UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, DC 20549

                                 FORM 10-Q/A
                               AMENDMENT No. 1


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


             For the Quarterly Period Ended: September 30, 2004


                        Commission File No. 1-4436


                              THE STEPHAN CO.
          (Exact Name of Registrant as Specified in its Charter)



               Florida                               59-0676812
   (State or Other Jurisdiction of               (I.R.S. Employer
   Incorporation or Organization)               Identification No.)


   1850 West McNab Road, Fort Lauderdale, Florida      33309
      (Address of principal executive offices)       (Zip Code)



Registrant's Telephone Number, including Area Code: (954) 971-0600



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

Indicate by check mark whether the Registrant is an accelerated filer (as 
defined in Rule 12b-2 of the Exchange Act).
YES       NO X


         Approximate number of shares of Common Stock outstanding
                         as of November 8, 2004:


                               4,389,805                     



                       THE STEPHAN CO. AND SUBSIDIARIES
                    QUARTERLY REPORT PURSUANT TO SECTION 13 
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                             SEPTEMBER 30, 2004

                                    INDEX
                                                               PAGE NO.
PART I.    FINANCIAL INFORMATION

           ITEM 1.  Financial Statements

           Unaudited Condensed Consolidated Balance Sheets 
           as of September 30, 2004 and December 31, 2003        4-5

           Unaudited Condensed Consolidated Statements
           of Operations for the nine months ended 
           September 30, 2004 and 2003                            6

           Unaudited Condensed Consolidated Statements
           of Operations for the three months ended
           September 30, 2004 and 2003                            7   

           Unaudited Condensed Consolidated Statements
           of Cash Flows for the nine months ended
           September 30, 2004 and 2003                           8-9 

           Notes to Unaudited Condensed Consolidated 
           Financial Statements                                 10-18

           ITEM 2.    Management's Discussion and Analysis
                      of Financial Condition and 
                      Results of Operations                     19-23

           ITEM 3.    Quantitative and Qualitative
                      Disclosure About Market Risk                23

           ITEM 4.    Controls and Procedures                   23-24

        
PART II.   OTHER INFORMATION            

           ITEM 1.  Legal Proceedings                             25  

           ITEM 2.  Unregistered Sales of Equity Securities
                    And Use of Proceeds                           25  

           ITEM 5.  Other Information                             25

           ITEM 6.  Exhibits                                      25 


SIGNATURES                                                        26 

                                     2





EXPLANATORY NOTE
 

This Amendment constitutes Amendment No. 1 to The Stephan Co.'s Quarterly 
Report on Form 10-Q for the quarter ended September 30, 2004, which was 
previously filed with the Securities and Exchange Commission ("SEC") on 
November 22, 2004.  The Company is filing this amendment to remove pro-
forma information presented in connection with stock options exercised by 
certain Officers and Directors.  All information contained in this 
Amendment is subject to update and supplement by the Company's reports 
filed with the SEC for periods subsequent to the date of the original 
filing of the Quarterly Report on Form 10-Q. 






                        THE STEPHAN CO. AND SUBSIDIARIES
                    QUARTERLY REPORT PURSUANT TO SECTION 13 
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                             SEPTEMBER 30, 2004   


         CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
    PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     
          This quarterly report contains certain "forward-looking" 
statements. The Stephan Co. ("Stephan" or the "Company") desires to take 
advantage of the "safe harbor" provisions of the Private Securities 
Litigation Reform Act of 1995 and is including this statement for the 
express purpose of availing itself of the protections of such safe harbor 
with respect to all such forward-looking statements.  Such forward-looking 
statements involve risks, uncertainties and other factors which may cause 
the actual results, condition (financial or otherwise), performance, trends 
or achievements of the Company and its subsidiaries to be materially 
different from any results, condition, performance, trends or achievements 
projected, anticipated or implied by such forward-looking statements.

     Such factors include, but are not limited to, the following: general 
economic and business conditions; competition; relative success of 
operating initiatives; development and operating costs; advertising and 
promotional efforts; brand awareness; the existence or absence of adverse 
publicity; acceptance of any new product offerings; changing trends in 
customer tastes; the success of multi-branding; changes in business 
strategy or development plans; quality of management; costs and expenses 
incurred by the Company in pursuing strategic alternatives; availability, 
terms and deployment of capital; Stephan's ability to come into compliance 
with AMEX's continued listing requirements; the outcome of the Company's 
pending AMEX delisting hearing; regulatory approvals of the pending 
preliminary proxy filings in connection with the going-private transaction 
discussed in this report; business abilities and judgment of personnel; 
availability of qualified personnel; labor and employee benefit costs; 
availability and cost of raw materials and supplies; changes in or newly-
adopted accounting principles; changes in, or failure to comply with, law; 
changes in product mix and associated gross profit margins; and other 
factors or events referenced in this Form 10-Q.

     The Company does not undertake, subject to applicable law, any 
obligation to publicly release the results of any revisions which may be 
made to any forward-looking statements to reflect events or circumstances 
occurring after the date of such statements or to reflect the occurrence of 
anticipated or unanticipated events.  Therefore, the Company cautions each 
reader of this report to carefully consider the specific factors and 
qualifications discussed herein with respect to such forward-looking 
statements, as such factors and qualifications could affect the ability of 
the Company to achieve its objectives and may cause actual results to 
differ materially from those projected, anticipated or implied herein.


                                     3



                         PART I.  FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS


                       THE STEPHAN CO. AND SUBSIDIARIES
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                   ASSETS


                                             September 30,   December 31,
                                                 2004            2003
                                             ____________    ____________
 
CURRENT ASSETS

 Cash and cash equivalents                    $ 3,998,495    $ 13,302,159

 Accounts receivable, net                       2,337,739       1,444,508

 Inventories                                    7,330,434       7,497,262

 Prepaid expenses and      
  other current assets                            532,415         784,601
                                             ____________    ____________

   TOTAL CURRENT ASSETS                        14,199,083      23,028,530

RESTRICTED CASH                                 4,817,661       5,642,500

PROPERTY, PLANT AND EQUIPMENT, net              1,626,240       1,702,330

GOODWILL, net                                   5,857,980       5,857,980

TRADEMARKS, net                                 8,664,809       8,664,809

DEFERRED ACQUISITION COSTS, net                   236,133         298,773

OTHER ASSETS, net                               2,430,638       2,867,958
                                             ____________    ____________

   TOTAL ASSETS                              $ 37,832,544    $ 48,062,880
                                             ============    ============






    See notes to unaudited condensed consolidated financial statements
                  
                                     4 


                      THE STEPHAN CO. AND SUBSIDIARIES
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                   LIABILITIES AND STOCKHOLDERS' EQUITY


                                           September 30,     December 31,
                                               2004              2003
                                           _____________     ____________
CURRENT LIABILITIES

 Accounts payable and
  accrued expenses                         $  2,382,019      $  2,614,731

 Current portion of
  long-term debt                              1,110,000         2,442,273

 Income taxes payable                            15,148            28,270
                                           ____________      ____________

   TOTAL CURRENT LIABILITIES                  3,507,167         5,085,274
                                                                         
DEFERRED INCOME TAXES, net                    1,402,238         1,133,051

LONG-TERM DEBT                                3,515,000         4,347,500
                                           ____________      ____________

   TOTAL LIABILITIES                          8,424,405        10,565,825
                                           ____________      ____________

COMMITMENTS AND CONTINGENCIES (NOTE 3)

STOCKHOLDERS' EQUITY 

  Common stock, $.01 par value                   43,898            44,106
  Additional paid in capital                 17,556,731        18,417,080
  Retained earnings                          11,807,510        20,387,432
                                           ____________      ____________
                                             29,408,139        38,848,618
  LESS:
   125,000 CONTINGENTLY
    RETURNABLE SHARES                              -           (1,351,563)
                                           ____________      ____________
  TOTAL STOCKHOLDERS' EQUITY                 29,408,139        37,497,055
                                           ____________      ____________
TOTAL LIABILITIES AND 
  STOCKHOLDERS' EQUITY                     $ 37,832,544      $ 48,062,880
                                           ============      ============



    See notes to unaudited condensed consolidated financial statements

                                     5 


                    THE STEPHAN CO. AND SUBSIDIARIES
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                            
                                            Nine Months Ended September 30, 
                                            ______________________________  
                                                 2004             2003
                                            _____________     ____________

NET SALES                                     $18,819,564      $20,048,643

COST OF GOODS SOLD                             10,977,964       11,248,070
                                              ___________      ___________
GROSS PROFIT                                    7,841,600        8,800,573

LESS OPERATING EXPENSES:

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                       7,566,271        7,285,559
                                              ___________     ____________

OPERATING INCOME                                  275,329        1,515,014

OTHER INCOME(EXPENSE)
  Interest income                                 145,616          178,311
  Interest expense                                (73,176)        (287,374)
  Royalty and other income, net                   320,245          224,500
                                              ___________      ___________

INCOME BEFORE INCOME TAXES                        668,014        1,630,451

INCOME TAX EXPENSE                                249,195          614,027
                                              ___________      ___________
NET INCOME                                    $   418,819      $ 1,016,424 
                                              ===========      ===========
 
BASIC AND DILUTED
  EARNINGS PER SHARE                          $      .10       $      .24 
                                              ===========      ===========
WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                         4,335,336        4,308,832
                                              ===========      ===========








    See notes to unaudited condensed consolidated financial statements


                              
                                     6
              

                    THE STEPHAN CO. AND SUBSIDIARIES
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                          
                                          Three Months ended September 30,
                                          ________________________________

                                                2004            2003
                                           ____________     ____________

NET SALES                                   $ 7,305,025      $ 6,698,288

COST OF GOODS SOLD                            4,309,542        3,916,807
                                            ___________      ___________

GROSS PROFIT                                  2,995,483        2,781,481

LESS OPERATING EXPENSES:

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                     2,979,579        2,319,991
                                            ___________     ____________
  
OPERATING INCOME                                 15,904          461,490

OTHER INCOME(EXPENSE)
  Interest income                                46,805           50,981
  Interest expense                              (23,243)         (73,447)
  Royalty and other income, net                   2,100          199,500
                                            ___________      ___________

INCOME BEFORE INCOME TAXES                       41,566          638,524

INCOME TAX EXPENSE                               12,222          236,157
                                            ___________      ___________

NET INCOME                                  $    29,344      $   402,367
                                            ===========      ===========

BASIC AND DILUTED
  EARNINGS PER SHARE                        $      .01       $      .09
                                            ===========      ===========
WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                       4,394,385        4,308,832
                                            ===========      ===========







    See notes to unaudited condensed consolidated financial statements

                                     7


                      THE STEPHAN CO. AND SUBSIDIARIES
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             
                                                  
                                                  Nine Months Ended
                                                    September 30,
                                             ___________________________

                                                 2004            2003
                                             ___________     ____________

CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income                                  $   418,819     $ 1,016,424 
                                             ___________     ____________

 Adjustments to reconcile net income       
  to cash flows provided by
  operating activities:

   Depreciation                                  118,631         245,930
   Amortization of intangible assets              62,640          70,092
   Write-down of inventories                     100,000          20,660
   Compensation expense resulting from 
     exercise of stock options                   415,430            -
   Deferred income tax provision                 269,187         483,109 
   Provision for doubtful accounts                61,323          75,249 
   
   Changes in operating assets and
   liabilities:

     Accounts receivable                        (954,554)       (764,873)
     Inventories                                  66,828        (602,480)
     Income taxes payable/receivable             (13,122)         11,604 
     Prepaid expenses
      and other current assets                   252,186        (213,041)
     Other assets                                437,320         826,688 
     Accounts payable and accrued expenses      (232,712)        588,207 
                                             ___________     ___________

     Total adjustments                           583,157         741,145  
                                             ___________     ___________
Net cash flows provided          
 by operating activities                       1,001,976       1,757,569 
                                             ___________     ___________





    See notes to unaudited condensed consolidated financial statements



                                     8


                       THE STEPHAN CO. AND SUBSIDIARIES
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                   Nine Months Ended
                                                     September 30,
                                             ____________________________
                                                  2004             2003
                                             ____________     ___________
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 Purchase of property, plant
  and equipment                                  (42,541)         (10,213)
                                             ___________      ___________
Net cash flows used in
 investing activities                            (42,541)         (10,213)
                                             ___________      ___________
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 Repayments of long-term debt                 (2,164,773)        (912,683)
 Dividends paid                               (8,998,741)        (264,635)
 Changes in certificates of deposit              824,839          832,500
 Proceeds from exercise of stock options          75,576             -
                                             ___________      ___________
Net cash flows used in 
 financing activities                        (10,263,099)        (344,818)
                                             ___________      ___________
(DECREASE)/INCREASE IN CASH 
 AND CASH EQUIVALENTS                         (9,303,664)       1,402,538 
 
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                          13,302,159       10,785,995
                                             ___________      ___________
CASH AND CASH EQUIVALENTS,
 END OF PERIOD                               $ 3,998,495      $12,188,533
                                             ===========      ===========
Supplemental Disclosures of
 Cash Flow Information:

          Interest paid                      $   175,918      $   220,693
                                             ===========      ===========
          Income taxes paid                  $    69,659      $    88,629
                                             ===========      ===========

Supplemental Disclosure of Non-Cash
 Investing and Financing Activities:

     On August 20, 2004, 125,000 contingently returnable shares, carried at 
$1,351,563, were retired and Common Stock and Additional Paid in Capital 
were reduced by the same amount in the aggregate.   


    See notes to unaudited condensed consolidated financial statements
                        
                                     9


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


         BASIS OF PRESENTATION:  In the opinion of management, all 
adjustments (consisting only of normal recurring accruals) necessary for a 
fair presentation of the financial position and results of operations of 
The Stephan Co. and Subsidiaries (the "Company") are reflected in these 
unaudited interim condensed consolidated financial statements.  

          The results of operations for the nine-month period ended 
September 30, 2004 is not necessarily indicative of the results to be 
achieved for the year ending December 31, 2004.  The December 31, 2003 
condensed consolidated balance sheet was derived from the audited 
consolidated financial statements, but does not include all disclosures 
required by accounting principles generally accepted in the United States 
of America ("generally accepted accounting principles").  These interim 
financial statements should be read in conjunction with the audited 
consolidated financial statements and accompanying notes appearing in the 
Company's Annual Report on Form 10-K for the year ended December 31, 2003, 
previously filed with the Securities and Exchange Commission.
     
         NATURE OF OPERATIONS:  The Company is engaged in the manufacture, 
sale and distribution of hair and personal care grooming products 
principally throughout the United States.  Statement of Financial 
Accounting Standards ("SFAS") No. 131, "Disclosures About Segments of an 
Enterprise and Related Information", requires the reporting of segment 
information using a "management approach" as it relates to the operating 
segments of a business.  The Company manages its business in three 
segments: (1) professional hair care products and distribution; (2) retail 
personal care products; and (3) manufacturing.

         USE OF ESTIMATES:  The preparation of condensed consolidated 
financial statements in conformity with generally accepted accounting 
principles requires management to make estimates and assumptions that 
affect the reported amounts of assets and liabilities and the disclosure of 
contingent assets and liabilities as of the date of the condensed 
consolidated balance sheet and the reported amounts of revenues and 
expenses during the reporting period.  Actual results could differ from 
those estimates and assumptions.

         CASH AND CASH EQUIVALENTS:    Cash and cash equivalents include 
cash, money market investment accounts and short-term municipal bonds 
having maturities of 90 days or less.  The Company maintains cash deposits 
at certain financial institutions in amounts in excess of the federally 
insured limit.  Cash and cash equivalents (including restricted cash) held 
in interest bearing accounts as of September 30, 2004 and December 31, 2003 
were approximately $7,678,000 and $12,698,000, respectively.

         
                                     10      


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         INVENTORIES:  Inventories are stated at the lower of cost 
(determined on a first-in, first-out basis) or market, and are as follows:

                                      September 30,        December 31,
                                          2004                 2003
                                      ____________         ____________
Raw materials                         $  1,971,670         $  2,007,174
Packaging and components                 2,492,354            2,612,798
Work in progress                           292,438              257,476
Finished goods                           4,872,608            5,338,369
                                      ____________         ____________
                                         9,629,070           10,215,817
Less: Amount included in
      other assets, net                 (2,298,636)          (2,718,555)
                                      ____________         ____________
                                    
                                      $  7,330,434         $  7,497,262
                                      ============         ============

     Raw materials principally include surfactants, chemicals and 
fragrances used in the production process.  Packaging materials include 
cartons, inner sleeves and boxes used in the actual product, as well as 
outer boxes and cartons used for shipping purposes.  Components are the 
actual bottles or containers (plastic or glass), jars, caps, pumps and 
similar materials that become part of the finished product.  Finished goods 
include hair dryers, electric clippers, lather machines, scissors and salon 
furniture. 

     Included in other assets is inventory not anticipated to be utilized 
within one year and is comprised primarily of packaging, components and 
finished goods.  The Company reduces the carrying value of slow moving 
inventory that may ultimately become unusable or obsolete, taking into 
consideration anticipated carrying costs and estimated costs of disposal.  
For the nine months ended September 30, 2004, the Company recorded an 
additional write-down of $100,000 for slow-moving and obsolete inventory.
        
         BASIC AND DILUTED EARNINGS PER SHARE:  Basic and diluted earnings 
per share are computed by dividing net income by the weighted average 
number of shares of common stock outstanding.  For the nine months ended 
September 30, 2004 and 2003, the Company had 291,822 and 664,620 
outstanding stock options, respectively, a significant portion of which 
were non-dilutive. The inclusion of dilutive stock options in the 
calculation of earnings per share did not have any significant impact on 
the earnings per share amounts for the nine and three months ended 
September 30, 2004 and 2003, respectively.


                                     11    


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         STOCK-BASED COMPENSATION:  The Company adopted the disclosure 
requirements of SFAS No. 148, "Accounting for Stock-Based Compensation-
Transition and Disclosure."  SFAS No. 148 amends SFAS No. 123, "Accounting 
for Stock-Based Compensation," to provide alternate methods of transition 
for a voluntary change to the fair value based method of accounting for 
stock-based compensation and to require prominent disclosures in both 
annual and interim financial statements about the methods of accounting for 
stock-based compensation and the effect of the method used on reported 
results.  As permitted by SFAS No. 148 and 123, the Company continues to 
apply the accounting provisions of APB No. 25, "Accounting for Stock Issued 
to Employees," and related interpretations, with regard to the measurement 
of compensation cost for options granted under the Company's existing 
plans.  No stock-based compensation cost, other than as discussed below, is 
reflected in net income/(loss) as all options granted under the plans had 
an exercise price not less than the market value of the underlying common 
stock on the date of grant.  Had expense been recognized using the fair 
value method described in SFAS No. 123, using the Black-Scholes option-
pricing model, the Company would have reported the following results of 
operations (in thousands, except per share amounts): 

                                    Nine Months Ended      Three Months  
                                      September 30,       Ended Sept. 30,
                                   __________________     _______________
                                       2004      2003        2004    2003 
                                    _______   _______     _______ _______ 

  Net income, as reported           $   419   $ 1,016     $   29   $  402

  Add: Stock-based compensation
   included in reported net income,
   net of related tax effects           272                  272
   
  Deduct: Total stock-based 
   employee compensation expense
   determined under fair value
   based method for all awards, 
   net of related tax effects          (371)     (124)      (308)     (41)
                                    ________  ________    _______ _______ 
  Pro forma net income/(loss)       $   320   $   892     $   (7)  $  361
                                    ========  ========    ======= =======
  Net income/(loss) per share:

        As reported                 $  .10    $   .24     $  .01   $  .09
        Pro forma                   $  .07    $   .21     $ (.00)  $  .08



                                     12              


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     In the third quarter of 2004, officers of the Company exercised stock 
options utilizing the "cashless method" of exercise.  As such, the Company 
recorded compensation expense in the amount of $415,430.  

         NEW FINANCIAL ACCOUNTING STANDARDS:  In January 2003, the FASB 
issued FASB Interpretation No. 46, "Consolidation of Variable Interest 
Entities" ("FIN 46"), an interpretation of ARB 51. FIN 46, as revised in 
December 2003, provides guidance on identifying entities for which control 
is achieved through means other than through voting rights, variable 
interest entities ("VIE"), and how to determine when and which business 
enterprises should consolidate the VIE. In addition, FIN 46 requires both 
the primary beneficiary and all other enterprises with a significant 
variable interest in a VIE to make additional disclosures. The 
consolidation provisions of FIN 46 are effective immediately for variable 
interests in VIE's created after January 31, 2003.  For variable interests 
in VIE's created before February 1, 2003, the provisions of FIN 46 are 
effective for the first interim or annual period ending after December 15, 
2003. The adoption of FIN 46 did not require a change in accounting 
treatment since the Company has no investments in any VIE's. 

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain 
Financial Instruments with Characteristics of both Liabilities and 
Equity".  This statement establishes standards for the classification and 
measurement of financial instruments that possess characteristics similar 
to both liability and equity instruments.  SFAS No. 150 also addresses the 
classification of certain financial instruments that include an obligation 
to issue equity shares.  On October 29, 2003, the FASB voted to defer, for 
an indefinite period, the application of certain provisions of the guidance 
in SFAS No. 150 until it could consider some of the resulting 
implementation issues. The Company has adopted certain provisions of SFAS 
No. 150 which did not have a material impact on the Company's financial 
condition or results of operations.  The Company does not believe the 
effect of the provisions of SFAS No. 150 that have been deferred to future 
periods will have a material impact on the Company's financial statements.

NOTE 2: SEGMENT INFORMATION

     In accordance with the guidelines established by SFAS No. 131, 
"Disclosures about Segments of an Enterprise and Related Information," the 
Company has identified three reportable operating segments based upon how 
its management evaluates its business.  These segments are Professional 
Hair Care Products and Distribution ("Professional"), Retail Personal Care 
Products ("Retail") and "Manufacturing".  The Professional segment has a 
customer base consisting generally of distributors that purchase the 
Company's hair products and beauty and barber supplies for sale to salons 


                                     13


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 2: SEGMENT INFORMATION (continued)

and barbershops.  The customer base for the Retail segment consists of mass 
merchandisers, chain drug stores and supermarkets that sell products to 
end-users. The Manufacturing segment manufactures products for different 
subsidiaries of the Company and manufactures private label brands for 
customers.
 
     The Company conducts operations principally in the United States and 
sales to international customers are not material to its consolidated net 
sales. Income Before Income Taxes as shown below reflects an allocation of 
corporate overhead expenses incurred by the Manufacturing segment.  The 
following tables, in thousands, summarize Net Sales and Income Before 
Income Taxes (in thousands):
                                 NET SALES           NET SALES
                              _______________     _______________
                                Nine Months         Three Months 
                               Ended Sept. 30,     Ended Sept 30,
                                2004    2003        2004    2003
                              _______________     _______________
Professional                  $13,897 $13,806     $ 5,293 $ 5,174
Retail                          4,435   5,971       1,811   1,461 
Manufacturing                   4,194   5,198       1,431   1,538 
                              _______ _______     _______ _______
   Total                       22,526  24,975       8,535   8,173 

Intercompany  
  Manufacturing                (3,706) (4,926)     (1,230) (1,475) 
                              _______ _______     _______ _______ 
   Consolidated               $18,820 $20,049     $ 7,305 $ 6,698 
                              ======= =======     ======= ======= 

                               INCOME BEFORE       INCOME BEFORE
                                INCOME TAXES        INCOME TAXES  
                              _______________     _______________   
                                Nine Months         Three Months 
                              Ended Sept. 30,      Ended Sept. 30,
                               2004    2003         2004    2003
                              _______________     _______________

Professional                  $   485 $ 1,162     $   18   $  412 
Retail                            366     604         20      179
Manufacturing                    (183)   (136)         4       48 
                              _______ _______     ______   ______
   
 Consolidated                 $   668 $ 1,630     $   42   $  639 
                              ======= =======     ======   ====== 


                                     14


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 3: COMMITMENTS AND CONTINGENCIES

     In addition to the matters set forth below, the Company is involved in 
other litigation matters arising in the ordinary course of business.  It is 
the opinion of management that none of these other matters, at September 
30, 2004, would likely, if adversely determined, have a material adverse 
effect on the Company's financial position, results of operations or cash 
flows.  Additionally, other than as indicated below, there has been no 
material change in the status of any other pending litigation since the 
Company's filing of its Annual Report on Form 10-K with the Securities and 
Exchange Commission for the year ended December 31, 2003.

     In the action commenced by New Image Laboratories, Inc. against the 
Company in the United States District Court for the Central District of 
California, the parties reached a settlement pursuant to a stipulation of 
settlement and amendments thereto which provided, among other things, as 
follows: (i) New Image relinquished title to 65,000 of the 125,000 shares 
of the Company's common stock held in escrow and received 60,000 shares.  
Subsequently, New Image elected to sell the Company its 60,000 shares for 
$285,000, (ii) Stephan will receive $44,000 in damages from New Image, 
(iii) dividends, and interest accrued thereon, held in the escrow account 
(which is currently estimated to be in excess of $70,000) will be 
distributed with Stephan receiving 52% of such funds and New Image 
receiving 48% of such funds.  As a result of this settlement, the Company 
recorded an expense of approximately $275,000 for the quarter ended June 
30, 2004.  In the third quarter of 2004, the amount of the contingently 
returnable shares carried on the books of the Company was reflected as 
treasury stock when the shares were received by the Company and then offset 
against additional paid in capital when the shares were retired.  New 
Image's claim for diminution of the value of the shares held in escrow, in 
the amount of $547,800, plus interest, was heard before a special master in 
late October 2004 and the parties are awaiting the special master's 
decision.  In connection with the diminution claim, the parties have agreed 
that any recovery recommended by the special master shall be limited to the 
diminution in the value of 60,000 shares of the Company's stock.  The 
parties have reserved the right to challenge and appeal the recommendation 
of the special master in the federal court. 

     In the fourth quarter of 2003, Sorbie Acquisition Co. ("SAC"), a 
wholly-owned subsidiary of the Company, and Trevor Sorbie International, 
Plc. ("TSI") commenced arbitration proceedings against each other before 
the American Arbitration Association in Pittsburgh, Pennsylvania.  In TSI's 
statement of claim, TSI alleged claims for breach of contract, trademark 
infringement and breach of certain implied covenants.  Specifically, TSI 
alleged that SAC owes past due royalty payments and interest.  TSI also 
alleged that SAC breached the contract between the parties by various acts 
and omissions which diminished sales of Sorbie products and the value of 


                                     15


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 3: COMMITMENTS AND CONTINGENCIES (continued)

the Sorbie trademarks.  TSI further alleged that SAC has diverted product 
outside of SAC's territory. TSI sought damages in the amount of the 
royalties allegedly due, termination of the agreement between the parties 
and cancellation and forfeiture of SAC's rights in the Sorbie Trademarks. 
SAC denied the allegations raised in the TSI statement of claim.  In SAC's 
statement of claim against TSI, SAC alleged causes of action for 
declaratory relief, diversion, breach of contract for failure to support 
the brand, trademark infringement and injunctive relief.  SAC alleged that 
TSI had been engaged in diversion of TSI product into SAC's territory and 
that TSI and Trevor Sorbie failed to render assistance to SAC in violation 
of the parties' agreement.  SAC further alleged that TSI and Trevor Sorbie 
engaged in intentional and detrimental infringement of SAC's exclusive 
rights in the Sorbie Trademarks and rights to publicity to the name, 
likeness and image of Trevor Sorbie in SAC's territory.  Among other 
things, SAC alleged that Trevor Sorbie and TSI infringed SAC's rights by 
appearing at shows in North and South America that promoted Trevor Sorbie 
and non-SAC products.  SAC sought damages for the diversion, infringement 
and permanent injunctive relief.  In addition, SAC further alleged that 
TSI's claim for royalties is premised upon an incorrect reading of the 
agreement and is at odds with the method by which the parties have 
calculated royalties since the inception of the agreement.  SAC has also 
filed a claim against Trevor Sorbie individually, premised upon his 
involvement in certain of the acts alleged above.  On October 25, 2004, the 
arbitration panel returned an award in favor of TSI with respect to the 
royalties due, including interest, and in favor of SAC with respect to the 
infringement of SAC's rights to exclusive publicity in their territory.  
The panel did not affirm any of the other claims alleged by either of the 
parties to the action.  The Company intends to appeal the decision on 
certain grounds, including an improper computation of the interest due on 
additional royalties, however the financial statements for the nine months 
ended September 30, 2004 reflect a liability of approximately $720,000 for 
payment of the award.  Also, SAC may incur additional interest from the 
date of the award.  Due to the complexities of the issues involved, 
however, the Company is currently unable to predict the outcome of the 
appeal, including whether or not the appeal will be heard.  
   
     On April 30, 2003, the Board of Directors approved a definitive merger 
agreement (the "Merger Agreement") pursuant to which the Company would be 
acquired, in a "going-private" transaction, by Gunhill Enterprises, Inc., a 
wholly-owned subsidiary of Eastchester Enterprises, Inc.  Eastchester 
Enterprises, Inc. is owned by Frank F. Ferola, Thomas M. D'Ambrosio, John 
DePinto and Shouky A. Shaheen (all of whom are current Board members) 
together with their affiliates (the "Acquisition Group").  The Company 
entered into the Merger Agreement following approval by its Board of 
Directors based in part upon the unanimous recommendation of the Special 


                                     16


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 3: COMMITMENTS AND CONTINGENCIES (continued)

Committee comprised of two non-management and disinterested directors of 
the Company's Board of Directors. The Special Committee had received an 
opinion from SunTrust Robinson Humphrey that the consideration to be paid 
pursuant to the Merger Agreement was fair from a financial point of view to 
the stockholders other than the Acquisition Group.

     On November 4, 2003, in connection with the "going-private" trans- 
action, the Company filed a Preliminary Proxy with the Securities and 
Exchange Commission ("SEC").  The Company is currently in the process of 
responding to comment letters issued by the SEC as a result of its review 
of the Preliminary Proxy.  When its review is complete, the SEC may require 
the Company to file an amended Form 10-K to enhance disclosures with 
respect to the non-current inventory.  On August 25, 2004, the Merger 
Agreement was terminated and the Acquisition Group withdrew its offer to 
acquire the shares of Stephan common stock not owned by it and informed 
Stephan that it has decided not to pursue such an acquisition at this time.

     Independent legal counsel and investment banking advisors were 
retained to advise the Special Committee in connection with the 
transaction.  The Company incurred over $650,000 of expenses through June 
30, 2004.   For the quarter ended September 30, 2004, the Company accrued 
an additional $155,000 for expenses previously incurred by Eastchester 
Enterprises, in accordance with the terms of the Merger Agreement.  In 
connection with the "going-private" transaction, the Company had previously 
entered into a Working Capital Management Account ("WCMA") agreement with 
Merrill Lynch Business Financial Services Inc., providing for the creation 
of a WCMA line of credit not to exceed $5,000,000. Borrowings against the 
line of credit are to be collateralized by the Company's accounts 
receivable and inventories and the debt will bear a variable interest rate 
using a 1-month LIBOR rate plus 2.25%.  The provisions of the credit line 
included periodic accounting and reporting requirements, maintenance of 
certain business and financial ratios as well as restrictions on additional 
borrowings.  The credit line remains unused, and has been extended pending 
the satisfactory renegotiation of the terms, use of proceeds and amount of 
the credit line. 

     As previously reported, because the anticipated "going private" 
transaction commenced on or about March 2001 but subsequently withdrawn, 
the Company has not submitted any matters to a vote of its security holders 
since the Company's September 1, 2000 Annual Meeting.  In accordance with 
the rules and regulations of the American Stock Exchange ("AMEX"), the 
Company was required to promptly notify its stockholders and AMEX, in 
writing, indicating the reasons for the failure to have a meeting and to 
use good faith efforts to ensure that an annual meeting is held as soon as 
reasonably practicable.  The Company included annual meeting materials in 


                                     17


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003


NOTE 3: COMMITMENTS AND CONTINGENCIES (continued)

its revised proxy statement, filed with the Securities and Exchange 
Commission on April 13, 2004.  In a press release issued by the Company on 
October 29, 2004, the Company indicated that the next annual meeting of 
shareholders, previously set for November 10, 2004, has been delayed, and 
the Company expects to formally notify all shareholders of the definitive 
date and location of such meeting in the near future.  The Company was 
required by AMEX to file a Corporate Governance Certification by October 
31, 2004, but has been unable to do so because the composition of the Board 
of Directors and the Audit Committee does not meet the enhanced independent 
requirements of AMEX.  On November 19, 2004, the Company received a warning 
letter from AMEX indicating that the Company was deficient with respect to 
the above, in addition to not being in compliance with nominating committee 
requirements and a web-site posting (or other public notice) of a code of 
conduct and ethics for all directors, officers and employees.  The Company 
has until December 31, 2004 to become compliant and as such, has been 
engaged in discussions and has been active in the process of re-
constituting the Board of Directors to bring it into compliance with 
current AMEX guidelines, as well as formulating and implementing the 
appropriate policies and rules.  The Company believes that if its common 
stock is delisted from AMEX, such delisting is not expected to have a 
direct impact on the financial condition or operations of the Company, but 
it could adversely affect the liquidity and price of the Company's common 
stock, as well as the Company's ability to raise additional capital.

NOTE 4: SPECIAL DIVIDEND

     On August 25, 2004, the Company announced that its Board of Directors 
approved the payment of a special dividend of $2.00 per share to all 
shareholders of record as of September 8, 2004, paid on September 15, 2004 
and amounting to $8,779,606.   

















                                     18


                   THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2004 AND 2003 

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

Nine months ended September 30, 2004 compared to nine months ended 
September 30, 2003. 

RESULTS OF OPERATIONS

     For the nine months ended September 30, 2004, net sales were 
$18,820,000, compared to $20,049,000 achieved in the corresponding nine 
months of 2003. The overall decrease in sales was principally due to the 
return to a normal level of military orders for Quinsana Medicated Talc.  
As indicated in previous filings, the first and second quarters of 2003 
were favorably impacted by military orders as troops were deployed to the 
Middle East conflict.  In addition, and for largely the same reason as 
above, the gross margin for the nine months ended September 30, 2004 
declined to 41.7% as compared to 43.9% for the nine months ended September 
30, 2003.  Sales of the other retail products also declined, but sales of 
the Professional segment were up slightly, due to strong sales of hard 
goods offsetting declines in wet goods sales for the nine-month period 
ended September 30, 2004, when compared to the sales achieved for the 
corresponding nine-month period ended September 30, 2003.  Sales of hotel 
and spa amenities (included in the Manufacturing and Other segment) also 
increased in this corresponding period.

     Gross profit for the nine months ended September 30, 2004, was 
$7,842,000 compared to gross profit of $8,801,000 achieved for the 
corresponding nine-month period in 2003.  Cost of sales for the nine months 
ended September 30, 2004 was $10,978,000, when compared to the cost of 
sales of $11,248,000 for the nine months ended September 30, 2003.  Gross 
profit decreased overall for the reasons discussed above.

     Selling, general and administrative expenses for the nine months ended 
September 30, 2004 decreased by $135,000, to $7,151,000, when compared to 
the corresponding 2003 nine-month period total of $7,286,000.  This 
decrease was due, in large part, to a decrease in expenses in connection 
with the "going-private" transaction, which was withdrawn on August 24, 
2004, as well as a decline in officer payroll costs.  The Company continues 
its efforts to control selling, general and administrative expenses; 
however, no assurance can be given that it can continue to keep reducing 
these expenses.                

     In the third quarter of 2004, officers of the Company exercised stock 
options utilizing the "cashless method" of exercise.  As such, the Company 
recorded compensation expense in the amount of $415,430 in conformity with 
accounting principles generally accepted in the United States of America 
("GAAP").  


                                     19


                  THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2004 AND 2003 


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

     Interest expense for the nine months ended September 30, 2004 was 
$73,000, a decrease of approximately $214,000 from the $287,000 incurred in 
the corresponding period of 2003, primarily because the Company's 
obligation to Colgate-Palmolive was paid in full on April 2, 2004.  As 
indicated in previously filed reports, on April 7, 2004, the Company and 
Colgate-Palmolive mutually agreed to settle all outstanding claims and 
issues between them.  The net result of this settlement was a reduction of 
the outstanding obligation by approximately $418,000.  This amount is 
reflected in other income.  Interest income of $146,000 for the nine months 
ended September 30, 2004 was lower than the $178,000 earned in the 
corresponding nine months of 2003.  Although the Company had more cash 
invested in 2004, prior to the payment of the $2.00 special dividend on 
September 15, 2004, it received lower interest rates on its investments as 
overall interest rates remained low.  

     In addition to the Colgate-Palmolive settlement above, other income 
was impacted by the settlement of two lawsuits.  In one case, the Company 
received payment of $150,000 in connection with a customer's failure to 
perform on a purchase order issued by them to the Company.  In July 2004, 
the Company also settled a portion of the New Image litigation by agreeing 
to pay New Image $285,000 for 60,000 of the 125,000 shares of stock held in 
escrow.  All 125,000 shares of stock were retired in the third quarter of 
2004.  Other income also includes royalty fees received from the licensing 
of Frances Denney products.

     As a result of decrease in income for the nine-month period ended 
September 30, 2004, the provision for income taxes decreased $365,000, to 
$249,000 from the $614,000 incurred for the corresponding period in 2003.  
Net income for the nine-month period ended September 30, 2004 was $419,000, 
compared to $1,016,000 for the nine months ended September 30, 2003.  Basic 
and diluted earnings per share were $0.10 for the nine months ended 
September 30, 2004, compared to $0.24 for the nine months ended September 
30, 2003, based on a weighted average number of shares of 4,335,336 and 
4,308,832 for the nine months ended September 30, 2004 and 2003, 
respectively.

     In June 2001, the Financial Accounting Standards Board ("FASB") issued 
SFAS No. 142, "Goodwill and Other Intangible Assets".  SFAS No. 142 
provides that goodwill and other intangible assets with indefinite lives 
will not be amortized, but will be tested for impairment at least annually. 
The Company adopted SFAS No. 142 on January 1, 2002.  SFAS No. 142 requires 
that goodwill and other intangible assets be tested for impairment upon 
adoption and at least annually thereafter.  Additionally, SFAS No. 142 


                                     20


                  THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2004 AND 2003 


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

dictates testing for impairment between annual tests if an event (as 
defined) occurs or circumstances change.  The Company does not currently 
believe that any qualifying event or circumstance has occurred. However, 
one of the Company's reporting units has experienced a decline in sales 
during 2004.  The reporting unit is actively developing various marketing 
alternatives, which are expected to result in sales and earnings beginning 
in the latter half of 2005 that the Company believes will eventually more 
than offset the decline in sales.  The timing of such sales and earnings 
are primarily based upon the negotiation of certain distribution and sales 
agreements.  Should the reporting unit incur a significant delay in 
developing the expanded marketing alternatives, the Company could be 
required to recognize an impairment of all or a portion of the reporting 
unit's goodwill or other intangible assets when the Company performs its 
annual test for impairment.
 

Three months ended September 30, 2004 compared to three months ended 
September 30, 2003. 

     For the three months ended September 30, 2004, net sales were 
$7,305,000, compared to $6,698,000 for the three months ended September 30, 
2003, an increase of $607,000.  Sales for both the Professional and Retail 
segments were up in the third quarter, as were sales of hotel and spa 
amenities (included in the Manufacturing and Other segment).  Gross profit 
for the three months ended September 30, 2004 was $2,995,000, compared to 
gross profit of $2,781,000 achieved for the corresponding three-month 
period in 2003.  The gross profit margin, however, for the third quarter, 
decreased from 41.5% in 2003 to 41.0% in 2004.  Although the gross profit 
increased as indicated above, the gross profit margin for this third 
quarter was adversely impacted by a $100,000 additional write down of slow-
moving and obsolete goods, on the basis of the Company's on-going and 
continuing evaluation of inventory.  

     Selling, general and administrative expenses for the three months 
ended September 30, 2004 increased by $244,000, to $2,564,000, from 
$2,320,000 when compared to the corresponding three-month period of 2003. 
This increase is a result of going-private expenses incurred in the third 
quarter of 2004 and the award by the arbitration panel with respect to the 
SAC litigation.  As discussed above, the exercise of options obligated the 
Company to record compensation expense in the amount of $415,430 for the 
quarter ended September 30, 2004.




                                     21


                  THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2004 AND 2003 

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

     Interest income for the three-month period ended September 30, 2004 
was $47,000, a decrease of approximately $4,000 when compared to $51,000  
earned in the corresponding three-month period of 2003.  Interest expense 
for the three-month period ended September 30, 2004 was $23,000, a decrease 
of $50,000 from the $73,000 charged in the corresponding three-month period 
of 2003, due in large part to the retirement of the Colgate debt discussed 
earlier.  Other income was significantly lower in the third quarter of 2004 
when compared to the quarter ended September 30, 2003 as a result of a 
settlement in 2003 with the Dept. of Transportation with respect to the 
Company's claim in connection with the widening of Interstate Highway 4.

     Income tax expense for the three months ended September 30, 2004 was 
$12,000 compared to $236,000, a decrease of $224,000 for the corresponding 
period in 2003.  Net income of $29,000 for the three months ended September 
30, 2004, was a $373,000 decrease from net income of $402,000 achieved in 
the three months ended September 30, 2003.  Basic and diluted earnings per 
share were $0.01 for the three months ended September 30, 2004 and 2003, 
based on a weighted average number of shares 4,394,385 and 4,308,832 for 
the three months ended September 30, 2004 and 2003, respectively.

LIQUIDITY & CAPITAL RESOURCES

     Cash and cash equivalents decreased $9,304,000 from December 31, 2003, 
to $3,998,000 at September 30, 2004.  Total cash of $8,816,000 at September 
30, 2004 includes restricted cash of $4,818,000 pledged as collateral for a 
bank loan.  Accounts receivable were $2,338,000 at September 30, 2004, a 
net increase of $955,000 from the $1,445,000 at December 31, 2003, due 
largely as a result of normally strong third quarter sales of Morris 
Flamingo-Stephan.  Overall, inventories decreased $587,000 from $10,216,000 
at December 31, 2003 to $9,629,000 at September 30, 2004.  Inventory not 
anticipated to be utilized within one year made up a significant portion of 
the total decrease in inventory. 

     Total current assets at September 30, 2003 were $14,199,000 compared 
to $23,029,000 at December 31, 2003. Working capital decreased $7,251,000 
when compared to December 31, 2003, as a result of the payment of a special 
dividend of $2.00 per share, paid on September 15, 2004.  The Company does 
not anticipate any significant capital expenditures in the near term, other 
than the exposure in connection with the Sorbie litigation matter discussed 
previously, and management believes that there is sufficient cash on hand 
and working capital to satisfy upcoming requirements.
 
     The Company does not have any off-balance sheet financing or similar 
arrangements.


                                     22


                  THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2004 AND 2003 

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

NEW FINANCIAL ACCOUNTING STANDARDS

     See Note 1 to the Financial Statements included in Part I, Item 1 for 
a discussion of new financial accounting standards.          

DISCUSSION OF CRITICAL ACCOUNTING POLICIES

     The preparation of consolidated financial statements in conformity 
with generally accepted accounting principles requires management to make 
estimates and assumptions that affect the reported amounts of assets and 
liabilities and disclosure of contingent assets and liabilities at the date 
of the consolidated financial statements and the reported amounts of 
revenues and expenses during the reporting period.  Actual results would 
differ significantly from those estimates if different assumptions were 
used or unexpected events transpire.  Please see Item 7 in the Company's 
Annual Report on Form 10-K for the year ended December 31, 2003 filed with 
the Securities and Exchange Commission.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company does not participate in derivative or other financial 
instruments for which fair value disclosure would be required under SFAS 
No. 107.  In addition, the Company does not invest in securities that would 
require disclosure of market risk, nor does it have floating rate loans or 
foreign currency exchange rate risks.

ITEM 4.  CONTROLS AND PROCEDURES

     (a) DISCLOSURE CONTROLS AND PROCEDURES:  The Company's management, 
with the participation of the Company's chief executive officer and chief 
financial officer, has evaluated the effectiveness of the Company's 
disclosure controls and procedures (as such term is defined in Rules 13a- 
15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended 
(the "Exchange Act")) as of the end of the period covered by this report. 
Based on such evaluation, the Company's chief executive officer and chief 
financial officer have concluded that, as of the end of such period, the 
Company's disclosure controls and procedures are effective in recording, 
processing, summarizing and reporting, on a timely basis, information 
required to be disclosed by the Company in the reports that it files or 
submits under the Exchange Act.






                                     23


                  THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2004 AND 2003 


ITEM 4.  CONTROLS AND PROCEDURES (continued)

     (b) CHANGES IN INTERNAL CONTROLS:  There have not been any changes in 
the Company's internal control over financial reporting (as such term is 
defined in Rules 13a-15(f) and 15d - 15(f) under the Exchange Act) during 
the fiscal quarter to which this report relates that have materially 
affected, or are reasonably likely to materially affect, the Company's 
internal control over financial reporting.







































                                     24




                   THE STEPHAN CO. AND SUBSIDIARIES
                 QUARTERLY REPORT PURSUANT TO SECTION 13
                 OF THE SECURITIES EXCHANGE ACT OF 1934
                       SEPTEMBER 30, 2004 AND 2003


                      PART II.  OTHER INFORMATION


 ITEM 1.  LEGAL PROCEEDINGS

     The disclosure of the Company's legal proceedings set forth in Note 3 
to the Financial Statements included in Part I, Item 1 are incorporated 
herein by reference.     

     Other than the above, there has been no material change in the status 
of any other pending litigation since our last periodic report. 

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     Repurchase of Equity Securities:  In connection with a settlement 
agreement entered into in July 2004, with New Image Laboratories, Inc., as 
set forth in Note 3 to the Financial Statements included in Part I, Item 1, 
the Company repurchased 60,000 shares (at $4.75 per share) of the Company's 
common stock for an aggregate amount of $285,000 in August 2004.  

     The Company did not repurchase any shares of its common stock pursuant 
to publicly announced plans or programs and the Company does not presently 
have any such plans or programs

ITEM 5.  OTHER MATTERS

     The Company was required by the American Stock Exchange ("AMEX") to 
file a Corporate Governance Certification by October 31, 2004, but has been 
unable to do so because the composition of the Board of Directors and the 
Audit Committee does not meet the enhanced independent requirements of 
AMEX.  On November 19, 2004, the Company received a warning letter from 
AMEX indicating that the Company was deficient with respect to the above, 
in addition to not being in compliance with nominating committee 
requirements and a web-site posting (or other public notice) of a code of 
conduct and ethics for all directors, officers and employees.  The Company 
has until December 31, 2004 to become compliant and as such, has been 
engaged in discussions and has been active in the process of re-
constituting the Board of Directors to bring it into compliance with 
current AMEX guidelines, as well as formulating and implementing the 
appropriate policies and rules.  

ITEM 6.  EXHIBITS 

     The exhibits required by this item are listed on the Exhibit Index 
attached hereto.


                                     25 




                                 SIGNATURES



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



THE STEPHAN CO.




   /s/ Frank F. Ferola
_____________________________________
Frank F. Ferola
President and Chief Executive Officer
July 25, 2005     




  /s/ David A. Spiegel
____________________________________
David A. Spiegel
Chief Financial Officer
July 25, 2005























                                     26



EXHIBIT INDEX



          Exhibit 
          Number                Exhibit Title


           31.1    Rule 13a-14(a)/15d-14(a) Certification of Chief 
Executive Officer.

           31.2    Rule 13a-14(a)/15d-14(a) Certification of Chief 
Financial Officer.

           32.1       Certification by the Chief Executive Officer pursuant 
to 18 U.S.C. Section 1350, as adopted pursuant to 
Section 906 of the Sarbanes-Oxley Act of 2002.

           32.2       Certification by the Chief Financial Officer pursuant 
to 18 U.S.C. Section 1350, as adopted pursuant to 
Section 906 of the Sarbanes-Oxley Act of 2002.