FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)     Quarterly Report Pursuant to Section 13 or 15(d) of
   |X|                  the Securities Exchange Act of 1934

                For The Quarterly Period Ended September 30, 2007

                                       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 1-13648

                               BALCHEM CORPORATION
             (Exact name of registrant as specified in its charter)

Maryland                                 13-2578432
------------------------------------     ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

P.O. Box 600 New Hampton, New York             10958
----------------------------------------       ---------------------------
(Address of principal executive offices)               (Zip Code)

                                  845-326-5600
                  ---------------------------------------------
               Registrant's telephone number, including area code:

Indicate  by a 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
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 |X|   Non-accelerated filer |_|

Indicate by check mark whether the  Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                                                  Yes |_| No |X|

As of November 5, 2007 the registrant had 17,965,215 shares of its Common Stock,
$.06 2/3 par value, outstanding.




Part 1 - Financial Information
Item 1.  Financial Statements

                                  BALCHEM CORPORATION
                         Condensed Consolidated Balance Sheets
                    (In thousands, except share and per share data)
                                      (unaudited)



                                 Assets                                      September 30,   December 31,
                                                                                 2007           2006
                                                                             -------------   ------------
                                                                                       
Current assets:
     Cash and cash equivalents                                               $       5,501   $      5,189
     Accounts receivable                                                            27,395         11,578
     Inventories                                                                    14,995          9,918
     Prepaid expenses and other                                                      1,102          1,754
     Deferred income taxes                                                             459            416
     Other current assets                                                            3,607             --
                                                                             -------------   ------------
           Total current assets                                                     53,059         28,855

Property, plant and equipment, net                                                  40,762         31,313

Goodwill                                                                            26,264         25,253
Intangible assets with finite lives, net                                            34,346          6,912
Other assets                                                                            60             --
                                                                             -------------   ------------
               Total assets                                                  $     154,491   $     92,333
                                                                             =============   ============

                     Liabilities and Stockholders' Equity
Current liabilities:
     Trade accounts payable                                                  $       6,561   $      3,010
     Accrued expenses                                                               11,367          3,696
     Customer deposits and other deferred revenue                                      264          1,072
     Current portion of long-term debt                                               7,329             --
     Revolver borrowings                                                             2,854             --
     Dividends payable                                                                  --          1,596
     Income tax payable                                                              2,306            186
                                                                             -------------   ------------
           Total current liabilities                                                30,681          9,560
                                                                             -------------   ------------

Long-term debt                                                                      26,465             --
Deferred income taxes                                                                6,295          6,627
Other long-term obligations                                                          1,201            784
                                                                             -------------   ------------
               Total liabilities                                                    64,642         16,971
                                                                             -------------   ------------

Stockholders' equity:
  Preferred stock, $25 par value. Authorized 2,000,000
     shares; none issued and outstanding                                                --             --
  Common stock, $.0667 par value. Authorized 25,000,000 shares;
     17,916,417 shares issued and outstanding at September 30, 2007 and
     17,733,849 shares issued and outstanding  at December 31, 2006                    800            788
  Additional paid-in capital                                                        13,199         10,393
  Retained earnings                                                                 75,660         63,988
  Accumulated other comprehensive income                                               190            193
                                                                             -------------   ------------
     Total stockholders' equity                                                     89,849         75,362
                                                                             -------------   ------------

                                                                             -------------   ------------
           Total liabilities and stockholders' equity                        $     154,491   $     92,333
                                                                             =============   ============


See accompanying notes to condensed consolidated financial statements.


                                        2


                               BALCHEM CORPORATION
                  Condensed Consolidated Statements of Earnings
                      (In thousands, except per share data)
                                   (unaudited)



                                              Three Months Ended             Nine Months Ended
                                                 September 30,                 September 30,
                                              2007          2006            2007           2006
                                           -----------   -----------     -----------   ------------
                                                                           
Net sales                                  $    50,498   $    25,122     $   122,468   $     74,819

Cost of sales                                   37,889        16,449          87,936         49,124
                                           -----------   -----------     -----------   ------------

Gross profit                                    12,609         8,673          34,532         25,695

Operating expenses:
   Selling expenses                              3,176         1,683           8,498          5,293
   Research and development expenses               613           549           1,797          1,561
   General and administrative expenses           1,627         1,460           4,913          4,521
                                           -----------   -----------     -----------   ------------
                                                 5,416         3,692          15,208         11,375

                                           -----------   -----------     -----------   ------------
Earnings from operations                         7,193         4,981          19,324         14,320

Other expenses (income):
   Interest (income)                               (96)          (13)           (170)          (102)
   Interest expense                                672            16           1,283            186
   Other, net                                     (155)           --            (242)            --
                                           -----------   -----------     -----------   ------------

Earnings before income tax expense               6,772         4,978          18,453         14,236

   Income tax expense                            2,315         1,827           6,490          5,172
                                           -----------   -----------     -----------   ------------

Net earnings                               $     4,457   $     3,151     $    11,963   $      9,064
                                           ===========   ===========     ===========   ============

Net earnings per common share - basic      $      0.25   $      0.18     $      0.67   $       0.52
                                           ===========   ===========     ===========   ============

Net earnings per common share - diluted    $      0.24   $      0.17     $      0.65   $       0.50
                                           ===========   ===========     ===========   ============


See accompanying notes to condensed consolidated financial statements.


                                        3


                               BALCHEM CORPORATION
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (unaudited)



                                                                             Nine Months Ended
                                                                               September 30,
                                                                            2007          2006
                                                                         ----------    ----------
                                                                                 
Cash flows from operating activities:
    Net earnings                                                         $   11,963    $    9,064

    Adjustments to reconcile net earnings to
    net cash provided by operating activities:
      Depreciation and amortization                                           4,615         2,573
      Foreign currency transaction gain                                        (125)           --
      Shares issued under employee benefit plans                                306           281
      Deferred income taxes                                                    (375)          (11)
      Stock compensation expense                                              1,176           786
      Provision for doubtful accounts                                            --            23
      Gain on sale of equipment                                                 (11)           --
      Other                                                                      20            --
          Changes in assets and liabilities net of
          effects of acquisitions:
           Accounts receivable                                              (13,475)          215
           Inventories                                                        1,082           376
           Prepaid expenses and other current assets                           (135)        1,074
           Income taxes                                                       2,103         1,125
           Customer deposits and other deferred revenue                        (808)         (916)
           Accounts payable and accrued expenses                              1,678          (318)
           Other long-term obligations                                          395            41
                                                                         ----------    ----------
                 Net cash provided by operating activities                    8,409        14,313
                                                                         ----------    ----------

Cash flows from investing activities:
    Capital expenditures                                                     (3,005)       (1,235)
    Proceeds from sale of property, plant & equipment                            11            --
    Cash paid for intangible assets acquired                                   (149)          (71)
    Acquisition of assets                                                   (40,640)      (22,772)
                                                                         ----------    ----------
                 Net cash used in investing activities                      (43,783)      (24,078)
                                                                         ----------    ----------

Cash flows from financing activities:
    Proceeds from long-term borrowings                                       38,946        10,000
    Proceeds from short-term obligations                                      3,554            --
    Repayment of short-term obligations                                        (870)           --
    Principal payments on long-term debt                                     (5,768)      (10,000)
    Proceeds from stock options exercised                                       752           321
    Excess tax benefits from stock compensation                                 584           163
    Dividends paid                                                           (1,596)       (1,045)
    Other                                                                        --           (10)
                                                                         ----------    ----------
                 Net cash provided by (used in) financing activities         35,602          (571)
                                                                         ----------    ----------

Effect of exchange rate changes on cash                                          84            --

Increase (decrease) in cash and cash equivalents                                312       (10,336)

Cash and cash equivalents beginning of period                                 5,189        12,996
                                                                         ----------    ----------
Cash and cash equivalents end of period                                  $    5,501    $    2,660
                                                                         ==========    ==========


See accompanying notes to condensed consolidated financial statements.


                                        4


                               BALCHEM CORPORATION
            Condensed Consolidated Statements of Comprehensive Income
                                  (In thousands)
                                   (unaudited)



                                                             Three Months Ended       Nine Months Ended
                                                                September 30,           September 30,
                                                              2007        2006        2007        2006
                                                            --------    --------    --------    --------
                                                                                    
Net earnings                                                $  4,457    $  3,151    $ 11,963    $  9,064

Other comprehensive income, net of tax:

    Unfunded post retirement benefit plan -
     prior service cost and gain  amortized during period         (3)         --         (10)         --

    Equity adjustment from translation                            (1)         --           7          --
                                                            --------    --------    --------    --------

Comprehensive income                                        $  4,453    $  3,151    $ 11,960    $  9,064
                                                            ========    ========    ========    ========


See accompanying notes to condensed consolidated financial statements.


                                        5


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All dollar amounts in thousands, except per share data)

NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------

The  condensed  consolidated  financial  statements  presented  herein have been
prepared by the Company in accordance with the accounting  policies described in
its December 31, 2006 consolidated  financial statements,  and should be read in
conjunction with the consolidated  financial  statements and notes, which appear
in our  Annual  Report  on Form  10-K  for the year  ended  December  31,  2006.
References in this report to the "Company"  mean either  Balchem  Corporation or
Balchem  Corporation  and its  subsidiaries,  including BCP  Ingredients,  Inc.,
Balchem Minerals Corporation,  and Balchem B.V., on a consolidated basis, as the
context requires.

In the opinion of management,  the unaudited  condensed  consolidated  financial
statements  furnished in this Form 10-Q include all adjustments  necessary for a
fair  presentation  of the financial  position,  results of operations  and cash
flows for the interim periods  presented.  All such  adjustments are of a normal
recurring  nature.  The condensed  consolidated  financial  statements have been
prepared  in  accordance  with U.S.  generally  accepted  accounting  principles
governing  interim  financial  statements and the  instructions to Form 10-Q and
Article  10 of  Regulation  S-X under the  Securities  Exchange  Act of 1934 and
therefore  do not include  some  information  and notes  necessary to conform to
annual  reporting  requirements.  The results of operations  for the nine months
ended September 30, 2007 are not necessarily indicative of the operating results
expected for the full year or any interim period.

NOTE 2 - STOCKHOLDERS' EQUITY
-----------------------------

STOCK-BASED COMPENSATION

On January 1, 2006,  the  Company  adopted  Statement  of  Financial  Accounting
Standards ("SFAS") No. 123 (revised 2004),  "Share Based Payment" ("SFAS 123R"),
which requires all share-based  payments,  including grants of stock options, to
be  recognized in the  statement of earnings as an operating  expense,  based on
their fair values.  SFAS 123R  establishes  the accounting for  transactions  in
which an entity pays for employee services in share-based payment  transactions.
SFAS 123R  eliminates  the  ability  to  account  for  share-based  compensation
transactions  using the intrinsic value method and requires companies to measure
the cost of  employee  services  received  in  exchange  for an award of  equity
instruments  based on the grant-date fair value of the award.  The fair value of
employee share options and similar instruments is estimated using option-pricing
models that take into account the unique  characteristics  of those instruments.
That cost is recognized  over the period during which an employee is required to
provide  service  in  exchange  for the award.  The  Company  adopted  SFAS 123R
effective  January 1, 2006, using the modified  prospective  transition  method.
Under this method,  compensation  cost is recognized  for awards granted and for
awards  modified,  repurchased  or  cancelled  in  the  period  after  adoption.
Compensation  cost is also recognized for the unvested portion of awards granted
prior to adoption over the remaining  requisite  service  period.  The Company's
results  for the  three  and  nine  months  ended  September  30,  2007 and 2006
reflected the following  compensation cost as a result of adopting SFAS 123R and
such


                                        6


compensation  cost had the following effects on net earnings and basic and
diluted earnings per share:

-------------------------------------------------------------------------------
                                                Three Months      Three Months
                                                    Ended            Ended
                                                September 30,    September 30,
                                                    2007              2006
-------------------------------------------------------------------------------
Cost of sales                                   $          44    $           27
Operating expenses                                        348               235
Net earnings                                             (267)             (206)
Basic earnings per common share                         (0.01)            (0.01)
Diluted earnings per common share               $       (0.01)   $        (0.01)
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
                                                 Nine Months      Nine Months
                                                    Ended            Ended
                                                September 30,    September 30,
                                                    2007              2006
-------------------------------------------------------------------------------
Cost of sales                                   $         131    $           81
Operating expenses                                      1,045               705
Net earnings                                             (801)             (665)
Basic earnings per common share                         (0.05)            (0.04)
Diluted earnings per common share               $       (0.04)   $        (0.04)
-------------------------------------------------------------------------------

As  required  by SFAS  123R,  the  Company  has  made an  estimate  of  expected
forfeitures, based on its historical experience, and is recognizing compensation
cost only for those stock-based compensation awards expected to vest.

Additionally,  since adoption of SFAS 123R, excess tax benefits related to stock
compensation  are  presented as a cash inflow from  financing  activities.  This
change had the effect of decreasing  cash flows from  operating  activities  and
increasing  cash flows from  financing  activities by $83 and $584 for the three
and nine months ended September 30, 2007, respectively, and by $-0- and $163 for
the three and nine months ended September 30, 2006, respectively.

The Company's stock  incentive plans allow for the granting of restricted  stock
awards and options to purchase  common stock.  Both incentive  stock options and
nonqualified  stock  options can be awarded  under the plans.  No option will be
exercisable  for longer than ten years after the date of grant.  The Company has
approved  and  reserved  a number of shares to be issued  upon  exercise  of the
outstanding options that is adequate to cover all exercises. As of September 30,
2007,  the plans had 720,153 shares  available for future  awards.  Compensation
expense  for stock  options  and  restricted  stock  awards is  recognized  on a
straight-line  basis over the vesting  period,  generally  three years for stock
options,  four years for employee  restricted stock awards,  and seven years for
non-employee  director  restricted  stock  awards.  Certain  awards  provide for
accelerated vesting if there is a change in control (as defined in the plans) or
other qualifying events.


                                        7


Option  activity  for the  nine  months  ended  September  30,  2007 and 2006 is
summarized below:



----------------------------------------------------------------------------------------------------------
                                                                                                Weighted
                                                                  Weighted       Aggregate       Average
                                                                   Average       Intrinsic      Remaining
For the nine months ended                                         Exercise         Value       Contractual
September 30, 2007                               Shares (000s)      Price         ($000s)         Term
----------------------------------------------------------------------------------------------------------
                                                                                           
Outstanding as of December 31, 2006                      2,170    $   10.13     $    15,168
  Granted                                                   10        18.00
  Exercised                                               (160)        4.70
  Expired                                                   --           --
  Forfeited                                                (13)       14.01
----------------------------------------------------------------------------------------------------------
Outstanding as of September 30, 2007                     2,007    $   10.58     $    19,726            6.9
==========================================================================================================
Exercisable as of September 30, 2007                     1,490    $    8.70     $    17,441            6.3
==========================================================================================================


----------------------------------------------------------------------------------------------------------
                                                                                                Weighted
                                                                  Weighted       Aggregate       Average
                                                                   Average       Intrinsic      Remaining
For the nine months ended                                         Exercise         Value       Contractual
September 30, 2006                               Shares (000s)      Price         ($000s)         Term
----------------------------------------------------------------------------------------------------------
                                                                                           
Outstanding as of December 31, 2005                      2,153    $    8.38     $    10,479
  Granted                                                   15        15.06
  Exercised                                                (64)        4.98
  Expired                                                   --           --
  Forfeited                                                (21)        9.64
----------------------------------------------------------------------------------------------------------
Outstanding as of September 30, 2006                     2,083    $    8.53     $     9,720            6.8
==========================================================================================================
Exercisable as of September 30, 2006                     1,366    $    7.02     $     8,430            5.9
==========================================================================================================


The fair value of each option  grant is estimated on the date of the grant using
the  Black-Scholes  option-pricing  model with the  following  weighted  average
assumptions:  dividend yields of 0.3% and 0.4%; expected volatilities of 27% and
26%;  risk-free  interest  rates of 4.2% and 3.8%; and expected lives of 3.7 and
4.5,  in each  case for the nine  months  ended  September  30,  2007 and  2006,
respectively.

The  Company  used a projected  expected  life for each award  granted  based on
historical  experience of employees'  exercise behavior.  Expected volatility is
based on the Company's historical  volatility levels.  Dividend yields are based
on the Company's historical dividend yields.  Risk-free interest rates are based
on the implied yields  currently  available on U.S.  Treasury zero coupon issues
with a remaining term equal to the expected life.


                                        8


Other information pertaining to option activity during the three and nine months
ended September 30, 2007 and 2006 was as follows:



------------------------------------------------------------------------------------------------------
                                                        Three Months Ended        Nine Months Ended
                                                          September 30,             September 30,
                                                         2007        2006          2007        2006
------------------------------------------------------------------------------------------------------
                                                                                
Weighted-average fair value of options granted        $     6.44  $      N/A    $     6.44  $     3.50
Total intrinsic value of stock options exercised      $      424  $       89    $    1,936  $      613
------------------------------------------------------------------------------------------------------


Non-vested  restricted  stock  activity for the nine months ended  September 30,
2007 and 2006 is summarized below:

--------------------------------------------------------------------------------
                                                                       Weighted
                                                                       Average
                                                                        Grant
                                                                      Date Fair
Nine Months ended September 30, 2007                Shares (000s)       Value
--------------------------------------------------------------------------------
Non-vested balance as of December 31, 2006                    113     $    16.40
Granted                                                         5          18.61
Vested                                                         --             --
Forfeited                                                      --             --
Non-vested balance as of September 30, 2007                   118     $    16.49
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                                                                       Weighted
                                                                       Average
                                                                        Grant
                                                                      Date Fair
Nine Months ended September 30, 2006                Shares (000s)       Value
--------------------------------------------------------------------------------
Non-vested balance as of December 31, 2005                     34     $    13.22
Granted                                                        --             --
Vested                                                         --             --
Forfeited                                                      --             --
Non-vested balance as of September 30, 2006                    34     $    13.22
--------------------------------------------------------------------------------

As of September 30, 2007 and 2006, there was $2,946 and $1,625, respectively, of
total   unrecognized   compensation  cost  related  to  non-vested   share-based
compensation arrangements granted under the plans. As of September 30, 2007, the
unrecognized   compensation   cost  is   expected  to  be   recognized   over  a
weighted-average  period of 2 years. We estimate that  share-based  compensation
expense for the year ended December 31, 2007 will be approximately $1,576.

STOCK SPLITS AND REPURCHASE OF COMMON STOCK

On  December  8,  2006,  the  Board  of  Directors  of the  Company  approved  a
three-for-two  split of the Company's common stock to be effected in the form of
a stock  dividend to  shareholders  of record on December 29,  2006.  Such stock
dividend  was made on  January  19,  2007.  The stock  split was  recognized  by
reclassifying  the par value of the additional  shares resulting from the split,
from additional paid-in capital to common stock.

On  December  15,  2005,  the  Board of  Directors  of the  Company  approved  a
three-for-two  split of the Company's common stock to be effected in the form of
a stock  dividend to


                                        9


shareholders  of record on December  30, 2005.  Such stock  dividend was made on
January 20, 2006. The stock split was recognized by reclassifying  the par value
of the additional  shares  resulting  from the split,  from  additional  paid-in
capital to common stock.

All  references to number of common  shares and per share amounts  except shares
authorized  in  the   accompanying   consolidated   financial   statements  were
retroactively  adjusted to reflect the effect of the December  2006 and December
2005 stock splits.

In June 1999, the Board of Directors of the Company authorized the repurchase of
shares  of  the  Company's  outstanding  common  stock  over a  two-year  period
commencing July 2, 1999. Under this program,  which was  subsequently  extended,
the Company had, as of December 31, 2004,  repurchased a total 1,158,692  shares
at an average  cost of $2.74 per share,  none of which  remained  in treasury at
December  31, 2004.  In June 2005,  the board of  directors  authorized  another
extension  of the stock  repurchase  program for up to an  additional  1,350,000
shares,  over and above those 1,158,692 shares previously  repurchased under the
program.  Under this  extension,  a total of 149,175 shares were purchased at an
average cost of $8.03 per share, none of which remained in treasury at September
30, 2007.  During the nine months ended September 30, 2007, no additional shares
have been purchased.  The Company intends to acquire shares from time to time at
prevailing  market  prices if and to the extent it deems it  advisable  to do so
based on its  assessment of corporate  cash flow,  market  conditions  and other
factors.

NOTE 3 - ACQUISITIONS
---------------------

Akzo Nobel Acquisition
----------------------

Effective  April 30, 2007,  pursuant to an asset purchase  agreement dated March
30, 2007 (the "Akzo Nobel Asset Purchase Agreement"),  the Company,  through its
European subsidiary,  Balchem B.V., completed an acquisition of the methylamines
and  choline  chloride  business  and  manufacturing  facilities  of Akzo  Nobel
Chemicals S.p.A., located in Marano Ticino, Italy (the "Akzo Nobel Acquisition")
for a provisional purchase price including acquisition costs of $9,067,  subject
to adjustment based on actual working capital and other adjustments.

The Akzo Nobel  Acquisition  has been accounted for using the purchase method of
accounting  and the purchase price of the  acquisition  has been assigned to the
net  assets  acquired  based on the fair  value  of such  assets  at the date of
acquisition.  The preliminary  allocation of the total purchase price, including
acquisition  costs, was based on the estimated fair values as of April 30, 2007.
Adjustments  to  these  estimates  will be  included  in the  allocation  of the
purchase  price of the Akzo Nobel  Acquisition  upon  settlement  of any working
capital or other adjustments.  The preliminary purchase price has been allocated
as follows:


                                       10


--------------------------------------------------------------------------------
                                                       Fair Value Recorded
                                                      in Purchase Accounting
--------------------------------------------------------------------------------
Property plant & equipment                               $            7,994
Short-term receivable                                                 2,506
Inventories                                                           4,323
Goodwill                                                                990
Other                                                                    83
Accounts payable and accrued expenses                                (8,258)
--------------------------------------------------------------------------------
         Total                                           $            7,638
================================================================================

Chinook Acquisition
-------------------

On March  16,  2007,  the  Company,  through  its  wholly-owned  subsidiary  BCP
Ingredients,  Inc. ("BCP"), entered into an asset purchase agreement (the "Asset
Purchase Agreement") with Chinook Global Limited  ("Chinook"),  a privately held
Ontario corporation, pursuant to which BCP acquired certain of Chinook's choline
chloride  business  assets (the "Chinook  Acquisition")  for a purchase price of
approximately  $29,000,  plus  the  value  of  certain  product  inventories  of
approximately $1,840. The acquisition closed effective the same date.

The Chinook  Acquisition  has been  accounted  for using the purchase  method of
accounting  and the purchase price of the  acquisition  has been assigned to the
net  assets  acquired  based on the fair  value  of such  assets  at the date of
acquisition.  The preliminary  allocation of the total purchase price, including
acquisition  costs, was based on the estimated fair values as of March 16, 2007.
Adjustments  to  these  estimates  will be  included  in the  allocation  of the
purchase price of the Chinook Acquisition upon settlement of any working capital
or other  adjustments.  The  preliminary  purchase  price has been  allocated as
follows:

-----------------------------------------------------
                                 Fair Value Recorded
                               in Purchase Accounting
-----------------------------------------------------
Customer list                              $   29,262
Inventory                                       1,840
Short-term receivable                           1,850
Short-term obligation                            (870)
Other                                              73
-----------------------------------------------------
         Total                             $   32,155
-----------------------------------------------------

The short-term receivable was included in other current assets.

Pro Forma Summary of Operations

The  following  unaudited  pro forma  information  has been  prepared  as if the
Chinook  Acquisition  had  occurred on January 1, 2007 and does not include cost
savings expected from the  transaction.  In addition to including the results of
operations,  the pro forma  information  gives  effect  primarily  to changes in
depreciation and  amortization of tangible and intangible  assets resulting from
the acquisition.


                                       11


The pro forma  information  presented  does not purport to be  indicative of the
results that actually  would have been attained if the Chinook  Acquisition  had
occurred at the  beginning of the periods  presented and is not intended to be a
projection of future results.

--------------------------------------------------
                                    Pro Forma
                                Nine Months Ended
                                  September 30,
                                       2007
--------------------------------------------------
Net sales                       $          131,455
Net earnings                                12,439
Basic EPS                                      .70
Diluted EPS                                    .67
==================================================

St. Gabriel Acquisition
-----------------------

Effective August 24, 2006,  pursuant to an asset purchase  agreement of the same
date,  the  Company,  through  its  wholly  owned  subsidiaries  BCP and BCP St.
Gabriel,  acquired from BioAdditives,  LLC, CMB Additives, LLC and CMB Realty of
Louisiana  (the "St.  Gabriel  Sellers")  an animal feed grade  aqueous  choline
chloride  manufacturing  facility  and related  assets  located in St.  Gabriel,
Louisiana  (the "St.  Gabriel  Acquisition").  The Company also acquired the St.
Gabriel Sellers'  remaining  interest in a land lease  (approximately  21 years)
relating to the realty upon which the acquired  facility and related  assets are
located.  The  acquisition  was funded through the Company's  cash reserves.  In
February 2007, the facility was placed in service.

CMC Acquisition
---------------

On February 8, 2006, the Company,  through its wholly owned  subsidiary  Balchem
Minerals Corporation  ("BMC"),  completed an acquisition (the "CMC Acquisition")
of all  of the  outstanding  capital  stock  of  Chelated  Minerals  Corporation
("CMC"),  a privately  held Utah  corporation,  for a purchase price of $17,350,
subject  to  adjustment  based  upon  CMC's  actual  working  capital  and other
adjustments.  On February 6, 2006,  the Company and its  principal  bank entered
into a Loan  Agreement  (the "Loan  Agreement")  providing for an unsecured term
loan of $10,000 (the "Term  Loan"),  the proceeds of which were used to fund the
CMC Acquisition, in part. The remaining balance of the purchase price of the CMC
Acquisition  was funded  through the Company's  cash  reserves.  At December 31,
2006, the Term Loan had been repaid in full.

The CMC  Acquisition  has been  accounted  for  using  the  purchase  method  of
accounting  and the purchase price of the  acquisition  has been assigned to the
net assets  acquired  based on the fair value of such assets and  liabilities at
the date of acquisition.  The allocation of the total purchase price,  including
acquisition  costs, of CMC's net tangible and intangible assets was based on the
estimated  fair values as of February 8, 2006.  Adjustments  to these  estimates
have  been  included  in  the  allocation  of the  purchase  price  of CMC  upon
settlement  of any  working  capital  or other  adjustments.  The  excess of the
purchase  price over the  identifiable  intangible  and net tangible  assets was
allocated to goodwill. The purchase price has been allocated as follows:


                                       12


------------------------------------------------
                             Fair Value Recorded
                                 in Purchase
                                 Accounting
------------------------------------------------
Accounts receivable               $    884
Inventory                              552
Property, plant and equipment        1,980
Current liabilities                   (388)
Other long-term liabilities         (2,368)
Goodwill                            11,925
Other intangible assets              5,334
------------------------------------------------
         Total                    $ 17,919
================================================

Pro Forma Summary of Operations

The following  unaudited pro forma  information  has been prepared as if the CMC
Acquisition  had  occurred on January 1, 2006 and does not include  cost savings
expected  from  the  transaction.  In  addition  to  including  the  results  of
operations,  the pro forma  information  gives  effect  primarily  to changes in
depreciation and  amortization of tangible and intangible  assets resulting from
the acquisition.

The pro forma  information  presented  does not purport to be  indicative of the
results  that  actually  would have been  attained  if the CMC  Acquisition  had
occurred at the  beginning of the periods  presented and is not intended to be a
projection of future results.

----------------------------------------------------------------
                                    Actual           Pro Forma
                                  Nine Months       Nine Months
                                     Ended             Ended
                                 September 30,     September 30,
                                     2007              2006
----------------------------------------------------------------
Net sales                        $     122,468     $      75,553
Net earnings                            11,963             9,078
Basic EPS                                  .67               .52
Diluted EPS                                .65               .50
================================================================

NOTE 4 - INVENTORIES
--------------------

Inventories  at  September  30,  2007 and  December  31, 2006  consisted  of the
following:

----------------------------------------------------------------
                                   September 30,    December 31,
                                       2007            2006
----------------------------------------------------------------
Raw materials                      $       6,380    $      4,264
Work in progress                             225             143
Finished goods                             8,390           5,511
----------------------------------------------------------------
         Total inventories         $      14,995    $      9,918
================================================================

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
--------------------------------------

Property,  plant and  equipment at September  30, 2007 and December 31, 2006 are
summarized as follows:


                                       13


-------------------------------------------------------------------
                                      September 30,    December 31,
                                          2007            2006
-------------------------------------------------------------------
Land                                 $        1,234     $       650
Building                                     12,316          11,640
Equipment                                    45,241          38,545
Construction in progress                      5,371           1,247
-------------------------------------------------------------------
                                             64,162          52,082
Less: Accumulated depreciation               23,400          20,769
-------------------------------------------------------------------
   Net property, plant and equipment $       40,762     $    31,313
===================================================================

NOTE 6 - INTANGIBLE ASSETS
--------------------------

Goodwill  represents the excess of costs over fair value of assets of businesses
acquired.  The  Company  adopted  the  provisions  of  SFAS  No.  141,  Business
Combinations,  and SFAS No. 142,  Goodwill and Other  Intangible  Assets,  as of
January 1, 2002.  These  standards  require  the use of the  purchase  method of
accounting for a business  combination and define an intangible asset.  Goodwill
and intangible assets acquired in a purchase business combination and determined
to have an indefinite useful life are not amortized,  but are instead tested for
impairment at least annually in accordance  with the provisions of SFAS No. 142.
SFAS No. 142 also requires that intangible assets with estimable useful lives be
amortized  over  their  respective  estimated  useful  lives to their  estimated
residual  values,  and reviewed for impairment in accordance  with SFAS No. 144,
Accounting for Impairment or Disposal of Long-Lived Assets.

As of  December  31,  2006,  the Company  performed  an  impairment  test of its
goodwill  balance.  As of such date, the Company's  reporting units' fair values
exceeded  their carrying  amounts,  and therefore  there was no indication  that
goodwill was impaired.  Accordingly, the Company was not required to perform any
further  impairment  tests. The Company will perform its impairment test next on
December 31, 2007.

The Company had goodwill in the amount of $26,264 and $25,253 at  September  30,
2007 and December 31, 2006, respectively, subject to the provisions of SFAS Nos.
141 and 142.  For the nine months  ended  September  30,  2007,  the increase in
goodwill is primarily  attributable to the cost in excess of net assets acquired
from the Akzo Nobel Acquisition, as described in Note 3.

As of September  30, 2007 and December  31, 2006,  the Company had  identifiable
intangible assets with finite lives with a gross carrying value of approximately
$37,227 and $7,799,  respectively,  less accumulated  amortization of $2,881 and
$887,  respectively.  For the nine months ended September 30, 2007, the increase
in the gross  carrying  amount is primarily  attributable  to the customer  list
acquired as part of the Chinook Acquisition, as described in Note 3.

Identifiable  intangible  assets with  finite  lives at  September  30, 2007 and
December 31, 2006 are summarized as follows:


                                       14




-------------------------------------------------------------------------------------------------------
                                                 Gross                        Gross
                              Amortization      Carrying     Accumulated     Carrying      Accumulated
                                 Period        Amount at    Amortization    Amount at     Amortization
                               (in years)       9/30/07      at 9/30/07      12/31/06      at 12/31/06
-------------------------------------------------------------------------------------------------------
                                                                           
Customer lists                          10    $    34,150   $       2,325   $    4,888    $         497
Regulatory re-registration
costs                                   10             28              --           28               --
Patents & trade secrets              15-17          1,616             289        1,550              221
Trademarks & trade names                17            880             134          876               94
Other                                    5            553             133          457               75
-------------------------------------------------------------------------------------------------------
                                              $    37,227   $       2,881   $    7,799    $         887
=======================================================================================================


Amortization  of  identifiable  intangible  assets was $1,994 for the first nine
months of 2007.  Assuming no change in the gross carrying value of  identifiable
intangible assets, the estimated  amortization expense for the remainder of 2007
is $912,  approximately  $3,614  per annum  for 2008 and  2009,  $3,611 in 2010,
$3,610 in 2011,  and  $3,573 in 2012.  At  September  30,  2007,  there  were no
identifiable  intangible  assets with indefinite useful lives as defined by SFAS
No. 142. Identifiable intangible assets are reflected in "Intangible assets with
finite lives, net" in the Company's condensed consolidated balance sheets. There
were no changes to the useful lives of intangible assets subject to amortization
during the nine months ended September 30, 2007.

NOTE 7 - NET EARNINGS PER SHARE
-------------------------------

The following  presents a reconciliation  of the net earnings and shares used in
calculating basic and diluted net earnings per share:



----------------------------------------------------------------------------------------------------------
                                                          Net Earnings     Number of Shares      Per Share
    Three months ended September 30, 2007                 (Numerator)        (Denominator)        Amount
----------------------------------------------------------------------------------------------------------
                                                                                           
Basic EPS - Net earnings and weighted
average common shares outstanding                          $   4,457           17,783,384           $.25

Effect of dilutive securities - stock options
and restricted stock                                                              873,218
                                                                               ----------

Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options and restricted stock               $   4,457           18,656,602           $.24
==========================================================================================================



                                       15




----------------------------------------------------------------------------------------------------------
                                                          Net Earnings     Number of Shares      Per Share
    Three months ended September 30, 2006                 (Numerator)        (Denominator)        Amount
----------------------------------------------------------------------------------------------------------
                                                                                           
Basic EPS - Net earnings and weighted
average common shares outstanding                          $   3,151           17,445,075           $.18

Effect of dilutive securities - stock options
and restricted stock                                                              778,478
                                                                               ----------

Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options and restricted stock               $   3,151           18,223,553           $.17
==========================================================================================================


----------------------------------------------------------------------------------------------------------
                                                          Net Earnings     Number of Shares      Per Share
    Nine months ended September 30, 2007                  (Numerator)        (Denominator)        Amount
----------------------------------------------------------------------------------------------------------
                                                                                           
Basic EPS - Net earnings and weighted
average common shares outstanding                          $  11,963           17,744,182           $.67

Effect of dilutive securities - stock options
and restricted stock                                                              799,362
                                                                               ----------

Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options and restricted stock               $  11,963           18,543,544           $.65
==========================================================================================================


----------------------------------------------------------------------------------------------------------
                                                          Net Earnings     Number of Shares      Per Share
    Nine months ended September 30, 2006                  (Numerator)        (Denominator)        Amount
----------------------------------------------------------------------------------------------------------
                                                                                           
Basic EPS - Net earnings and weighted
average common shares outstanding                          $   9,064           17,421,466           $.52

Effect of dilutive securities - stock options
and restricted stock                                                              811,707
                                                                               ----------

Diluted EPS - Net earnings and weighted
average common shares outstanding and
effect of stock options and restricted stock               $   9,064           18,233,173           $.50
==========================================================================================================


The Company had stock options  covering  294,400 and 349,300 shares at September
30, 2007 and 2006,  respectively,  that could potentially  dilute basic earnings
per share in future periods that were not included in diluted earnings per share
because their effect on the period presented was anti-dilutive.


                                       16


NOTE 8 - INCOME TAXES
---------------------

Effective  January 1, 2007,  the Company  adopted the  provisions  of  Financial
Accounting  Standards  Board ("FASB")  Interpretation  No. 48,  "Accounting  for
Uncertainty  in Income  Taxes"  ("FIN  48").  This  interpretation,  among other
things,  creates a two-step  approach for  evaluating  uncertain tax  positions.
Recognition (step one) occurs when an enterprise  concludes that a tax position,
based solely on its technical  merits, is  more-likely-than-not  to be sustained
upon  examination.  Measurement (step two) determines the amount of benefit that
more-likely-than-not  will be realized upon settlement.  De-recognition of a tax
position that was previously  recognized would occur when a company subsequently
determines  that  a  tax  position  no  longer  meets  the  more-likely-than-not
threshold  of  being  sustained.  FIN 48  specifically  prohibits  the  use of a
valuation allowance as a substitute for de-recognition of tax positions,  and it
has expanded disclosure  requirements.  The adoption of FIN 48 resulted in, as a
cumulative  effect,  a non-cash  charge,  net of federal tax benefits,  of $291,
recorded  as a reduction  to  beginning  retained  earnings.  The charge  before
federal tax benefits was $411. The Company  includes  interest expense or income
as well as potential  penalties on unrecognized  tax positions as a component of
income tax expense in the consolidated statement of operations. The total amount
of accrued interest and penalties  related to uncertain tax positions at January
1,  2007 was $89 and is  included  in other  long-term  obligations.  All of our
unrecognized  tax benefits,  if recognized in future  periods,  would impact the
Company's  effective tax rate. The Company  remains open for  examination by the
IRS for 2003 through 2006. For most of its other  significant tax  jurisdictions
(U.S.  states),  the Company's  income tax returns are also open for examination
for 2003 through 2006. There was not a significant change in our liabilities for
unrecognized tax benefits during the nine months ended September 30, 2007.

NOTE 9 - SEGMENT INFORMATION
----------------------------

The Company's  reportable segments are strategic  businesses that offer products
and services to different  markets.  Presently,  the Company has three segments:
specialty products, encapsulated / nutritional products and BCP Ingredients, its
unencapsulated feed supplements segment.

Business Segment Net Sales:



---------------------------------------------------------------------------------------------------
                                             Three Months Ended              Nine Months Ended
                                                September 30,                  September 30,
                                           2007             2006           2007             2006
---------------------------------------------------------------------------------------------------
                                                                              
Specialty Products                      $   8,248        $    7,966     $   24,676        $  23,927
Encapsulated/Nutritional Products          12,880            10,349         36,126           30,676
BCP Ingredients                            29,370             6,807         61,666           20,216
---------------------------------------------------------------------------------------------------
Total                                   $  50,498        $   25,122     $  122,468        $  74,819
===================================================================================================



                                       17


Business Segment Earnings:



---------------------------------------------------------------------------------------------------
                                             Three Months Ended              Nine Months Ended
                                                September 30,                  September 30,
                                           2007             2006           2007             2006
---------------------------------------------------------------------------------------------------
                                                                              
Specialty Products                      $   2,935        $    2,863     $    8,891        $   8,400
Encapsulated/Nutritional Products           2,186             1,028          4,642            3,079
BCP Ingredients                             2,072             1,090          5,791            2,841
Other expense                                (421)               (3)          (871)             (84)
----------------------------------------------------------------------------------------------------
Earnings before income taxes            $   6,772        $    4,978     $   18,453        $  14,236
===================================================================================================


The following table  summarizes  domestic (U.S.) and foreign sales for the three
and nine months ended September 30, 2007 and September 30, 2006:



---------------------------------------------------------------------------------------------------
                                            Three Months Ended               Nine Months Ended
                                               September 30,                   September 30,
                                           2007             2006           2007              2006
---------------------------------------------------------------------------------------------------
                                                                              
Domestic                                $  31,958        $   22,275     $   87,433        $  67,505
Foreign                                    18,540             2,847         35,035            7,314
---------------------------------------------------------------------------------------------------
Total                                   $  50,498        $   25,122     $  122,468        $  74,819
===================================================================================================


NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION
--------------------------------------------

Cash paid during the nine months  ended  September  30, 2007 and 2006 for income
taxes and interest is as follows:

----------------------------------------------------
                             Nine months ended
                               September 30,
                          2007                2006
----------------------------------------------------
Income taxes           $   4,005          $    3,896
Interest               $   1,074          $      186
====================================================

Other  supplemental  non-cash  transactions   resulting  from  acquisitions  are
described in Notes 3 and 11.

NOTE 11 - LONG-TERM DEBT AND CREDIT AGREEMENTS
----------------------------------------------

On April 30,  2007,  the  Company,  and its  principal  bank entered into a Loan
Agreement (the "European Loan  Agreement")  providing for an unsecured term loan
of $10,244 (the "European  Term Loan"),  the proceeds of which were used to fund
the  Akzo  Nobel   Acquisition   (see  Note  3)  and  initial   working  capital
requirements. The European Term Loan is payable in equal monthly installments of
principal,  each equal to 1/84th of the  principal  of the  European  Term Loan,
together with accrued interest, with remaining principal and interest payable at
maturity.  The  European  Term  Loan has a  maturity  date of May 1, 2010 and is
subject to a monthly  interest  rate equal to EURIBOR plus 1%. At


                                       18


September 30, 2007,  this interest rate was 5.41%.  The European Loan  Agreement
also  provides  for a  short-term  revolving  credit  facility  of  (euro)2,000,
translated  to  $2,854  as  of  September  30,  2007  (the  "European  Revolving
Facility").  The European  Revolving  Facility is subject to a monthly  interest
rate equal to EURIBOR plus 1.25%, and accrued  interest is payable monthly.  The
Company has drawn down the European  Revolving  Facility in full as of September
30, 2007.  The European  Revolving  Facility has a maturity date of May 1, 2008.
Management  believes  that such facility will be renewed in the normal course of
business.

On March 16,  2007,  the  Company and its  principal  bank  entered  into a Loan
Agreement  (the "New Loan  Agreement")  providing for an unsecured  term loan of
$29,000  (the "New Term  Loan"),  the  proceeds  of which  were used to fund the
Chinook  Acquisition (see Note 3). The New Term Loan is payable in equal monthly
installments of principal, each equal to 1/60th of the principal of the New Term
Loan,  together with accrued  interest,  with  remaining  principal and interest
payable at maturity. The New Term Loan has a maturity date of March 16, 2010 and
is subject to a monthly  interest  rate equal to LIBOR plus 1%. At September 30,
2007,  this interest rate was 6.75%.  As of September 30, 2007,  the Company has
prepaid  $2,500 of the New Term Loan. The New Loan Agreement also provides for a
short-term  revolving credit facility of $6,000 (the "New Revolving  Facility").
The New Revolving  Facility is subject to a monthly interest rate equal to LIBOR
plus 1%, and accrued interest is payable monthly.  No amounts have been drawn on
the New Revolving Facility as of the date hereof. The New Revolving Facility has
a maturity date of May 31, 2009.  Management believes that such facility will be
renewed in the normal course of business.

NOTE 12 - EMPLOYEE BENEFIT PLANS
--------------------------------

The Company  sponsors a 401(k)  savings  and profit  sharing  plan for  eligible
employees.  The plan allows  participants to make pretax  contributions  and the
Company matches certain percentages of those pretax contributions with shares of
the  Company's  common  stock.  The  profit  sharing  portion  of  the  plan  is
discretionary  and  non-contributory.  All amounts  contributed  to the plan are
deposited into a trust fund administered by independent trustees.

The Company also currently  provides  postretirement  benefits in the form of an
unfunded  retirement  medical  plan  under  a  collective  bargaining  agreement
covering eligible retired employees of its Verona, Missouri facility.

Net periodic  benefit cost for such retirement  medical plan for the nine months
ended September 30, 2007 and September 30, 2006 was as follows:

--------------------------------------------------------------
                                               2007      2006
--------------------------------------------------------------
Service Cost                                  $   22    $   21
Interest Cost                                     31        29
Expected return on plan assets                    --        --
Amortization of transition obligation             --        --
Amortization of prior service cost               (14)      (14)
Amortization of (gain) or loss                    (2)       (2)
--------------------------------------------------------------
Net periodic benefit cost                     $   37    $   34
==============================================================


                                       19


The plan is unfunded and approved claims are paid from Company funds. Historical
cash payments made under such plan approximated $50 per year.

NOTE 13 - NEW ACCOUNTING PRONOUNCEMENTS
---------------------------------------

In  February,  2007 the FASB  issued SFAS No.  159,  "The Fair Value  Option for
Financial  Assets and  Financial  Liabilities",  including  an amendment of FASB
Statement No. 115.  This  statement  permits  entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve  financial  reporting  by providing  entities  with the  opportunity  to
mitigate  volatility in reported earnings caused by measuring related assets and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.  This  statement  is expected to expand the use of fair market value
measurement,  which is consistent  with  long-term  measurement  objectives  for
accounting for financial  instruments.  This statement is effective beginning in
January 2008.  The Company does not expect the adoption of this  statement to be
significant to its consolidated financial statements.

In September  2006, the FASB issued SFAS 157, "Fair Value  Measurements,"  which
defines  fair value,  establishes  a framework  for  measuring  fair value under
generally accepted  accounting  principles,  and expands  disclosures about fair
value  measurements.  SFAS 157 does not require any new fair value measurements,
but  provides  guidance on how to measure  fair value by  providing a fair value
hierarchy  used to classify  the source of the  information.  This  statement is
effective  beginning in January 2008. The Company is evaluating whether adoption
of this statement will result in a change to its fair value measurements.


                                       20


Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations (All dollar amounts in thousands)

This Report contains forward-looking  statements,  within the meaning of Section
21E of the  Securities  Exchange  Act of 1934,  as  amended,  which  reflect our
expectation  or  belief   concerning   future  events  that  involve  risks  and
uncertainties.  Our actions and performance could differ materially from what is
contemplated by the forward-looking statements contained in this Report. Factors
that might cause differences from the  forward-looking  statements include those
referred to or  identified  in Item 1 of our Annual  Report on Form 10-K for the
year ended December 31, 2006 and other factors that may be identified  elsewhere
in this Report. Reference should be made to such factors and all forward-looking
statements are qualified in their entirety by the above cautionary statements.

Overview
--------

We develop, manufacture, distribute and market specialty performance ingredients
and  products  for the food,  nutritional,  pharmaceutical,  animal  health  and
medical device sterilization  industries.  Our reportable segments are strategic
businesses that offer products and services to different  markets.  We presently
have three reportable segments:  specialty products;  encapsulated / nutritional
products; and BCP Ingredients.

Specialty Products
------------------

Our specialty products segment operates as ARC Specialty Products.

Ethylene oxide, at the 100% level, is sold as a sterilant gas, primarily for use
in the health  care  industry.  It is used to  sterilize a wide range of medical
devices because of its versatility  and  effectiveness  in treating hard or soft
surfaces,  composites,  metals,  tubing and different types of plastics  without
negatively  impacting the performance of the device being  sterilized.  Our 100%
ethylene  oxide  product  is  distributed  in  uniquely   designed,   recyclable
double-walled  stainless steel drums to assure  compliance with safety,  quality
and  environmental  standards as outlined by the U.S.  Environmental  Protection
Agency (the "EPA") and the U.S.  Department of Transportation.  Our inventory of
these specially built drums, along with our two filling facilities, represents a
significant   capital   investment.   Contract   sterilizers,   medical   device
manufacturers, and medical gas distributors are our principal customers for this
product. In addition, we also sell single use canisters with 100% ethylene oxide
for use in medical device  sterilization.  As a fumigant,  ethylene oxide blends
are highly effective in killing bacteria, fungi, and insects in spices and other
seasoning materials.

We sell two other products, propylene oxide and methyl chloride,  principally to
customers seeking smaller (as opposed to bulk) quantities and whose requirements
include  timely  delivery  and  safe  handling.  Propylene  oxide  is  used  for
fumigation in spice treatment, various chemical synthesis applications,  to make
paints  more  durable,  and for  manufacturing  specialty  starches  and textile
coatings.  Methyl  chloride is used as a raw material in  specialty  herbicides,
fertilizers, pharmaceuticals, malt and wine preservers.


                                       21


Encapsulated / Nutritional Products
-----------------------------------

The encapsulated / nutritional  products  segment  provides  microencapsulation,
granulation  and  agglomeration  solutions to a variety of applications in food,
pharmaceutical and nutritional ingredients to enhance performance of nutritional
fortification,  processing, mixing, packaging applications and shelf-life. Major
product  applications  are baked goods,  refrigerated  and frozen dough systems,
processed meats,  seasoning  blends,  confections,  nutritional  supplements and
animal  nutrition.  We also market human grade choline nutrient products through
this segment for wellness applications. Choline is recognized to play a key role
in the development and structural  integrity of brain cell membranes in infants,
processing dietary fat, reproductive  development and neural functions,  such as
memory and muscle  function.  Our  portfolio  of  granulated  calcium  carbonate
products are primarily used in, or in conjunction  with, novel  over-the-counter
and  prescription  pharmaceuticals  for the treatment of  osteoporosis,  gastric
disorders and calcium deficiencies in the United States.

In the animal health industry,  we market REASHURE(R)  Choline,  an encapsulated
choline  product that boosts health and milk  production in transition and early
lactation cows.  Commercial sales are currently  derived from the dairy industry
where REASHURE(R)  delivers nutrient  supplements that survive the rumen and are
biologically  available,  providing  required  nutritional levels during certain
weeks preceding and following  calving,  commonly referred to as the "transition
period" of the  animal.  Also,  in animal  health,  we market  NITROSHURETM,  an
encapsulated urea supplement for lactating dairy cows that is designed to create
a slow-release  nitrogen source for the rumen,  allowing for greater flexibility
in feed rations for dairy  nutritionists  and  producers,  and  NIASHURETM,  our
microencapsulated  niacin product for dairy cows. In addition, CMC manufactures,
sells and  distributes  chelated  mineral  supplements  for use in  animal  feed
throughout the world. CMC's proprietary  chelation  technology provides enhanced
nutrient absorption for various species of domestic and companion animals.

BCP Ingredients
---------------

This  segment  manufactures  and  supplies  raw choline  chloride,  an essential
nutrient for animal health,  predominantly to the poultry and swine  industries.
Choline  plays  a vital  role in the  metabolism  of fat  and the  building  and
maintaining of cell  structures.  Choline  deficiency can result in, among other
symptoms,  reduced  growth  and  perosis in  poultry,  and fatty  liver,  kidney
necrosis  and general  poor health  condition  in swine.  In  addition,  certain
derivatives of choline  chloride are also  manufactured and sold into industrial
applications.  Choline  chloride is manufactured and sold in both an aqueous and
dry form.

We sell products for all three segments through our own sales force, independent
distributors, and sales agents.

The following  tables  summarize  consolidated net sales by segment and business
segment  earnings for the nine months ended September 30, 2007 and September 30,
2006:


                                       22


Business Segment Net Sales:
--------------------------------------------------------------------------------
                                   Three Months Ended          Nine Months Ended
                                     September 30,                September 30,
                                    2007       2006            2007       2006
--------------------------------------------------------------------------------
Specialty Products                $  8,248    $  7,966       $ 24,676   $ 23,927
Encap/Nutritional Products          12,880      10,349         36,126     30,676
BCP Ingredients                     29,370       6,807         61,666     20,216
--------------------------------------------------------------------------------
Total                             $ 50,498    $ 25,122       $122,468   $ 74,819
================================================================================

Business Segment Earnings:
-------------------------------------------------------------------------------
                                   Three Months Ended        Nine Months Ended
                                     September 30,             September 30,
                                    2007       2006           2007       2006
-------------------------------------------------------------------------------
Specialty Products                $  2,935    $  2,863      $  8,891   $  8,400
Encap/Nutritional Products           2,186       1,028         4,642      3,079
BCP Ingredients                      2,072       1,090         5,791      2,841
Other expense                         (421)         (3)         (871)       (84)
-------------------------------------------------------------------------------
Earnings bef. income taxes        $  6,772    $  4,978      $ 18,453   $ 14,236
===============================================================================


                                       23


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

Three months ended  September 30, 2007 compared to three months ended  September
30, 2006

Net Sales
---------

Net sales for the three months ended  September  30, 2007 were $50,498  compared
with  $25,122 for the three  months ended  September  30,  2006,  an increase of
$25,376 or 101.0%.  Net sales for the specialty products segment were $8,248 for
the three months ended  September  30, 2007  compared  with $7,966 for the three
months ended  September 30, 2006, an increase of $282 or 3.5%. This increase was
principally  due to an  increase  in  sales  volume,  along  with  modest  price
increases  for  products  in this  segment.  Net  sales for the  encapsulated  /
nutritional  products  segment were $12,880 for the three months ended September
30, 2007 compared with $10,349 for the three months ended September 30, 2006, an
increase of $2,531 or 24.5%.  This result was driven  principally  by  increased
global sales of human nutritional and choline  products,  and includes $701 from
the Akzo  Nobel  Acquisition,  as  described  in Note 3.  Sales of  REASHURE(R),
Niashure  and Chelated  Minerals,  our  specialty  animal  nutrition  and health
products  targeted for ruminant  animals,  and increases in the companion animal
market also  contributed to this growth.  Net sales of $29,370 were realized for
the  three   months   ended   September   30,  2007  for  the  BCP   Ingredients
(unencapsulated feed supplements) segment, as compared with $6,807 for the three
months ended  September 30, 2006, an increase of $22,563 or 331.5%.  This result
reflects  sales from the customer  list  acquisition  of Chinook  Group  Limited
("Chinook"),  as  described  in Note 3, as well as sales  from  the  Akzo  Nobel
Acquisition.  The Chinook and Akzo Nobel acquisitions contributed  approximately
$21,338  of the  revenue  increase  in  this  segment.  The  remaining  increase
(approximately  18.5%)  was due to  increased  volumes  sold in the core dry and
aqueous choline, as well as the specialty industrial product lines.

Gross Margin
------------

Gross margin for the three months ended  September 30, 2007 increased to $12,609
compared to $8,673 for the three months ended September 30, 2006, an increase of
$3,936 or 45.4%, due largely to the above-noted  increase in sales. Gross margin
percentage  for the three months ended  September 30, 2007 was 25.0% compared to
34.5% for the three months ended  September  30,  2006.  This  decrease in gross
margin  percentage  reflects the impact of the  acquisitions in the animal grade
choline  business,  which  carry  lower  gross  margins and was also a result of
higher raw  material  and fuel costs.  Gross  margin  dollars for the  specialty
products  segment  increased  5.3% as increases in sales volume and modest sales
price  increases  were  partially  offset by higher raw material  prices.  Gross
margin dollars in the  encapsulated  / nutritional  products  segment  increased
39.8% as margins were favorably  affected by increased volumes sold in the human
choline markets and specialty animal nutrition and health markets.  Gross margin
dollars for the BCP Ingredients  segment,  while unfavorably impacted by certain
petro-chemical  raw material cost  increases,  improved 194.4% and was favorably
affected  by  the  previously  noted  increased  sales  volumes,   and  improved
productivity.


                                       24


Operating Expenses
------------------

Operating  expenses for the three months  ended  September  30, 2007 were $5,416
compared to $3,692 for the three months ended September 30, 2006, an increase of
$1,724 or 46.7%.  This $1,724  increase was due  primarily to $734 of additional
amortization expense, plus sales and technical personnel expense associated with
the Chinook and Akzo Nobel acquisitions.  We also incurred approximately $160 of
commercial  development expenses toward our pharmaceutical market initiatives in
the quarter. With these increases, operating expenses were 10.7% of sales or 4.0
percentage  points  less  than the  operating  expenses  as a  percent  of sales
incurred  in last  year's  comparable  quarter.  During the three  months  ended
September 30, 2007 and 2006, the Company spent $613 and $549,  respectively,  on
research and development  programs,  substantially all of which pertained to the
Company's  encapsulated / nutritional products segment for both human and animal
health.

Earnings From Operations
------------------------

Primarily  as a result  of the  above-noted  increase  in sales,  earnings  from
operations for the three months ended September 30, 2007 were $7,193 as compared
to $4,981 for the three months ended September 30, 2006.

Other Expenses (Income)
-----------------------

Interest  income for the three  months ended  September  30, 2007 totaled $96 as
compared to $13 for the three months ended September 30, 2006.  Interest expense
was $672 for the three months ended  September  30, 2007 compared to $16 for the
three months ended  September  30, 2006.  This increase is  attributable  to the
increase in average current and long-term debt resulting from the aforementioned
Chinook and Akzo Nobel  acquisitions.  Other income of $155 for the three months
ended  September  30, 2007 is the result of  favorable  fluctuations  in foreign
currency  exchange rates between the U.S.  dollar (the  reporting  currency) and
functional foreign currencies.

Income Tax Expense
------------------

The Company's  effective tax rate for the three months ended  September 30, 2007
and 2006 was 34.2% and 36.7%,  respectively.  This decrease in the effective tax
rate is primarily attributable to a domestic  manufacturer's  deduction and to a
change in allocation relating to state income taxes.

Net Earnings
------------

Primarily as a result of the  above-noted  increase in sales,  net earnings were
$4,457 for the three months ended September 30, 2007 as compared with $3,151 for
the three months ended September 30, 2006, an increase of 41.4%.


                                       25


Nine months ended September 30, 2007 compared to Nine months ended September 30,
2006

Net Sales
---------

Net sales for the nine months ended  September 30, 2007 were  $122,468  compared
with  $74,819 for the nine  months  ended  September  30,  2006,  an increase of
$47,649 or 63.7%. Net sales for the specialty  products segment were $24,676 for
the nine months  ended  September  30, 2007  compared  with $23,927 for the nine
months ended  September 30, 2006, an increase of $749 or 3.1%. This increase was
principally due to an increase in sales volume along with modest price increases
for our ethylene  oxide  products  for medical  device  sterilization  partially
offset by a decline in sales of propylene oxide for starch processing. Net sales
for the  encapsulated / nutritional  products  segment were $36,126 for the nine
months ended  September 30, 2007 compared with $30,676 for the nine months ended
September  30,  2006,  an increase  of $5,450 or 17.8%.  This  increase  was due
principally  to increased  volumes sold in the human choline  markets  partially
offset  by  slowness  in sales of  calcium  products  into the  over-the-counter
pharmaceutical  markets.  Sales of REASHURE(R),  Niashure and Chelated Minerals,
our  specialty  animal  nutrition  and health  products  targeted  for  ruminant
animals,  and increases in the companion  animal market also contributed to this
growth.  Net sales of $61,666 were realized for the nine months ended  September
30, 2007 for the BCP Ingredients  (unencapsulated feed supplements)  segment, as
compared with $20,216 for the nine months ended  September 30, 2006, an increase
of  $41,450  or 205.0%.  This  result  reflects  sales  from the  customer  list
acquisition  of Chinook as well as sales from the Akzo Nobel  Acquisition.  This
increase  was also due to  increased  volumes  sold in the core dry and  aqueous
choline  product  lines,  and  choline  derivatives,  along  with  modest  price
increases in all product lines.

Gross Margin
------------

Gross margin for the nine months ended  September 30, 2007  increased to $34,532
compared to $25,695 for the nine months ended September 30, 2006, an increase of
$8,837 or 34.4%, due largely to the above-noted  increase in sales. Gross margin
percentage  for the nine months ended  September 30, 2007 was 28.2%  compared to
34.3% for the nine months  ended  September  30,  2006.  This  decrease in gross
margin  percentage  reflects the initial impact of the  acquisitions  in the BCP
Ingredients  business,  which carry lower gross margins and was also a result of
higher raw  material  and fuel costs.  Gross  margin  dollars for the  specialty
products  segment  increased 7.1% due to improved  productivity,  resulting from
increases in sales volume,  and modest  increases in average  selling price that
were initiated to offset higher raw material prices. Gross margin dollars in the
encapsulated  / nutritional  products  segment  increased  22.6% as margins were
favorably  affected by increased  volumes sold in the human choline  markets and
specialty animal nutrition and health products, as described above. Gross margin
dollars  for BCP  Ingredients  increased  176.3% and was  favorably  affected by
increased sales volumes and improved productivity.

Operating Expenses
------------------

Operating  expenses  for the nine months ended  September  30, 2007 were $15,208
compared to $11,375 for the nine months ended September 30, 2006, an increase of


                                       26


$3,833 or 33.7%.  This $3,833  dollar  increase was due  primarily to additional
amortization expense, plus sales and technical personnel expense associated with
the  Chinook  and Akzo  Nobel  acquisitions.  With  these  increases,  operating
expenses  were 12.4% of sales or 2.8  percentage  points less than the operating
expenses as a percent of sales incurred in last year's comparable period. During
the nine months ended  September 30, 2007 and 2006, the Company spent $1,797 and
$1,561, respectively, on research and development programs, substantially all of
which pertained to the Company's encapsulated / nutritional products segment for
both human and animal health.

Earnings From Operations
------------------------

Primarily  as a result  of the  above-noted  increase  in sales,  earnings  from
operations for the nine months ended September 30, 2007 were $19,324 as compared
to $14,320 for the nine months ended September 30, 2006.

Other Expenses (Income)
-----------------------

Interest  income for the nine months  ended  September  30, 2007 totaled $170 as
compared to $102 for the nine months ended  September 30, 2006. This decrease is
attributable to the decrease in the average total cash balance. Interest expense
was $1,283 for the nine months ended September 30, 2007 compared to $186 for the
nine months ended  September  30, 2006.  This  increase is  attributable  to the
increase in average current and long-term debt resulting from the aforementioned
Chinook and Akzo Nobel  acquisitions.  Other  income of $242 for the nine months
ended  September  30, 2007 is the result of  favorable  fluctuations  in foreign
currency  exchange rates between the U.S.  dollar (the  reporting  currency) and
functional foreign currencies.

Income Tax Expense
------------------

The Company's  effective  tax rate for the nine months ended  September 30, 2007
and 2006 was 35.2% and 36.3%,  respectively.  This decrease in the effective tax
rate is primarily attributable to a domestic  manufacturer's  deduction and to a
change in allocation relating to state income taxes.

Net Earnings
------------

Primarily as a result of the  above-noted  increase in sales,  net earnings were
$11,963 for the nine months ended September 30, 2007 as compared with $9,064 for
the nine months ended September 30, 2006, an increase of 32.0%.


                                       27


                               FINANCIAL CONDITION
                               -------------------

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

Contractual Obligations
-----------------------

As part of the June 30,  2005  acquisition  of certain  assets  relating  to the
encapsulation,  agglomeration  and granulation  business of Loders Croklaan USA,
LLC, the asset purchase  agreement  provides for the  contingent  payment by the
Company of additional  consideration  based upon the volume of sales  associated
with one particular product acquired by the Company during the three year period
following the acquisition.  Such contingent consideration will be recorded as an
additional cost of the acquired product lines. No such contingent  consideration
has been earned or paid in 2007.

The Company's other contractual  obligations and commitments principally include
obligations  associated  with  future  minimum  non-cancelable  operating  lease
obligations (including for the headquarters office space entered into in 2002).

As a result of the  adoption  of FIN 48 on January 1, 2007,  we have a liability
for uncertain  tax  positions of $291. We are unable to reasonably  estimate the
amount or timing of payments for this liability, if any. Other than the adoption
of FIN 48, there have been no significant changes to the Contractual Obligations
table,  which was included in our Annual  Report on Form 10-K for the year ended
December 31, 2006.

The Company knows of no current or pending  demands on, or commitments  for, its
liquid assets that will materially affect its liquidity.

The Company expects its operations to continue  generating  sufficient cash flow
to fund working capital  requirements  and necessary  capital  investments.  The
Company is actively  pursuing  additional  acquisition  candidates.  The Company
could seek  additional  bank loans or access to  financial  markets to fund such
acquisitions,  its operations, working capital, necessary capital investments or
other cash requirements should it deem it necessary to do so.

Cash
----

Cash and cash equivalents  increased to $5,501 at September 30, 2007 from $5,189
at December 31, 2006.  Working capital amounted to $22,379 at September 30, 2007
as compared to $19,295 at December 31, 2006, an increase of $3,084.


                                       28


Operating Activities
--------------------

Cash flows from operating  activities  provided $8,409 for the nine months ended
September 30, 2007  compared to $14,313 for the nine months ended  September 30,
2006. The decrease in cash flows from operating  activities was primarily due to
an increase in accounts  receivable  resulting  from our recently  acquired Akzo
Nobel   Methylamines   and  Choline  business  and  the  Chinook  customer  list
acquisition,  which was  completed  in March  2007,  in which we did not acquire
outstanding accounts receivable. Combined they contributed approximately $21,338
of revenue in 2007.  This  decrease was  partially  offset by an increase in net
earnings, depreciation and amortization expense.

Investing Activities
--------------------

Capital  expenditures  were $3,005 for the nine months ended  September 30, 2007
compared to $1,235 for the nine months ended  September 30, 2006.  Cash paid for
the  acquisition  of certain  business  assets of Chinook Global Limited and the
Akzo Nobel Methylamines and Choline business was $40,640.

Financing Activities
--------------------

In June 1999, the board of directors  authorized the repurchase of shares of the
Company's  outstanding  common stock over a two-year  period  commencing July 2,
1999. Under this program,  which was subsequently  extended, the Company had, as
of December 31, 2004, repurchased a total 1,158,692 shares at an average cost of
$2.74 per share,  none of which  remained in treasury at December 31,  2004.  In
June 2005,  the board of  directors  authorized  another  extension of the stock
repurchase  program for up to an  additional  1,350,000  shares,  over and above
those 1,158,692  shares  previously  repurchased  under the program.  Under this
extension,  a total of 149,175 shares were purchased at an average cost of $8.03
per share,  none of which remained in treasury at September 30, 2007. During the
nine months ended September 30, 2007, no additional  shares have been purchased.
The Company  intends to acquire  shares from time to time at  prevailing  market
prices  if and to the  extent  it  deems  it  advisable  to do so  based  on its
assessment of corporate cash flow, market conditions and other factors.

On April 30,  2007,  the  Company,  and its  principal  bank entered into a Loan
Agreement (the "European Loan  Agreement")  providing for an unsecured term loan
of $10,244 (the "European  Term Loan"),  the proceeds of which were used to fund
the  Akzo  Nobel   Acquisition   (see  Note  3)  and  initial   working  capital
requirements. The European Term Loan is payable in equal monthly installments of
principal,  each equal to 1/84th of the  principal  of the  European  Term Loan,
together with accrued interest, with remaining principal and interest payable at
maturity.  The  European  Term  Loan has a  maturity  date of May 1, 2010 and is
subject to a monthly  interest  rate equal to EURIBOR plus 1%. At September  30,
2007,  this interest rate was 5.41%.  The European Loan  Agreement also provides
for a short-term revolving credit facility of (euro)2,000,  translated to $2,854
as of  September  30, 2007 (the  "European  Revolving  Facility").  The European
Revolving  Facility is subject to a monthly  interest rate equal to EURIBOR plus
1.25%, and accrued  interest is payable monthly.  The Company has drawn down the
European  Revolving  Facility in full as of  September  30,  2007.  The European
Revolving Facility has a maturity date of May 1, 2008.  Management believes that
such facility will be renewed in the normal course of business.

On March 16,  2007,  the  Company and its  principal  bank  entered  into a Loan
Agreement  (the "New Loan  Agreement")  providing for an unsecured  term loan of
$29,000  (the "New


                                       29


Term  Loan"),  the  proceeds of which were used to fund the Chinook  Acquisition
(see Note 3).  The New Term Loan is  payable in equal  monthly  installments  of
principal,  each equal to 1/60th of the principal of the New Term Loan, together
with  accrued  interest,  with  remaining  principal  and  interest  payable  at
maturity. The New Term Loan has a maturity date of March 16, 2010 and is subject
to a monthly  interest rate equal to LIBOR plus 1%. At September 30, 2007,  this
interest  rate was 6.75%.  As of  September  30,  2007,  the Company has prepaid
$2,500  of the New  Term  Loan.  The New  Loan  Agreement  also  provides  for a
short-term  revolving credit facility of $6,000 (the "New Revolving  Facility").
The New Revolving  Facility is subject to a monthly interest rate equal to LIBOR
plus 1%, and accrued interest is payable monthly.  No amounts have been drawn on
the New Revolving Facility as of the date hereof. The New Revolving Facility has
a maturity date of May 31, 2009.  Management believes that such facility will be
renewed in the normal course of business.

Proceeds from stock options  exercised totaled $752 and $321 for the nine months
ended September 30, 2007 and 2006,  respectively.  Dividend payments were $1,596
and $1,045 for the nine months ended September 30, 2007 and 2006, respectively.


                                       30


Other Matters Impacting Liquidity
---------------------------------

The  Company  currently  provides  postretirement  benefits  in  the  form  of a
retirement  medical  plan  under  a  collective  bargaining  agreement  covering
eligible retired employees of its Verona, Missouri facility. The amount recorded
on the Company's  balance sheet as of September 30, 2007 for this  obligation is
$779. The postretirement plan is not funded. Historical cash payments made under
such plan have approximated $50 per year.

Critical Accounting Policies
----------------------------

Accounting for Uncertainty in Income Taxes

As discussed above, effective January 1 2007, the Company adopted the provisions
of FASB  Interpretation  No. 48,  "Accounting  for  Uncertainty in Income Taxes"
("FIN 48"). This interpretation, among other things, creates a two-step approach
for evaluating  uncertain tax positions.  Recognition  (step one) occurs when an
enterprise concludes that a tax position,  based solely on its technical merits,
is more-likely-than-not to be sustained upon examination. Measurement (step two)
determines the amount of benefit that more-likely-than-not will be realized upon
settlement.  De-recognition  of a tax position  that was  previously  recognized
would occur when a company subsequently determines that a tax position no longer
meets the more-likely-than-not threshold of being sustained. FIN 48 specifically
prohibits the use of a valuation allowance as a substitute for de-recognition of
tax positions, and it has expanded disclosure requirements.  The adoption of FIN
48 resulted in a non-cash  transition charge of $291, recorded as a reduction to
beginning retained earnings.

Other than the  aforementioned  adoption of FIN 48, there were no changes to the
Company's Critical  Accounting  Policies,  as described in its December 31, 2006
Annual Report on Form 10-K, during the nine months ended September 30, 2007.

Related Party Transactions
--------------------------

The Company was not engaged in related party transactions during the nine months
ended September 30, 2007 and all  transactions of the Company during such period
were at arms length.


                                       31


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Cash and cash  equivalents  are invested  primarily  in money  market  accounts.
Accordingly,  we believe we have limited  exposure to market risk for changes in
interest  rates.  The  Company  has  no  derivative  financial   instruments  or
derivative  commodity  instruments,  nor does  the  Company  have any  financial
instruments  entered into for trading or hedging  purposes.  As of September 30,
2007, the Company's  borrowings were under a bank term loan bearing  interest at
LIBOR plus 1.00%,  a second  bank term loan  bearing  interest  at EURIBOR  plus
1.00%,  and a revolving line of credit bearing interest at EURIBOR plus 1.25%. A
100 basis point increase or decrease in interest rates, applied to the Company's
borrowings  at September  30,  2007,  would result in an increase or decrease in
annual interest  expense and a corresponding  reduction or increase in cash flow
of  approximately  $366.  The Company is exposed to market  risks for changes in
foreign  currency  rates and has  exposure to commodity  price risks,  including
prices of our primary raw materials. Our objective is to seek a reduction in the
potential  negative earnings impact of changes in foreign exchange rates and raw
material pricing arising in our business  activities.  The Company manages these
financial exposures,  where possible, through pricing and operational means. Our
practices may change as economic conditions change.


                                       32


Item 4.    Controls and Procedures

  (a) Evaluation of Disclosure Controls and Procedures

      Pursuant  to the  requirements  of the  Sarbanes-Oxley  Act of  2002,  the
      Company's management,  under the supervision and with the participation of
      the Company's Chief Executive  Officer and Chief  Financial  Officer,  has
      evaluated, as of the end of the period covered by this Quarterly Report on
      Form 10-Q,  the  effectiveness  of the Company's  disclosure  controls and
      procedures  (including its internal  controls and procedures.)

      Based upon  management's  evaluation,  the Chief Executive Officer and the
      Chief Financial Officer have concluded that, as of the end of such period,
      the  Company's  disclosure  controls  and  procedures  were  effective  in
      identifying  the  information  required to be disclosed  in the  Company's
      periodic  reports  filed  with  the  Securities  and  Exchange  Commission
      ("SEC"),  including this Quarterly  Report on Form 10-Q, and ensuring that
      such  information is recorded,  processed,  summarized and reported within
      the time periods specified in the SEC's rules and forms.

  (b) Changes in Internal Controls

      During  the most  recent  fiscal  quarter,  there has been no  significant
      change in the Company's internal control over financial reporting that has
      materially  affected,  or is reasonably likely to materially  affect,  the
      Company's internal control over financial reporting.


                                       33


Part II.   Other Information

Item 1A.   Risk Factors

There  have been no  material  changes  in the Risk  Factors  identified  in the
Company's Annual Report on Form 10-K for the year ended December 31, 2006.

Item 4.    Submission of Matters to a Vote of Security Holders.

Item 6.    Exhibits

           Exhibit 31.1     Certification of Chief Executive Officer pursuant to
                            Rule 13a-14(a).

           Exhibit 31.2     Certification of Chief Financial Officer pursuant to
                            Rule 13a-14(a).

           Exhibit 32.1     Certification of Chief Executive Officer pursuant to
                            Rule  13a-14(b)  and  Section  1350 of Chapter 63 of
                            Title 18 of the United States Code.

           Exhibit 32.2     Certification of Chief Financial Officer pursuant to
                            Rule  13a-14(b)  and  Section  1350 of Chapter 63 of
                            Title 18 of the United States Code.

                                   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.

                                                 BALCHEM CORPORATION
                                                 -------------------

                                                 By: /s/ Dino A. Rossi
                                                 ----------------------------
                                                 Dino A. Rossi, President and
                                                 Chief Executive Officer

      Date: November 9, 2007


                                       34


                                  Exhibit Index

Exhibit No.                Description
-----------                -----------

Exhibit 31.1     Certification  of  Chief  Executive  Officer  pursuant  to Rule
                 13a-14(a).

Exhibit 31.2     Certification  of  Chief  Financial  Officer  pursuant  to Rule
                 13a-14(a).

Exhibit 32.1     Certification  of  Chief  Executive  Officer  pursuant  to Rule
                 13a-14(b)  and  Section  1350 of  Chapter 63 of Title 18 of the
                 United States Code.

Exhibit 32.2     Certification  of  Chief  Financial  Officer  pursuant  to Rule
                 13a-14(b)  and  Section  1350 of  Chapter 63 of Title 18 of the
                 United States Code.


                                       35