SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-K
                 Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                  For the Fiscal year ended December 31, 1998

                          Commission File No. 01-21617
                          ----------------------------

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


          Nevada                                      23-2577138
- ----------------------------------------------------------------------------
 (State or other jurisdiction of        (IRS Employer Identification Number)
  incorporation or organization)

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

        Landmark Building, 10 South Clinton Street, Doylestown, PA 18901
- ----------------------------------------------------------------------------
        (Address of principle executive offices)               (Zip Code)

                                 (215) 345-0919
                                 --------------
              (Registrant's telephone number, including area code)

      Securities registered under Section 12(b) of the Exchange Act: None

                Securities registered under Section 12(g) of the
                 Exchange Act: COMMON STOCK ($.0005 Par Value)
                               COMMON SHARE PURCHASE RIGHTS

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

[X] Yes [ ] No 

Indicate by the check mark if there is no disclosure  of  delinquent  filers in
response  to  Item  405 of  Regulation  S-X  contained  in  this  form,  and no
disclosure  will be  contained,  to the  best  of  registrant's  knowledge,  in
definitive  proxy or information  statements  incorporated by reference in Part
III of this Form 10-K or any amendments to this Form 10-K.

[ ]

As of March 15, 1999,  the  aggregate  market value of the voting stock (all of
one  class  $.0005  par  value  Common  Stock)  held by  non-affiliates  of the
Registrant was $61,587,053  based upon the closing price of the Common Stock on
that date as reported on the NASDAQ National Market.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

Number of shares of each of the Registrant's  classes of securities (all of one
class of  $.0005  par  value  Common  Stock)  outstanding  on March  15,  1999:
12,016,986

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  following  documents  are  incorporated  by  reference in this
Report on Form 10-K:

1.  Information  set  forth  in Part  III of this  report  is  incorporated  by
reference to the  Registrant's  Proxy  Statement for the 1999 Annual Meeting of
Stockholders

                  THE EXHIBIT INDEX IS LOCATED ON PAGES 17-18.



                                  Page 1 of 22








                               TABLE OF CONTENTS


Part I                                                                   Page
                                                                         ----

     Item      1.   Business                                             3-6

               2.   Properties                                             6

               3.   Legal Proceedings                                      6

               4.   Submission of Matters to a Vote by Security Holders    6

Part II

               5.   Market for the Registrant's Common Equity and
                    Related Stockholders Matters                         7-8

               6.   Selected Financial Data                                8

               7.   Management's Discussion and Analysis of Results
                    of Operations and Financial Condition               9-14

               8.   Financial Statements                                  15

               9.   Change in and Disagreements with Accountants on
                    Accounting and Financial Disclosure                   16

Part III  

              10.   Directors and Executive Officers of the Registrant    16

              11.   Executive Compensation                                16

              12.   Security Ownership of Certain Beneficial
                    Owners and Management                                 16

              13.   Certain Relationships and Related Transactions        16


Part IV    

              14.   Exhibits, Financial Statement Schedules and
                    Reports on Form 8-K                                17-22






                                      -2-




Forward-Looking Statements
- --------------------------

In  addition  to   historical   information,   this  Annual   Report   contains
forward-looking  statements.  These  forward-looking  statements are subject to
certain  risks and  uncertainties  that could  cause  actual  results to differ
materially from those reflected in these  forward-looking  statements.  Factors
that might cause such a difference  include,  but are not limited to management
of growth,  competition,  pricing pressures on the Company's product,  industry
growth and general  economic  conditions.  Readers are  cautioned  not to place
undue reliance on these forward-looking statements,  which reflect management's
opinions  only as of the date hereof.  The Company  undertakes no obligation to
revise or publicly release the results of any revision to these forward-looking
statements. Readers should carefully review the risk factors described in other
documents the Company files from time to time with the  Securities and Exchange
Commission  including Quarterly Reports on Form 10-Q to be filed by the Company
in fiscal year 1999.


                                     PART 1
                                     ------

ITEM 1.   DESCRIPTION OF BUSINESS
          -----------------------

Business Development
- --------------------

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  current primary  business is the manufacture and distribution of
the  Cold-Eeze(R)  and  Bodymate(TM)  products  to  the  consumer  through  the
over-the-counter market place. Cold-Eeze(R) is a zinc gluconate glycine lozenge
proven in two double-blind clinical studies to reduce the duration and severity
of the common cold symptoms by nearly half.  Cold-Eeze(R) is now an established
product in the health care and cold remedy  market.  Bodymate(TM)  is a dietary
supplement and weight management  program competing in the nutrition and weight
management marketplace.

Description of Business Operations
- ----------------------------------

Since its inception,  the Company has conducted  research and development  into
various types of health-related food supplements and homeopathic cold remedies.
Prior to the three  months ended  December  31,  1996,  the Company had minimal
revenues from  operations  and as a result  suffered  continuing  losses due to
research and  development  and  operations  expenses.  However,  the  Company's
product line has been  developed,  and during the year ended December 31, 1997,
significant  revenues  materialized  from its  national  marketing  program and
increased public awareness of its Cold-Eeze(R) lozenge product.

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 glycine cold relief lozenge product.

Since June 1996, the Company has  concentrated  its business  operations 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 glycine formula,  which in two double-blind clinical studies has
shown to reduce the  duration  and  severity of the common cold  symptoms.  The
Quigley Corporation acquired worldwide manufacturing and distribution rights to
this formulation in 1992 and commenced  national  marketing in 1996. By the end
of 1998,  Bodymate(TM),  a new product line was launched to enter the nutrition
and weight management program industry.



                                      -3-




Products
- --------

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

In 1996, the Company also acquired an exclusive license to a zinc gluconate use
patent,  thereby assuring the Company of exclusivity in the  manufacturing  and
marketing of zinc gluconate glycine lozenge formulated cold relief products.

Under a Food and Drug Administration ("FDA") approved  Investigational New Drug
Application,   filed  by   Dartmouth   College,   a   randomized   double-blind
placebo-controlled  study,  conducted  at  Dartmouth  College  Health  Science,
Hanover,  New  Hampshire,  concluded  that the lozenge  formulation  treatment,
initiated within 48 hours of symptom onset, resulted in a significant reduction
in the total duration of the common cold.

On May 22, 1992,  ZINC AND THE COMMON COLD, A CONTROLLED  CLINICAL  STUDY,  was
published  in England,  in the  "Journal of  International  Medical  Research",
Volume  20,  Number  3,  Pages  234-246.  According  to this  publication,  (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 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 were  published,  which  commenced  at the  Cleveland
Clinic  Foundation  on October 3rd,  1994.  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 result still
showed a 42% reduction in the duration of the common cold symptoms.

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

Patents, Trademarks, Royalty and Commission Agreements
- ---------------------------------------------------------

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, which are
patented as follows:


      United States:  No. 4 684 528 (August 4, 1987)       
                      No. 4 758 439 (July 19, 1988)  
             Sweden:  No. 0 183 840 (March 2, 1994)
             Canada:  No. 1 243 952 (November 1, 1988)
            Germany:  No. 3,587,766 (March 2, 1994)
      Great Britain:  No. 2 179 536 (December 21, 1988)
     France & Italy:  No. EP 0 183 840 B1 (March 2, 1994) 
             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.  This use patent
gives the Company  exclusive rights to both the use and formulation  patents on
zinc  gluconate  for  reducing  the  duration  and  severity of the common cold
symptoms.



                                      -4-



The  Cold-Eeze(R)  product  is  manufactured  for  the  Company  by a  contract
manufacturer  and  marketed  by the Company in  accordance  with the terms of a
licensing  agreement  (between the Company and the developer).  The contract is
assignable by the Company with the developer's consent. Throughout the duration
of the  agreement  the  developer is to receive a three percent (3%) royalty on
sales  collected,  less certain  deductions.  A separate  consulting  agreement
between the parties  referred to directly  above was similarly  entered into on
May 4,  1992,  whereby  the  developer  is to receive a  consulting  fee of two
percent  (2%) on sales  collected,  less  certain  deductions,  for  consulting
services to the Company with respect to such product.

Pursuant  to the License  Agreement  entered  into  between the Company and the
patent  holder,  the Company  pays a royalty fee to the patent  holder of three
percent (3%) on sales collected, less certain deductions.

During 1997, the Company instituted a trademark for the major components of its
lozenge,  ZIGG(TM) (denoting zinc gluconate glycine), to set Cold-Eeze(R) apart
from the imitations proliferating the marketplace.

An  agreement  between the Company and the  founders was entered into on June 1,
1995. The founders, in consideration of the acquisition of the Cold-Eeze(R) cold
therapy  product,  are to receive a total  commission  of five percent  (5%), on
sales collected, less certain deductions until the termination of said agreement
on May  31,  2005. 

Product Distribution and Customers
- ----------------------------------

The Company has several Broker, Distributor and Representative Agreements, both
Nationally   and   Internationally,   which   are  sales   performance   based.
Additionally,  prior to 1998,  the Company has issued  incentive  common  stock
purchase options to its Brokers, Distributors and Representatives.

The Cold-Eeze(R)  lozenge products are distributed through numerous independent
and chain drug and discount stores throughout the United States,  including the
Walgreen Company,  Bindley-Western Drug Company,  Revco,  American Drug Stores,
CVS,  Rite-Aid,  Eckerd Drug Company,  Phar-Mor  Inc.,  Drug  Emporium,  K-Mart
Corporation, and wholesale distributors including McKesson Drug Company, Bergen
Brunswig Drug Company, US Health Distributors, and AmeriSource.

The  Company is not  dependent  on any single  customer  as the broad  range of
customers includes many large wholesalers, mass merchandisers, and multi-outlet
pharmacy  chains,  five of which account for a significant  percentage of sales
volume.  These five  represent 38% and 68% of sales revenue for the years ended
December 31, 1998 and 1997,  76% for the three months ended  December 31, 1996,
and 62% for the year ended September 30, 1996.

Research and Development
- ------------------------

The Company's  research and development  costs for the years ended December 31,
1998,  1997, three months ended December 31, 1996, and year ended September 30,
1996 were $256,492, $79,784, $20,777 and $41,856, respectively. Future research
and development expenditures to develop extensions of the Cold-Eeze(R) product,
including  potential  unrelated  new  products  in  the  consumer  health  care
industry,   are  primarily  supported  by  clinical  studies,  for  efficacious
long-term   products  that  can  be  coupled  with  possible  line   extensions
derivatives for a family of products.

Regulatory Matters
- ------------------

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.  The Company's Cold-Eeze(R) product is a homeopathic remedy, which is
subject to regulation by various federal,  state and local agencies,  including
the  FDA  and  the  Homeopathic  Pharmacopoeia  of  the  United  States.  These
regulatory  authorities  have  broad  powers,  and the  Company  is  subject to
regulatory  and  legislative  changes  that can  affect  the  economics  of the
industry by requiring  changes in operating  practices  or by  influencing  the
demand for, and the costs of providing its products.  Management  believes that
the Company is in  compliance  with all such laws,  regulations  and  standards
currently in effect  including the Food, Drug and Cosmetics Act of 1938 and the
Homeopathic Pharmacopoeia Regulatory Service.  Management further believes that
the cost of compliance  with such laws,  regulations and standards have not and
will not have a material  adverse effect on the Company's  financial  position,
operations or cash flows in future years.

                                      -5-



Competition
- -----------

The Company competes with other suppliers of cold remedy,  nutrition and weight
management  products.  These  suppliers  range  widely  in  size.  Some  of the
Company's  competitors  have  significantly  greater  financial,  technical  or
marketing resources than the Company. Management believes that its Cold-Eeze(R)
product, which has been clinically proven in two double-blind studies 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.  Bodymate(TM) at this time, has the same competition challenges to gain
acceptance  by the consumer.  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.

Employees
- ---------

At December 31, 1998 the Company had 16 full-time  employees,  of whom all were
involved in an executive,  marketing or  administrative  capacity.  None of the
Company's  employees are covered by a collective  bargaining  agreement or is a
member of a union.

Suppliers
- ---------

The Company currently uses three separate suppliers to produce  Cold-Eeze(R) in
lozenge,  bubble  gum,  and  sugar  free  tablet  form.  The  lozenge  form  is
manufactured by a third party  manufacturer  that produces  exclusively for the
Company.  Should these  relationships  terminate or discontinue for any reason,
the Company has  formulated a  contingency  plan  necessary in order to prevent
such discontinuance from materially affecting the Company's operations with the
exception of bubble gum, which cannot be duplicated.  Any such termination may,
however,  result in a  temporary  delay in  production  until  the  replacement
facility is able to meet the Company's production requirements.

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

ITEM 2.   Description of Property
          -----------------------

The  Company   currently   maintains  its  executive   offices  in  Doylestown,
Pennsylvania, where it occupies approximately 2,500 square feet of office space
pursuant to a month to month lease agreement.  In December 1998 the purchase of
a building, approximating 14,000 square feet, was completed, which will be used
as  corporate  offices  as well as  laboratory  facilities,  that with  planned
improvements  will cost  approximately  $1.5 million dollars.  The Company also
occupies   warehouse   space,  in  Las  Vegas,   Nevada  and  in  New  Britain,
Pennsylvania.   The  Nevada   location  has  a  three-year   lease,   occupying
approximately  5,400 square feet, with the New Britain  location having a month
to month ongoing  arrangement,  occupying  2,600 square feet.  The Company also
stores its product in three additional  warehouses in Pennsylvania with storage
charges  based  upon the  quantities  of  product  being  stored.  The  monthly
aggregate  lease  payments are $4,796.  The Company  believes that its existing
warehousing facilities are adequate.


ITEM 3.   Legal Proceedings
          -----------------

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


ITEM 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

None
                                      -6-





                                    PART II

ITEM 5.   Market for Company's Common Equity and Related Stockholder Matters
          ------------------------------------------------------------------

Market Information
- ------------------

The Company's Common Stock, $.0005 par value, is currently traded on the NASDAQ
National Market under the trading symbol "QGLY."

By Quarter, Calendar 1998 & 1997 
- --------------------------------

                                  Common Stock
                                  ------------

                           1998                        1997
                 ----------- -----------      ----------- -----------     
Quarter Ended        High        Low             High           Low
- -------------        ----        ---             ----           ---

March 31           $16.438      $9.500          $18.500        $8.375

June 30            $13.250      $6.250          $11.250        $7.687

September 30        $9.750      $6.625          $20.125        $9.187

December 31         $7.750     $4.938           $23.000       $14.000


Prior to July 1997, trading  transactions in the Company's  securities had been
limited to the  over-the-counter  market. The  over-the-counter  market quotes,
dated before July 1997, indicated above,  reflect inter-dealer prices,  without
retail  mark-up  or  commissions,  and may  not  necessarily  represent  actual
transactions.  Accordingly,  an  "established  public trading  market" for such
securities  existed for more than sixty  business  days  before July 1997.  All
prices indicated herein relating to periods before July 1997, had been reported
to the Registrant by  broker-dealer(s)  making a market in its securities.  Bid
and asked quotations at fixed prices had appeared  regularly in the established
quotation systems on at least one-half of such business days. From July 1997 to
May 1998, the Company's  securities were traded on the NASDAQ SmallCap  Market.
Since May 1998,  the  Company's  securities  are traded on the NASDAQ  National
Market and  consequently  stock prices are available  daily as generated by the
National Market established quotation system.

In  January  1997,  there  was a two  for  one  share  split,  benefiting  each
stockholder on record as of January 15, 1997.

Holders
- -------

As of December 31, 1998, there were  approximately 413 holders of record of the
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
but would necessarily exceed the number of record owners indicated above.

Dividends
- ---------

No cash  dividends  were paid during 1998 and 1997. The Company has not paid or
declared  any  dividends  upon its Common  Stock  since its  inception.  Future
dividends are dependent upon cash needs for international expansion.



                                      -7-




Warrants and Options
- --------------------

In addition to the Company's aforesaid  outstanding Common Stock, there are, as
of December 31, 1998, issued and outstanding Common Stock Purchase Warrants and
Options which are exercisable at the price-per-share indicated and which expire
on the date indicated, as follows:

  Description        Number     Exercise Price       Expiration Date
  -----------        ------     --------------       ---------------

  CLASS "D"         740,000          $0.50            December 14, 2000
  CLASS "E"       1,175,000          $1.75            June 30, 2001
  CLASS "F"         325,000          $2.50            November 4, 2001
  CLASS "G"         945,000         $10.00            May 5, 2002
  Options/Warrants  614,900    $0.50-$1.75            December 1, 2000
                                                      to October 1, 2001
  Option Plan       550,500          $9.68            December 2, 2007



ITEM 6.   Selected Financial Data
          -----------------------

The Company  changed its fiscal  year-end  from  September 30 to December 31 on
January 2, 1997. The following table sets forth the selected  financial data of
the Company for, and at the end of (i) the years ended September 30, 1994, 1995
and 1996,  (ii) the three  months  ended  December 31, 1996 and (iii) the years
ended December 31, 1997 and 1998.

The data  presented  below  should be read in  conjunction  with  "Management's
Discussion and Analysis of Financial  Condition and Results of Operations"  and
the Company's  financial  statements and the notes thereto appearing  elsewhere
herein.



                                                                          Three Months
(Amounts in thousands,                      Year ended     Year  ended       ended         Year ended     Year ended     Year ended
 except per share data)                     December 31,   December 31,   December 31,  September 30,  September 30,  September 30,
                                                1998           1997           1996           1996           1995           1994
                                            ------------   ------------   ------------   ------------   ------------   ------------
 .......................................                                                                     
Statement of Income Data:
Net Sales .................................    $36,354        $70,173        $ 4,092        $ 1,050        $   502        $    77
Gross Profit ..............................     25,477         48,745          2,717            766            390             50
Net Income (loss) .........................      6,809         20,967          1,676           (694)          (153)           (74)

Basic earnings per
  common share ............................    $  0.51        $  1.72        $  0.15       ($  0.08)      ($  0.02)      ($  0.01)
Diluted earnings per
  common share ............................    $  0.46        $  1.43        $  0.12       ($  0.08)      ($  0.02)      ($  0.01)
Weighted average common shares outstanding:
  Basic ................................        13,335         12,181         11,087          8,131          6,723          5,850
  Diluted ..............................        14,944         14,634         13,611          8,131          6,723          5,850


                                                As of          As of          As of         As of          As of          As of
                                            December 31,   December 31,   December 31,  September 30,  September 30,  September 30,
                                                1998           1997           1996           1996           1995           1994
                                            ------------   ------------   ------------   ------------   ------------   ------------
Balance Sheet Data:
Working capital ...........................   $ 43,024        $41,141        $ 5,206        $   911        $   287       ($   60)
Total Assets ..............................     48,611         49,847          6,950          1,368            437            58
Stockholders' equity (deficit) ............     44,607         41,748          5,544          1,243            299           (69)






                                      -8-




ITEM 7.   Management's Discussion and Analysis of Financial Condition And 
          ---------------------------------------------------------------
          Results of Operations
          ---------------------

Overview
- --------

During 1998,  the Company  continued to apply its resources to the  manufacture
and  marketing  of  the  patented  Cold-Eeze(R)  cold  relief  lozenge.  In the
preceding  year,  Cold-Eeze(R)   established  itself  as  the  dominant  remedy
available to counteract the effects of the common cold symptoms. The uniqueness
of  the  product  was  established   following  the  publication  of  a  second
double-blind  study  in July  1996,  showing  that  Cold-Eeze(R)  significantly
reduced both the duration and severity of the common cold  symptoms.  Continued
advertising  and  promotional  activity  during 1998 has  increased  the public
awareness of the product,  along with various  independent  television programs
highlighting the product's desirability as a common cold remedy. The 1998 sales
revenue was $36.4 million compared to $70.2 million for the same period in 1997
and $5.0 million for 1996.  The main  reasons for reduced  sales in 1998 are an
exceptionally  mild cold  season,  higher  than usual  inventory  levels at our
customer level,  new herbal cold treatments  promulgated  through national news
media announcements,  and the consumer awareness that the product is now widely
available, which contributes to the reduced demand and ultimate sell-through of
Cold-Eeze(R) at the consumer level. During the second half of 1998, the Company
commenced  selling the product  internationally  with sales to Canada,  and the
Peoples  Republic of China.  The demand for the product is  seasonal,  with the
third and fourth quarters representing the largest sales volume.

In the last half of 1998,  the Company  launched  Cold-Eeze(R)  in a sugar free
version of the product to benefit diabetics and other consumers  concerned with
their sugar intake.  Late in the fourth quarter,  the Company launched a bubble
gum version of Cold-Eeze(R) and in a different therapeutic area, an all-natural
nutrition and weight management program called Bodymate(TM).

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

Different manufacturing sources are used for the production of the Cold-Eeze(R)
bubble  gum and  sugarfree  products  and the same  manufacturer  produces  the
Cold-Eeze(R) lozenge and Bodymate(TM)  products.  In addition,  the lozenge and
Bodymate(TM)  manufacturer commenced manufacturing  exclusively for the Company
in 1997,  thereby  increasing their output and the availability of the product.
At  the  end  of  1996,  as  a  result  of  unexpected  demand  and  inadequate
manufacturing availability,  there was a significant order backlog, in contrast
at the end of 1997 and 1998,  when all orders were being  fulfilled in a timely
manner. All three  manufacturing  sites have the capacity to respond quickly to
market requirements.

The change in  manufacturing  availability  has allowed the Company to commence
selling  internationally  in 1998.  In February  1998,  the Company  reached an
agreement with Merck KGaA,  Darmstadt,  Germany for exclusive  distribution  of
Cold-Eeze(R) in the Canadian  market.  In December 1998, the Company reached an
agreement with a Hong Kong based Chinese distribution company for the exclusive
distribution of Cold-Eeze(R) in the Peoples Republic of China. This exclusivity
is predicated  on minimum sales levels being met each year,  that in total must
attain  at least  $52  million  over the  7-year  life of the  agreement.  Both
agreements  during 1998 have resulted in  approximately $2 million in revenues.
Ongoing,  future  revenues,  costs,  margins  and profits  will  continue to be
influenced by the Company's ability to maintain its manufacturing  availability
and capacity together with its marketing and distribution capabilities in order
to continue to compete on a national and international level.

Results of Operations
- ---------------------

Twelve months ended  December 1998 compared with same period 1997
- -----------------------------------------------------------------

1998 produced revenues of $36,354,155 and net income of $6,809,526  compared to
revenues of $70,172,563 and net income of $20,966,862 for the comparable period
in 1997.  The reasons for the slow down in sales in 1998  included mild weather
conditions  which are reflected in lower incidence of consumers'  colds and new
herbal cold treatments  promulgated through national news media  announcements.
Additionally,  due to greater output  availability at the  manufacturing  site,
product  lead-time  has reduced  from six or more weeks in 1997 to two weeks in
1998  resulting in the  customer  being able to order  product  closer to their
needs.  Cold-Eeze(R) is now a formidable  force in the market place as a unique
remedy to reduce the severity and duration of the common cold symptoms.

                                      -9-



Cost of Goods Sold,  as a percentage of net sales,  decreased by 0.6%,  down to
29.9%  in 1998  from  30.5%  in  1997.  The  reduction  in 1998  resulted  from
efficiencies implemented by the manufacturer in 1997 continued to be beneficial
in 1998 and a change in  accounting  estimates.  These  gains were  offset by a
repackaging charge of approximately 0.5% of net sales,  higher cost margins for
different product configurations and international sales.

1998  operating  expenses  were  $15,762,598  compared  to  $13,798,827  in the
comparable  period  1997.  The  increase  over 1997 is primarily as a result of
advertising and marketing  spending to further  establish and grow the product.
During 1998,  the Company's  major  operating  expenses of delivery,  salaries,
brokerage commissions,  promotion,  advertising,  and legal costs accounted for
approximately $13,805,588 (88%) of the total of $15,762,598.

The total assets of the Company at December 31, 1998 and 1997 were  $48,610,644
and  $49,847,090  respectively.  Working  capital  increased by  $1,883,938  to
$43,024,485 at December 31, 1998. The significant movements in these categories
are, the slowdown in sales in 1998,  the reduction in the components of current
liabilities and changes in funds or  paid-in-capital as a result of the sale or
exercise of the  Company's  Common Stock,  options and warrants.  Additionally,
during the course of 1998, the Company  repurchased a quantity of the Company's
Common Stock to treasury.

Twelve months ended December 1997 compared with same period 1996
- ----------------------------------------------------------------

For 1997,  the  Company  reported  revenues  of  $70,172,563  and net income of
$20,966,862, as compared with revenues of $4,993,496 and net income of $986,392
for the comparable period ended December 31, 1996. This substantial increase in
revenue is primarily  attributable to the market acceptance of the Cold-Eeze(R)
lozenge product.  The year 1997 saw  Cold-Eeze(R)  become a formidable force in
the  marketplace  as a unique remedy to reduce the severity and duration of the
common  cold  symptoms.  This  resulted  from the release of the results of The
Cleveland  Clinic  Study  in July  1996,  a  national  marketing  program  that
commenced in the fourth quarter of 1996 together with national  exposure in the
media, such as NBC's PrimeTime network national news program and "20/20" on ABC
in January 1997.  Sales in the transition  quarter ended December 31, 1996 were
$4,091,653,  thereby commencing the current trend of Cold-Eeze(R) being a major
player in the cold remedy market.

Cost of Goods Sold, as a percentage of net sales,  decreased by 2.35%,  down to
30.5%  for  1997  from  32.85%  for  1996.  This  decrease  in cost of goods is
primarily  due  to  efficiencies  resulting  from  the  manufacturer  utilizing
improved equipment such as fully automated  production lines. In addition,  the
higher volume of production  brought  economies of scale resulting in the lower
purchase cost of raw materials and packaging, thereby, reducing the cost of the
finished product. During 1997, operating expenses increased to $13,798,827 from
$2,155,646 in the comparable  period 1996. This was a result of increased costs
associated with a national marketing and advertising program and other variable
costs associated with bringing the sales volume to the level achieved.

During 1997,  the Company's  major  operating  expenses of delivery,  salaries,
brokerage  commissions,  promotion,  advertising  and legal costs accounted for
approximately  $12,562,060  (93%)  of the  $13,798,827  total  operating  costs
incurred by the Company. 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 1997.  During 1996, these expenses amounted
to $1,826,651  (85%) of the total of $2,155,646.  For future periods,  a normal
profitable  relationship should develop for all costs and operating expenses as
they relate to sales.

The total assets of the Company at December 31, 1997 and 1996 were  $49,847,090
and $6,950,297  respectively.  Working  capital  increased to $41,140,547  from
$5,205,531  for  the  respective  periods.   These  significant  increases  are
primarily due to increased sales volume, and funds or paid in capital generated
from the sale, exercise or exchange for services of the Company's Common Stock,
options and warrants.  Additionally,  inventory has increased  from $300,732 at
December 31, 1996 to $7,726,757 at December 31, 1997.


                                      -10-




Three months ended December 1996 compared with same period 1995
- ---------------------------------------------------------------

For the three months ended December 31, 1996, the Company reported  revenues of
$4,091,653 and net income of $1,676,314,  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  was  primarily  due to the
Company's national marketing program coupled with the publication of a clinical
trial study in a medical  journal  during 1996,  proving the  effectiveness  of
Cold-Eeze(R)  as a remedy for the  common  cold.  Prior to the  release of this
study,  financial  information  reported was not  comparable  to the  financial
relationships  that were present in the three month  period ended  December 31,
1996.  The  gross  profit  rate of 66.4%  was lower  because  of  manufacturing
inefficiencies associated with the set up of larger production volume.

Operating expenses,  such as delivery,  brokerage commissions,  promotion,  and
advertising costs, increased significantly over the prior comparable period due
to the national marketing efforts for 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 $6,950,297,  working  capital of $5,205,531  and  shareholders'
equity  of  $5,543,504  for the  period  ended  December  31,  1996,  increased
dramatically from the period ended September 30, 1996. 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.

Twelve months ended September 1996 compared with same period 1995
- -----------------------------------------------------------------

For  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 was  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
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.

Cost of Goods Sold, as a percentage  of net sales,  increased to 27.1% for 1996
from 22.3% for 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 1996, operating expenses similarly
increased to $1,486,913  from $552,696 in 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 1996.

During 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
1995.  During 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  1995,  then the net loss for 1996  would have
changed to basically a break even.

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 sales order 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 and shortfalls in the manufacturing capabilities.



                                      -11-





Material Commitments and Significant Agreements
- -----------------------------------------------

As a result of all of the  Company's  products  being  manufactured  by outside
sources any  capital  expenditure  expected  to be incurred  during 1999 is not
anticipated  to be  material.  The Company has  agreements  in place with these
manufacturers,  which insures a reliable source of product for the future.  The
facility   producing  the   Cold-Eeze(R)   lozenge  and  the  Bodymate  product
manufactures exclusively for the Company.

The Company has agreements in place with independent  brokers whose function it
is to  represent  the  Company,  in a  product  sales and  promotion  capacity,
throughout the United States and  internationally.  The brokers are remunerated
through a commission structure,  which is a percentage on sales collected, less
certain deductions.

There are significant  royalty and commission  agreements  between the Company,
patent  holders and the developer of the Company's  cold-relief  products.  The
Company  has entered  into  royalty  agreements  with the patent  holders  that
require payments of 6% on sales collected,  less certain  deductions,  and with
the  founders  who share a commission  of 5% on sales  collected,  less certain
deductions. Additionally, the developer of the Cold-Eeze(R) product formulation
receives a consulting fee of 2% on sales collected, less certain deductions.

The agreements with the patent holder and the developer expire on March 5, 2002
and May 4, 2007, respectively and with the founders on May 31, 2005.

Liquidity and Capital Resources
- -------------------------------

The Company had working  capital of $43,024,485 and $41,140,547 at December 31,
1998 and 1997,  respectively.  The  increase  in working  capital is due to the
decrease in the  components  of current  liabilities,  strong  cash  collection
procedures  and  proceeds  received by the Company from the exercise of options
and  warrants.  Total Cash  balances at December 31, 1998 were  $28,331,765  as
compared to $25,498,359 at December 31, 1997.

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,  newly available products and
further  growth in  international  sales should  provide an internal  source of
capital to fund the Company's business  operations.  In addition to anticipated
earnings from operations, the Company may continue to raise capital through the
issuance of equity securities to finance anticipated growth.

In October 1998 the Company's  Board of Directors  approved an  additional  buy
back of up to 2,000,000  shares of the Company's  Common  Stock,  which will be
based on market conditions.

Management is not aware of any trends, events or uncertainties that have or are
reasonably  likely to have a material  negative  impact upon the  Company's (a)
short term or long term  liquidity,  (b) net  sales,  revenues  or income  from
continuing operations.  Any challenge to the Company's patent rights could have
a material  adverse  effect on future  liquidity of the Company,  however,  the
Company is not aware of any condition that would make such an event probable.

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 1999.  However,  in the event of the
Company  expanding  significantly  in  the  near  future,  the  Company  has an
available  line of  credit.  This was put in place  in  September  1997 and was
increased to $10,000,000 in September 1998 to be used, if required, for general
corporate purposes.  This facility is collateralized by accounts receivable and
inventory,  and renews in one year,  with interest  accruing at the Wall Street
Journal prime rate,  or 275 basis points above the  Euro-Dollar  Rate,  each to
move with the respective  base rate.  There were no borrowings  under this line
during the year ended December 31, 1998 or 1997.


                                      -12-




New Accounting Standards
- ------------------------

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130,  "Reporting  Comprehensive  Income," requiring more detailed disclosure of
specific  areas of income and  expenses.  This new  standard is  effective  for
periods  beginning  after  December 15, 1997. The effect of its adoption by the
Company is insignificant.

In June 1997, the "FASB" issued SFAS No. 131,  "Disclosure about Segments of an
Enterprise and Related Information,"  requiring public companies report certain
information  about  operating  segments  within  their  financial   statements.
Additionally,  it requires that such entities report certain  information about
their products and services,  the geographic  areas in which they operate,  and
their  major  customers.  These  additional  disclosures  are  required  within
financial statements for fiscal years beginning after December 15, 1997. During
1998,  the  Company  commenced   international   activities.   Because  minimum
thresholds have not been reached, no additional disclosures are required.

Impact of Inflation
- -------------------

The Company is subject to normal  inflationary  trends and anticipates that any
increased costs should be passed on to its customers.

Year 2000 Compliant
- -------------------

The Year 2000 issue relates to the way the computer systems and programs define
calendar dates; they could fail or make  miscalculations  due to interpreting a
date including "00" to mean 1900,  not 2000.  Also,  many systems and equipment
that  are  not  typically  thought  of as  "computer-related"  (referred  to as
"non-IT") contain embedded hardware or software that may have a time element.

The Company began work on the Year 2000  compliance  issue in the later part of
1996.  The  scope of the  project  includes:  ensuring  the  compliance  of all
applications, operating systems and hardware on the Company's computer network;
addressing issues to non-IT embedded software and equipment; and addressing the
compliance of key business partners.

The project has four phases:  assessment of the systems and equipment  affected
by the Year 2000 issue;  definition of strategies to address  affected  systems
and equipment; remediation of affected systems and equipment; and certification
that each is Year 2000  compliant.  To certify that all IT systems  (internally
developed,  purchased,  or licensed)  are Year 2000  compliant,  each system is
tested using a standard testing  methodology which includes regression testing,
millennium  testing,  millennium leap year testing and cross over year testing.
Certification  testing is  performed on each system as soon as  remediation  is
completed.

The  most   significant   category  of  key  business   partners  is  financial
institutions.  Their critical functions include  safeguarding and management of
investment  portfolios,  processing of the Company's  operating  bank accounts,
sales and  distribution  funds  transfers.  Other  partner  categories  include
suppliers of communication services,  utilities,  materials and supplies. Based
on the importance of each  relationship,  the Company is defining a strategy to
determine compliance.

The  target for  completion  of all  phases is the third  quarter of 1999.  The
Company has completed the  assessment  and strategy  phases for its computer PC
applications, operating systems and hardware.

The  majority  of the  Company's  non-IT  related  systems  and  equipment  are
currently  Year  2000   compliant,   based   primarily  on  verbal  or  written
communication  with vendors.  Compilation  of written  documentation  regarding
compliance is underway and is scheduled to be completed by the third quarter of
1999. With respect to key business partners, the assessment and strategy phases
are in the preliminary  stages,  with the Company in the process of compiling a
compliance  list.  The Company has and continues to conduct  surveys of all its
software and hardware vendors, and testing is underway.



                                      -13-




For business  partners with whom the Company engages in electronic  transfer of
information,  sample testing is and will be conducted  until full compliance is
achieved.

The Company has investments with financial institutions and could in the future
have  loans.  The  Company  may be  exposed to credit  risk to the extent  that
related borrowers are materially adversely impacted by the Year 2000 issue.

The  Company  has  not had an  independent  review  of its  Year  2000  risk or
estimates. However, experts have been engaged to assist in developing estimates
and to complete remediation work on specific portions of the project.

Since the  inception of the project,  the Company has not incurred any material
external  cost with respect to the Year 2000 issue.  Internal  cost and current
estimates based on actual  experience to date,  project a total expense for the
project of less than $50,000. To date, costs of $30,000 have been incurred. The
remaining  internal  cost is not  expected to exceed  beyond the cost of normal
operating  expenses.  Current  year  costs  are  expensed  as those  costs  are
incurred.  There  has not  been a  material  adverse  impact  on the  Company's
operations or financial condition as a result of IT projects caused by the Year
2000 project.

With respect to contingency  plans for critical  systems,  the Company has long
recognized   that  there  is  no  viable   alternative  if  these  systems  are
non-compliant. Certification of these systems as compliant remains on schedule.
For non-IT  systems and equipment and key business  partners,  the Company will
continue to reassess the need for formal  contingency  plans, based on progress
of the Year 2000 efforts by the Company and third parties.

Although the Company's  critical  systems are Year 2000 compliant,  there is no
guarantee that  compliance by third parties whose systems and operation  impact
the Company will be completed by the end of 1999. A reasonably  possible  worst
case scenario might include one or more of the Company's key business  partners
being non-compliant. Such an event could result in a material disruption of the
Company's   operations.   Specifically,   the  Company   could   experience  an
interruption  in  its  ability  to  collect  and  process  receipts,  broadcast
commercial advertising,  safeguard and manage its invested assets and operating
cash accounts,  accurately maintain customer  information,  accurately maintain
accounting records,  and/or perform adequate customer service. Should the worst
case  scenario  occur,  it could,  depending on its  duration,  have a material
impact on the Company's results of operations and financial position.







                                      -14-





ITEM 8    FINANCIAL STATEMENTS


INDEX TO FINANCIAL STATEMENTS                                         Page
                                                                      ----

Balance Sheets as of December 31, 1998, and 1997                       F-1

Statements of Income for the years ended December 31,
  1998, 1997, three months ended December 31, 1996 and 
  year ended September 30, 1996                                        F-2

Statements of Stockholders' Equity for the years ended 
  December 31, 1998, 1997, three months ended December 31,
  1996 and year ended September 30, 1996                            F-3 to F-4

Statements of Cash Flows for the years ended December 31,
  1998, 1997, three months ended December 31, 1996 and year 
  ended September 30, 1996                                          F-5 to F-6

Notes to Financial Statements                                       F-7 to F-17

Responsibility for Financial Statements                                F-18

Report of Independent Accountants                                      F-19

Report of Independent Certified Public Accountant                      F-20










                                      -15-





                            THE QUIGLEY CORPORATION
                                 BALANCE SHEETS


                         ASSETS                    December 31,     December 31,
                                                      1998             1997
                                                   ------------     ------------

CURRENT ASSETS:
  Cash and cash equivalents....................    $28,331,765      $25,498,359
  Accounts receivable (less doubtful                 7,575,366       10,851,573
    accounts of $182,079 and $96,598)..........
  Inventory....................................      6,522,612        7,726,757
  Prepaid income taxes.........................      2,565,321        3,548,057
  Prepaid expenses and other current assets....      1,635,099        1,023,628
  Deferred income taxes........................        397,489          591,245
                                                   ------------     ------------
    TOTAL CURRENT ASSETS.......................     47,027,652       49,239,619
                                                   ------------     ------------

PROPERTY, PLANT AND EQUIPMENT - net............      1,041,386          162,189
                                                   ------------     ------------

OTHER ASSETS:
  Patent rights-Less accumulated amortization..        285,224          372,986
  Other assets.................................        256,382           72,296
                                                              
                                                   ------------     ------------
    TOTAL OTHER ASSETS.........................        541,606          445,282
                                                   ------------     ------------
TOTAL ASSETS...................................    $48,610,644      $49,847,090
                                                   ===========      ============


                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable.............................       $758,033       $1,115,620
  Accrued royalties and sales commissions......      2,085,446        4,730,856
  Accrued advertising..........................        561,266          202,756
  Accrued freight..............................         37,082          468,577
  Other current liabilities....................        561,340        1,581,263
                                                   ------------     ------------
    TOTAL CURRENT LIABILITIES..................      4,003,167        8,099,072
                                                   ------------     ------------


COMMITMENT AND CONTINGENCIES                                                  

STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value;
    authorized 1,000,000;  no shares issued....          -                 -
                            
  Common stock, $.0005 par value; authorized 
    50,000,000; Issued: 14,409,058 and 
    13,791,358 shares..........................          7,205            6,896
 Additional paid-in capital....................     28,207,208       23,046,551
 Retained earnings.............................     26,649,455       19,839,929
 Less: Treasury stock, 1,665,022 and 
    486,862, at cost...........................    (10,256,391)      (1,145,358)
                                                   ------------     ------------
    TOTAL STOCKHOLDERS' EQUITY.................     44,607,477       41,748,018
                                                   ------------     ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.....    $48,610,644      $49,847,090
                                                  ===========       ============


                 See accompanying notes to financial statements
                                      F-1









                                       THE QUIGLEY CORPORATION
                                        STATEMENTS OF INCOME

                                                                    Three
                                  Year Ended       Year Ended   Months Ended     Year Ended
                                  December 31,    December 31,  December 31,     September 30,
                                      1998            1997          1996              1996
                                  -----------     -----------    -----------     ----------- 
                                                                              

NET SALES.....................    $36,354,155     $70,172,563    $ 4,091,653     $ 1,049,561
                                  -----------     -----------    -----------     ------------ 

COST OF SALES.................     10,877,594      21,427,888      1,374,327         283,967
                                  -----------     -----------    -----------     ------------

GROSS PROFIT..................     25,476,561      48,744,675      2,717,326         765,594
                                  -----------     -----------    -----------     ------------ 


OPERATING EXPENSES:
  Sales and marketing.........     10,476,030       7,741,428        585,202         647,782
  Administration..............      5,286,568       6,057,399        217,621         839,131
                                  -----------     -----------    -----------     ------------ 
TOTAL OPERATING EXPENSES......     15,762,598      13,798,827        802,823       1,486,913
                                  -----------     -----------    -----------     ------------ 

INCOME FROM OPERATIONS........      9,713,963      34,945,848      1,914,503        (721,319)

INTEREST INCOME...............      1,449,194         292,575           -               -
                                  -----------     -----------    -----------     ------------ 

INCOME BEFORE TAXES...........     11,163,157      35,238,423      1,914,503        (721,319)
                                  -----------     -----------    -----------     ------------ 

INCOME TAXES..................      4,353,631      14,271,561        238,189         (27,050)
                                  -----------     -----------    -----------     ------------ 

NET INCOME....................     $6,809,526     $20,966,862     $1,676,314       ($694,269)
                                  ===========     ===========    ===========     ============ 

Earnings  per common share:                                                                                     

    Basic                               $0.51           $1.72          $0.15          ($0.08)
                                  ===========     ===========    ===========     ============ 
  
    Diluted                             $0.46           $1.43          $0.12          ($0.08)
                                  ===========     ===========    ===========     ============ 
   

Weighted average common 
    shares outstanding:

    Basic                          13,334,684      12,181,020     11,087,279       8,131,178
                                  ===========     ===========    ===========     =========== 

    Diluted                        14,944,172      14,633,999     13,611,295       8,131,178
                                  ===========     ===========    ===========     =========== 

   






                 See accompanying notes to financial statements
                                      F-2




                            THE QUIGLEY CORPORATION
                       STATEMENTS OF STOCKHOLDERS' EQUITY

                                  Common                 Additional                                Stockholders
                                  Stock        Issued      Paid-in-     Treasury     Retained      Subscription
                                  Shares       Amount       Capital      Stock       Earnings       Receivable        Total
                                                                                     (Deficit)
                                 -------------------------------------------------------------------------------------------
                                                                                                     
Balance October 1, 1995          6,722,828    $ 3,361    $2,466,632                 ($2,108,978)    ($ 61,875)     $ 299,140

Conversion of options               84,000         42        44,058                                                   44,100

Shares issued to officers        1,060,000        530       313,220                                                  313,750

Shares issued  for services        674,386        337       790,499                                                  790,836

Proceeds from warrants
  exercised                          4,140          2         2,068                                                    2,070

Partial receipt of receivable                                                                           9,145          9,145

Proceeds from stock, options,
& warrants exercised                994,174        497       512,779                                                 513,276
  
Issue of notes                                                                                        (35,000)       (35,000)

Net loss year ended
   September 30,  1996                                                                 (694,269)                    (694,269)
                                ---------------------------------------------------------------------------------------------
Balance September 30, 1996        9,539,528      4,769     4,129,256                 (2,803,247)      (87,730)     1,243,048
                                ---------------------------------------------------------------------------------------------

Shares issued  for services         140,000         70       217,745                                                 217,815

Proceeds from common
   stock issued                      54,664         27        40,973                                                  41,000

Shares issued for
   subscription receivable                                                                           (258,126)      (258,126)

Proceeds from options  &                                                                                         
   warrants exercised              2,365,000     1,183     1,590,416                                               1,591,599
  
Tax benefits from options,
          warrants, & stock                                1,031,854                                               1,031,854

Net income period ended
   December 31, 1996                                                                  1,676,314                    1,676,314
                                ---------------------------------------------------------------------------------------------
Balance December 31, 1996         12,099,192     6,049     7,010,244                 (1,126,933)     (345,856)     5,543,504
                                ---------------------------------------------------------------------------------------------

Shares issued for services            21,054        11       212,894                                                 212,905

Subscription sales                    17,884         8        75,998                                                  76,006

Shares for subscription                                                                            
   receivable                                                                                         345,856        345,856

Warrants issued for contract                               
   termination costs                                         609,000                                                 609,000

Treasury stock                      (486,862)              1,145,358   ($1,145,358)                                
                                                                                                                       -

Tax benefits from options,
   warrants & common stock                                11,148,083                                              11,148,083

Exercise of options and
   warrants issued for                              
   services                                                  438,501                                                 438,501

Proceeds from options and
   warrants exercised              1,653,228       828     2,406,473                                               2,407,301

Net income year ended
   December 31, 1997                                                                  20,966,862                  20,966,862

                                ---------------------------------------------------------------------------------------------
Balance December 31, 1997         13,304,496     6,896    23,046,551    (1,145,358)   19,839,929            -     41,748,018
                                ---------------------------------------------------------------------------------------------

                 See accompanying notes to financial statements
                                      F-3








                            THE QUIGLEY CORPORATION
                       STATEMENTS OF STOCKHOLDERS' EQUITY (continued)

                                  Common                 Additional                                Stockholders
                                  Stock        Issued      Paid-in-     Treasury     Retained      Subscription
                                  Shares       Amount       Capital      Stock       Earnings       Receivable        Total
                                                                                     (Deficit)
                               ---------------------------------------------------------------------------------------------
                                                                                                     


Treasury stock                  (1,178,160)                           (9,111,033)                                 (9,111,033)

Tax benefits from options,
   warrants & common  stock                               3,512,205                                                3,512,205

Exercise of options and                                                                                        
   warrants issued for                            
   services                                                 981,785                                                  981,785

Proceeds from options and
   warrants exercised              617,700        309       666,667                                                  666,976

Net income year ended
   December 31, 1998                                                                  6,809,526                    6,809,526
                              -----------------------------------------------------------------------------------------------
Balance December 31, 1998       12,744,036    $7,205   $28,207,208  ($10,256,391)   $26,649,455         -        $44,607,477
                              ===============================================================================================
 












                 See accompanying notes to financial statements
                                      F-4






                                             THE QUIGLEY CORPORATION
                                             STATEMENTS OF CASH FLOWS

                                                                                       Three Months       
                                                         Year Ended     Year Ended         Ended       Year Ended
                                                        December 31,   December 31,    December 31,  September 30,
                                                            1998           1997            1996           1996
                                                        -----------    -----------     -----------   ------------
                                                                                          

OPERATING ACTIVITIES:
   Net income (loss) ................................   $ 6,809,526    $20,966,862     $ 1,676,314    $ (694,269)
                                                        -----------    -----------     -----------    -----------
   Adjustments to reconcile net income (loss) to
       net cash provided  by operations:
         Depreciation and amortization ..............       206,640        133,323          18,807        17,461
         Expenditures paid with common stock ........       981,785      1,131,025         142,814       894,586
         Deferred income taxes ......................       193,756       (171,617)       (363,107)      (27,050)
         (Increase) decrease in assets:
              Accounts receivable ...................     3,276,207     (8,650,749)     (1,593,746)     (471,095)
              Inventory .............................     1,204,145     (7,426,025)       (242,393)       24,098
              Prepaid expenses and current assets ...      (621,471)    (1,001,045)       (544,609)      (11,633)
              Prepaid income tax ....................       982,736     (3,117,499)       (430,558)          -
         Increase (decrease) in liabilities:
              Accounts payable ......................      (357,587)       983,823          68,658         8,576
              Accrued royalties and sales commissions    (2,645,410)     4,100,211         630,645           -
              Accrued advertising ...................       358,510        202,756             -             -
              Accrued freight .......................      (431,495)       464,107           4,470           -
              Other current liabilities .............    (1,009,923)     1,379,883         618,767           -
                                                        -----------    -----------      -----------    ----------
                   Total adjustments ................     2,137,893    (11,971,807)     (1,690,252)      434,943
                                                        -----------    -----------      -----------    ----------

NET CASH PROVIDED BY OPERATING
  ACTIVITIES ........................................     8,947,419      8,995,055         (13,938)     (259,326)
                                                        -----------    -----------      -----------    ----------

CASH FLOWS USED IN INVESTING
  ACTIVITIES:
   Capital expenditures .............................      (998,075)      (121,008)         (6,212)      (42,757)
   Other assets .....................................      (184,086)       (68,907)            (11)
                                                                                                     
                                                        ------------   ------------     -----------    ----------

NET CASH FLOWS USED IN INVESTING
  ACTIVITIES ........................................    (1,182,161)      (189,915)         (6,223)      (42,757)
                                                        -----------    -----------      -----------    ----------

CASH FLOWS FROM FINANCING
  ACTIVITIES:
   Tax benefits from stock options, warrants & stock      3,512,205     11,148,083       1,031,854          -
   Proceeds from exercises of options and warrants ..       666,976      2,407,301       1,591,600       515,346
   Proceeds from common stock issued                           -            76,006          41,000          -
   Due from attorney's escrow account ...............          -           260,000        (260,000)        9,000
   Change in stock subscription receivable ..........          -           345,856        (298,467)       15,145
   Repurchase of Common Stock .......................    (9,111,033)          -               -             -
                                                         -----------    -----------     -----------    ----------
                                           
   NET CASH FLOWS FROM FINANCING
     ACTIVITIES .....................................    (4,931,852)    14,237,246       2,105,987       539,491
                                                         -----------    -----------     -----------    ----------
   NET INCREASE IN CASH .............................     2,833,406     23,042,386       2,085,826       237,408

CASH & CASH EQUIVALENTS,
   BEGINNING OF PERIOD ..............................    25,498,359      2,455,973         370,147       132,739
                                                         -----------    -----------     ----------     ----------

CASH & CASH EQUIVALENTS,
   END OF PERIOD ....................................  $ 28,331,765    $25,498,359     $ 2,455,973     $ 370,147
                                                        ===========    ===========     ===========     ==========




                 See accompanying notes to financial statements
                                      F-5



                                            THE QUIGLEY CORPORATION
                                            STATEMENTS OF CASH FLOWS (continued)


    Supplemental disclosure of cash flow information




                                                                                       Three Months       
                                                         Year Ended     Year Ended         Ended       Year Ended
                                                        December 31,   December 31,    December 31,  September 30,
                                                            1998           1997            1996           1996
                                                              $              $               $              $
                                                        -----------    -----------     -----------   ------------
 .................................................                                                

 Income taxes paid                                          283,669      6,650,000            -             -
 ----------------------------------------------------------------------------------------------------------------

 Non cash investing and financing:
 Conversion of put option into equity                          -              -               -          (44,100)
 Capital expenditures                                          -           (7,905)            -             -
 Patent rights                                                 -         (205,000)         (75,000)     (210,000)
 Common stock issued for services performed                    -        1,358,263           75,000       254,100
 Treasury stock cost                                           -       (1,145,358)            -             -

















                 See accompanying notes to financial statements
                                      F-6




                            THE QUIGLEY CORPORATION
                         NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 most recent fiscal periods, the Company has concentrated its efforts in the
promotion  of a product  known as  "Cold-Eeze(R)"  in the United  States.  This
product serves the cold remedy market.  The demand for the product is seasonal,
with the third and fourth quarters  representing  the largest sales volume.  In
December 1998 the Company  launched a nutrition and weight  management  program
called Bodymate(TM).

Principles of Accounting

The  preparation  of the  financial  statements in  conformity  with  generally
accepted  accounting  principles  requires  management  to make  estimates  and
assumptions  that affect the  reported  amounts of assets and  liabilities  and
disclosure of contingent  liabilities at the dates of the financial  statements
and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.

Fiscal Year

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 that
has been generally  adopted by the  pharmaceutical  industry.  The  three-month
transition  period ended  December 31, 1996  represents  the bridge between the
Company's old and new fiscal year-ends.  Certain prior period amounts have been
reclassified to conform with the 1998 presentation.

Cash Equivalents

The Company considers all highly liquid investments with an initial maturity of
three  months  or less at the time of  purchase  to be cash  equivalents.  Cash
equivalents  include  cash on hand,  monies  invested in money market funds and
savings accounts. The carrying amount approximates the fair market value due to
the short term maturity of these investments.

Inventories

Inventories  are stated at the lower of cost or market.  The  Company  uses the
first-in,  first-out  ("FIFO") method of determining  cost for all inventories.
Inventories are primarily comprised of finished goods only.

Property, Plant and Equipment

Property,  plant  and  equipment  is  recorded  at  cost.  The  Company  uses a
combination of straight-line and accelerated methods in computing  depreciation
for financial  reporting  purposes.  The annual  provision for depreciation has
been computed  principally in accordance with the following ranges of estimated
asset lives: building and building  improvements - twenty years;  machinery and
equipment - five to seven years;  computer  software - three years;  vehicles -
five years; and furniture & fixtures - seven years.

Patent Rights

Patent  rights are  amortized on a  straight-line  basis over the period of the
related  licensing  agreements,  approximating  67 months.  Amortization  costs
incurred for the year ended  December 31, 1998,  year ended  December 31, 1997,
three months ended  December 31, 1996 and year ended  September 30, 1996,  were
$87,762, $100,000, $13,881 and $3,134 respectively. Accumulated amortization at
December 31, 1998,  December 31, 1997, December 31, 1996 and September 30, 1996
is $204,777, $117,015, $17,015 and $3,134 respectively.

                                      F-7




International Licenses

Included in other assets,  are amounts that have been  capitalized  relating to
the Company's  development of  international  licenses.  Such amounts are to be
amortized  using the  straight-line  method over the estimated  benefit period.
These costs will be expensed should future benefits become impaired.

Concentration of Risks

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

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

Trade accounts receivable, potentially subjects the Company to credit risk. The
Company  extends  credit  to its  customers  based  upon an  evaluation  of the
customer's  financial  condition  and credit  history  and  generally  does not
require  collateral.  The  Company has  historically  incurred  minimal  credit
losses. The Company's broad range of customers includes many large wholesalers,
mass merchandisers, and multi-outlet pharmacy chains, five of which account for
a significant  percentage of sales volume,  representing 38% for the year ended
December 31, 1998,  68% for the year ended December 31, 1997, 76% for the three
months ended December 31, 1996, and 62% for the year ended September 30, 1996.

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

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

Long-lived assets

The Company reviews its long-lived  assets for impairment on an exception basis
whenever events or changes in  circumstances  indicate that the carrying amount
of the  assets may not be  recoverable  through  future  cash  flows.  If it is
determined  that an  impairment  loss has occurred  based on the expected  cash
flows, a loss is recognized in the income statement.

Revenue Recognition

Sales are recognized at the time a shipment is received by the customer.

Royalties

The Company  includes  royalties and founders  commissions  incurred as cost of
products sold.




                                      F-8



Advertising

Advertising  costs are  generally  expensed  within  the  period to which  they
relate.  Advertising  cost  incurred  for the year  ended  December  31,  1998,
December  31,  1997,  three  months  ended  December  31,  1996 and year  ended
September  30, 1996,  were  $9,221,225,  $3,050,210,  $124,371,  and  $121,385,
respectively.  Included  in  prepaid  expenses  and other  current  assets  was
$998,370 and $558,740 at December 31, 1998 and 1997, respectively,  relating to
prepaid advertising and promotion expenses

Research and Development

Research and development  costs are charged to operations in the year incurred.
Expenditures  for the year ended  December 31, 1998,  December 31, 1997,  three
months  ended  December  31,  1996,  and year  ended  September  30,  1996 were
$256,492, $79,784, $20,777 and $41,856, respectively.

Reclassifications

Certain  prior  period  amounts  have been  reclassified  to conform  with 1998
presentation.

Income Taxes

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

Recently Issued Accounting Standards

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130,  "Reporting  Comprehensive  Income," requiring more detailed disclosure of
specific  areas of income and  expenses.  This new  standard is  effective  for
periods  beginning  after  December 15, 1997. The effect of its adoption by the
Company is insignificant.

In June 1997, the "FASB" issued SFAS No. 131,  "Disclosure about Segments of an
Enterprise and Related Information,"  requiring public companies report certain
information about operating segments within their financial  statements.  These
additional  disclosures  are required  within  financial  statements for fiscal
years  beginning  after December 15, 1997.  During 1998, the Company  commenced
international activities.  Because minimum thresholds have not been reached, no
additional disclosures are required.

NOTE 2 - CHANGES IN ACCOUNTING ESTIMATES

During 1998, the company made certain changes in accounting  estimates totaling
$1,243,677,  after  tax,  as a result of new  information  becoming  available.
Included in this amount was a provision for  contingencies,  which is no longer
necessary,  and  reductions  in  operating  expenses  that are not  expected to
materialize.

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

Consisted of the following as of:      December 31, 1998      December 31, 1997
                                       -----------------      -----------------

   Land                                     $152,203                    -
   Construction in Progress                  558,077                    -
   Machinery & equipment                     238,129                $155,430
   Computer software                          42,442                  36,264
   Vehicles                                  207,165                  22,089
   Furniture & fixtures                       16,686                  14,991
                                      -----------------     -------------------
                                           1,214,702                 228,774
   Less: Accumulated  depreciation           173,316                  66,585
                                      -----------------     -------------------
   Property, Plant and Equipment, net     $1,041,386                $162,189
                                      =================     ===================

                                      F-9




Depreciation  expense for the year ended December 31, 1998,  December 31, 1997,
three months ended  December 31, 1996 and year ended  September 30, 1996,  were
$118,878, $33,323, $4,926 and $14,327 respectively.

NOTE 4 - PATENT RIGHTS AND RELATED ROYALTY COMMITMENTS

During 1996, the Company  entered into a licensing  agreement  resulting in the
utilization of the zinc gluconate patent. In return for the acquisition of this
license,  the Company  issued a total of 240,000  shares of common stock to the
patent holder and attorneys during 1996 and 1997. The related intangible asset,
approximating  $490,000,  has been valued at the fair value of these  shares at
the date of the grant.  This asset value is being  amortized over the remaining
life of the patent which expires in March 2002.  The Company is required to pay
a 3% royalty of sales collected,  less certain deductions, to the patent holder
throughout the term of this agreement, which also expires in 2002.

The Company also maintains a separate representation and distribution agreement
relating to the development of the zinc gluconate glycine product  formulation.
In return for exclusive distribution rights, the Company must pay the developer
a 3% royalty and a 2%  consulting  fee based on sales  collected,  less certain
deductions,   throughout  the  term  of  this  agreement,   expiring  in  2007.
Additionally,  a founder's  commission  totaling 5%, on sales  collected,  less
certain  deductions is paid to two of the officers whose  agreements  expire in
2005.

All of the aforementioned  individuals  receiving royalties and commissions are
also  stockholders  of the Company.  These expenses for the respective  periods
relating to such agreements  amounted to $3,784,340,  $8,870,828,  $592,003 for
the year ended December 31, 1998,  December 31, 1997 and the three months ended
December  31, 1996,  respectively,  and no amounts were paid for the year ended
September 30, 1996.  Amounts  accrued for these  expenses at December 31, 1998,
December  31,  1997  and  1996  were   $1,592,917,   $3,388,920   and  $485,844
respectively.

NOTE 5- SHORT TERM BORROWINGS

In September 1997, the Company  obtained a $5,000,000  revolving line of credit
facility for general corporate purposes. This line was increased to $10,000,000
in September 1998. This facility is collateralized  by accounts  receivable and
inventory,  renews in one  year,  with  interest  accruing  at the Wall  Street
Journal prime rate,  or 275 basis points above the  Euro-Dollar  Rate,  each to
move with the respective  base rate.  There were no borrowings  under this line
during the years ended December 31, 1998 or 1997.

NOTE 6 - INCOME TAXES

The provision (benefit) for income taxes, consists of the following:


                                                  Three Months
                   Year Ended      Year Ended        Ended        Year Ended
                  December 31,    December 31,    December 31,    September 30,
                      1998            1997            1996            1996
                  ------------    -----------     ------------    ------------

Current:
     Federal       $3,537,579     $12,161,445        $454,580           -
     State            622,296       2,281,733         146,716           -
                   ----------     -----------     -----------     -----------
                    4,159,875      14,443,178         601,296           -
                   ----------     -----------     -----------     -----------

Deferred:
     Federal          163,147        (180,601)       (260,718)      ($27,050)
     State             30,609           8,984        (102,389)          -
                   ----------     -----------     -----------     -----------
                      193,756        (171,617)       (363,107)       (27,050)
                   ----------     -----------     -----------     -----------
        Total      $4,353,631     $14,271,561        $238,189       ($27,050)
                   ==========     ===========     ===========     ===========







                                      F-10




A reconciliation  of the statutory  federal income tax expense (benefit) to the
effective tax is as follows:

                                                   Three Months
                   Year Ended      Year Ended          Ended         Year Ended
                   December 31,    December 31,    December 31,    September 30,
                      1998            1997              1996            1996
                   ------------    -----------     ------------    ------------

Statutory rate       $3,907,105     $12,333,448        $650,931       ($108,198)
State taxes net of
   federal benefit      446,526       1,937,029         125,094            -
Net operating loss 
   carry-forward           -               -           (594,357)        (56,521)
Other                      -              1,084            -             (1,339)
Valuation allowance        -               -             56,521         168,479
Cumulative effect 
   adjustment              -               -               -            (29,471)
                     ----------     -----------        ---------       ---------
     Total           $4,353,631     $14,271,561        $238,189        ($27,050)
                     ==========     ===========        =========      ==========

The tax effects of the primary "temporary  differences" between values recorded
for assets and liabilities for financial reporting purposes and values utilized
for  measurement  in  accordance  with tax laws  giving  rise to the  Company's
deferred tax assets are as follows:

Net operating loss
   carry-forward           -                -          $419,628         $56,521
Contract termination
   costs               $378,554       $234,000             -               -
Other                    18,935        357,245             -               -
                     ----------     -----------        ---------       ---------
     Total             $397,489       $591,245         $419,628         $56,521
                     ==========     ==========         =========       =========

Certain  exercises of options and  warrants,  and  restricted  stock issued for
services that became unrestricted during the period,  resulted in reductions to
taxes    currently     payable    and    a     corresponding     increase    to
additional-paid-in-capital  totaling $3,512,205 for the year ended December 31,
1998,  $11,148,083  for the year ended December 31, 1997 and $1,031,854 for the
three months ended December 31, 1996.

NOTE 7 - EARNINGS PER SHARE

Basic  earnings per share "EPS"  excludes  dilution and is computed by dividing
income  available to common  stockholders  by the weighted - average  number of
common shares  outstanding  for the period.  Diluted EPS reflects the potential
dilution  that could occur if  securities  or other  contracts  to issue common
stock were exercised or converted into common stock or resulted in the issuance
of common  stock that then shared in the  earnings  of the entity.  Diluted EPS
also utilizes the treasury stock method which prescribes a theoretical buy back
of shares from the theoretical proceeds of all options and warrants outstanding
during  the  period.  Since  there is a large  number of options  and  warrants
outstanding,  fluctuations  in the  actual  market  price can have a varying of
results for each period presented.

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




                          Year Ended            Year Ended              Three Months Ended            Year Ended
                     December 31, 1998      December 31, 1997           December 31, 1996         September 30, 1996
                 ------------------------ ------------------------- ------------------------  --------------------------

                  Income   Shares    EPS    Income   Shares   EPS    Income   Shares    EPS     Loss    Shares     EPS
                 -------- -------- ------ --------- ------- ------- -------- -------- ------- -------- -------- --------
                                                                                 
Basic EPS          $6.8     13.3    $0.51    $21.0    12.2   $1.72    $1.7     11.1    $0.15   ($0.7)     8.1    ($0.08)

Dilutives:
Options and                 
Warrants            --       1.6              --       2.4             --       2.5              --       --
                 -------- -------- ------- -------- ------- ------- -------- -------- ------- -------- -------- --------

Diluted EPS        $6.8     14.9    $0.46    $21.0    14.6   $1.43    $1.7     13.6    $0.12   ($0.7)     8.1    ($0.08)
                 ======== ======== ======= ======== ======= ======= ======== ======== ======= ======== ======== ========




                                      F-11





The weighted  average number of shares used in the  computations  for the three
months ended  December 31, 1996 and the year ended  September  30, 1996 reflect
the  retroactive  effect of the  two-for-one  stock split  which was  effective
January 23, 1997. The Diluted EPS computations for the year ended September 30,
1996,  exclude 4,355,000 shares relating to stock options as their effect would
have been anti-dilutive.

NOTE 8 - STOCK-BASED COMPENSATION

Stock options for purchase of the  company's  common stock have been granted to
both  employees  and  non-employees  since  the  date of the  Company's  public
inception.  Options are exercisable  during a period determined by the Company,
but in no event later than five years from the date granted.

On December 2, 1997,  the  Company's  Board of  Directors  approved a new Stock
Option Plan ("Plan")  which would provide for the granting of up to one million
five hundred  thousand  shares to employees.  Under this Plan,  the Company may
grant  options to  employees,  officers or directors of the Company at variable
percentages of the market value of stock at the date of grant.  No option shall
be exercisable  more than ten years after the date of grant or five years where
the individual owns more than ten percent of the total combined voting power of
all classes of stock of the Company. Shareholders approved the Plan in 1998 and
550,500 options were granted under this Plan during the year ended December 31,
1998.

The  Company  applies  Accounting  Principles  Board  Opinion  25 ("APB 25") in
accounting for its grants of options to both employees and non-employees. Under
the  intrinsic  value  method  prescribed  by APB 25, no  compensation  expense
relating  to grants to  employees  has been  recorded by the Company in periods
reported.  Had  compensation  expense  for awards  made  during the years ended
December 31, 1998,  December 31, 1997, three months ended December 31, 1996 and
year ended  September 30, 1996 been  determined  under the fair value method of
SFAS No. 123,  "Accounting  for  Stock-Based  Compensation,"  the Company's net
income and earnings per share would have been reduced to the pro forma  amounts
indicated below:




                                                                Three Months
                                Year Ended       Year Ended        Ended       Year Ended
                                December 31,     December 31,   December 31,  September 30,
                                    1998             1997           1996           1996
                                ------------     -----------    -----------   ------------
                                                                          
 Pro forma net income             $5,339,691     $20,194,062     $1,501,314   ($1,243,769)

 Pro forma earnings per share:
      Basic                         $0.40            $1.66         $0.14        ($0.15)
      Diluted                       $0.36            $1.38         $0.11        ($0.15)


Expense  relating to options granted to  non-employees  has been  appropriately
recorded in the periods  presented based on either fair values agreed upon with
the grantees or fair values as  determined by the  Black-Scholes  pricing model
dependent upon the circumstances relating to the specific grants.

The Company used the Black-Scholes pricing model to determine the fair value of
stock  options  granted  during  the  periods  presented  using  the  following
assumptions:  expected  life of the option of 5 years and  expected  forfeiture
rate of 0%; expected stock price volatility of 29%;  expected dividend yield of
2.5%;  and  risk-free  interest  rate of 5.71% for the year ended  December 31,
1998, 6.56% for the year ended December 31, 1997, a range of 6.03-6.39% for the
three months ended  December  31, 1996 and a range of  5.55-6.49%  for the year
ended  September 30, 1996 based on the expected life of the option.  The impact
of applying SFAS No. 123 in this pro forma  disclosure is not indicative of the
impact on future years' reported net income as SFAS 123 does not apply to stock
options granted prior to the beginning of fiscal year 1996 and additional stock
options awards are  anticipated in future years.  All options were  immediately
vested upon grant.

A summary of the status of the Company's stock options and warrants  granted to
both  employees  and  non-employees  as of December  31, 1998,  1997,  1996 and
September  30, 1996 and  changes  during the  periods  then ended is  presented
below:

                                      F-12






Year Ended December 31, 1998:
                                                 Employees                Non-Employees                   Total
                                       --------------------------     ----------------------       ---------------------

                                                         Weighted                   Weighted                    Weighted
                                                         Average                    Average                     Average
                                           Shares        Exercise     Shares        Exercise       Shares       Exercise
                                           (,000)        Price        (,000)        Price          (,000)        Price
                                       ---------------------------------------------------------------------------------
                                                                                                 

 Options/warrants
 outstanding               
    at  beginning of period                2,030          $2.86        2,388         $3.61         4,418          $3.27
 Additions (deductions):
   Granted                                   530           9.68           20          9.68           550           9.68
   Exercised                                                             618          1.08           618           1.08
   Expired
                                       ---------------------------------------------------------------------------------
 Options/warrants outstanding       
    at end of period                       2,560         $4.27        1,790         $4.55         4,350         $4.39
                                       =================================================================================
 Options/warrants exercisable
    at end of period                       2,560                      1,790                       4,350
                                       =================================================================================

 Weighted average fair value
 of Grants                                 $2.67                      $2.67                       $2.67

 Price range of  options/warrants       
    exercised                                                     $.50 - $1.75                $.50 - $1.75
 Price range of options/warrants        
    outstanding                        $.50-$10.00                $.50-$10.00                 $.50-$10.00
 Price range of options/warrants
    exercisable                        $.50-$10.00                $.50-$10.00                 $.50-$10.00


 Year Ended December 31, 1997:
                                                 Employees                Non-Employees                   Total
                                       --------------------------     ----------------------       ---------------------

                                                         Weighted                   Weighted                    Weighted
                                                         Average                    Average                     Average
                                           Shares        Exercise     Shares        Exercise       Shares       Exercise
                                           (,000)        Price        (,000)        Price          (,000)        Price
                                       ---------------------------------------------------------------------------------

 Options/warrants
 outstanding                         
    at  beginning of period                1,820          $1.39        3,240         $1.36         5,060         $1.37
 Additions (deductions):
   Granted                                   345          10.00          675          9.82         1,020         10.00
   Exercised                                 135           1.33        1,527          1.55         1,662          1.53
   Expired
                                       ---------------------------------------------------------------------------------
 Options/warrants Outstanding
    at end of period                       2,030          $2.86        2,388         $3.61         4,418         $3.27
                                       ---------------------------------------------------------------------------------
 Options/warrants exercisable
    at end of period                       2,030                       2,388                       4,418
                                       =================================================================================

 Weighted average fair value
 of grants                                  $2.24                      $2.24                       $2.24
 Price range of options/warrants
    exercised                          $.50 - $2.50               $.50-$10.00                 $.50-$10.00
 Price range of options/warrants        
    outstanding                        $.50-$10.00                $.50-$10.00                 $.50-$10.00
 Price range of options/warrants
    exercisable                        $.50-$10.00                $.50-$10.00                 $.50-$10.00


                
                                      F-13






 Three months ended December 31, 1996:
                                                 Employees                Non-Employees                   Total
                                       --------------------------     ----------------------       ---------------------

                                                         Weighted                   Weighted                    Weighted
                                                         Average                    Average                     Average
                                           Shares        Exercise     Shares        Exercise       Shares       Exercise
                                           (,000)        Price        (,000)        Price          (,000)        Price
                                       ---------------------------------------------------------------------------------
                                                                                                 

 Options/warrants outstanding at
   beginning of period                     1,570          $1.22        4,355          $.76         5,925          $.88
 Additions (deductions):
   Granted                                   250           2.50        1,250          1.81         1,500          1.68
   Exercised                                                           2,365           .50         2,365           .50
   Expired
                                       ---------------------------------------------------------------------------------
 Options/warrants outstanding at
    end of period                          1,820          $1.39        3,240         $1.36         5,060         $1.37
                                       ---------------------------------------------------------------------------------
 Options/warrants exercisable at
    end of period                          1,820                       3,240                       5,060
                                       =================================================================================



 Weighted average fair value of grants      $.70                        $.52                        $.56
 Price range of options /warrants           
    exercised                                                         $.50-$2.50                  $.50-$2.50
 Price range of options /warrants
    outstanding                            $.50-$2.50                 $.50-$2.50                  $.50-$2.50
 Price range of options/warrants
    exercisable                            $.50-$2.50                 $.50-$2.50                  $.50-$2.50

 Year ended September 30, 1996:
                                                 Employees                Non-Employees                   Total
                                       --------------------------     ----------------------       ---------------------

                                                         Weighted                   Weighted                    Weighted
                                                         Average                    Average                     Average
                                           Shares        Exercise     Shares        Exercise       Shares       Exercise
                                           (,000)        Price        (,000)        Price          (,000)        Price
                                       ---------------------------------------------------------------------------------
 Options/warrants outstanding at
    beginning of period                    1,570           $.08        6,525          $.08         8,095        $.08
 Additions (deductions):
   Granted                                 1,570           1.22        1,730          1.38         3,300        1.05
   Exercised                                                             851           .47           851         .47
   Expired                                 1,570            .08        3,049           .08         4,619         .08
                                       ---------------------------------------------------------------------------------
 Options/warrants outstanding at
    end of period                          1,570          $1.22        4,355          $.76         5,925        $.88
                                       ---------------------------------------------------------------------------------
 Options/warrants exercisable at
    end of period                          1,570                       4,355                       5,925
                                       =================================================================================

 Weighted average fair value of grants      $.35                        $.39                        $.37
 Price range of options/warrants                                                                   
   exercised                                                          $.08 - $.50                 $.08 - $.50
 Price range of options/warrants
   outstanding                             $.50-$1.75                 $.50-$1.75                  $.50-$1.75
 Price range of options/warrants
   exercisable                             $.50-$1.75                 $.50-$1.75                  $.50-$1.75






                                      F-14





The following table summarizes  information about stock options outstanding and
stock options  exercisable  as granted to both employees and  non-employees  at
December 31, 1998, December 31, 1997, December 31, 1996 and September 30, 1996,
respectively:


                                               December 31,       December 31,       December 31,       September 30,
                                                   1998               1997               1996                1996
 --------------------------------------------------------------------------------------------------------------------
 Employees:
                                                                                                     
 Range of exercise prices                    $.50 - $10.00        $.50- $10.00      $.50 - $2.50        $.50 - $1.75
 Share (thousands)                                 2,560              2,030             1,820                1,570
 Weighted average remaining in
    contractual life                                4.0                3.5                4.3                4.5
 Weighted average exercise price                   $4.27              $2.86             $1.39               $1.22

 Non-Employees:

 Range of exercise prices                     $.50 - $10.00      $.50 - $10.00       $.50 - $2.50       $.50 - $1.75
 Share (thousands)                                 1,790              2,388              3,240              4,355
 Weighted average remaining in
    contractual life                                3.0                3.7                4.4                4.2
 Weighted average exercise price                   $4.55              $3.61              $1.36                $.76

   Totals:

 Range of exercise prices                     $.50 - $10.00        $.50 - $10.00      $.50 - $2.50       $.50 - $1.75
 Share (thousands)                                 4,350              4,418              5,060              5,925
 Weighted average remaining in
    contractual life                               3.6                 3.6                4.4                4.3
 Weighted average exercise price                   $4.39              $3.27              $1.37                $.88



Options  outstanding as of December 31, 1998,  December 31, 1997,  December 31,
1996 and  September 30, 1996 expire from December 14, 2000 through May 5, 2002,
depending upon the date of grant.

NOTE 9 - STOCKHOLDERS' EQUITY

On  September 8, 1998,  the  Company's  Board of Directors  declared a dividend
distribution of Common Share Purchase Rights ("the Rights"), thereby creating a
Shareholder  Rights  Plan (the  "Plan").  The  dividend  being  payable  to the
shareholders  of  record  on  September  25,  1998.  Each  Right  entitles  the
shareholder of record to purchase from the Company that number of common shares
having a combined  market value equal to two times the Rights exercise price of
$45. The Rights are not exercisable until the Distribution  Date, which will be
the earlier of a public  announcement  that a person or group of  affiliated or
associated  persons has acquired 15% or more of the outstanding  Common Shares,
or the  announcement  of an  intention  to  make a  tender  or  exchange  offer
resulting in the ownership of 15% or more of the outstanding Common Shares by a
similarly  constituted  party.  The  dividend  has the  effect  of  giving  the
stockholder a 50% discount on the share's  current  market value for exercising
such right. In the event of a cashless  exercise of the Right, and the acquirer
has acquired less than a 50% beneficial ownership of the Company, a stockholder
may  exchange  one  Right  for one  common  share  of the  Company.  The  Final
Expiration of the Plan is September 25, 2008.

On October 16, 1998,  the  Company's  Board of  Directors  authorized a plan to
reacquire  up to  2,000,000  of the  Company's  issued and  outstanding  common
shares.  The  schedule  and  amount of shares  re-purchased  will be based upon
market  conditions.  As of February 18, 1999, an additional 503,835 shares have
been repurchased at a cost of $2,799,098 since December 31, 1998.






                                      F-15





NOTE 10 - SERVICE CONTRACTS AND RELATED TERMINATION COSTS

In October 1996,  the Company  entered into a three-year  agreement  with Sands
Brothers  &  Co.,  Ltd.  for  investment  banking  services  including  private
placements.  Upon commencement of the contract, Sands received 800,000 warrants
with an  exercise  price of $1.75  per share  contingent  upon  services  to be
provided.

During the first quarter of 1997,  the Company  decided not to pursue a private
placement offering. In order to terminate the agreement with Sands, the Company
issued to Sands 350,000 additional  warrants to purchase the Company's stock at
$10 per share. As a result,  the Company  recorded an expense of  approximately
$700,000 in 1997, and $462,000 in 1998.

Additionally,  during  September 1996, the Company  contracted with Diversified
Corporate  Consulting Group,  L.L.C.  ("Diversified")  for public relations and
consulting  services over a period of one year.  Diversified  received  350,000
stock  options  with an exercise  price of $1.75 per share for these  services.
During May 1997, the Company made the decision to terminate this contract. As a
result, the Company recorded an expense of approximately $91,000.

NOTE 11 - SETTLED LITIGATION

During  1992,  the Company  authorized  litigation  against  Nutritional  Foods
Corporation  ("NFC")  in  which  the  Company  sought  to  cancel  the  729,928
restricted  shares issued to NFC for  international  marketing  services,  as a
result  of  certain  false  and  misleading  representations  made by it to the
Company  including,  but not limited to, NFC's  failure to act as the Company's
international sales agent under an Agreement between NFC and the Company.

Pursuant to a final decree issued in the Court of Common Pleas of Bucks County,
Pennsylvania dated January 23, 1997, the Company received an order to return to
treasury  these  outstanding  shares.  In November of 1997,  NFC challenged the
validity of the decree.  In March of 1998, a  subsequent  order of the Court of
Common Pleas of Bucks County modified the decree of January 23, 1997 to provide
for a return to treasury of 604,928 shares to the Company. As payment for legal
services,  118,066  of  these  shares  were  reissued  with a  market  value of
approximately  $1,145,358.  This value,  the cost of reacquiring  these shares,
then became the value of the net treasury  stock ($2.35 per share)  represented
by 486,862 shares returned to treasury.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Certain  operating  leases for office and  warehouse  space  maintained  by the
Company resulted in rent expense for the year ended December 31, 1998, December
31, 1997,  three months ended  December 31, 1996 and year ended  September  30,
1996 of $153,594,  $92,464, $7,410, $28,265,  respectively.  The future minimum
lease  obligations  under these  operating  leases are  $41,112  for 1999,  and
$25,545 for 2000.

The  Company has  committed  to  advertising  costs  approximating  $3,551,000.
Additional  advertising  costs are expected to be incurred for the remainder of
1999.

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









                                      F-16





NOTE 13 - RELATED PARTY TRANSACTIONS

In the ordinary  course of business,  the Company has sales brokerage and other
arrangements  with entities whose major  shareholders are also  shareholders of
The Quigley  Corporation,  or are related to major shareholders of the Company.
Commissions  and other items  expensed  under such  arrangements  for the years
ended  December 31, 1998,  December 31, 1997,  three months ended  December 31,
1996,  and year ended  September 30, 1996 amounted to  approximately  $270,113,
$274,154,  $6,890 and $0 respectively.  Management  believes these transactions
were under terms no less  favorable to the Company than those arranged by other
parties.  Amounts  payable under such  agreements at December 31, 1998 and 1997
were approximately $70,634 and $117,685 respectively.

The  Company  is in the  process of  acquiring  licenses  in certain  countries
through  affiliated  entities.  During  1998,  fees have been paid to a related
entity to obtain such licenses amounting to $40,000.

NOTE 14 - QUARTERLY INFORMATION (UNAUDITED)




                                                                             Quarter Ended
                                                   -----------------------------------------------------------------
                                                      March 31,        June 30,    September 30,    December 31,
                                                   -----------------------------------------------------------------
                                                                                                 
Fiscal 1998
Net Sales                                          $ 7,271,819       $1,317,872     $10,747,978      $17,016,486
Gross Profit                                         5,060,523          919,530       7,572,872       11,923,636
Net Income                                           1,266,933           $1,235       3,014,056        2,527,302

Basic earnings per common share                          $0.10             $0.00           $0.22           $0.19
Diluted earnings per common share                        $0.08             $0.00           $0.20           $0.18


Fiscal 1997
Net Sales                                          $22,182,007       $4,083,736     $14,698,350      $29,208,470
Gross Profit                                        15,293,184        2,858,362      10,375,786       20,217,343
Net Income                                           6,489,815        1,057,365       4,368,025        9,051,657

Basic earnings per common share                          $0.54            $0.09           $0.36            $0.71
Diluted earnings per common share                        $0.44            $0.08           $0.29            $0.60














                                      F-17









                    RESPONSIBILITY FOR FINANCIAL STATEMENTS
                    ---------------------------------------




The management of The Quigley  Corporation is responsible  for the  information
and  representations  contained in this report.  Management  believes  that the
financial  statements have been prepared in conformity with generally  accepted
accounting  principles and that the other  information in this annual report is
consistent  with those  statements.  In  preparing  the  financial  statements,
management is required to include  amounts  based on estimates  and  judgements
which it believes are reasonable under the circumstances.

In fulfilling its  responsibilities for the integrity of the data presented and
to safeguard  the  Company's  assets,  management  employs a system of internal
accounting  controls designed to provide reasonable  assurance,  at appropriate
cost,  that the  Company's  assets  are  protected  and that  transactions  are
appropriately  authorized,  recorded and summarized.  This system of control is
supported  by  the  selection  of  qualified   personnel,   by   organizational
assignments  that provide  appropriate  delegation of authority and division of
responsibilities, and by the dissemination of policies and procedures.

PricewaterhouseCoopers LLP, the Company's independent accountants, performed an
audit for the years ended December 31, 1998 and 1997, and Nachum  Blumenfrucht,
CPA  performed an audit of the three  months  ended  December 31, 1996 and year
ended  September 30, 1996,  in  accordance  with  generally  accepted  auditing
standards.   The  independent   accountants  conducted  a  review  of  internal
accounting  controls to the extent  required  by  generally  accepted  auditing
standards and performed  such tests and  procedures,  as they deem necessary to
arrive at an opinion on the  fairness  of the  financial  statements  presented
herein.






 /s/  Guy J. Quigley                                       February 18, 1999
      --------------                                       -----------------
      Guy J. Quigley, Chairman of the Board,               Date
          President, Chief Executive Officer


 /s/ George J. Longo                                       February 18, 1999
     ---------------                                       -----------------
     George J. Longo, Vice President,                      Date
          Chief Financial Officer 
          (Principal Financial and Accounting Officer)













                                      F-18






                       REPORT OF INDEPENDENT ACCOUNTANTS
                       ---------------------------------



To the Board of Directors and Shareholders of The Quigley Corporation

In our opinion,  the accompanying  balance sheets and the related statements of
income,  shareholders'  equity and cash flows present  fairly,  in all material
respects,  the financial  position of The Quigley  Corporation  at December 31,
1998 and 1997,  and the  results of its  operations  and its cash flows for the
years then ended in conformity with generally accepted  accounting  principles.
These financial statements are the responsibility of the Company's  management;
our responsibility is to express an opinion on these financial statements based
on our audits.  We conducted our audits of these  statements in accordance with
generally  accepted  auditing  standards which require that we 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,  assessing the accounting principles used and significant estimates
made  by   management,   and  evaluating   the  overall   financial   statement
presentation.  We believe that our audits  provide a  reasonable  basis for the
opinion expressed above.




/s/ PricewaterhouseCoopers LLP
    --------------------------
    PricewaterhouseCoopers LLP




    Philadelphia, Pennsylvania
    February 18, 1999



















                                      F-19









               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
               ------------------------------------------------





Stockholders of the The Quigley Corporation


     I have audited the accompanying  balance sheets of the Quigley Corporation
as of December 31, 1996 and  September  30, 1996 and the related  statements of
income,  stockholders'  equity,  and cash  flows  for the  three  months  ended
December  31,  1996 and the year ended  September  30,  1996.  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  an 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
statement  presentation.  I believe that my audit provides 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 December 31, 1996 and September 30, 1996 and the results of its  operations,
cash flows,  and  stockholders'  equity for the three months ended December 31,
1996 and the year ended  September  30,  1996,  in  conformity  with  generally
accepted accounting principles.



/S/ Nachum Blumenfrucht 
    -------------------
    Nachum Blumenfrucht
    Certified Public Accountant




    Brooklyn, New York
    February 11, 1998







                                      F-20







ITEM  9  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
         ----------------------------------------------------------------------
         Financial Disclosure
         --------------------

On January 29, 1997, the Company  engaged the  independent  accounting  firm of
PricewaterhouseCoopers  LLP 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 the 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.


                                    PART III
                                    --------

ITEM 10. Directors and Executive Officers of the Registrant
         --------------------------------------------------

The  information  required under this item is  incorporated by reference to the
Company's Proxy Statement for the 1999 Annual Meeting of Stockholders.

ITEM 11. Executive Compensation
         ----------------------

The  information  required under this item is  incorporated by reference to the
Company's Proxy Statement for the 1999 Annual Meeting of Stockholders.


ITEM 12. Security Ownership of Certain Beneficial Owners and Management
         -------------------------------------------------------------- 

The  information  required under this item is  incorporated by reference to the
Company's Proxy Statement for the 1999 Annual Meeting of Stockholders.

ITEM 13. Certain Relationships and Related Transactions
         ---------------------------------------------- 
The  information  required under this item is  incorporated by reference to the
Company's Proxy Statement for the 1999 Annual Meeting of Stockholders.






















                                      -16-




                                    PART IV
                                    -------


ITEM 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K


(a) Exhibits:

3.1 Articles of  Incorporation  of the Company (as amended),  (incorporated  by
reference to Exhibit 3.1 of Form 10-KSB/A dated April 4, 1997)

3.2  Certificate  to increase  the number of  authorized  shares of the Company
(incorporated by reference to Exhibit 3.2 of Form 10-KSB/A dated April 4, 1997)

3.3 Bylaws of the Company as currently in effect  (incorporated by reference to
Exhibit 3.2 of Form 10-KSB/A dated April 4, 1997)

4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1
of Form 10-KSB/A dated April 4, 1997)

10.1 1997 Stock Option Plan  (incorporated  by reference to Exhibit 10.1 of the
Company's  Regristration  Statement on Form S-8 (File No. 333-61313) filed with
the Commission on August 13, 1998)

10.2 Exclusive  Representation  and  Distribution  Agreement  dated May 4, 1992
between the Company and Godfrey Science and Design, Inc. et al (incorporated by
reference to Exhibit 10.2 of Form 10-KSB/A dated April 4, 1997)

10.3  Employment  Agreement  dated June 1, 1995  between the Company and Guy J.
Quigley (incorporated by reference to Exhibit 10.3 of Form 10-KSB/A dated April
4, 1997)

10.4 Employment Agreement dated June 1, 1995 between the Company and Charles A.
Phillips  (incorporated  by reference to Exhibit  10.4 of Form  10-KSB/A  dated
April 4, 1997)

10.5 Exclusive Master Broker Wholesale  Distributor and Non-Exclusive  National
Chain  Broker  Agreement  dated July 22,  1994  between the Company and Russell
Mitchell  (incorporated  by reference to Exhibit  10.7 of Form  10-KSB/A  dated
April 4, 1997)

10.6 Licensing  Agreement dated August 24, 1996 between the Company,  George A.
Eby III and George Eby Research  (incorporated  by reference to Exhibit 10.6 of
Form 10-KSB/A dated April 4, 1997)

10.8 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,  incorporated by reference to Exhibit 10.5 of Form SB-2
dated September 29, 1997)

10.9  Consulting  Agreement  dated May 4, 1992  between the Company and Godfrey
Science and Design,  Inc. et al.  (incorporated by reference to Exhibit 10.5 of
Form 10-KSB/A dated April 4, 1997)

10.10  Employment  Agreement  dated  November  5, 1996  between the Company and
George J. Longo  (incorporated  by  reference  to Exhibit  10.10 of Form 10-KSB
dated March 30, 1998)

10.11  Employment  Agreement dated January 1, 1997 between the Company and Eric
H. Kaytes  (incorporated  by  reference  to Exhibit  10.11 of Form 10-KSB dated
March 30, 1998)


                                      -17-



10.12 Rights  Agreement  dated as of September 15, 1998 between the Company and
American Stock Transfer and Trust Company (incorporated be reference to Exhibit
1.  to the  Company's  Regristration  Statement  on Form  8-A  filed  with  the
Commission on September 18, 1998

23.1  Consent of  PricewaterhouseCoopers  LLP,  Auditors,  dated March 15, 1999
(filed herewith)

23.2 Consent of Nachum Blumenfrucht, CPA dated March 17, 1999 (filed herewith)

27.1 Financial Data Schedule.

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


(a) Reports on Form 8-K

No reports were filed on Form 8-K in the quarter ended December 31, 1998.

































                                      -18-




Signatures


Pursuant to the requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, the company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                                      THE QUIGLEY CORPORATION



 /s/  Guy J. Quigley                                         March 19, 1999  
      --------------                                         --------------
      Guy J. Quigley, Chairman of the Board,                 Date
      President, Chief Executive Officer and Director




Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  this
report has been signed by the following persons on behalf of the company in the
capacities and on the dates indicated:


       Signature                    Title                              Date 



/s/ Guy J. Quigley       Chairman of the Board, President,        March 19, 1999
    --------------       Chief Executive Officer and Director                
    Guy J. Quigley                    


/s/ George J. Longo      Vice President, Chief Financial          March 19, 1999
    ---------------      Officer and Director (Principal
    George J. Longo      Financial and Accounting Officer)


/s/ Charles A. Phillips  Executive Vice President,                March 19, 1999
    -------------------  Chief Operating
    Charles A. Phillips  Officer and Director


/s/ Eric H. Kaytes       Vice President,                          March 19, 1999
    --------------       Chief Information Officer,    
    Eric H. Kaytes       Secretary, Treasurer and Director


/s/ Gurney P. Sloan      Director                                 March 19, 1999
    ---------------
    Gurney P. Sloan


/s/ Jacqueline F. Lewis  Director                                 March 19, 1999
    -------------------
    Jacqueline F. Lewis








                                      -19-