointed who is not
discharged within thirty (30) days.

22. EFFECT OF TERMINATION. Upon termination of this Agreement, the
rights granted hereunder shall terminate and JOEL shall discontinue all use of
the Formula. Also, upon termination, JOEL shall either: 1) deliver all completed
Product to a location

-8-

<PAGE>
designated by Quigley at Quigley's expense, or 2) make the Product available for
pick-up by Quigley. In either case, Quigley shall pay JOEL for such completed
Product.

23. FORCE MAJEURE. Either party shall be excused from performance
and liability under this Agreement to the extent that such performance is
prevented by an Act of God, strike or other labor dispute, war condition, civil
disorder, embargo, fire, flood, accident or any other casualty beyond the
reasonable control of such party.

24. NONCOMPETITION. JOEL agrees that, while this Agreement remains
in effect and until termination of the Patents, it will not manufacture,
process, or package any zinc-based lozenges, provided Quigley purchases all of
its United States requirements from JOEL or approved third parties. Beginning on
or before January 1, 1998, while this Agreement remains in effect JOEL shall not
produce any other zinc lozenges for any third party, provided Quigley purchases
all of its United States requirements from JOEL or approved third parties.

25. RIGHT OF FIRST OFFER. Quigley shall have a right of first
offer to purchase JOEL's business as set forth herein. JOEL shall give Quigley
written notice of JOEL's election to offer its entire business for sale to third
parties. Quigley shall have thirty (30) business days after the receipt of said
notice (the "Offer Period") to make a written offer (the "Offer") to JOEL which
shall set forth the basic terms and conditions upon which Quigley would be
willing to enter into a binding agreement for the purchase of JOEL's business.
Upon JOEL's acceptance of the Offer, the parties shall negotiate in good faith
for a period of not more than sixty (60) business days after such acceptance
(the "Negotiation Period") in order to enter into a binding agreement for the
sale of the business to Quigley in accordance with the terms and conditions of
the accepted Offer. The right of first offer shall automatically expire and
terminate upon the earlier of: (i) Quigley's failure to make an Offer within the
Offer Period; (ii) JOEL's good faith rejection of the offer within the Offer
period; or (iii) the failure or inability of Quigley and JOEL in good faith to
enter into a binding purchase agreement within the Negotiation Period. Upon the
expiration of the Right of First Offer, JOEL shall be permitted to offer the
business for sale to any third party and neither Quigley nor JOEL shall have any
further rights or obligations under the terms of this paragraph, provided that
the manufacture of the Products by a purchasing party shall require Quigley's
permission and approval for such manufacture and such permission and approval
shall not unreasonably be withheld.

26. RELATIONSHIP. The relationship between Quigley and JOEL is
that of independent contractor. This Agreement shall not be construed as
creating between Quigley and JOEL the relationship of principal and agent, joint
venturers, co-partners or any other

-9-

<PAGE>
similar relationship, nor shall JOEL be considered in any sense an affiliate or
subsidiary of Quigley. Neither party shall have any authority to create or
assume, in the other's name, any obligation, express or implied, or to act or
purport to act as the other's agent or legally empowered representative for any
purpose whatsoever. Neither party shall be liable to any third party in any way
for any engagement, obligation, commitment, contract, representation,
transaction, act or omission of the other except as expressly provided herein.

27. SEVERABILITY. In the event that any provision of this
Agreement is declared invalid or contrary to any law, rule, regulation or public
policy of the United States or any state, all of the remaining provisions hereof
shall continue in full force and effect.

28. SURVIVAL OF REPRESENTATIONS. The provisions set forth in
paragraphs 7, 10, 11, 16, 17, 24, and 19 of this Agreement, as well as all of
the representations, warranties, indemnities and guarantees of JOEL and Quigley
contained in this Agreement, shall survive the termination or cancellation of
this Agreement.

29. GOVERNING LAW. This Agreement shall in all respects be
governed by the laws of the Commonwealth of Pennsylvania. The parties further
specifically agree that any action or proceeding arising out of or in connection
with this Agreement shall be venued in the Federal District Court for the Middle
District of Pennsylvania sitting in Harrisburg, or, if appropriate, the Court of
Common Pleas for Dauphin County, Pennsylvania, and hereby consent to the
jurisdiction of each of said courts or if appropriate, the Court of Common Pleas
for Bucks County, Pennsylvania and hereby consent to the jurisdiction of each of
said courts.

30. NOTICES. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be deemed to have been
sufficiently given if in writing and delivered by hand or by telefax
transmission (with a mandatory written confirmation, via a recognized overnight
courier, as provided below) or sent by registered or certified mail (postage
prepaid) or by express courier or express mail, fees prepaid, addressed as
indicated below:

(a) If to Quigley:

The Quigley Corporation
10 South Clinton Street
Doylestown, PA. 18901
ATTN: Charles A. Phillips
Telephone No.: (215)345-0919
Fax No. (215)345-5920

-10-

<PAGE>
With a copy to:

Thomas F. J. MacAniff, Esquire
Eastburn and Gray, P.C.
60 East Court Street
Post Office Box 1389
Doylestown, PA. 18901-4350
Telephone No.: (215)345-7000
Fax No. (215)345-9142

(b) If to JOEL:

JOEL, Inc.
31 North Spruce Street
Elizabethtown, PA. 17022
ATTN: David B. Deck
Telephone No.: (800)367-2441
Fax No. (717)367-4055

With a copy to:

Franklin A. Miles, Jr., Esquire
McNees, Wallace & Nurick
100 Pine Street
Post Office Box 1166
Harrisburg, PA. 17108 -1166
Telephone No.: (717)237-5287
Fax No. : (717)237-5300

Either party may, by notice as aforesaid, designate a different address for
notices or other communications intended for it.

Any notice which is delivered in the manner provided herein (provided
mandatory confirmation copies are sent) shall be deemed to have been duly given
to the party to whom it is directed upon actual receipt by such party.

31. ASSIGNMENT. Neither party shall assign or transfer this
Agreement or their rights or obligations hereunder without the prior written
consent of the other party, which consent shall not be unreasonably withheld.

32. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties relating to the subject matter of this
Agreement and supersedes and cancels any and all previous contracts, irrevocable
corporate purchase orders, agreements or understandings between the parties with
respect thereto. This Agreement may not be altered or amended except by a
written instrument executed by duly authorized representatives of Quigley and
JOEL. Unless expressly agreed by both parties, this Agreement shall not be
altered or amended by any purchase order issued by

-11-

<PAGE>
Quigley. No waiver hereunder shall be asserted or effective except upon a
written instrument executed by the party against whom the waiver is asserted.

33. HEADINGS. The headings contained herein are inserted for
convenience only and shall not be deemed to have any substantive meaning.

34. NO WAIVER. Any failure to either party to notify the other of
a violation, default or breach of this Agreement or to terminate this Agreement
on account thereof shall not constitute a waiver of such violation, default or
breach, or a consent, acquiescence or waiver of any later violation, default or
breach, whether of the same or a different character.

35. AUTHORIZATION: ACCEPTANCE. Each party hereto warrants and
represents to the other that all necessary corporate actions and approvals have
been taken and given, and that upon execution by its duly authorized
representative, this Agreement shall be a binding obligation of such party.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the day and year first
above written.

The Quigley Corporation

By: /S/ GUY J. QUIGLEY
--------------------
Name: Guy J. Quigley
Title: President

JOEL, Inc.

By: /S/ DAVID B. DECK
--------------------
Name: David B. Deck
Title: President

-12-

<PAGE>
EXHIBIT A

JOEL, INC. PHARMALOZ AND SIMON DIVISION

- --------------------------------------------------------------------------------
SUBJECT: SPECIFICATION SHEET FOR QUIGLEY COLD EEZE CHERRY FLAVOR
- --------------------------------------------------------------------------------

- --------------------------
RX:301
- --------------------------

Stability
Sensory Tests Action Limits Limits Release Limits
- ------------- ------------- ---------- --------------

Appearance NMT 3* NMT 3* Oval lozenge with convex side

Color NMT 3* NMT 3* Light brown

Odor NMT 3* NMT 3* Sweet no off odors

Taste NMT 3* NMT 3* Astringent with sweet undertones

Physical Properties
- -------------------

Shape
Length 22.60mm + or - .75mm
width 17.00mm + or - .60mm
thickness 11.20mm + or - .93mm

Weight 4.50grams + or - .20grams

Moisture Content NMT 2% 1.5% + or - .5%

Active Ingredient
- -----------------
Ionic zinc from Zincum Gluconicum
13.3 mg/lozenge

95.0% to 115.0% 90.0% to 120% of 90.0% to 120% of
of Label Claim Label Claim Label Claim

Inactive Ingredient
- -------------------

Liquid Sucrose -2534.71 mg/lozenge None None None

Corn Syrup - 1769.04 mg/lozenge None None None

Glycine [text omitted] ____ ____ ____

Copper sulfate [text omitted] ____ ____ ____

Cherry flavor - 4.31 mg/lozenge None None None

Product Imprinting - "Q" imprinted on two sides of lozenge All lozenges
manufactured at
Pharmaloz Division
must have "Q"
imprinted on one
side

Note: At present Simon Division product
without "Q" imprinting on lozenges.
Imprinting will be added after May 5,
1997.

Assay Testing for Active Ingredient Levels (Method:TI001-P)
- ------------------------------------------

Page 1 of 2

<PAGE>
Wrap and Packaging
- ------------------

Wrap style: Lozenges individually wrapped in bright red PVC film.
Bright red PVC film contains "COLD-EEZE" in white
lettering.

Package style: PRINTED BAG STYLE:
Bag material is an adhesive lamination of
polypropylene film with an interiaminar coating of
PVDC to enhance the oxygen barrier. All printing is
trapped within layers of lamination. Bags are heat
sealed and coded with packaging code on the front
window panel. Lozenge count 18 per bag.

PRINTED BOX STYLE:
Clear cello bag packed in printed box. Clear bags are
heat sealed and coded with packaging code on front
pannel of bag. Lozenge count per bag packed in box -
18 lozenges

- --------------------------------------------------------------------------------
*LEGEND CODES FOR DETAILS ON PAGE 1
NMT - Not More Than
NC - No Change
1- Very slight change; noticeable to trained laboratory personnel
2- Definite Change; noticeable to trained laboratory personnel
3- Change barely noticeable to consumer
4- Definite change; noticeable to consumer
5- Extreme Change
- --------------------------------------------------------------------------------

Page 2 of 2

<PAGE>
EXHIBIT A

JOEL, INC. PHARMALOZ AND SIMON DIVISION

- --------------------------------------------------------------------------------
SUBJECT: SPECIFICATION SHEET FOR QUIGLEY COLD EEZE CITRUS FLAVOR
- --------------------------------------------------------------------------------

- --------------------------
RX:302
- --------------------------

Stability
Ssnsory Tests Action Limits Limits Release Limits
- ------------- ------------- ---------- --------------

Appearance NMT 3* NMT 3* Oval lozenge with convex side

Color NMT 3* NMT 3* Light brown

Odor NMT 3* NMT 3* Sweet no off odors

Taste NMT 3* NMT 3* Astringent with sweet undertones

Physical Properties
- -------------------

Shape
Length 22.60mm + or - .75mm
width 17.00mm + or - .60mm
thickness 11.20mm + or - .93mm

Weight 4.50grams + or - .20grams

Moisture Content NMT 2% 1.5% + or - .5%

Active Ingredient
- -----------------
Ionic zinc from Zincum Gluconicum
13.3 mg/lozenge

95.0% to 115.0% 90.0% to 120% of 90.0% to 120% of
of Label Claim Label Claim Label Claim

Inactive Ingredient
- -------------------

Liquid Sucrose -2534.71 mg/lozenge None None None

Corn Syrup - 1769.04 mg/lozenge None None None

Glycine - [text omitted] [ ] [ ] [ ]

Copper Sulfate [text omitted] [ ] [ ] [ ]

Lime Oil - 4.93 mg/lozenge None None None

Lemon Oil - 2.13 mg/lozenge None None None

Product Imprinting - "Q" imprinted on two sides of lozenge All lozenges
manufactured at
Pharmaloz Division
must have "Q"
imprinted on one
side
Note: At present Simon Division product
without "Q" imprinting on lozenges.
Imprinting will be added after May 5,
1997.

Assay Testing for Active Ingredient Levels (Method:TI001-P)
- ------------------------------------------
<PAGE>
Wrap and Packaging
- ------------------

Wrap style: Lozenges individually wrapped in bright red PVC film.
Bright red PVC film contains "COLD-EEZE" in white
lettering.

PRINTED BOX STYLE:
Clear cello bag packed in printed box. Clear bags are
heat sealed and coded with packaging code on front
pannel of bag. Lozenge count per bag packed in box -
18 lozenges

Page 2 of 2

<PAGE>
EXHIBIT A

JOEL, INC. PHARMALOZ AND SIMON DIVISION

- --------------------------------------------------------------------------------
SUBJECT: SPECIFICATION SHEET FOR QUIGLEY COLD EEZE TROPICAL PUNCH FLAVOR
- --------------------------------------------------------------------------------

- ------------------------
RX:303
- ------------------------

Stability
Ssnsory Tests Action Limits Limits Release Limits
- ------------- ------------- ---------- --------------

Appearance NMT 3* NMT 3* Oval lozenge with convex side

Color NMT 3* NMT 3* Light brown

Odor NMT 3* NMT 3* Sweet no off odors

Taste NMT 3* NMT 3* Astringent with sweet undertones

Physical Properties
- -------------------

Shape
Length 22.60mm + or - .75mm
width 17.00mm + or - .60mm
thickness 11.20mm + or - .93mm

Weight 4.50grams + or - .20grams

Moisture Content NMT 2% 1.5% + or - .5%

Active Ingredient
- -----------------
Ionic zinc from Zincum Gluconicum
13.3 mg/lozenge

95.0% to 115.0% 90.0% to 120% of 90.0% to 120% of
of Label Claim Label Claim Label Claim

Inactive Ingredient
- -------------------

Liquid Sucrose -2534.71 mg/lozenge None None None

Corn Syrup - 1769.04 mg/lozenge None None None

Glycine - [text omitted] [ ] [ ] [ ]

Copper Sulfate [text omitted] [ ] [ ] [ ]

Tropical Punch Flavor - 3.81 mg/lozenge None None None

Product Imprinting - "Q" imprinted on two sides of lozenge All lozenges
manufactured at
Pharmaloz Division
must have "Q"
imprinted on one
side

Note: At present Simon Division product
without "Q" imprinting on lozenges.
Imprinting will be added after May 5,
1997.

Assay Testing for Active Ingredient Levels (Method:TI001-P)
- ------------------------------------------

Page 1 of 2
<PAGE>
Wrap and Packaging
- ------------------

Wrap style: Lozenges individually wrapped in bright orange cello.

PRINTED BOX STYLE:
Clear cello bag packed in printed box. Clear bags are
heat sealed and coded with packaging code on front
pannel of bag. Lozenge count per bag packed in box -
18 lozenges

Page 2 of 2

<PAGE>
EXHIBIT A

JOEL, INC. PHARMALOZ AND SIMON DIVISION

- --------------------------------------------------------------------------------
SUBJECT: SPECIFICATION SHEET FOR QUIGLEY COLD EEZE PLUS CHERRY FLAVOR
- --------------------------------------------------------------------------------

- --------------------------
RX:304
- --------------------------

Stability
Ssnsory Tests Action Limits Limits Release Limits
- ------------- ------------- ---------- --------------

Appearance NMT 3* NMT 3* Oval lozenge with convex side

Color NMT 3* NMT 3* Light brown

Odor NMT 3* NMT 3* Sweet no off odors

Taste NMT 3* NMT 3* Astringent with sweet undertones

Physical Properties
- -------------------

Shape
Length 24.97mm + or - .75mm
width 18.84mm + or - .60mm
thickness 9.64mm + or - .93mm

Weight 4.50grams + or - .20grams

Moisture Content NMT 2% 1.5% + or - .5%

Active Ingredient
- -----------------
Ionic zinc from Zincum Gluconicum
13.3 mg/lozenge

95.0% to 115.0% 90.0% to 120% of 90.0% to 120% of
of Label Claim Label Claim Label Claim

Inactive Ingredient
- -------------------

Liquid Sucrose - 2585.52 mg/lozenge None None None

Corn Syrup - 1905.12 mg/lozenge None None None

Glycine [text omitted] [ ] [ ] [ ]

Copper sulfate [text omitted] [ ] [ ] [ ]

Cherry flavor - 4.98 mg/lozenge None None None

Product Imprinting - "Q" imprinted on two sides of lozenge All lozenges
manufactured at
Pharmaloz Division
must have "Q"
imprinted on one
side

Assay Testing for Active Ingredient Levels (Method:TI001-P)
- ------------------------------------------

Page 1 of 2

<PAGE>
Wrap and Packaging
- ------------------

Wrap style: Lozenges individually wrapped in bright red PVC film.
Bright red PVC film contains "COLD-EEZE" in white
lettering.

PRINTED BOX STYLE:
Clear cello bag packed in printed box. Clear bags are
heat sealed and coded with packaging code on front
pannel of bag. Lozenge count per bag packed in box -
18 lozenges

Page 2 of 2

<PAGE>
EXHIBIT A

JOEL, INC. PHARMALOZ AND SIMON DIVISION

- --------------------------------------------------------------------------------
SUBJECT: SPECIFICATION SHEET FOR QUIGLEY COLD EEZE PLUS CITRUS FLAVOR
- --------------------------------------------------------------------------------

- -----------------
RX:305
- -----------------

Stability
Ssnsory Tests Action Limits Limits Release Limits
- ------------- ------------- ---------- --------------

Appearance NMT 3* NMT 3* Oval lozenge with convex side

Color NMT 3* NMT 3* Light brown

Odor NMT 3* NMT 3* Sweet no off odors

Taste NMT 3* NMT 3* Astringent with sweet undertones

Physical Properties
- -------------------

Shape
Length 24.970mm + or - .75mm
width 18.84mm + or - .60mm
thickness 9.64mm + or - .93mm

Weight 4.50grams + or - .20grams

Moisture Content NMT 2% 1.5% + or - .5%

Active Ingredient
- -----------------
Ionic zinc from Zincum Gluconicum
13.3 mg/lozenge

95.0% to 115.0% 90.0% to 120% of 90.0% to 120% of
of Label Claim Label Claim Label Claim

Inactive Ingredient
- -------------------

Liquid Sucrose - 2585.52 mg/lozenge None None None

Corn Syrup - 1905.12 mg/lozenge None None None

Glycine - [text omitted] [ ] [ ] [ ]

Copper sulfate [text omitted] [ ] [ ] [ ]

Lime Oil - 7.52 mg/lozenge None None None

Lemon Oil - 5.44 mg/lozenge None None None

Assay Testing for Active Ingredient Levels (Method:TI001-P)
- ------------------------------------------

Page 1 of 2

<PAGE>
Wrap and Packaging
- ------------------

Wrap style: Lozenges individually wrapped in clear cello.

PRINTED BOX STYLE:
Clear cello bag packed in printed box. Clear bags are
heat sealed and coded with packaging code on front
pannel of bag. Lozenge count per bag packed in box -
18 lozenges

Page 2 of 2

<PAGE>

EXHIBIT B

PRICE SCHEDULE ON QUIGLEY PRODUCTS

COLD-EEZE(TM) CHERRY - 18 LOZENGES PER BOX; 12 BOXES PER CASE; 12
CASES PER MASTER CASE. (13.3 MG IONIC ZINC)
$________.

COLD-EEZE(TM) CITRUS - 18 LOZENGES PER BOX; 12 BOXES PER CASE; 12
CASES PER MASTER CASE. (13.3 MG IONIC ZINC)
$_______.

COLD-EEZE(TM) CHERRY - 18 LOZENGES PER BAG; 24 BAGS PER CASE;
$_______. (13.3 MG IONIC ZINC)

COLD-EEZE(TM) CITRUS - 18 LOZENGES PER BAG; 24 BAGS PER CASE;
$_______. (13.3 MG IONIC ZINC)

COLD-EEZE(TM) TROPICAL FRUIT - 18 LOZENGES PER BAG; 24 BAGS PER CASE;
$_______. (13.3 MG IONIC ZINC)

COLD-EEZER PLUS CHERRY - 30 LOZENGES PER BAG; 56 BAGS PER CASE;
$_______. (14.2 MG IONIC ZINC)

COLD-EEZER PLUS CITRUS - 30 LOZENGES PER BAG; 56 BAGS PER CASE;
$_______. (14.2 MG IONIC ZINC)

COLD-EEZER PLUS CHERRY - 60 LOZENGES PER BAG; 28 BAGS PER CASE;
$______. (14.2 MG IONIC ZINC)

COLD-EEZER PLUS CITRUS - 60 LOZENGES PER BAG; 28 BAGS PER CASE;
$______. (14.2 MG IONIC ZINC)

COLD-EEZE(TM) CHERRY - 3000 LOZENGES PER CARTON
$______. (13.3 MG IONIC ZINC)

COLD-EEZE(TM) CITRUS - 3000 LOZENGES PER CARTON
$______. (13.3 MG IONIC ZINC)

COLD-EEZE(TM) TROPICAL FRUIT - 3000 LOZENGES PER CARTON
$______. (13.3 MG IONIC ZINC)

PRICES EFFECTIVE FEBRUARY 1, 1997