UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q
(Mark One)


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

     For the quarterly period ended           March 31, 2006
                                              ---------------

                                                   OR

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

     For the transition period from ______________ to ______________


                         Commission file number 0-21617

                             THE QUIGLEY CORPORATION
            -------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


                 Nevada                              23-2577138
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of           (I.R.S. Employer Identification No.)
Incorporation or Organization)

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

  Kells Building, 621 Shady Retreat Road, Doylestown, Pennsylvania     18901
 -------------------------------------------------------------------------------
          (Address of Principal Executive Offices)                   (Zip Code)


                                 (215) 345-0919
                      -----------------------------------
                         (Registrant's Telephone Number,
                              Including Area Code)


                                       N/A
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):
Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

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

As of April 25, 2006, there were 12,480,478  shares of common stock,  $.0005 par
value per share, outstanding.




                                TABLE OF CONTENTS



                                                                        Page No.
       PART I - FINANCIAL INFORMATION


Item 1.   Condensed Consolidated Financial Statements                     3-14

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations                  15-21

Item 3.   Quantitative and Qualitative Disclosures About
          Market Risk                                                       22

Item 4.   Controls and Procedures                                           22




       PART II - OTHER INFORMATION


Item 1.   Legal Proceedings                                              22-23

Item 6.   Exhibits                                                          23

Signatures                                                                  24





                                      -2-



                                              PART I. FINANCIAL INFORMATION

ITEM 1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                                 THE QUIGLEY CORPORATION
                                          CONDENSED CONSOLIDATED BALANCE SHEETS


                                   ASSETS                                      March 31, 2006          December 31, 2005
                                                                                 (Unaudited)
                                                                               ----------------        ----------------
CURRENT ASSETS:

    Cash and cash equivalents                                                      $18,190,419             $16,885,170
    Accounts receivable (net of doubtful accounts of $354,972 and $354,972)          2,685,493               7,880,140
    Inventory                                                                        4,227,815               3,900,064
    Prepaid expenses and other current assets                                        1,233,409               1,582,851
                                                                               ----------------        ----------------
       TOTAL CURRENT ASSETS                                                         26,337,136              30,248,225
                                                                               ----------------        ----------------

PROPERTY, PLANT AND EQUIPMENT - NET                                                  5,422,760               5,585,793
                                                                               ----------------        ----------------


OTHER ASSETS:
    Goodwill                                                                            30,763                  30,763
    Other assets                                                                       120,448                 110,858
                                                                               ----------------        ----------------
       TOTAL OTHER ASSETS                                                              151,211                 141,621
                                                                               ----------------        ----------------

TOTAL ASSETS                                                                       $31,911,107             $35,975,639
                                                                               ================        ================

             LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

    Current portion of debt                                                         $1,321,428                $428,571
    Accounts payable                                                                   686,556                 771,819
    Accrued royalties and commissions                                                2,906,329               3,301,598
    Accrued advertising                                                                761,334               2,860,414
    Other current liabilities                                                        2,227,106               2,203,561
                                                                               ----------------        ----------------
       TOTAL CURRENT LIABILITIES                                                     7,902,753               9,565,963
                                                                               ----------------        ----------------

LONG-TERM DEBT                                                                               -               1,035,715

MINORITY INTEREST                                                                       57,311                  54,314

COMMITMENTS AND CONTINGENCIES  (NOTE 7)

STOCKHOLDERS' EQUITY:

    Common stock, $.0005 par value; authorized 50,000,000;
     Issued: 16,349,531 and 16,360,524  shares                                           8,175                   8,180
    Additional paid-in-capital                                                      35,490,499              35,404,803
    Retained earnings                                                               13,640,528              15,094,823
    Less: Treasury stock, 4,646,053 and 4,646,053 shares, at cost
                                                                                   (25,188,159)            (25,188,159)
                                                                               ----------------        ----------------
       TOTAL STOCKHOLDERS' EQUITY                                                   23,951,043              25,319,647
                                                                               ----------------        ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $31,911,107             $35,975,639
                                                                               ================        ================

                          See accompanying notes to condensed consolidated financial statements


                                                           -3-





                                                THE QUIGLEY CORPORATION
                                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                      (UNAUDITED)


                                                                                          Three Months Ended
                                                                                 March 31, 2006       March 31, 2005
                                                                                ----------------     ----------------

NET SALES                                                                           $10,266,038          $11,753,270
                                                                                ----------------     ----------------

COST OF SALES                                                                         4,953,454            6,050,298
                                                                                ----------------     ----------------

GROSS PROFIT                                                                          5,312,584            5,702,972
                                                                                ----------------     ----------------

OPERATING EXPENSES:
      Sales and marketing                                                             2,434,925            1,834,831
      Administration                                                                  3,705,761            2,994,769
      Research and development                                                          784,523            1,068,303
                                                                                ----------------     ----------------
TOTAL OPERATING EXPENSES                                                              6,925,209            5,897,903
                                                                                ----------------     ----------------

LOSS FROM OPERATIONS                                                                 (1,612,625)            (194,931)
                                                                                ------------------    ---------------

OTHER INCOME (EXPENSE)
      Interest and other income                                                         179,974               69,489
      Interest expense                                                                  (21,644)             (29,053)
                                                                                ----------------     ----------------
TOTAL OTHER INCOME (EXPENSE)                                                            158,330               40,436
                                                                                ----------------     ----------------

LOSS  FROM OPERATIONS
  BEFORE TAXES                                                                       (1,454,295)            (154,495)

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


NET LOSS                                                                            ($1,454,295)           ($154,495)
                                                                                ================     ================


EARNINGS (LOSS) PER COMMON SHARE:
     Basic                                                                               ($0.12)              ($0.01)
                                                                                ================     ================

     Diluted                                                                             ($0.12)              ($0.01)
                                                                                ================     ================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
      Basic                                                                          11,714,140           11,654,796
                                                                                ================     ================

      Diluted                                                                        11,714,140           11,654,796
                                                                                ================     ================



                         See accompanying notes to condensed consolidated financial statements

                                                         -4-



                                                THE QUIGLEY CORPORATION
                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (UNAUDITED)


                                                                                          Three Months Ended
                                                                                 March 31, 2006       March 31, 2005
                                                                                ----------------     ----------------



NET CASH PROVIDED BY OPERATING ACTIVITIES                                            $1,503,382           $2,214,737
                                                                                ----------------     ----------------

NET CASH FLOWS USED IN INVESTING ACTIVITIES                                            (140,966)             (33,734)
                                                                                ----------------     ----------------

NET CASH FLOWS USED IN FINANCING ACTIVITIES                                             (57,167)             (66,868)
                                                                                ----------------     ----------------

NET INCREASE IN CASH                                                                   1,305,249           2,114,135

CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD                                          16,885,170          14,366,441
                                                                                ----------------     ----------------

CASH & CASH EQUIVALENTS, END OF PERIOD                                              $18,190,419          $16,480,576
                                                                                ================     ================





                         See accompanying notes to condensed consolidated financial statements


                                                         -5-




                             THE QUIGLEY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND BUSINESS

The Quigley  Corporation (the "Company"),  organized under the laws of the state
of Nevada,  is engaged  in the  development,  manufacturing,  and  marketing  of
homeopathic and health products that are being offered to the general public and
the research and development of potential  prescription products. The Company is
organized  into four  business  segments:  Cold  Remedy,  Health  and  Wellness,
Contract  Manufacturing  and  Ethical  Pharmaceutical.  For the  fiscal  periods
presented,  the majority of the Company's  revenues have come from the Company's
Cold Remedy and Health and Wellness business segments.

The Company's  principal  cold-remedy  product,  Cold-Eeze(R),  a zinc gluconate
glycine formulation  (ZIGG(TM)) is an over-the-counter  consumer product used to
reduce the duration  and  severity of the common  cold.  The lozenge form of the
product is manufactured by Quigley  Manufacturing  Inc. ("QMI"),  a wholly owned
subsidiary of the Company, which was formed following the acquisition of certain
assets and  assumption  of  certain  liabilities  of JoEl,  Inc.,  the  contract
manufacturer of the lozenge product prior to October 1, 2004.

Darius International Inc. ("Darius"),  a wholly owned subsidiary of the Company,
is a direct selling  organization  constituting  the Health and Wellness segment
that was formed in January  2000 to introduce  new  products to the  marketplace
through a network of independent distributor representatives.

In January 2001, the Company formed an Ethical  Pharmaceutical  segment which is
now Quigley Pharma Inc.  ("Pharma"),  a wholly-owned  subsidiary of the Company.
The result of that segment's  research and  development  activity may enable the
Company to diversify into the prescription drug market.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The  Condensed  Consolidated  Financial  Statements  include the accounts of the
Company and its wholly owned  subsidiaries.  All inter-company  transactions and
balances  have  been  eliminated.   Effective  March  31,  2004,  the  financial
statements include consolidated variable interest entities ("VIEs") of which the
Company is the primary beneficiary (see discussion in Note 3, "Variable Interest
Entity").

These financial  statements  have been prepared by management  without audit and
should be read in conjunction  with the  consolidated  financial  statements and
notes thereto  included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2005. In the opinion of management, all adjustments necessary
for a fair  presentation of the consolidated  financial  position,  consolidated
results of operations and consolidated  cash flows,  for the periods  indicated,
have been made.  The results of operations  for the three months ended March 31,
2006 and 2005 are not  necessarily  indicative of the results to be expected for
the entire year or any other period.

USE OF ESTIMATES

The Company's  consolidated financial statements are prepared in accordance with
generally accepted accounting  principles (GAAP) in the United Sates of America.
In connection with the preparation of the consolidated financial statements,  it
is required to make  assumptions  and estimates  about future events,  and apply
judgments  that affect the  reported  amounts of assets,  liabilities,  revenue,
expenses and related disclosures. These assumptions, estimates and judgments are
based on historical experience, current trends and other factors that management
believes to be relevant at the time the  consolidated  financial  statements are
prepared. Management reviews the accounting policies, assumptions, estimates and
judgments on a quarterly basis to ensure the financial  statements are presented
fairly and in accordance  with GAAP.  However,  because  future events and their
effects cannot be determined  with  certainty,  actual results could differ from
these assumptions and estimates, and such differences could be material.

The Company is organized  into four  different  but related  business  segments,
Cold-Remedy,   Health  and   Wellness,   Contract   Manufacturing   and  Ethical
Pharmaceutical.  When providing for the appropriate  sales returns,  allowances,
cash discounts and cooperative advertising costs, each segment applies a uniform
and  consistent  method for making  certain  assumptions  for  estimating  these
provisions that are applicable to each specific  segment.  Traditionally,  these
provisions are not material to reported  revenues in the Health and Wellness and
Contract  Manufacturing segments and the Ethical Pharmaceutical segment does not
have any revenues.

                                      -6-


Provisions to these reserves  within the Cold Remedy segment  include the use of
such estimates, which are applied or matched to the current sales for the period
presented.  These  estimates  are based on  specific  customer  tracking  and an
overall historical  experience to obtain an applicable effective rate. Estimates
for sales returns are tracked at the specific  customer  level and are tested on
an annual  historical  basis,  and  reviewed  quarterly,  as is the estimate for
cooperative  advertising costs. Cash discounts follow the terms of sales and are
taken by  virtually  all  customers.  Additionally,  the  monitoring  of current
occurrences,   developments  by  customer,   market  conditions  and  any  other
occurrences that could affect the expected  provisions for any future returns or
allowances,  cash discounts and  cooperative  advertising  costs relative to net
sales for the period presented are also performed.

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 and monies invested in money market funds. The
carrying  amount  approximates  the  fair  market  value  due to the  short-term
maturity of these investments.

INVENTORY VALUATION

Inventory is valued at the lower of cost,  determined  on a first-in,  first-out
basis (FIFO), or market.  Inventory items are analyzed to determine cost and the
market  value  and  appropriate   valuation   reserves  are   established.   The
consolidated  financial  statements  include a  specific  reserve  for excess or
obsolete  inventory  of $356,220  and $369,508 as of March 31, 2006 and December
31, 2005, respectively.  Inventories included raw material, work in progress and
packaging  amounts of approximately  $1,060,000 and $1,340,000 at March 31, 2006
and December 31, 2005,  respectively,  with the  remainder  comprising  finished
goods.

PROPERTY, PLANT AND EQUIPMENT

Property,  plant  and  equipment  are  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 in  accordance  with the  following  ranges of  estimated  asset lives:
building and improvements - twenty to thirty nine years; machinery and equipment
- - five to seven  years;  computer  software - three  years;  and  furniture  and
fixtures - seven years.

GOODWILL AND INTANGIBLE ASSETS

Goodwill is not amortized but reviewed for impairment on an annual basis or when
events and circumstances indicate the carrying amount may not be recoverable.

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 several 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  subject 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.  It is not  anticipated  that any one  customer  will  exceed 10% of
consolidated sales in 2006. 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 26% and
22% of sales volume for the three month  periods  ended March 31, 2006 and 2005,
respectively. Customers comprising the five largest accounts receivable balances
represented 49% and 47% of total trade receivable balances at March 31, 2006 and
December 31, 2005, respectively.  During the three month periods ended March 31,
2006 and 2005,  approximately  11% and 8%,  respectively,  of the  Company's net
sales were related to international markets.

The Company's revenues are currently  generated from the sale of the Cold-Remedy
products  which  approximated  50% and 49% of total  revenues in the three month
periods  ended March 31, 2006 and 2005,  respectively.  The Health and  Wellness


                                      -7-


segment approximated 45% and 43%, respectively, for the three-month periods. The
Contract  Manufacturing  segment approximated 5% and 8%,  respectively,  for the
respective three-month periods.

Raw materials used in the production of the products are available from numerous
sources.  Raw  materials  for the  Cold-Eeze(R)  lozenge  product  is  currently
procured  from a single  vendor in order to secure  purchasing  economies.  In a
situation where this one vendor is not able to supply QMI with the  ingredients,
other sources have been  identified.  Should these product sources  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.

Darius' products for resale can be sourced from several suppliers.  In the event
that such sources were no longer in a position to supply  Darius with  products,
other vendors have been identified as reliable alternatives with minimal adverse
loss of business.

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 compared
to the related asset value, an impairment loss is recognized in the Statement of
Operations.

REVENUE RECOGNITION

Sales are recognized at the time ownership is transferred to the customer, which
for the Cold Remedy segment is the time the shipment is received by the customer
and for both the Health and  Wellness  segment  and the  Contract  Manufacturing
segment,  when the  product is shipped to the  customer.  Revenue is reduced for
trade promotions,  estimated sales returns,  cash discounts and other allowances
in the same  period  as the  related  sales  are  recorded.  The  Company  makes
estimates of potential  future product returns and other  allowances  related to
current period revenue. The Company analyzes historical returns, current trends,
and changes in customer and consumer  demand when evaluating the adequacy of the
sales  returns  and other  allowances.  The  consolidated  financial  statements
include  reserves of $525,240  for future  sales  returns and $422,280 for other
allowances  as of March 31, 2006 and $634,580 and $533,250 at December 31, 2005,
respectively.  The 2006 and 2005 reserve  balances  include a remaining  returns
provision at March 31, 2006 and December 31, 2005 of approximately  $174,000 and
$184,000,  respectively,  in the event of future product  returns  following the
discontinuation of the Cold-Eeze(R) Cold Remedy Nasal Spray product in September
2004. The reserves also include an estimate of the  uncollectability of accounts
receivable  resulting  in a reserve  of  $354,972  at both  March  31,  2006 and
December 31, 2005.

COST OF SALES

For the Cold  Remedy  Segment,  in  accordance  with  contract  terms,  payments
calculated  based  upon  net  sales  collected  to  the  patent  holder  of  the
Cold-Eeze(R) formulation and payments to the corporation founders and developers
of the final saleable  Cold-Eeze(R)  product amounting to $242,514 and $535,102,
respectively,  for the three  month  periods  ended  March 31, 2006 and 2005 are
presented in the  financial  statements as cost of sales (see also Note 4). Such
payments to the founders  terminated in May 2005 in accordance with  contractual
agreements.

In the Health and Wellness  Segment,  agreements  with  Independent  Distributor
Representatives  ("IR's")  require  payments to them to be calculated based upon
net  commissionable  sales of other  IR's in their  down-line  and not on any of
their  individual  purchases  of  products  including  not  taking  title to the
products  that are sold by other  IR's.  In  accordance  with  EITF  01-9,  such
payments to the IR's do not qualify as a reduction of the selling price as these
payments are not offered as an  allowance  or as a  percentage  rebate of direct
purchases  made,  and the  IR's  are not  offered  any  cooperative  advertising
incentives  of any type.  Such  payments,  among other  factors,  are related to
expand the cycle of additional IR's and for maintaining the distribution channel
for this segment's products.

Accordingly,  such distribution payments amounting to $2,052,714 and $2,293,193,
respectively,  for the three  month  periods  ended  March 31, 2006 and 2005 are
presented in the financial statements as cost of sales.

OPERATING EXPENSES

Agreements  relating  to the Cold Remedy  segment  with a major  national  sales
brokerage firm are for this firm to sell the manufactured  Cold-Eeze(R)  product
to our customers.  Such related costs are presented in the financial  statements
as selling expenses.

                                      -8-


In the Health and Wellness Segment,  the Company includes payments in accordance
with agreements with the former owner of its acquired proprietary  products,  to
be  calculated  based upon net sales  collected.  These  agreements  provide for
exclusivity,   consulting,   marketing   presentations,    confidentiality   and
non-compete  arrangements  with such payments being classified as administration
expense.

SHIPPING AND HANDLING

Product  sales  relating to Health and  Wellness  products  carry an  additional
identifiable shipping and handling charge to the purchaser,  which is classified
as revenue. For the Cold Remedy and Contract Manufacturing  segments, such costs
are included as part of the invoiced  price.  In all cases costs related to this
revenue are recorded in cost of sales.

STOCK COMPENSATION

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

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

As of January 1, 2006, the Company  adopted SFAS 123R,  "SHARED BASED  PAYMENT".
The  adoption  of SFAS 123R did not have an impact  on the  Company's  financial
position or results of operations in the 2006 period reported.

No stock  options were granted in the three month  periods  ended March 31, 2006
and 2005.

ADVERTISING

Advertising  costs are  expensed  within the period in which they are  utilized.
Advertising  expense is  comprised  of media  advertising,  presented as part of
sales and marketing expense; co-operative advertising, which is accounted for as
a deduction  from sales;  and bonus  product,  which is accounted for as part of
cost of sales.  Advertising  costs  incurred for the three month  periods  ended
March 31, 2006 and 2005 were $2,035,284 and $1,694,832,  respectively.  Included
in prepaid  expenses and other current  assets was zero and $96,050 at March 31,
2006 and  December  31,  2005,  respectively,  relating  to prepaid  advertising
expenses.

RESEARCH AND DEVELOPMENT

Research and development costs are charged to operations in the period incurred.
Expenditures  for the three  month  periods  ended  March 31, 2006 and 2005 were
$784,523 and  $1,068,303,  respectively.  Principally,  research and development
costs are  related  to  Pharma's  study  activities  and costs  associated  with
Cold-Eeze(R) products.

INCOME TAXES

The  Company  utilizes  the 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. Until sufficient taxable income to offset the temporary
timing   differences   attributable   to  operations   and  the  tax  deductions
attributable to option,  warrant and stock  activities are assured,  a valuation
allowance equaling the total deferred tax asset is being provided.  See Note 9 -
Income Taxes for further discussion.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash  and  cash  equivalents,  accounts  receivable  and  accounts  payable  are
reflected  in the  consolidated  financial  statements  at carrying  value which
approximates fair value because of the short-term maturity of these instruments.
The fair value of long-term  debt was  approximately  equivalent to its carrying
value due to the fact that the interest rates currently available to the Company
for debt with similar terms are  approximately  equal to the interest  rates for
its existing debt.  Determination of the fair value of related party payables is
not practicable due to their related party nature.

                                      -9-



NOTE 3 - VARIABLE INTEREST ENTITY

In December 2003, the Financial Accounting Standards Board (FASB or the "Board")
issued FASB  Interpretation  No. 46 (revised  December 2003),  CONSOLIDATION  OF
VARIABLE INTEREST ENTITIES (FIN 46R), to address certain  implementation issues.
FIN 46R varies  significantly from FASB Interpretation No. 46,  CONSOLIDATION OF
VARIABLE INTERESTENTITIES("VIE") (FIN 46), which it supersedes. FIN 46R requires
the application of either FIN 46 or FIN 46R by "Public  Entities" to all Special
Purpose  Entities  ("SPEs") at the end of the first interim or annual  reporting
period  ending after  December 15, 2003.  FIN 46R is  applicable to all non-SPEs
created prior to February 1, 2003 by Public Entities that are not small business
issuers at the end of the first interim or annual  reporting period ending after
March 15, 2004.  Effective March 31, 2004, the Company adopted FIN 46R for VIE's
formed prior to February 1, 2003. The Company has determined that Scandasystems,
a related  party,  qualifies as a variable  interest  entity and the Company has
consolidated  Scandasystems beginning with the quarter ended March 31, 2004. Due
to the  fact  that the  Company  has no  long-term  contractual  commitments  or
guarantees,  the  maximum  exposure  to loss is  insignificant.  As a result  of
consolidating  the VIE of which the  Company  is the  primary  beneficiary,  the
Company  recognized a minority interest of approximately  $57,311 and $54,314 on
the  Consolidated  Balance  Sheets  at March 31,  2006 and  December  31,  2005,
respectively,  which  represents  the  difference  between  the  assets  and the
liabilities recorded upon the consolidation of the VIE.

The liabilities recognized as a result of consolidating the VIE do not represent
additional claims on the Company's general assets. Rather, they represent claims
against  the  specific  assets  of  the  consolidated  VIE.  Conversely,  assets
recognized as a result of  consolidating  this VIE do not  represent  additional
assets  that could be used to  satisfy  claims  against  the  Company's  general
assets. Reflected on the Company's Consolidated Balance Sheets at March 31, 2006
and  December  31,  2005,  respectively,  are $72,372 and $61,844 of VIE assets,
representing  all of the  assets of the VIE.  The VIE  assists  the  Company  in
acquiring  licenses and with  research  and  development  activities  in certain
countries.

NOTE 4 - PATENT RIGHTS AND RELATED ROYALTY COMMITMENTS

The Company has maintained 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,  which is due to expire in
2007.  However,  the Company and the developer are in litigation  and as such no
potential  offset  from such  litigation  for these fees have been  recorded.  A
founder's  commission totaling 5%, on sales collected,  less certain deductions,
has been paid to two of the officers, who are also directors and stockholders of
the Company, and whose agreements expired in 2005, (see Note 11).

The expenses for the respective periods relating to such agreements  amounted to
$242,514  and  $535,102,  for the three month  periods  ended March 31, 2006 and
2005,  respectively.  Amounts  accrued for these  expenses at March 31, 2006 and
December 31, 2005 were $2,319,925 and $2,077,411, respectively.

Amounts  included  in accrued  royalties  and sales  commissions  in the balance
sheets at March 31, 2006 and  December  31, 2005,  apportioned  between  related
party and other balances, are as follows:


                                                            March 31,    December 31,
                                                             2006             2005
                                                      --------------------------------

    Related party balances (see Note 11)                       -                -
    Other non-related party balances                       2,906,329        3,301,598
                                                      --------------------------------
    Total accrued royalties and sales commissions         $2,906,329       $3,301,598
                                                      --------------------------------

NOTE 5 - DEBT

In connection with the Company's  acquisition of certain assets of JoEl, Inc. in
October 2004,  the Company  entered into a term loan in the amount of $3 million
payable to PNC Bank, N.A. which was collateralized by mortgages on real property
located in Lebanon and  Elizabethtown,  Pennsylvania.  The  Company  could elect
interest  rate options at either the Prime Rate or LIBOR plus 200 basis  points.
The loan was payable in eighty-four equal monthly principal  payments of $35,714
that commenced on November 1, 2004. In April 2006, the Company prepaid the total
outstanding balance of approximately $1.3 million. The Company was in compliance
with all related loan covenants for the duration of the loan.

                                      -10-


NOTE 6 - OTHER CURRENT LIABILITIES

Included in other  current  liabilities  are $864,600  and  $923,411  related to
accrued compensation at March 31, 2006 and December 31, 2005, respectively.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Certain  operating  leases for  office and  warehouse  space  maintained  by the
Company  resulted in rent  expense for the three month  periods  ended March 31,
2006 and 2005 of $64,588, and $55,316, respectively. The Company has approximate
future obligations over the next five years as follows:

                                Property
              Research and      and Other
  Year         Development       Leases          Advertising           Other         Total
 ---------- ------------------ -------------- ----------------- ---------------- -----------------
 2006            $2,731,979       $130,841           $15,000          $62,000        $2,939,820
 2007                36,174         90,913            -                -                127,087
 2008              -                                  -                -                -
 2009              -                                  -                -                -
 2010              -                    -             -                -                -
 2011              -                    -             -                -                -
 ---------- ------------------ -------------- ----------------- ---------------- -----------------
 Total           $2,768,153       $221,754           $15,000          $62,000        $3,066,907
 ---------- ------------------ -------------- ----------------- ---------------- -----------------

Additional  advertising  and research and  development  costs are expected to be
incurred during the remainder of 2006.

The Company has an  agreement  with the former  owners of the Utah based  direct
marketing and selling company, whereby they receive payments, currently totaling
5% of net  sales  collected,  for  product  exclusivity,  consulting,  marketing
presentations,  confidentiality  and non-compete  arrangements.  Amounts paid or
payable under such agreement during the three month periods ended March 31, 2006
and 2005, were $190,639 and $199,339,  respectively.  Amounts payable under such
agreement  at March 31, 2006 and  December  31, 2005 were  $120,032 and $58,597,
respectively.

The Company has several licensing and other contractual agreements, see Note 4.

          DARIUS INTERNATIONAL INC., AND INNERLIGHT INC., F/K/A DARIUS
             MARKETING INC. VS. ROBERT O. YOUNG AND SHELLEY R. YOUNG
                 (FEDERAL DISTRICT COURT - EASTERN DISTRICT, PA)

In this action, the Company seeks injunctive relief and monetary damages against
two individuals for violation of a  non-competition  agreement  between a wholly
owned subsidiary of the Company,  Innerlight  Inc., and the defendants,  each of
whom are also under agreement to serve as consulting to the Company.


In late November,  2005, the Company  learned that the defendants had launched a
line of nutritional  supplement products that competed with Innerlight products.
Defendants promoted their line of products by a website,  among other means. The
Company moved for a temporary  restraining  order against the defendants,  which
the  court  denied;  however,  the  Court  ordered  expedited  discovery  and  a
preliminary  injunction  hearing was held before the Court on January 24 and 25,
2006. The parties filed briefs on the  significance  of the hearing  evidence in
relation  to the  parties'  respective  claims and argued the matter  before the
Federal  District Court for the Eastern District of Pennsylvania on February 17,
2006.

On April 21, 2006 a preliminary  injunction was issued by the Court and enjoined
the defendants with the respect to Darius' and Innerlight's  claims of breach of
contract and unfair competition.  It gave further relief to Darius International
and  Innerlight  Inc.  with the  respect  to claims of  trademark  infringement.
Defendants were enjoined from endorsing, developing,  marketing, and selling any
and all  nutritional  dietary  supplement  products  that  compete  with  Darius
International's  and Innerlight  Inc.'s products.  Defendants were also enjoined
from using certain marks used in the  Innerlight  Inc.  business in  conjunction
with any product.  The defendants  were ordered to remove from their website all
reference to competing  nutritional or dietary  supplement  products,  including
hyperlinks to such  products;  and were also enjoined from including a reference
to  dietary  supplement  products  owned by  defendants  on any  other  website.
Defendants have filed an answer and counterclaims and the Company believes these
pleadings are without merit and is vigorously  defending those counterclaims and
is prosecuting its action on the complaint.


                                      -11-



On May 5, 2006  defendants  filed a motion to  dissolve  and/or  reconsider  the
motion for a  preliminary  injunction.  The Company has answered this motion and
believes that its allegations are without merit.  Based upon the information the
Company  has at this time,  it  believes  the  counterclaim  actions are without
merit. However, at this time no prediction as to the outcome can be made.

            ROBERT O. AND SHELLEY YOUNG VS. DARIUS INTERNATIONAL INC.
               AND INNERLIGHT INC., (UTAH THIRD PARTY COMPLAINTS)

On September 14, 2005, a third-party  complaint was filed by Shelley R. Young in
Fourth  District  Court in Provo,  Utah against  Innerlight  Inc. and its parent
company,  Darius.  Robert O. Young has filed a motion to  intervene to join as a
third-party  plaintiff with Shelley R. Young.  On November 3, 2005,  Shelley and
Robert Young filed a parallel suit also in Fourth District Court in Provo, Utah.
The allegations in both complaints  include,  but are not limited to, an alleged
breach of contract by  Innerlight  Inc.  for  alleged  failures to make  certain
payments  under  an  asset  purchase  agreement  entered  into  by all  parties.
Additional  allegations  stem from this  alleged  breach of  contract  including
unjust  enrichment,  trademark  infringement and alleged  violation of rights of
publicity.  The  plaintiffs  are seeking both  monetary and  injunctive  relief.
Innerlight Inc. has objected to the complaint in the third-party action based on
procedural deficiencies and other grounds.

The Fourth  District  Court of Utah has stayed both the  September  14, 2005 and
November 3, 2005 actions pending the  adjudication of the Federal District Court
action  referenced  above and has ordered that all disputes be determined in the
Federal District Court action in the Eastern District of Pennsylvania.

In connection with the Utah actions the Company has sued the Youngs in Equity in
the Court of Common  Pleas of  Philadelphia  County,  PA,  and in United  States
District Court for the Eastern District of Pennsylvania. The Company has alleged
breach of  contract,  including  but not  limited  to breach of  non-competition
provisions  in a  consulting  agreement  between  the  parties  and  is  seeking
unspecified damages and injunctive relief.

                    INNERLIGHT INC. VS. THE MATRIX GROUP, LLC

On March 13, 2006  Innerlight  Inc. filed a declaratory  judgment  action in the
Fourth Judicial District,  Utah County, State of Utah,  requesting a declaration
that there is no valid contract  between the parties.  The Matrix Group, LLC has
alleged there is a contract  between the parties  obligating  Innerlight Inc. to
purchase  $750,000 of products for the 12-month  period  commencing  October 18,
2004 and ending October 17, 2005,  $1,500,000 for the period commencing  October
18, 2005 and ending October 17, 2006, and for each 12-month  period  thereafter,
through and including October 17, 2013, at least $4,000,000 of products from The
Matrix Group, LLC. The document on which Matrix relies was drafted by Matrix and
states that the acceptance of the appointment by distributor  (Innerlight  Inc.)
is conditioned upon  distributor's  written  acceptance of the Company's product
price list.  No written  acceptance  of the product  price list was ever made by
Innerlight Inc.

The Matrix Group,  LLC has filed a Utah Rule of Civil Procedure  12(b)(3) motion
asking that the complaint be dismissed for lack of jurisdiction. Innerlight Inc.
has answered the motion on May 8, 2006.

The  Company  believes  that the  defendant's  claims are  without  merit and is
vigorously  defending  those  claims  and  is  prosecuting  its  action  on  its
complaint.  Based upon the information the Company has at this time, it believes
that the  defendant's  actions  are  without  merit.  However,  at this  time no
prediction as to the outcome can be made.

NOTE 8 - TRANSACTIONS AFFECTING STOCKHOLDERS' EQUITY

On  September 8, 1998,  the  Company's  Board of  Directors  declared a dividend
distribution  of Common  Stock  Purchase  Rights  (individually,  a "Right"  and
collectively,  the "Rights"),  thereby  creating a Stockholder  Rights Plan (the
"Plan"). The dividend was payable to the stockholders of record on September 25,
1998. Each Right entitles the stockholder 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  by a
similarly  constituted party to make a tender or exchange offer resulting in the
ownership of 15% or more of the outstanding  common shares. 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 50% beneficial  ownership of the
Company,  a  stockholder  may  exchange  one Right for one  common  share of the
Company. The final expiration date of the Plan is September 25, 2008.

                                      -12-


Since the inception of the stock buy-back program in January 1998, the Board has
subsequently  increased  the  authorization  on  five  occasions,  for  a  total
authorized  buy-back of 5,000,000  shares or  approximately  38% of the previous
shares  outstanding.  Such shares are  reflected  as treasury  stock and will be
available for general corporate purposes.  From the initiation of the plan until
March 31, 2006,  4,159,191 shares have been repurchased at a cost of $24,042,801
or an average cost of $5.78 per share. No shares were repurchased during 2005 or
2006 to date.

NOTE 9 - INCOME TAXES

Certain  exercises  of options and  warrants,  and  restricted  stock issued for
services that became  unrestricted  resulted in  reductions  to taxes  currently
payable and a  corresponding  increase to  additional-paid-in-capital  for prior
years.  In  addition,  certain tax  benefits  for option and  warrant  exercises
totaling    $4,190,063    are    deferred    and    will    be    credited    to
additional-paid-in-capital  when the NOL's  attributable  to these exercises are
utilized.  As a result,  these NOL's will not be available to offset  income tax
expense.  The net operating  loss  carry-forwards  currently  approximate  $11.4
million for federal  purposes,  of which $3.5 million will expire in 2019,  $4.0
million in 2020 and $3.9 million in 2022. Additionally,  there are net operating
loss  carry-forwards of $16.4 million for state purposes,  of which $9.7 million
will expire in 2009, $2.1 million in 2010, $2.8 million in 2012 and $1.8 million
in 2013.  Until  sufficient  taxable  income  to  offset  the  temporary  timing
differences  attributable  to operations and the tax deductions  attributable to
option, warrant and stock activities are assured, a valuation allowance equaling
the total deferred tax asset is being provided.

NOTE 10 - EARNINGS PER SHARE

Basic loss 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  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 variety  of
results for each period presented.

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


                           Three Months Ended            Three Months Ended
                             March 31, 2005                March 31, 2006
                        --------------------------------------------------------
                         Loss    Shares     EPS         Loss   Shares    EPS
                        --------------------------------------------------------

Basic EPS               ($1.5)    11.7    ($0.12)      ($0.2)   11.7   ($0.01)
Dilutives:
Options/Warrants           -        -                    -       -

                        --------------------------------------------------------
Diluted EPS             ($1.5)    11.7    ($0.12)      ($0.2)   11.7   ($0.01)
                        ========================================================

Options and warrants  outstanding  at March 31, 2006 and 2005 were 4,593,750 and
4,287,250,  respectively.  They were not included in the  computation of diluted
earnings for the periods because the effect would be anti-dilutive.

NOTE 11 - RELATED PARTY TRANSACTIONS

An  agreement  between the Company and the  founders  Mr. Guy J. Quigley and Mr.
Charles A. Phillips,  both officers and stockholders of the Company, was entered
into on June 1, 1995. The founders,  in  consideration of the acquisition of the
Cold-Eeze(R)  cold therapy  product,  shared a total  commission of five percent
(5%), on sales collected,  less certain  deductions until this agreement expired
on May 31,  2005.  For the three  month  periods  ended March 31, 2006 and 2005,
amounts of zero and  $267,551,  respectively,  were paid or  payable  under such
founders' commission agreements.  Amounts payable under such agreements at March
31, 2006 and December 31, 2005 were zero.

The Company is in the process of acquiring licenses in certain countries through
related party entities whose  stockholders  include Mr. Gary Quigley, a relative
of the Company's Chief Executive Officer.  Fees amounting to $53,250 and $86,298
have been paid to a related  entity  during the three month  periods ended March
31,  2006 and 2005,  respectively,  to assist  with the  regulatory  aspects  of
obtaining such licenses.

                                      -13-



NOTE 12 - SEGMENT INFORMATION

The basis for presenting  segment  results  generally is consistent with overall
Company reporting.  The Company reports information about its operating segments
in  accordance  with  Financial  Accounting  Standard  Board  Statement No. 131,
"DISCLOSURE  ABOUT  SEGMENTS OF AN ENTERPRISE  AND RELATED  INFORMATION,"  which
establishes  standards for  reporting  information  about a company's  operating
segments. All consolidating items are included in Corporate & Other.

The Company divides its operations into four reportable segments as follows: The
Quigley  Corporation  (Cold-Remedy),  whose  main  product  is  Cold-Eeze(R),  a
proprietary zinc gluconate  glycine lozenge for the common cold;  Darius (Health
and  Wellness),  whose  business is the sale and direct  marketing of a range of
health and wellness products;  Quigley Manufacturing  (Contract  Manufacturing),
which is the production  facility for the Cold-Eeze(R)  lozenge product and also
performs contract manufacturing services for third party customers,  and Pharma,
(Ethical  Pharmaceutical),   currently  involved  in  research  and  development
activity to develop patent applications for potential pharmaceutical products.

Financial information relating to 2006 and 2005 operations, by business segment,
follows:

- ---------------------------------------------------------------------------------------------------------------------------
FOR THE THREE  MONTHS ENDED           Cold       Health and       Contract        Ethical       Corporate &
MARCH 31, 2006                       Remedy       Wellness     Manufacturing    Pharmaceutical     Other           Total
- ---------------------------------------------------------------------------------------------------------------------------
Revenues
  Customers-domestic              $5,177,340     $3,416,889       $523,892           -               -         $9,118,121
  Customers-international             -           1,147,917            -             -               -          1,147,917
  Inter-segment                       -            -             1,593,128           -          (1,593,128)       -
Segment operating profit
   (loss)                          ($305,907)     ($218,372)     ($169,795)       ($876,961)      ($41,590)   ($1,612,625)



- ---------------------------------------------------------------------------------------------------------------------------
FOR THE THREE  MONTHS ENDED           Cold       Health and       Contract        Ethical       Corporate &
MARCH 31, 2005                       Remedy       Wellness     Manufacturing    Pharmaceutical     Other           Total
- ---------------------------------------------------------------------------------------------------------------------------
Revenues
  Customers-domestic              $5,746,641     $4,113,318     $1,010,624           -               -        $10,870,583
  Customers-international             -             882,687            -             -               -            882,687
  Inter-segment                       -              -           1,442,297           -          (1,442,297)       -
Segment operating profit
   (loss)                           $356,243       $393,345       $160,358      ($1,043,482)      ($61,395)     ($194,931)



                                      -14-



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

FORWARD-LOOKING STATEMENTS

In addition to  historical  information,  this Report  contains  forward-looking
statements.  These  forward-looking  statements are subject to certain risks and
uncertainties  that could cause actual results to differ  materially  from those
reflected in these forward-looking  statements.  Factors that might cause such a
difference include,  but are not limited to, management of growth,  competition,
pricing  pressures  on the  Company's  products,  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.

CERTAIN RISK FACTORS

The Quigley  Corporation makes no representation that the United States Food and
Drug  Administration  ("FDA")  or any  other  regulatory  agency  will  grant an
Investigational  New  Drug  ("IND")  or take  any  other  action  to  allow  its
formulations  to be studied or/and for any IND to be marketed.  Furthermore,  no
claim is made that potential  medicine discussed herein is safe,  effective,  or
approved  by  the  FDA.   Additionally,   data  that  demonstrates  activity  or
effectiveness  in animals or in vitro tests do not necessarily mean such formula
test  compound,  referenced  herein,  will be  effective  in humans.  Safety and
effectiveness  in humans will have to be  demonstrated  by means of adequate and
well controlled clinical studies before the clinical significance of the formula
test  compound  is known.  Readers  should  carefully  review  the risk  factors
described  in other  sections  of the filing as well as in other  documents  the
Company  files from time to time with the  Securities  and  Exchange  Commission
("SEC").

OVERVIEW

The  Company,   headquartered   in  Doylestown,   Pennsylvania,   is  a  leading
manufacturer, marketer and distributor of a diversified range of homeopathic and
health products which comprise the Cold Remedy, Health and Wellness and Contract
Manufacturing  segments.  The  Company  is also  involved  in the  research  and
development  of  potential  prescription  products  that  comprise  the  Ethical
Pharmaceutical segment.

The  Company's  business  is the  manufacture  and  distribution  of cold remedy
products to the consumer through the over-the-counter  marketplace together with
the sale of proprietary  health and wellness products through its direct selling
subsidiary.  One of the  Company's  key  products in its Cold Remedy  segment is
Cold-Eeze(R),  a zinc  gluconate  glycine  product  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.  Effective  October  1,  2004,  the  Company  acquired
substantially all of the assets of JoEl, Inc., the previous  manufacturer of the
Cold-Eeze(R)  lozenge product.  This  manufacturing  entity,  now called Quigley
Manufacturing  Inc.  ("QMI"),  a wholly owned  subsidiary  of the Company,  will
continue to produce lozenge product along with performing such operational tasks
as warehousing and shipping the Company's  Cold-Eeze(R)  products.  In addition,
QMI  produces  a  variety  of hard and  organic  candy  for sale to third  party
customers  in addition  to  performing  contract  manufacturing  activities  for
non-related entities.

The Cold-Remedy  segment  reported a reduction in net sales in the first quarter
2006 of $569,301 as  compared  to the same period in 2005,  possibly  due to the
release in January 2006, by a medical association of controversial effectiveness
data relative to  over-the-counter  (OTC) products for the  cough/cold  category
even though  Cold-Eeze(R) is proven to be effective in two double-blind  placebo
controlled  studies in reducing  the  severity  and duration of the common cold.
Sales may also have been  negatively  affected due to extensive  media  exposure
gained by vitamin  based  products  despite the lack of both safety and clinical
efficacy data.

The Contract  Manufacturing  segment reported sales in the first quarter of 2006
of $523,892 a reduction of $486,732 as compared to sales in the 2005 comparative
period  of  $1,010,624.  The main  reason  for the  reduction  was due to an OTC
company  that   utilized   manufacturing   abilities  of  this  segment   having
discontinued their product in the marketplace.

Darius International Inc. ("Darius"),  the Health and Wellness segment, a wholly
owned  subsidiary  of the Company,  was formed in January 2000 to introduce  new
products  to the  marketplace  through  a  network  of  independent  distributor
representatives.  Darius  is  a  direct  selling  organization  specializing  in
proprietary health and wellness  products.  The formation of Darius has provided
diversification  to the Company in both the method of product  distribution  and
the broader range of products available to the marketplace, serving as a balance
to the seasonal  revenue cycles of the  Cold-Eeze(R)  branded  products.  In the
first three months of 2006, this segment's net sales were $4,564,806 compared to


                                      -15-


$4,996,005  for  the  2005  three  month  period.   However,  sales  related  to
international  locations  improved by approximately  $265,230 or 30% in the 2006
period over the 2005 comparable period offsetting a decrease in domestic sales.

In January 2001, the Company formed an Ethical Pharmaceutical  segment,  Quigley
Pharma  Inc.  ("Pharma"),  that is under the  direction  of its  Executive  Vice
President and Chairman of its Medical Advisory Committee.  Pharma was formed for
the  purpose of  developing  naturally  derived  prescription  drugs.  Pharma is
currently  undergoing  research  and  development  activity in  compliance  with
regulatory  requirements.  The Company is in the initial stages of what may be a
lengthy process to develop these patent  applications into commercial  products.
The  Company   continues  to  invest   significantly  in  ongoing  research  and
development  activities of this segment. Such investment amounted to $876,961 in
the first quarter 2006 compared to $1,043,482 in the 2005 comparative period.

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 and the requirements
associated  with the  development of Pharma's  potential  prescription  drugs in
order to  continue  to  compete  on a  national  and  international  level.  The
continued  expansion of Darius is dependent  on the Company  retaining  existing
independent   distributor   representatives  and  recruiting  additional  active
representatives  both  internationally  and within the United States,  continued
conformity with government regulations, a reliable information technology system
capable of  supporting  continued  growth and  continued  reliable  sources  for
product and materials to satisfy consumer demand.

COLD-REMEDY PRODUCTS

In May 1992, the Company  entered into an exclusive  agreement for the worldwide
representation,  manufacturing  and  marketing of  Cold-Eeze(R)  products in the
United States. Cold-Eeze(R), a zinc gluconate glycine formulation (ZIGG(TM)), is
an over-the-counter consumer product used to reduce the duration and severity of
the common cold and is available in lozenge, sugar-free tablet and gum form. The
Company has substantiated the effectiveness of Cold-Eeze(R) through a variety of
studies.  A  randomized  double-blind  placebo-controlled  study,  conducted  at
Dartmouth College of 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 formulation delivers  approximately 93% of the active
Zinc to the  mucosal  surfaces  and (c) the  patient  has the same  sequence  of
symptoms  as in the  absence  of  treatment  but goes  through  the phases at an
accelerated rate and with reduced symptom severity.

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

In April 2002, the Company announced the statistical  results of a retrospective
clinical  adolescent  study at the Heritage School facility in Provo,  Utah that
suggests that  Cold-Eeze(R)  is also an effective means of preventing the common
cold and statistically (a) lessens the number of colds an individual suffers per
year,  reducing  the  median  from  1.5 to  zero  and  (b)  reduces  the  use of
antibiotics  for respiratory  illnesses from 39.3% to 3.0% when  Cold-Eeze(R) is
administered as a first line treatment approach to the common cold.

In April 2002,  the Company was  assigned a Patent  Application  which was filed
with the Patent Office of the United States  Commerce  Department for the use of
Cold-Eeze(R) as a prophylactic for cold prevention.  The new patent  application
follows the results of the adolescent study at the Heritage School facility.

In May  2003,  the  Company  announced  the  findings  of a  prospective  study,
conducted at the Heritage School facility in Provo, Utah, in which 178 children,
ages 12 to 18 years, were given Cold-Eeze(R)  lozenges both  symptomatically and
prophylactically  from  October 5, 2001 to May 30,  2002.  The study found a 54%
reduction in the most  frequently  observed cold  duration.  Those  subjects not
receiving  treatment most  frequently  experienced  symptom  duration of 11 days
compared with 5 days when Cold-Eeze(R)  lozenges were administered,  a reduction
of 6 days.


                                      -16-



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

HEALTH AND WELLNESS

Darius,  through  Innerlight  Inc.,  its wholly  owned  subsidiary,  is a direct
selling company  specializing in the development and distribution of proprietary
health and wellness products,  including herbal vitamins and dietary supplements
for the human condition, primarily within the United States and since the second
quarter of 2003, internationally.

The continued  success of this segment is dependent,  among other things, on the
Company's ability:

     o    To  maintain  existing  independent  distributor  representatives  and
          recruit additional successful independent distributor representatives.
          Additionally,  the loss of key  high-level  distributors  or  business
          contributors  as a result of  business  disagreements,  litigation  or
          otherwise could negatively impact future growth and revenues;

     o    To continue to develop and make  available new and desirable  products
          at an acceptable cost;

     o    To maintain  safe and reliable  multiple-location  sources for product
          and materials;

     o    To  maintain a reliable  information  technology  system and  internet
          capability.  The Company has expended significant resources on systems
          enhancements  in the past and will  continue to do so to ensure prompt
          customer response times,  business  continuity and reliable  reporting
          capabilities.  Any  interruption  to computer  systems for an extended
          period of time could be harmful to the business;

     o    To execute conformity with various federal, state and local regulatory
          agencies both within the United States and abroad.  With the growth of
          international   business,   difficulties   with   foreign   regulatory
          requirements  could  have a  significant  negative  impact  on  future
          growth.  Any inquiries  from  government  authorities  relating to the
          Company's  business and compliance with laws and regulations  could be
          harmful to the Company;

     o    To compete with larger more mature organizations  operating within the
          same market and to remain  competitive  in terms of product  relevance
          and business opportunity;

     o    To successfully  implement  methods for progressing the direct selling
          philosophy internationally; and

     o    To plan strategically for general economic conditions.

Any or all of the above risks could result in significant reductions in revenues
and profitability of the Health and Wellness segment.

CONTRACT MANUFACTURING

From October 1, 2004, this manufacturing  entity, now called QMI, a wholly owned
subsidiary of the Company,  has continued to produce  lozenge product along with
performing  such  operational  tasks as  warehousing  and shipping the Company's
Cold-Eeze(R)  products. In addition to that function,  QMI produces a variety of
hard and  organic  candy  for sale to  third  party  customers  in  addition  to
performing contract manufacturing activities for non-related entities. QMI is an
FDA-approved facility.

ETHICAL PHARMACEUTICAL

Pharma's current  activity is the research and development of  naturally-derived
prescription  drugs with the goal of improving the quality of life and health of
those  in need.  Research  and  development  will  focus on the  identification,
isolation and direct use of active medicinal substances.  One aspect of Pharma's
research will focus on the potential  synergistic benefits of combining isolated
active constituents and whole plant components.  The Company will search for new
natural  sources of medicinal  substances  from plants and fungi from around the
world while also  investigating  the use of traditional and historic  medicinals
and therapeutics.


                                      -17-



The  pre-clinical  development,   clinical  trials,  product  manufacturing  and
marketing  of Pharma's  potential  new products are subject to federal and state
regulation in the United States and other  countries.  Obtaining FDA  regulatory
approval for these pharmaceutical products can require substantial resources and
take several years.  The length of this process depends on the type,  complexity
and novelty of the product and the nature of the disease or other indications to
be  treated.  If the  Company  cannot  obtain  regulatory  approval of these new
products in a timely  manner or if the patents are not granted or if the patents
are subsequently challenged,  these possible events could have a material effect
on the business  and  financial  condition  of the Company.  The strength of the
Company's patent position may be important to its long-term  success.  There can
be no assurance  that these  patents and patent  applications  will  effectively
protect the Company's products from duplication by others.

The areas of focus are:

     o    A Patent (No.  6,555,573 B2) entitled  "Method and Composition for the
          Topical Treatment of Diabetic  Neuropathy." The patent extends through
          March 27, 2021.

     o    A Patent (No. 6,592,896 B2) entitled "Medicinal Composition and Method
          of Using It" (for Treatment of Sialorrhea  and other  Disorders) for a
          product to relieve  sialorrhea  (drooling) in patients  suffering from
          Amyotrophic  Lateral Sclerosis (ALS),  otherwise known as Lou Gehrig's
          Disease. The patent extends through August 6, 2021.

     o    A Patent (No.  6,596,313  B2)  entitled  "Nutritional  Supplement  and
          Method of Using It" for a product to relieve sialorrhea  (drooling) in
          patients suffering from Amyotrophic Lateral Sclerosis (ALS), otherwise
          known as Lou Gehrig's  Disease.  The patent extends  through April 15,
          2022.

     o    A Patent  (No.  6,753,325  B2)  entitled  "Composition  and Method for
          Prevention,  Reduction  and  Treatment  of  Radiation  Dermatitis,"  a
          composition for preventing, reducing or treating radiation dermatitis.
          The patent extends through November 5, 2021.

     o    A Patent (No.  6,827,945  B2)  entitled  "Nutritional  Supplement  and
          Method of Using It" for a method for  treating at least one symptom of
          arthritis. The patent extends through April 22, 2023.

     o    In September  2002,  the Company  filed a foreign  patent  application
          entitled "Method and Composition for the Topical Treatment of Diabetic
          Neuropathy" in Europe and other foreign markets.

QR-333 - In April 2002, the Company  initiated a Phase II Proof of Concept Study
in France for treatment of diabetic neuropathy,  which was concluded in 2003. In
April 2003, the Company  announced that an independently  monitored  analysis of
the  Phase II  Proof  of  Concept  Study  concluded  that  subjects  using  this
formulation had 67% of their symptoms  improve,  suggesting  efficacy.  In March
2004,  the Company  announced that it had completed its first meeting at the FDA
prior to submitting the Company's IND  application for the relief of symptoms of
diabetic symmetrical peripheral  neuropathy.  The FDA's pre-IND meeting programs
are  designed  to  provide  sponsors  with  advance  guidance  and input on drug
development   programs.   In  September  2005,  the  Company  announced  that  a
preliminary  report  of its  topical  compound  for the  treatment  of  diabetic
neuropathy   was   recently   featured  in  the  JOURNAL  OF  DIABETES  AND  ITS
COMPLICATION.  Authored  by Dr. C.  LeFante  and Dr.  P.  Valensi,  the  article
appeared  in the June 1, 2005  issue,  and  included  findings  that  showed the
compound reduced the severity of numbness,  and irritation from baseline values.
In October 2005, the Company  announced the results of  pre-clinical  toxicology
studies that showed no irritation,  photo toxicity,  contact hypersensitivity or
photo allergy when applied  topically to hairless  guinea pigs and another study
that showed no difference in the dermal response of the compound or placebo when
applied  to  Gottingen  Minipigs.  (Both  animal  models are  suggested  for the
evaluation of topical drugs,  by the FDA). In March 2006, the Company  announced
the filing of an IND application  with the FDA for its topical  compound for the
treatment of Diabetic Peripheral  Neuropathy.  This filing allows the Company to
begin human clinical trials following a 30-day review period.  If the FDA has no
further comments,  studies with human subjects will commence as soon as possible
pending the availability of study drug. This application  includes a compilation
of all of the supporting development data and regulatory  documentation required
to file an IND  application  with the FDA. In April 2006,  upon FDA approval for
its IND, the Company  announced that it will be commencing  human studies on its
formulation.  Patient  screening and enrollment  will begin  immediately for the
first of two human trials designed to determine the safety  pharmacokinetics  of
the  Company's  IND. A Phase 2(b) dose  ranging  study will  commence  after the
completion of the pharmacokinetic study.

The Company also  announced that in  anticipation  of receiving this IND, it has
previously held its  investigators  meeting to organize its  multi-center  phase
2(b) trials.  This will allow the Company to begin these trials as soon as study
drug is available.

                                      -18-


QR-336 - In April 2004,  the  Company  announced  the results of a  preliminary,
pre-clinical  animal study which measured the effect of its  proprietary  patent
applied  for  formulation  against  ionizing  (nuclear)  radiation.  This  study
determined that parenteral (injection)  administration of the study compound was
protective  against the effects of a lethal,  whole body ionizing radiation dose
in a mouse model. This compound is being  investigated to potentially reduce the
effects of radiation exposure on humans.

QR-337 - In September  2003,  the Company  announced  its  intention to file for
permission  to study its patent  pending  potential  treatment for psoriasis and
other skin  disorders.  Continued  testing will  therefore  have to be conducted
under an IND application following positive preliminary results.

QR-435 - In May 2004, the Company announced that an intranasal spray application
of the anti-viral test compound demonstrated efficacy by significantly  reducing
the severity of illness in ferrets that had been  infected  with the Influenza A
virus. In pre-clinical studies, the antiviral formulation demonstrates antiviral
activity  against  Ocular and Genital  Herpes,  indicating  a new  research  and
development  path for the  versatile  compound.  The Company is pleased with the
progress  and  indicated  that  continued  research  is  required to confirm the
compound's safety and efficacy profiles.

QR-437 - In January 2004,  the Company  reported  that its  compound,  which was
demonstrating  antiviral  activity,  had shown virucidal and virustatic activity
against the strain 3B of the Human  Immunodeficiency  Virus Type 1 (HIV-1) in an
in-vitro study.  Additionally,  the Company decided that the derivative compound
of the  anti-viral  formulation  previously  found to be effective  for treating
Sialorrhea  would  probably  postpone  further  development  on  the  Sialorrhea
indication  and  concentrate  on further  qualification  and  development of the
anti-viral capabilities of the compound in humans.

QR-439 - In December  2003,  the Company  announced  positive  test results of a
preliminary  independent in vitro study  indicating  that a test compound of the
Company previously tested on the Influenza virus showed  "significant  virucidal
activity  against a strain  of the  Severe  Acute  Respiratory  Syndrome  (SARS)
virus."

In January 2004, the Company announced that it would conduct two further studies
evaluating the compound which had shown activity against Influenza and SARS. The
first  study was  intended to repeat the  previously  announced  results,  which
demonstrated the compound to be 100 percent effective in preventing non-infected
ferrets in close proximity to an infected ferret from becoming infected with the
Influenza  A  virus.  The  second  study  was a dose  ranging  study on the test
compound.   Upon  dosage  determination  and  confirmation  results  from  these
forthcoming  animal model studies,  a human proof of concept study using a virus
challenge  with  Influenza A virus in a  quarantine  unit would be a viable next
step.

QR-440 (A) - The Company received an additional  Investigational New Animal Drug
(INAD)  number from the Center for  Veterinary  Medicine of the FDA. In previous
studies, QR-440 has been shown to reduce inflammation and also suggests possible
disease-modifying potential.

QR-441(A) - In November  2005,  the Company was assigned  nine INADs for a broad
anti-viral agent by the Center for Veterinary  Medicine of the FDA. Eight of the
INADs are for  investigating  the  compound use against  avain flu  H5N1virus in
chickens,  turkeys,  ducks,  pigs,  horses,  dogs,  cats and non-food  birds. In
January  2006,  a ninth INAD was  assigned  for  investigating  its compound for
treating  arthritis in dogs.  In March 2006,  the Company  announced  that it is
planning a series of  controlled  experiments  designed  to test its all natural
broad spectrum anti-viral compound in poultry stocks. The Company also announced
that Dr. Timothy S. Cummings,  MS, DVM, ACPV Clinical  Poultry  Professor at the
College of Veterinary  Medicine at  Mississippi  State  University and Thomas G.
Voss, Ph.D.  Assistant  Professor Tulane  University  School of Medicine will be
assisting the Company in the development of the INAD bird challenge studies.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  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.

The Company is organized into four different but related business segments, Cold
Remedy, Health and Wellness,  Contract Manufacturing and Ethical Pharmaceutical.
When providing for the appropriate sales returns, allowances, cash discounts and
cooperative  advertising  costs,  each segment  applies a uniform and consistent
method for making certain  assumptions for estimating  these provisions that are
applicable to that specific  segment.  Traditionally,  these  provisions are not
material to net income in the Health and  Wellness  and  Contract  Manufacturing
segments. The Ethical Pharmaceutical segment does not have any revenues.


                                      -19-



The product in the Cold Remedy segment, Cold-Eeze(R), has been clinically proven
in two  double-blind  studies to reduce the severity and duration of common cold
symptoms.  Accordingly,  factors  considered in estimating the appropriate sales
returns and allowances for this product  include it being: a unique product with
limited competitors;  competitively priced;  promoted;  unaffected for remaining
shelf life as there is no expiration date; and monitored for inventory levels at
major customers and third-party consumption data, such as Information Resources,
Inc. ("IRI").

At March 31, 2006 and December  31, 2005,  the Company  included  reductions  to
accounts  receivable  for sales returns and allowances of $525,000 and $635,000,
respectively,  and  cash  discounts  of  $67,000  and  $178,000,   respectively.
Additionally,  current  liabilities  at March 31,  2006 and  December  31,  2005
include  $643,000 and  $1,067,000,  respectively,  for  cooperative  advertising
costs.

Management  believes there are no material  charges to net income in the current
period related to sales from a prior period.

REVENUE

Provisions to reserves to reduce  revenues for cold remedy  products that do not
have an  expiration  date,  include the use of  estimates,  which are applied or
matched to the current sales for the period presented. These estimates are based
on specific customer tracking and an overall historical  experience to obtain an
effective  applicable  rate,  which is tested on an  annual  basis and  reviewed
quarterly to ascertain the most  applicable  effective rate.  Additionally,  the
monitoring of current occurrences,  developments by customer,  market conditions
and any other occurrences that could affect the expected  provisions relative to
net sales for the period presented are also performed.

A one percent deviation for these consolidated  reserve provisions for the three
month  periods  ended  March  31,  2006,  and 2005  would  affect  net  sales by
approximately $117,000 and $133,000,  respectively.  A one percent deviation for
cooperative  advertising  reserve  provisions  for the three month periods ended
March 31,  2006 and 2005 would  affect net sales by  approximately  $62,000  and
$69,000, respectively.

The reported  results  include a remaining  returns  provision of  approximately
$174,000 and $184,000 at March 31, 2006 and December 31, 2005, respectively,  in
the  event of  future  product  returns  following  the  discontinuation  of the
Cold-Eeze(R) Cold Remedy Nasal Spray product in September 2004.

INCOME TAXES

The Company has  recorded a valuation  allowance  against its net  deferred  tax
assets.  Management  believes  that  this  allowance  is  required  due  to  the
uncertainty  of  realizing  these tax  benefits in the future.  The  uncertainty
arises because the Company may incur substantial  research and development costs
in its Ethical Pharmaceutical segment.

THREE  MONTHS  ENDED MARCH 31, 2006  COMPARED  WITH THREE MONTHS ENDED MARCH 31,
2005

Net sales for the three month  period  ended  March 31,  2006 were  $10,266,038,
reflecting a decrease of $1,487,232  over the net sales of  $11,753,270  for the
comparable  three month  period ended March 31,  2005.  The Cold Remedy  segment
reported net sales in the 2006 period of $5,177,340,  a decrease of $569,301, or
9.9%,  over the comparable  2005 period of  $5,746,641.  The Health and Wellness
segment  reported  net sales in the 2006  period of  $4,564,806,  a decrease  of
$431,199,  or 8.6%,  over the net sales of $4,996,005  for the  comparable  2005
period. The Contract Manufacturing segment reported net sales of $523,892 in the
2006 period compared to $1,010,624 in the comparable 2005 period,  a decrease of
$486,732 or 48.2%.

The  Cold-Remedy  segment  sales  decrease  may  possibly  be due in part to the
release  in  January  2006,   by  a  medical   association,   of   controversial
effectiveness  data  relative  to   over-the-counter   (OTC)  products  for  the
cough/cold  category even though  Cold-Eeze(R)  is proven to be effective in two
double-blind placebo controlled studies in reducing the severity and duration of
the common cold.  Sales may also have been negatively  affected due to extensive
media exposure gained by vitamin based products  despite the lack of both safety
and clinical efficacy data.

The Health and Wellness  segment's  net sales  decreased in the 2006 period as a
result of reduced activity of domestic independent distributor  representatives,
however,  sales related to international  markets increased by 30% from $882,687
in the 2005 period to $1,147,917 in the comparable 2006 period.

Cost of sales as a percentage  of net sales for the three months ended March 31,
2006 was 48.3% compared to 51.4% for the comparable  2005 period,  a decrease of


                                      -20-


3.1%.  This  decrease  was  primarily  due  to  the  expiration  of a  founders'
commission  in May 2005,  related to the  Cold-Remedy  segment,  amounting to an
approximately  4.2% decrease in the cost of goods of this  segment.  The cost of
goods for the Health and Wellness segment remained relatively  unchanged between
periods. The cost of goods of the Contract  Manufacturing segment was negatively
impacted in the 2006 period due to an OTC company  that  utilized  manufacturing
abilities of this segment having discontinued their product in the marketplace.

Sales and marketing expense for the three month period ended March 31, 2006 were
$2,434,925,  an increase of $600,094 over the  comparable  2005 period amount of
$1,834,831.  The increase was primarily due to increased advertising and product
promotion expense of $519,331, primarily related to the Cold-Remedy segment.

General and administration costs for the three month period ended March 31, 2006
was  $3,705,761  compared  to  $2,994,769  for the 2005  period,  an increase of
$710,992  between  the  periods.  The  increase  in 2006  was  primarily  due to
increased legal and insurance costs of $351,324 and $198,527, respectively.

Research and development costs during the three months ended March 31, 2006 were
$784,523 compared to $1,068,303 during the 2005 comparable period,  reflecting a
decrease in 2006 of $283,780,  primarily as a result of decreased Pharma segment
costs and reduced study activity related to the Cold-Eeze(R) products.

LIQUIDITY AND CAPITAL RESOURCES

The Company had working capital of $18,434,383 and $20,682,262 at March 31, 2006
and December 31, 2005,  respectively.  Changes in working  capital  overall have
been  primarily  due  to  the  following  items:  cash  balances   increased  by
$1,305,249;  account receivable balances decreased by $5,194,647 due to seasonal
factors and effective collection practices;  inventory increased by $327,751 due
to a slow down in sales activity with some offset due to increased international
sales activity;  accrued advertising decreased by $2,099,080 due to the seasonal
nature of the  Cold-Remedy  segment,  accrued  royalties  and sales  commissions
decreased  by  $395,269  largely  due to the  effects of certain  litigation  in
progress  and the payment in 2006 of sales  related  incentives  provided for at
December 31, 2005. Total debt decreased by $142,858 as a result of the repayment
of  recurring  monthly  principal  amounts in the  period.  The total  remaining
balance on this loan,  approximating  $1,300,000 was repaid in April 2006.  This
item related to the loan  liability  following  the  acquisition  of JoEl,  Inc.
effective  October 1, 2004 while the assets  acquired are presented in property,
plant and  equipment.  Total cash  balances at March 31,  2006 were  $18,190,419
compared to $16,885,170 at December 31, 2005.

Management believes that its strategy to establish  Cold-Eeze(R) as a recognized
brand name, its broader range of products, its diversified  distribution methods
as  it  relates  to  the  Health  and  Wellness   business   segment,   adequate
manufacturing  capacity,  and growth in international  sales,  together with its
current  working  capital,  should provide an internal source of capital to fund
the  Company's  business  operations.  The Cold  Remedy and Health and  Wellness
segments  contribute  current  expenditure  support in  relation  to the Ethical
Pharmaceutical segment. In addition to anticipated funding from operations,  the
Company  and its  subsidiaries  may in the  short and long  term  raise  capital
through the issuance of equity securities to finance anticipated growth.

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,  or (b) net sales 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 cash generated from operations,  along with its current
cash  balances,  will be  sufficient  to finance  working  capital  and  capital
expenditure requirements for at least the next twelve months.

Management  believes that cash generated from operations  along with its current
cash  balances  will be  sufficient  to  finance  working  capital  and  capital
expenditure requirements for at least the next twelve months.

CAPITAL EXPENDITURES

Capital  expenditures  during  the  remainder  of 2006  are not  expected  to be
material.


                                      -21-



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's  operations are not subject to risks of material  foreign currency
fluctuations, nor does it use derivative financial instruments in its investment
practices.  The Company  places its marketable  investments in instruments  that
meet high credit quality standards.  The Company does not expect material losses
with respect to its investment  portfolio or exposure to market risks associated
with interest  rates.  The impact on the Company's  results of a one  percentage
point change in short-term  interest  rates would not have a material  impact on
the Company's future earnings,  fair value, or cash flows related to investments
in cash equivalents or interest-earning marketable securities.

ITEM 4. CONTROLS AND PROCEDURES

Based on their  evaluation  as of the end of the period  covered by this report,
the Company's Chief Executive Officer and Chief Financial Officer have concluded
that the  Company's  disclosure  controls  and  procedures  (as defined in Rules
13a-15 and 15d-15 under the  Securities  Exchange  Act of 1934,  as amended) are
effective.  There have been no  significant  changes in internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their  evaluation,  including  any  corrective  actions  with  regard to
significant  deficiencies  and  material  weaknesses.  The Company is  currently
undergoing a comprehensive effort in preparation for compliance with Section 404
of the Sarbanes-Oxley Act of 2002. This will involve the documentation,  testing
and review of our internal controls under the direction of senior management.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS


          DARIUS INTERNATIONAL INC., AND INNERLIGHT INC., F/K/A DARIUS
             MARKETING INC. VS. ROBERT O. YOUNG AND SHELLEY R. YOUNG
                 (FEDERAL DISTRICT COURT - EASTERN DISTRICT, PA)

In this action, the Company seeks injunctive relief and monetary damages against
two individuals for violation of a  non-competition  agreement  between a wholly
owned subsidiary of the Company,  Innerlight  Inc., and the defendants,  each of
whom are also under agreement to serve as consulting to the Company.

In late November,  2005, the Company  learned that the defendants had launched a
line of nutritional  supplement products that competed with Innerlight products.
Defendants promoted their line of products by a website,  among other means. The
Company moved for a temporary  restraining  order against the defendants,  which
the  court  denied;  however,  the  Court  ordered  expedited  discovery  and  a
preliminary  injunction  hearing was held before the Court on January 24 and 25,
2006. The parties filed briefs on the  significance  of the hearing  evidence in
relation  to the  parties'  respective  claims and argued the matter  before the
Federal  District Court for the Eastern District of Pennsylvania on February 17,
2006.

On April 21, 2006 a preliminary  injunction was issued by the Court and enjoined
the defendants with the respect to Darius' and Innerlight's  claims of breach of
contract and unfair competition.  It gave further relief to Darius International
and  Innerlight  Inc.  with the  respect  to claims of  trademark  infringement.
Defendants were enjoined from endorsing, developing,  marketing, and selling any
and all  nutritional  dietary  supplement  products  that  compete  with  Darius
International's  and Innerlight  Inc.'s products.  Defendants were also enjoined
from using certain marks used in the  Innerlight  Inc.  business in  conjunction
with any product.  The defendants  were ordered to remove from their website all
reference to competing  nutritional or dietary  supplement  products,  including
hyperlinks to such  products;  and were also enjoined from including a reference
to  dietary  supplement  products  owned by  defendants  on any  other  website.
Defendants have filed an answer and counterclaims and the Company believes these
pleadings are without merit and is vigorously  defending those counterclaims and
is prosecuting its action on the complaint.

On May 5, 2006  defendants  filed a motion to  dissolve  and/or  reconsider  the
motion for a  preliminary  injunction.  The Company has answered this motion and
believes that its allegations are without merit.  Based upon the information the
Company  has at this time,  it  believes  the  counterclaim  actions are without
merit. However, at this time no prediction as to the outcome can be made.

                                      -22-



            ROBERT O. AND SHELLEY YOUNG VS. DARIUS INTERNATIONAL INC.
               AND INNERLIGHT INC., (UTAH THIRD PARTY COMPLAINTS)

On September 14, 2005, a third-party  complaint was filed by Shelley R. Young in
Fourth  District  Court in Provo,  Utah against  Innerlight  Inc. and its parent
company,  Darius.  Robert O. Young has filed a motion to  intervene to join as a
third-party  plaintiff with Shelley R. Young.  On November 3, 2005,  Shelley and
Robert Young filed a parallel suit also in Fourth District Court in Provo, Utah.
The allegations in both complaints  include,  but are not limited to, an alleged
breach of contract by  Innerlight  Inc.  for  alleged  failures to make  certain
payments  under  an  asset  purchase  agreement  entered  into  by all  parties.
Additional  allegations  stem from this  alleged  breach of  contract  including
unjust  enrichment,  trademark  infringement and alleged  violation of rights of
publicity.  The  plaintiffs  are seeking both  monetary and  injunctive  relief.
Innerlight Inc. has objected to the complaint in the third-party action based on
procedural deficiencies and other grounds.

The Fourth  District  Court of Utah has stayed both the  September  14, 2005 and
November 3, 2005 actions pending the  adjudication of the Federal District Court
action  referenced  above and has ordered that all disputes be determined in the
Federal District Court action in the Eastern District of Pennsylvania.

In connection with the Utah actions the Company has sued the Youngs in Equity in
the Court of Common  Pleas of  Philadelphia  County,  PA,  and in United  States
District Court for the Eastern District of Pennsylvania. The Company has alleged
breach of  contract,  including  but not  limited  to breach of  non-competition
provisions  in a  consulting  agreement  between  the  parties  and  is  seeking
unspecified damages and injunctive relief.

                    INNERLIGHT INC. VS. THE MATRIX GROUP, LLC

On March 13, 2006  Innerlight  Inc. filed a declaratory  judgment  action in the
Fourth Judicial District,  Utah County, State of Utah,  requesting a declaration
that there is no valid contract  between the parties.  The Matrix Group, LLC has
alleged there is a contract  between the parties  obligating  Innerlight Inc. to
purchase  $750,000 of products for the 12-month  period  commencing  October 18,
2004 and ending October 17, 2005,  $1,500,000 for the period commencing  October
18, 2005 and ending October 17, 2006, and for each 12-month  period  thereafter,
through and including October 17, 2013, at least $4,000,000 of products from The
Matrix Group, LLC. The document on which Matrix relies was drafted by Matrix and
states that the acceptance of the appointment by distributor  (Innerlight  Inc.)
is conditioned upon  distributor's  written  acceptance of the Company's product
price list.  No written  acceptance  of the product  price list was ever made by
Innerlight Inc.

The Matrix Group,  LLC has filed a Utah Rule of Civil Procedure  12(b)(3) motion
asking that the complaint be dismissed for lack of jurisdiction. Innerlight Inc.
has answered the motion on May 8, 2006.

The  Company  believes  that the  defendant's  claims are  without  merit and is
vigorously  defending  those  claims  and  is  prosecuting  its  action  on  its
complaint.  Based upon the information the Company has at this time, it believes
that the  defendant's  actions  are  without  merit.  However,  at this  time no
prediction as to the outcome can be made.

ITEM 6. EXHIBITS

(1) Exhibit 31.1   Certification  by the Chief  Executive  Officer  pursuant  to
                   Section 302 of the Sarbanes-Oxley Act of 2002
(2) Exhibit 31.2   Certification  by the Chief  Financial  Officer  pursuant  to
                   Section 302 of the Sarbanes-Oxley Act of 2002
(3) Exhibit 32.1   Certification  by the Chief  Executive  Officer  pursuant  to
                   Section 906 of the Sarbanes-Oxley Act of 2002
(4) Exhibit 32.2   Certification  by the Chief  Financial  Officer  pursuant  to
                   Section 906 of the Sarbanes-Oxley Act of 2002



                                      -23-



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                         THE QUIGLEY CORPORATION



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

Date: May 15, 2006












                                      -24-