CONFORMED COPY

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  Form 10-KSB

                      ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 1999
Commission File Number 0-4728

                 Arrow-Magnolia International, Inc.
            (Name of Small Business Issuer in its Charter)

			Texas				        75-0408335
     (State or other jurisdiction 		        (I.R.S. Employer
  of incorporation or organization)	              Identification No.)

		2646 Rodney Lane, Dallas, Texas 		    	75229
	 (Address of principal executive offices)	           (Zip Code)

Issuer's  telephone number, including area code:  (972) 247-7111
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.10 per share

	Check whether the issuer: (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 issuer was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.  Yes  ( x )    No (    )

	Check if no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is contained herein, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment of this Form 10-KSB.   (    )

	Issuer's revenues for the fiscal year ended December 31, 1999 were:
$14,001,716

	The aggregate market value of the registrant's voting stock held by non-
affiliates as of December 31, 1999 was:  $3,321,927 (* see note on index
page).

	The number of shares outstanding of each class of registrant's common
stock as of December 31, 1999 was:  Common Stock, par value $0.10 per share,
3,248,566 shares.
___________________
Documents Incorporated by Reference

	Portions of the registrant's definitive proxy statement to be furnished
to stockholders in connection with its Annual Meeting of Stockholders to be
held on May 24, 2000 are incorporated by reference in Part III of this Form
10-KSB.

	Transitional Small Business Disclosure Format:  	Yes      No    X

 <PAGE>


	                 ARROW-MAGNOLIA INTERNATIONAL, INC.
	                   ANNUAL REPORT ON FORM 10-KSB
	                           INDEX
Securities and Exchange Commission
Item Number and Description              					Page

	                           PART I

Item 1.   Description of Business..................................  1
Item 2.   Description of Property..................................  2
Item 3.   Legal Procee.............................................  2
Item 4.   Submission of Matters to a Vote of Security-Holders......  3

	                           PART II

Item 5.   Market for Common Equity and Related Stockholder Matters.  3
Item 6.   Management's Discussion and Analysis or Plan of Operation  4
Item 7.   Financial Statements.....................................  5
Item 8.   Changes in and Disagreements With Accountants on Accounting
	    and Financial Disclosure.................................  5

	                           PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
	    Compliance with Section 16(a) of the Exchange Act........  6
Item 10.  Executive Compensation...................................  6
Item 11.  Security Ownership of Certain Beneficial Owners and
          Management ...    	                                       6
Item 12.  Certain Relationships and Related Transactions...........  6
Item 13.  Exhibits and Reports on Form 8-K.........................  6

Index To Financial Statements and Schedules.........................  F-1

Signatures..........................................................


       *	The figure indicated on the cover page as to the aggregate market
value of shares of issuer's voting stock held by nonaffiliates, as such figure
relates to shares held by affiliates, represents the issuer's best good faith
estimate for purposes of this annual report on Form 10-KSB and for no other
purpose.  The aggregate market value indicated is based upon the last sales
price of the issuer's common stock as reported by the NASDAQ SmallCap Market
as of December 31, 1999.  See "Market for Common Equity and Related
Stockholder
Matters."

<PAGE>


                      ARROW-MAGNOLIA INTERNATIONAL, INC.
	                    Form 10-KSB Annual Report
	                    For the Fiscal Year Ended
	                      December 31, 1999

	                             PART I

ITEM 1. DESCRIPTION OF BUSINESS.

	Arrow-Magnolia International, Inc., a Texas corporation (the "Company"
or "Arrow-Magnolia"), was incorporated in the State of Texas in 1937.

	The Company's business consists primarily of the manufacture and
distribution of approximately 400 specialty chemical products for use in
cleaning and maintaining equipment and general maintenance and sanitation.
The Company's manufacturing operations blend, to the Company's specifications
and according to the Company's procedures, a variety of chemicals to create
the Company's products. The Company packages products that it blends or
manufacturesand, in addition, purchases products that have been blended or
manufactured and then packaged under the Company's private labels by third
parties. The Company also distributes certain nonchemical products, such as
paper and other janitorial supplies, related to its chemical products. The
Company's products, including its nonchemical products, are marketed
throughout the United States, Canada and other countries to a variety of
consumers. No single customer accounted for as much as 10% of its total net
sales during 1999, 1998 or 1997.

	The Company's product line includes aircraft coatings, cleaners,
corrosion preventatives, degreasers and air fresheners; construction chemicals
such as release agents, concrete strippers, safety solvents, custom lubricants
and rust reconverters; and telecommunication formulations such as refinishers,
cable cleaners, graffiti removers and fiber optic lubricants.  Sanitation and
maintenance products sold by the Company include soaps, enzymes, deodorants,
germicides, insecticides, disinfectants and miscellaneous janitorial supplies.
Nonchemical products sold by the Company include parts washers, sprayers,
paper products and poly liners.  The Company's products are designed and
packaged fforlarge-scale users rather than individual household consumers.

	The Company currently manufactures certain of its products in order to
give the Company greater control over its inventory in terms of quality and
availability of goods. Cost savings are also effected through elimination of
outside vendor overhead and profit and through reductions in the cost of
carrying finished goods inventory versus raw materials. Currently the Company
manufactures approximately 60% of its products (measured by 1999 sales
expressedin dollars).  The raw materials necessary for manufacture of the
Company's products and the finished products resold by the Company are readily
available from numerous sources and the Company is not dependent on any
particular supplier for these items.

	The Company markets its products primarily through its own sales
personnel consisting of ten sales managers and independent contractors (90
persons) and  distributors (12 companies).  In addition, the Company exhibits
its products at national and international trade shows. The Company attends,
on a regular basis,major trade shows annually.  The Company has no material
backlog of orders for its products.

	The Company does not incur any material costs in complying with
applicable environmental laws.




                                          1
<PAGE>

Competition

	The business of the Company is highly competitive in all of its phases.
However, the industry in which the Company competes is very fragmented and,
although two companies are significantly larger than other companies engaged
in this industry, no single firm or group of firms dominates the industry as a
whole.  Further, the total sales volume of the Company's products constitutes
only a very small portion of the total available market.

	The principal methods of competition in the business of the Company are
sales personnel, price, quality and delivery capability. The Company competes
with numerous other companies, both domestic and foreign, and with major
chemical companies that have many products that are substantially similar to
those sold by the Company.  Due to the substantial similarity in available
products and technology, product differentiation and preference is largely a
function of the sales effort.  Management therefore believes that the Company
is able to compete successfully whenever it maintains aggressive sales
personnel.

	To the best knowledge of the Company's management, the Company is the
only distributor of several products which are specially formulated to the
Company's specifications for the particular applications of the
telecommunications industry. There is no assurance, however, that other
manufacturers will not enter the market in the future.

Employees

	As of December 31, 1999, the Company employed forty-five (45) full-time
employees, including its warehouse personnel and administrative, accounting,
clerical and sales personnel. In addition, the Company retained the services
as independent contractors of ninety  (90) sales representatives.  None of the
Company's employees are covered by union contracts, and the Company considers
its relationship with its employees to be excellent.

ITEM 2.   DESCRIPTION OF PROPERTY.

	The principal executive and warehouse facilities of the Company are
located in a steel, glass, brick and concrete building owned by the Company at
2646 Rodney Lane, Dallas, Texas. These facilities occupy approximately 70,000
square feet of floor space, of which 60,000 square feet are devoted to
warehousing and shipping and manufacturing, and 10,000 square feet to
administrative and executive offices.

	The Company believes that all of its plant and office facilities are in
good condition and adequately insured.

	The Company does not as a regular aspect of its business acquire
interests in real estate for purposes of investment or acquire securities of
or interests in persons engaged in real estate activities.

ITEM 3.   LEGAL PROCEEDINGS.

	Other than as described below, the Company is not a party to, nor is any
of its property the subject of, any legal proceedings other than routine
litigation incidental to its business.

	On May 21, 1999, the Company and three of its employees were named as
defendants in an action filed by Parkway Research Company in the 189th
Judicial District Court of Harris County, Texas.  The plaintiff alleges that
the Company hired the defendant employees and obtained from them confidential
and proprietary information of the plaintiff, encouraged other employees to
leave the employ of plaintiff and made claims concerning the Company's
products that caused confusion regarding the plaintiff's products.  The
plaintiff seeks unspecified actual and punitive damages and attorneys' fees.
The Company denies these claims and its insurer is providing a defense.
                                         2
<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

	No matters were submitted during the fourth quarter of the fiscal year
ended December 31, 1999, to a vote of the Company's security holders, through
solicitation of proxies or otherwise.


PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

	The Company's common stock is included for quotation on the NASDAQ
SmallCap Market tier of the NASDAQ Stock Market under the trading symbol
"ARWM".  The following table sets forth the high and low sales prices in the
common stock during the last eight quarters reported in that market as
adjusted for 10% stock dividends which became effective July 15, 1999 and July
14, 1998, respectively:


<TABLE>
<S>                             <C>              <C>
Fiscal 1999                     High             Low
-----------                     ----             ----
  Fourth Quarter	              $4.44            $1.94
  Third Quarter                  4.00             3.00
  Second Quarter                 4.21             3.24
  First Quarter                  4.21             3.41

Fiscal 1998
-----------
  Fourth Quarter                $4.77            $3.64
  Third Quarter                  5.78             3.86
  Second Quarter                 6.41             4.75
  First Quarter                  5.74             4.55

</TABLE>


	The approximate number of record holders of the Company's Common Stock
as of December 31, 1999, was 350.

	The Company has paid no cash dividends with respect to its Common Stock
since 1988, when it paid a dividend of $0.05 per share.  The Company currently
intends to retain any earnings for use in its business and does not anticipate
paying any cash dividends in the foreseeable future.




                                          3
<PAGE>



ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

	The following table sets forth for the periods indicated the relative
percentages that certain items included in the consolidated statements of
income bear to net sales and the percentage changes of such items as compared
to the indicated prior period:

<TABLE>


                                                           Increase (Decrease)
                                                           From Prior Period
                                                           Years Ended
                             Percentage of Net Sales       ------------------
                             Years Ended December 31       1999       1998
                             ------------------------       vs.        vs.
                             1999     1998      1997       1998       1997
                             ----     ----      ----       ----       ----

<S>                          <C>        <C>       <C>       <C>       <C>
Net sales                    100.0%   100.0%    100.0%      1.7%      8.0%
Cost of sales                 57.2%    56.1%     56.4%      3.7%      7.3%
Gross profit                  42.8%    43.9%     43.6%     (0.9)%     8.9%
General and administrative
  expenses                    31.9%    30.5%     28.0%      6.2%     17.6%
Income before other income
  (expense)                   11.0%    13.4%     15.5%    (16.9)%    (6.7)%
Income before income taxes    11.8%    13.6%     15.6%    (12.4)%    (5.2)%
Net income                     7.5%     8.8%     10.0%    (13.2)%    (5.4)%

</TABLE>

Comparison of Annual Results.

	Net sales for fiscal year 1999 increased 1.7% to $14,001,716 from
$13,769,007 versus fiscal year 1998 after increasing 8.0% from fiscal 1997 to
fiscal 1998.  Cost of sales as a percentage of net sales increased to 57.2% in
fiscal 1999 from 56.1% in fiscal 1998 and 56.4% in fiscal 1997.  The increase
in sales from 1998 to 1999 is primarily attributable to the extension of sales
coverage through the addition of sales personnel under an ongoing hiring
program. As a result of increased hiring and training expenses associated with
the addition of these sales personnel, gross profit decreased by 0.9% to
$5,996,902 from $6,050,299 for fiscal 1999 versus fiscal 1998, after
increasing by 8.9% from fiscal 1997 to fiscal 1998.

	General and administrative expenses rose to 31.9% of net sales in fiscal
1999 primarily as the result of expenses associated with hiring additional
sales personnel, such as increased travel expense.  General and administrative
expenses also increased as a percentage of net sales to 30.5% in fiscal 1998
from 28.0% in fiscal 1997.  In addition to hiring additional sales personnel,
during fiscal 1998 the Company increased its reserve for bad debt to 4.0% of
net sales from 2.2% of net sales.

	Other income generated $110,766 in income during fiscal 1999 and $31,958
in income during fiscal 1998, primarily as the result of interest earned on
excess cash in excess of interest paid.

	As a result of these factors, for the fiscal year ended December 31,
1999, net income fell to $1,048,062 versus $1,207,280 for fiscal 1998 and
$1,275,847 for fiscal 1997.

                                       4
<PAGE>
Liquidity and Capital Resources.

	The Company's working capital (total current assets less total current
liabilities), which was $5,208,449 as of December 31, 1998, improved to
$5,484,646 as of December 31, 1999.  The Company's current assets increased as
the Company's cash increased due to continuing profitability.  Current
liabilities increased due to the addition of equipment, such as sprayers, used
to support sales and the resulting increase in accounts payable.

	As shown in the Company's statements of cash flows for 1999, the Company
generated $1,300,216 in cash flow from operations as the Company continued to
capitalize on its profitability, partially offset by increases in receivables
resulting from its sustained growth.  The Company utilized $996,736 in
investing activities as it purchased property and equipment, primarily related
to the construction of an additional 30,000 square feet of warehouse space to
its existing facilities at a total cost of $675,000.  A total of $20,142 was
provided by financing activities as the result of exercise of outstanding
options to purchase common stock.

	At December 31, 1999, the Company had $1,250,000 available under a
revolving line of credit bearing interest at the lender's prime rate (7.75% at
December 31, 1999) and is collateralized by certain accounts receivable and
inventories.  At December 31, 1999, there was no outstanding balance under
this note.  The credit agreement contains various debt covenants, the most
restrictive of which requires the Company to maintain certain minimum
financial requirements as of December 31, 1999.   The Company believes that
its present financing is also otherwise adequate for its capital needs for the
foreseeable future.

ITEM 7.   FINANCIAL STATEMENTS.

	Included at pages F-1 through F-17 hereof.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

	KPMG LLP ("KPMG") was previously the principal accountant for Arrow-
Magnolia.  During 1998, the Company and KPMG engaged in discussions concerning
fees for performing such work in the future, but were unable to reach
agreement.  Effective November 18, 1998, KPMG resigned.

	The former accountants' audit reports on financial statements of Arrow-
Magnolia International, Inc. as of December 31, 1997 and for the fiscal year
ended December 31, 1997 did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or
accounting principles.  In connection with the audit of the fiscal year ended
December 31, 1997, there were no disagreements with KPMG on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope procedures which, if not resolved to their satisfaction, would have
caused them to make reference in connection with their opinion to the subject
matter of the disagreement.

	Philip Vogel & Co., P.C. has been engaged as the principal accountants
to audit the financial statements of the Company.  Effective December 9, 1998,
Philip Vogel & Co., P.C. accepted the position.  The Company has not
previously consulted with that firm regarding the application of accounting
principles to any specified transaction or the type of audit opinion that
might be rendered on the Company's financial statements or upon any matter
that was a subject of disagreement with its previous accountants.

	The resignation of KPMG and the selection of Philip Vogel & Co., P.C.
has been approved by the Audit Committee and the Board of Directors of Arrow-
Magnolia International, Inc.
<PAGE>

                                  PART III


ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

	Information relating to the Company's Directors and executive officers
will be set forth under the heading  "Election of Directors and Information as
to Directors, Nominees and Executive Officers" in the Company's definitive
proxy statement relating to the Company's Annual Meeting of Stockholders to be
held May 24, 2000, which will be filed with the Securities and Exchange
Commission on or about April 30, 1999, and such information is incorporated
herein by reference.


ITEM 10.  EXECUTIVE COMPENSATION

	Information relating to executive compensation will be set forth under
the heading "Executive Compensation" in the Company's definitive proxy
statement relating to the Company's Annual Meeting of Stockholders to be held
May 24, 2000, which will be filed with the Securities and Exchange Commission
on or about April 30, 1999, and such information is incorporated herein by
reference.


ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

	Information relating to the ownership of certain beneficial owners and
management of the Company's Common Stock will be set forth under the heading
"Securities Ownership of Certain Beneficial Owners and Management" in the
Company's definitive proxy statement relating to the Company's Annual Meeting
of Stockholders to be held May 24, 2000, which will be filed with the
Securities and Exchange Commission on or about April 30, 1999, and such
information is incorporated herein by reference.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

	Information relating to the business relationships and related
transactions with respect to the Company and certain Directors and nominees
for election as Directors is set forth under the heading "Certain
Transactions" in the Company's definitive proxy statement relating to the
Company's Annual Meeting of Stockholders to be held May 24, 2000, which will
be filed with the Securities and Exchange Commission on or about April 30,
1999, and such information is incorporated herein by reference.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits.

	No.                         		Exhibit
      ---                                 -------
      3.1         Articles of Incorporation, as amended, of Arrow-Magnolia
                  International, Inc. (1).

      3.2         Bylaws of Arrow-Magnolia International, Inc.

                                       6
<PAGE>

      10.19       Arrow-Magnolia International, Inc. Amended and Restated Non-
                  Qualified Stock Option Plan (2).

      10.20       Credit Loan Agreement dated August 5, 1994 between Arrow-
                  Magnolia International, Inc. and Chase Bank of Texas (2).

      10.21       Extension and Modification Agreement dated August 18, 1994
                  between Arrow-Magnolia International, Inc. and Chase Bank of
                  Texas (2).

	10.22		1998 Stock Bonus Plan (3).

	23.1		Consent of Independent Auditors.

	23.2		Consent of Independent Auditors.





(1)	Filed as Exhibit 3.1 to Arrow-Magnolia International, Inc. Form 10-K for
the fiscal year ended December 31, 1988 and incorporated herein by reference.

(2)	Filed as Exhibits 10.19, 10.20 and 10.21 to Arrow-Magnolia
International, Inc. Form 10-KSB for the fiscal year ended December 31, 1994
and incorporated herein by reference.

(3)	Filed as Exhibit 10.19 to Arrow-Magnolia International, Inc. Form S-8
Registration Statement No. 333-47709 filed on March 10, 1998 and incorporated
herein by reference.


(b)  Reports on Form 8-K.

	None.

                                        7
<PAGE>




	                    ARROW-MAGNOLIA  INTERNATIONAL, INC.

	                Index to Financial Statements and Schedule



											Page
                                                                  ----
Independent Auditors' Reports							F-2

Financial Statements:

	Balance Sheets as of December 31, 1999 and 1998			F-4

	Statements of Income for the years ended December
      31, 1999, 1998 and 1997		                              F-5

	Statements of Stockholders' Equity for the years
      ended December 31, 1999, 1998
	and 1997									F-6

	Statements of Cash Flows for the years ended
       December 31, 1999, 1998 and 1997		                  F-7

      Notes to Financial Statements	      				F-8

                                         F-1
<PAGE>






	                     INDEPENDENT AUDITORS' REPORT





The Stockholders and Board of Directors
Arrow-Magnolia International, Inc.


We have audited the accompanying balance sheets of Arrow-Magnolia
International, Inc. as of December 31, 1999 and 1998, and the related
statements of income, stockholders' equity and cash flows for the years then
ended.  These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material supporting includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Arrow-Magnolia International,
Inc. as of December 31, 1999 and 1998, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.



                                           PHILIP VOGEL & CO. PC




                                            Certified Public Accountants

Dallas, Texas
February 18, 2000
                                          F-2
<PAGE>


                           INDEPENDENT AUDITORS' REPORT





The Stockholders and Board of Directors
Arrow-Magnolia International, Inc.


We have audited the accompanying statements of income, stockholders' equity
and cash flows of Arrow-Magnolia International, Inc. for the year ended
December 31, 1997.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and  cash flows of Arrow-
Magnolia International, Inc. for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.


                                              KPMG LLP




Dallas, Texas
February 6, 1998
                                         F-3
<PAGE>

	                   ARROW-MAGNOLIA INTERNATIONAL, INC.
                                  BALANCE SHEETS
	                      DECEMBER 31, 1999 AND 1998

<TABLE>                               1999                1998
        Assets                        ----                ----
<S>                                   <C>                 <C>
Current assets:
  Cash and cash equivalents          $2,710,341          $2,386,719
  Short-term investments                300,000            300,000
  Trade accounts receivable,
    less allowance for doubtful
    accounts of $438,990 in 1999
    and $414,276 in 1998              2,373,686          2,347,320
  Inventories                           672,068            702,615
  Prepaid income taxes                   79,961             70,861
  Deferred income taxes                 184,900            144,300
  Other assets                            9,247             27,315
                                     ----------         ----------
    Total current assets             $6,330,203         $5,979,130

Property and equipment, net           1,650,918            804,140
Intangible assets, net                  125,176            131,247
Notes receivable                         40,000             40,000
Deferred income taxes                         0             27,200
Other assets, at cost                     2,700              2,700
                                     ----------         ----------
    Total assets                     $8,148,997         $6,984,417
                                     ==========         ==========
       Liabilities and stockholders' equity

Current liabilities:
  Accounts payable                     $584,549           $491,447
Accrued liabilities                     236,510            215,939
Income taxes payable                     24,498             63,295
                                      ---------          ---------
    Total current liabilities          $845,557           $770,681

Deferred income taxes                    21,500                  0
Deferred compensation                   104,500            104,500
                                      ---------          ---------
    Total liabilities                  $971,557           $875,181
                                      ---------          ---------
Commitments and contingencies (see Note I)

Stockholders' equity:
  Preferred stock - par value $.10,
  authorized 500,000 shares; none issued     $0                 $0
Common stock - par value $.10, authorized
  10,000,000 shares; issued shares
  3,262,066 in 1999 and 2,958,990 shares
  in 1998                               326,207            295,899
Additional paid-in capital            5,607,214          4,546,795
Retained earnings                     1,305,487          1,328,010
Less cost of 13,500 shares of common
  stock in treasury                     (61,468)           (61,468)
                                     ----------         ----------
Total stockholders' equity           $7,177,440         $6,109,236
                                     ----------         ----------
Total liabiliities and stockholders'
  equity                             $8,148,997         $6,984,417
                                     ==========         ==========
</TABLE>
The accompanying notes are an integral part of these statements.
                                        F-4
<PAGE>







	                    ARROW-MAGNOLIA INTERNATIONAL, INC.
	                        STATEMENTS OF INCOME
	             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
                                       1999           1998            1997
                                     -----------    -----------     ----------
  <S>                                    <C>            <C>             <C>
Net sales                            $14,001,716    $13,769,007    $12,748,100
Cost of sales                          8,004,814      7,718,708      7,192,907
                                     -----------    -----------     ----------
Gross profit                          $5,996,902     $6,050,299     $5,555,193

General and administrative expenses    4,461,476      4,202,927      3,574,817
                                     -----------    -----------     ----------
Income before other income (expense)  $1,535,426     $1,847,372     $1,980,376
                                     -----------    -----------     ----------
Other income (expense):
Interest expense                              $0       $(69,278)     $(64,989)
Interest income                          110,244         87,616         62,946
Other income                                 522         13,620          4,475
                                     -----------    -----------     ----------
Total other income (expense)            $110,766        $31,958         $2,432
                                     -----------    -----------     ----------
Income before income taxes            $1,646,192     $1,879,330     $1,982,808

Provision for income taxes               598,130        672,050        706,961
                                     -----------    -----------     ----------
Net income                            $1,048,062     $1,207,280     $1,275,847
                                     ===========    ===========    ===========



Earnings per common share:

Basic                                      $0.32          $0.37          $0.40
                                     ===========    ===========    ===========

Diluted                                    $0.29          $0.33          $0.35
                                     ===========    ===========    ===========
</TABLE>


The accompanying notes are an integral part of these statements.

                                        F-5
<PAGE>

                         ARROW-MAGNOLIA INTERNATIONAL, INC.
                         STATEMENTS OF STOCKHOLDERS' EQUITY
	          FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>

                    Common stock    Additional           Cost of     Total
                   Shares            paid-in   Retained  treasurystockholders'
               Outstanding  Amount   capital   earnings   stock      equity
               -----------  ------   -------   --------   -------  -----------
   <S>          <C>        <C>        <C>        <C>       <C>       <C>
Balances at
December 31,
1996           2,373,120  $237,312  $1,347,748  $1,743,755      $0  $3,328,815

10% stock
dividend         237,312    23,731   1,127,232  (1,150,963)      0           0

Exercise of
stock options
and related
tax benefits       6,960       696      13,688           0       0      14,384

Exercise of
stock warrants
and related
tax benefits      64,000     6,400     262,514           0       0     268,914

Expense resulting
from issuance of
stock warrants         0         0      25,000           0       0      25,000

Net income             0         0           0   1,275,847       0   1,275,847
               --------- ---------  ----------  ----------   -----    --------
Balances at
December 31,
1997           2,681,392  $268,139  $2,776,182  $1,868,639      $0  $4,912,960

10% stock
dividend         268,909    26,891   1,721,018  (1,747,909)      0           0

Exercise of
stock options
and related
tax benefits      4,356       436      10,351            0       0      10,787

Expense resulting
from issuance of
stock warrants        0         0       7,720            0       0       7,720

Shares issued
pursuant to stock
bonus plan        4,333       433      31,524            0       0      31,957

Purchase of
13,500 shares
of common
stock for
treasury        (13,500)       0            0            0  (61,468)  (61,468)

Net income            0        0            0    1,207,280        0  1,207,280
               -------- --------  -----------   ----------   ------   --------

Balances at
December 31,
1998          2,945,490 $295,899   $4,546,795   $1,328,010 $(61,468)$6,109,236

10% stock
dividend       295,185   29,519    1,040,527    (1,070,585)       0      (539)

Exercise of
stock options
and related
tax benefits     4,791      479        7,414             0        0      7,893

Shares issued
pursuant to
stock bonus
plan             3,100      310       12,478             0        0     12,788

Net income           0        0            0     1,048,062        0  1,048,062
             --------- --------  -----------   -----------  -------   --------
Balances at
December 31,
1999         3,248,566 $326,207   $5,607,214    $1,305,487 $(61,468)$7,177,440
             ========= ========  ===========   ===========  ======= ==========

</TABLE>

The accompanying notes are an integral part of these statements.

                                         F-6

<PAGE>

                         ARROW-MAGNOLIA INTERNATIONAL, INC.
                             STATEMENTS OF CASH FLOWS
	          FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
                                   1999            1998             1997
                                ----------      ----------       ----------
<S>                                <C>             <C>              <C>
Cash flows from operating activities:
Net income                      $1,048,062      $1,207,280       $1,275,847

Adjustments to reconcile
net income to net cash
provided by operating
activities:
    Depreciation and
      amortization                 156,029         152,173          143,748
    Deferred income taxes            8,100         (23,642)         (45,086)
    Provision for doubtful
      Accounts                     381,764         548,547          291,901
    Compensation expense
      from issuance of stock
      options and warrants               0               0          129,500

Changes in operating assets
and liabilities:
    Receivables                   (408,130)       (122,515)      (1,479,701)
    Inventories                     30,547        (101,458)         (84,585)
    Prepaid income taxes            (9,100)        (70,861)               0
    Other assets                    18,068            (683)          (8,531)
    Accounts payable                93,102         (79,979)         125,966
    Accrued liabilities             20,571            (385)          55,295
    Income taxes payable           (38,797)        (76,986)            (630)
                                ----------      ----------        ---------
      Net cash provided by
      operating activities      $1,300,216      $1,431,491         $403,724
                                ----------      ----------        ---------

Cash flows from investing activities:

Proceeds from sale of
short-term investments           $300,000         $300,000         $300,000
    Purchase of short-term
      investments                (300,000)        (300,000)        (300,000)
    Acquisition of property
      and equipment              (996,736)        (211,326)        (286,301)
                                ---------        ---------        ---------
      Net cash provided (used)
      by investing activities   $(996,736)       $(211,326)       $(286,301)
                                ---------        ---------        ---------

Cash flows from financing activities:

Proceeds from issuance of
note payable                           $0               $0          $12,000
   Repayments of note payable           0         (600,000)         (57,000)
   Repayments of long-term debt         0         (101,361)        (133,484)
   Proceeds from issuance of
     common stock                  20,681           50,464          184,980
   Cash issued in lieu of
     fractional shares               (539)               0                0
   Purchase of common stock
     for treasury                       0          (61,468)               0
                                ---------        ---------         --------








Net cash provided (used) by
financing activities              $20,142        $(712,365)          $6,496
                                ---------        ---------         --------

Net increase in cash and
cash equivalents                 $323,622         $507,800         $123,919

Cash and cash equivalents:
Beginning of year               2,386,719        1,878,919        1,755,000
                               ----------       ----------       ----------
End of year                    $2,710,341       $2,386,719       $1,878,919
                               ==========       ==========       ==========

</TABLE>

The accompanying notes are an integral part of these statements.

                                        F-7

<PAGE>

Note A - Summary of significant accounting policies:

Basis of presentation
---------------------
The financial statements include the accounts of Arrow-Magnolia International,
Inc. (Arrow) and its wholly-owned subsidiary, Bio/Dyne Chemical Company
(Bio/Dyne) (collectively the Company), for periods prior to 1998.  All
significant intercompany balances and transactions were eliminated in
consolidation.  During 1992, Arrow sold the assets of Bio/Dyne to a group of
unrelated individuals in exchange for a $40,000 note receivable.  During 1997,
the corporate entity of Bio/Dyne was terminated.  The effects of these
transactions were not material to the financial statements of Arrow.

Nature of the operations
------------------------
The Company is engaged in the sale and distribution of chemical products,
primarily industrial and institutional cleaning and maintenance supplies and
related products, to industrial users, telephone supply distributors,
governmental agencies and school systems.  The Company's customers operate in
many different industries and geographic regions. No single customer accounted
for more than 10% of net sales in 1999, 1998 or 1997.

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

Concentrations of credit risk
-----------------------------
In the ordinary course of business, the Company extends unsecured credit to
its customers with payment terms generally  30 - 90 days.  In addition, the
terms of sale generally provide for the limited ability to return the product
under certain conditions.  Returns of merchandise have historically not been
significant to the Company.  Because of the credit risk involved, management
has provided an allowance for doubtful collections which reflects its opinion
of the amounts which will eventually become uncollectible.  In the event of
complete nonperformance by the Company's customers, the maximum exposure to
the Company is the outstanding accounts receivable balance at the date of
nonperformance.

At December 31, 1999, the Company had cash balances of approximately $370,000
in banking institutions in excess of federally insured amounts.  These
balances are therefore considered outstanding items.  The Company also had
approximately $1,200,000 of its funds invested in uninsured money accounts at
December 31, 1999.  These funds are managed by outside investment management
firms in short-term instruments with maturities of 120 days or less.

Cash equivalents and statements of cash flows
---------------------------------------------
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with original maturities of three months or less to be
cash equivalents.  Cash equivalents of $988,119 and $989,967 at December 31,
1999 and 1998, respectively, consist of U.S. treasury bills with original
maturities of less than three months.

Cash paid for interest during 1999, 1998 and 1997 was $9,111, $60,167 and
$64,989, respectively.  Cash paid for income taxes during 1999, 1998 and 1997
was $637,927, $843,539 and $752,677, respectively.

                                     F-8
<PAGE>


Note A - Summary of significant accounting policies (continued):

Short-term investments
----------------------
Short-term investments at December 31, 1999 and 1998 represent investments in
bank certificates of deposit.

Inventories
-----------
Inventories, which consist primarily of merchandise purchased for resale and
raw materials purchased for blending, are stated at the lower of cost or
market.
Cost is determined using the first-in, first-out method.

Property and equipment
----------------------
Property and equipment are stated at cost.  Depreciation is computed using the
straight-line method over the estimated useful lives of the assets.  The cost
of maintenance and repairs is charged to expense as incurred; significant
renewals and betterment are capitalized.

Goodwill
--------
Goodwill, which represents the excess of purchase price over fair value of net
assets acquired, is amortized on a straight-line basis over the expected
periods to be benefitted, generally 15 to 40 years.  The Company assesses the
recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired operation.
The amount of goodwill impairment, if any, is measured based on projected
discounted future operating cash flows using a discount rate reflecting the
Company's average cost of funds.  The assessment of the recoverability of
goodwill will be impacted if estimated future operating cash flows are not
achieved.

Income taxes
------------
Income taxes are accounted for under the asset and liability method.  Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax basis.  Deferred
tax assets and liabilities are measured using enacted tax rates that will
apply in the years in which those temporary differences are expected to be
recovered or settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Earnings per share
------------------
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings per Share, during 1997 and retroactively
restated all per share amounts.  SFAS No. 128 reporting requirements replace
primary and fully-diluted earnings per share (EPS) with basic and diluted EPS.
Basic EPS is calculated by dividing net income (available to common
stockholders) by the weighted average number of common shares outstanding for
the period.  Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted into common stock.

                                     F-9




<PAGE>


Note A - Summary of significant accounting policies (continued):

Earnings per share (continued)
-----------------------------
Effective July 20, 1999, the Company issued a 10% stock dividend on all
outstanding shares.  As a result, all share and per share information has been
retroactively restated to give effect to the dividend.  Shares used in
calculating basic and diluted income per share are as follows:

<TABLE>
                                    1999            1998            1997
                                  ---------       ---------      ---------
<S>                                  <C>             <C>            <C>
Weighted average common shares
   outstanding                    3,246,602       3,249,928      3,175,039

Dilutive securities:
   Common stock options             770,690         774,765        784,549
   Warrants to service providers          0               0         56,467
   Assumed repurchase of common
      shares                       (355,010)       (338,971)      (400,048)
                                  ---------       ---------      ---------
Weighted average common shares
   outstanding - diluted basis    3,662,282       3,685,722      3,616,007
                                  =========       =========      =========
</TABLE>

Stock option plan
----------------
Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if
the current market price of the underlying stock exceeded the exercise price.
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, which
permits entities to recognize as expense over the vesting period the fair
value of all stock-based awards on the date of grant.  Alternatively, SFAS No.
123 allows entities to continue to apply the provisions of APB Opinion No. 25
and provide proforma net income and proforma earnings per share disclosures
for employee stock option grants made in 1996 and future years as if the fair-
valued-based method defined in SFAS No. 123 had been applied.  The Company has
elected to continue to apply the provisions of APB Opinion No. 25 and provide
the proforma disclosure provisions of SFAS No. 123.

Impairment of long-lived assets and long-lived assets to be disposed of
-----------------------------------------------------------------------
The Company has adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
This statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.  Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset.  If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets.  Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell.  During the years ended December 31, 1999, 1998 and
1997, the Company's analyses indicated that there was not an impairment of its
long-lived assets.


                                         F-10
<PAGE>

Note A - Summary of significant accounting policies (continued):

Transfers and servicing of financial assets and extinguishment of liabilities
-----------------------------------------------------------------------------
The Company has adopted the provisions of SFAS No. 125, Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.
This statement provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishment of liabilities based on
consistent application of a financial-components approach that focuses on
control.  It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings.

Reporting comprehensive income and operating segments
-----------------------------------------------------
The Company has adopted the provisions of SFAS No. 130, Reporting
Comprehensive Income and SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information.  SFAS No. 130 requires that an enterprise
report, by major components and as a single total, the change in its net
assets during the period from nonowner sources.  SFAS No. 131 establishes
annual and interim reporting standards for an enterprise's operating segments
and related disclosures about its products, services, geographic areas and
major customers.  Adoption of these statements has had no impact on the
Company's  financial position, results of operations, cash flows, or related
disclosures.

Fair value of financial instruments
-----------------------------------
The Company defines the fair value of a financial instrument as the amount at
which the instrument could be exchanged in a current transaction between
willing parties.  Financial instruments included in the Company's financial
statements include cash and cash equivalents, short-term investments, trade
accounts receivable, other receivables, note receivable, other assets, trade
accounts payable, notes payable and long-term debt.  Unless otherwise
disclosed in the notes to the financial statements, the carrying value of
financial instruments is considered to approximate fair value due to the short
maturity and characteristics of those instruments.  The carrying value of
long-term debt approximates fair value as terms approximate those currently
available for similar debt instruments.

Year 2000
---------
In 1996, the Company developed a plan to deal with the Year 2000 problem and
began converting its computer systems to be Year 2000 compliant.  During 1997,
the Company began the conversion of its computer systems.  During 1998, the
Company was informed that substantially all its operating programs were Year
2000 compliant.  The Year 2000 problem is the result of computer programs
being written using two-digits rather than four to define the applicable year.
The Company has expensed all costs associated with these systems as the costs
were incurred.  The costs of conversion were not material to the financial
statements of the Company.

Revenue recognition
-------------------
The Company generally recognizes revenues when its products are shipped to
customers.  Appropriate provisions for estimated returns of product and other
allowances have been made in the accompanying financial statements.


                                     F-11

<PAGE>





Note B - Property and equipment:

Property and equipment consist of the following at December 31, 1999 and 1998:

<TABLE>                                            1999              1998
                                               ----------         ----------
      <S>                     <C>                  <C>                <C>
Land                                              $97,209            $97,209
Buildings and improvements   5 to 40 years      1,128,805            428,633
Machinery and equipment      3 to 10 years      1,177,733            912,432
Furniture and fixtures       5 to 10 years        295,516            264,253
                                               ----------         ----------
                                               $2,699,263         $1,702,527
Less accumulated depreciation                   1,048,345            898,387
                                               ----------         ----------
                                               $1,650,918           $804,140
                                               ==========         ==========
</TABLE>

Depreciation expense charged to operations was $186,651, $150,728 and $135,431
in 1999, 1998 and 1997, respectively.

Note C - Intangible assets:

Intangible assets consist of the following at December 31, 1999 and 1998:

<TABLE>
                                                   1999              1998
                                               ----------         ----------
  <S>                       <C>                    <C>                <C>
Goodwill                 15 to 40 years          $160,124           $160,124

Less accumulated amortization                      34,948             28,877
                                               ----------         ----------
                                                 $125,176           $131,247
                                               ==========         ==========
</TABLE>

Note D - Note payable:

The Company has available at December 31, 1999, a revolving line of credit
with an asset-based lender due on May 1, 2000.   The credit agreement provides
for a commitment from the lender at the lesser of $1,250,000 or the borrowing
base as defined.  At December 31, 1999 and 1998, there were no outstanding
balances due under this note.  The credit agreement contains various debt
covenants, the most restrictive of which requires the Company to maintain
certain minimum financial criteria.  At December 31, 1999, the Company
believes it is in compliance with all debt covenant requirements.  The note
requires monthly payments of interest at the lender's prime rate (7.75% at
December 31, 1999) and is collateralized by certain accounts receivable and
inventories.









                                      F-12



<PAGE>


Note E - Income taxes:

Income tax expense for the years ended December 31, 1999, 1998 and 1997
consists
of the following:

<TABLE>
                                   1999            1998            1997
                                  ----------      ----------      ----------
   <S>                               <C>             <C>              <C>
U.S. federal - current              $536,398        $641,509        $734,278
U.S. federal - deferred                8,100         (23,642)        (45,086)
State - current                       53,632          54,183          17,769
                                  ----------      ----------      ----------
                                    $598,130        $672,050        $706,961
                                  ==========      ==========      ==========
</TABLE>

Income tax expense for the years ended December 31, 1999, 1998 and 1997
differs from the "expected" tax expense (computed by applying the 34% U.S.
federal corporate rate to income before income taxes) as follows:

<TABLE>
                                     1999            1998            1997
                                  ---------       ----------      ----------
  <S>                                <C>              <C>             <C>
Computed "expected" tax expense    $559,705         $638,972        $674,155
Amortization of goodwill                939              703             703
State income taxes, net of federal
   Benefit                           35,397           35,761          11,728
Other                                 2,089           (3,386)         20,375
                                  ---------        ---------       ---------
                                   $598,130         $672,050        $706,961
                                  =========        =========       =========
</TABLE>

The tax effects of temporary differences that give rise to significantportions
of the deferred tax assets and deferred tax liabilities at December 31, 1999
and 1998 are presented below:

<TABLE>
                                                     1999            1998
                                                  ----------      ----------
  <S>                                                 <C>             <C>
Deferred tax assets:
  Accounts receivable, principally due to
    allowance for doubtful accounts                 $149,300        $140,900
  Overhead allocation to inventories under IRC 263a   21,400           3,450
  Expense resulting from issuance of stock
    options and warrants                              35,450          35,450
                                                  ----------      ----------
Total gross deferred tax assets                     $206,150        $179,800
Less valuation allowance                                   0               0
                                                  ----------      ----------
Net deferred tax assets                             $206,150        $179,800
                                                  ----------      ----------
Deferred tax liabilities:
  Property and equipment, principally due to
    differences in depreciation                     $(42,200)        $(7,600)
  Other                                                 (550)           (700)
                                                  ----------       ---------
Total gross deferred tax liabilities                $(42,750)        $(8,300)
                                                  ----------       ---------
Net deferred tax asset                              $163,400        $171,500
                                                  ==========       =========
<PAGE>                                 F-13
Note E - Income taxes (continued):

Deferred tax assets and liabilities are computed by applying the effective
U.S. federal income tax rate to the gross amounts of temporary differences and
other tax attributes.  Deferred tax assets and liabilities relating to state
income taxes are not material.  In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized.  The ultimate
realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become
deductible.  Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making this assessment.  The Company expects the net deferred tax assets at
December 31, 1999, to be realized as a result of future taxable income.

Note F - Stockholders' equity:

Stock equivalents at December 31, 1999, 1998 and 1997, and changes in stock
equivalents for the three-year period ended December 31, 1999, are presented
below:

</TABLE>
<TABLE>                         Stock options              Stock warrants
  <S>                      <C>      <C>      <C>       <C>      <C>      <C>
Stock options/warrants
exercise price             $0.50    $2.00    $4.375    $2.25    $4.13    $4.75
                        ========  =======  ========  =======  =======  =======
Stock options/warrants
  issued and
  outstanding,
  December 31, 1996      542,080        0         0   40,000        0        0
   Issuance of
     options/warrants          0   50,000         0        0   20,000        0
   Exercise of
     options/warrants     (6,960)       0         0  (44,000) (20,000)       0
   10% stock dividend     54,208    5,000         0    4,000        0        0
                        --------  -------  --------  -------  -------  -------
Stock options issued
  and outstanding,
  December 31, 1997      589,328   55,000         0        0        0        0
   Exercise of options    (4,356)       0         0        0        0        0
   10% stock dividend     58,497    5,500         0        0        0        0
                        --------  -------  --------  -------  -------  -------
Stock options issued
  and outstanding
  December 31, 1998      643,469   60,500         0        0        0        0
   Issuance of
     options/warrants          0        0    20,000        0        0   10,000
   Exercise of
     options/warrants     (4,791)       0         0        0        0        0
   10% stock dividend     63,864    6,050     2,000        0        0    1,000
                        --------  -------  --------  -------  -------  -------
Stock options issued
   and outstanding,
   December 31, 1999     702,542   66,550    22,000        0        0   11,000
                        ========  =======  ========  =======  =======  =======
</TABLE>
Stock option plan

The Company has a non-qualified stock option plan (Plan) covering
approximately 828,000 shares of common stock.  Participants are selected by
the Company's board of directors from the executive officers and other key
employees of the Company.  The Plan provides that the option price per share
and vesting period for stock options issued under the Plan are determined by
the Company's board of directors.
                         F-14
<PAGE>
Note F - Stockholders' equity (continued):

$.50 stock options
-----------------
In December 1994, 400,000 stock options were granted to certain officers of
the Company at an option price of $.50 per share, the estimated fair market
value of the common stock at the date of grant.  These stock options were
fully exercisable at the date of grant.

In January 1995, an additional 100,000 options were granted to certain key
employees.  These stock options were issued at an option price of $.50 per
share, the estimated fair value of the common stock at the date of grant, and
vest in annual increments of 20% with the first 20% vesting occurring on the
date of issuance.

Options outstanding were increased by 50,000 in 1995, 54,208 in 1997, 58,497
in 1998, and 63,864 in 1999 due to 10% stock dividends.   At December 31,
1999, 24,027 of these options had been exercised;  702,042 options remain
outstanding and all are exercisable.

$2.00 stock options
-------------------
In January 1997, the Company granted 50,000 stock options to an employee of
the Company.  These stock options were issued at an option price of $2.00 per
share.  The stock options were fully exercisable at the date of grant.  During
1997, the Company recognized the aggregate excess of the market price over the
exercise price at date of grant, $104,500, as expense.  Options outstanding
were increased by 5,000 in 1997, 5,500 in 1998, and 6,050 in 1999 due to 10%
stock dividends.  At December 31, 1999, none of these options have been
exercised; 66,550 options remain outstanding and all are exercisable.

$4.375 stock options
--------------------
In January 1999, the Company granted 20,000 stock options to certain employees
of the Company.  These stock options were issued at an option price of $4.375
per share and vest in annual increments of 20% with the first 20% vesting
occurring on the date of issuance.  Total stock options outstanding were
increased by 2,000 in 1999, due to a 10% stock dividend.  At December 31,
1999, none of these options had been exercised; 22,000 options remain
outstanding and 5,500 are exercisable.

The weighted average exercise price of all outstanding options as of December
31, 1999, was $.79.

Stock warrants
--------------
On May 15, 1995, the Company issued stock warrants to a certain service
provider.  The stock warrants were exercisable to purchase up to 50,000 shares
of the Company's common stock at $1.25 per share, the estimated fair market
value of the common stock at the date of grant.  The stock warrants were fully
exercisable at the date of the grant.  During 1996, all of the warrants were
exercised.

In May 1996, the Company issued stock warrants to an additional service
provider.  The stock warrants were exercisable to purchase up to 40,000 shares
of the Company's common stock at $2.25 per share.  Total warrants outstanding
were increased to 44,000 in 1997 due to a 10% stock dividend. The Company
recognized the aggregate excess of the estimated fair value over the exercise
price at date of grant of $50,000 as expense over the two year term of the
service agreement, which was the same life as the warrants.  The Company
recognized approximately  $7,700 and $25,000 as compensation expense during
1998 and 1997, respectively, related to these warrants. During 1997, all of
the warrants were exercised.

In May 1997, the Company issued stock warrants to a service provider.  The
stock warrants were exercisable to purchase up to 20,000 shares of the
Company's common stock at $4.125 per share, the estimated fair value at date
of grant.  No compensation cost was recognized with respect to these stock
warrants.  The stock warrants were fully exercisable at the date of the grant.
During 1997, all of the warrants were exercised.
                                      F-15
<PAGE>
Note F - Stockholders' equity (continued):

In February 1999, the Company issued stock warrants to a service provider.
The stock warrants are exercisable to purchase up to 10,000 shares of the
Company's common stock at $4.75 per share.  The stock warrants were increased
to 11,000 in 1999 due to a 10% stock dividend.    No compensation cost was
recognized with respect to these stock warrants.  At December 31, 1999, none
of these warrants have been exercised; 11,000 remain outstanding and all are
exercisable.

Stock dividends
---------------
Effective July 1, 1997, July 14, 1998, and July 20, 1999, the Company issued
10% stock dividends on all outstanding common shares.

Note G - Proforma information related to stock options:

The per share weighted-average fair value of stock options granted during 1999
and 1997 was $1.94 and $3.74, respectively, on the date of grant, using the
Black Scholes option-pricing model.  There were no stock options granted
during 1998.  The following weighted-average assumptions were used in the
pricing model:

<TABLE>
                                               1999            1997
                                           -----------     ------------
  <S>                                         <C>            <C>
Expected dividend yield                          0.00%            0.00%
Risk-free interest rate                          4.84%            6.70%
Expected life                                  7 years          7 years

</TABLE>
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, has recognized no compensation expense for stock options granted
at exercise prices at least equal to the market value of the Company's common
stock.  Had the Company determined compensation cost based on the fair value
at the grant date for its stock options under SFAS No. 123, the Company's net
income and earnings per share would have been reduced to the proforma amounts
indicated below:
<TABLE>
                                     1999            1998            1997
                                  -----------     -----------    -----------
  <S>                                <C>              <C>             <C>
Net income:
   As reported                     $1,048,062      $1,207,280     $1,275,847
                                   ==========      ==========     ==========
   Proforma                        $1,037,796      $1,207,280     $1,193,347
                                   ==========      ==========     ==========
Basic earnings per common share:
   As reported                          $0.32           $0.37          $0.40
                                   ==========      ==========     ==========
   Proforma                             $0.32           $0.37          $0.38
                                   ==========      ==========     ==========
Diluted earnings per common share:
   As reported                          $0.29           $0.33          $0.35
                                   ==========      ==========     ==========
   Proforma                             $0.28           $0.33          $0.33
                                   ==========      ==========     ==========
</TABLE>

Proforma net income reflects only options granted in 1997 and 1999.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the proforma net income amounts
presented above because compensation cost is reflected over the option's
vesting period, and compensation cost for options granted prior to January 1,
1995, is not considered.
                                   F-16
<PAGE<

Note H - Quarterly financial data (unaudited):

Quarterly net income and earnings per share for 1999, retroactively restated
for the 1999 stock dividend, are as follows:

<TABLE>
                                                       Earnings per share
                                                    -------------------------
                                Net income            Basic          Diluted
                               -----------           ---------      ----------
  <S>                              <C>                <C>               <C>
First quarter                     $417,080            $0.13             $0.11
Second quarter                     255,276            $0.08             $0.07
Third quarter                      305,986            $0.09             $0.08
Fourth quarter                      69,720            $0.02             $0.02
                               -----------
                                $1,048,062
                               ===========
</TABLE>

Note I - Commitments and contingencies:

Contingencies

The Company is involved in various claims and legal actions arising in the
ordinary course of business.  In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's  financial position, results of operations or liquidity.

                                     F-17
<PAGE>



                                 SIGNATURES


	In accordance with Section 13 or 15(d) of The Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunder duly authorized.

						ARROW-MAGNOLIA INTERNATIONAL, INC.


						By:   /s/ Mark I. Kenner
                                       ----------------------------------
		        Mark I. Kenner, Vice Chairman and
						    Chief Executive Officer


Dated:  March 30, 2000

	In accordance with The Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

Signature                			Title
	Date

/s/ Morris Shwiff
-------------------        Director and Chairman of the        }
Morris Shwiff              Board 		             	   }
										   }
									         }
/s/ Mark I. Kenner
-------------------        Director, Vice Chairman and	   }
Mark I. Kenner      	   Chief Executive Officer		   }	March
			         (Principal Executive Officer)	   }   30, 1999
								               }
/s/ Fred Kenner
-------------------         Director, President and            }
Fred Kenner         	    Chief Operating Officer		   }
				    (Principal Financial and      	   }
				    Accounting Officer)          	   }
								               }

-------------------          Director			         }
Robert D. DeRosier						         }
								               }

-------------------          Director			         }
Clifton R. Duke							         }

<PAGE>

                                    INDEX TO EXHIBITS


Number     Exhibit                            				Page

3.1 Articles of Incorporation, as amended, of
      Arrow-Magnolia International, Inc. (1).

3.2  	Bylaws of Arrow-Magnolia International, Inc.

10.19 Arrow-Magnolia International, Inc.  Amended and
      Restated Non-Qualified Stock
	Option Plan (2).

10.20 Credit Loan Agreement dated August 5, 1994 between
       Arrow-Magnolia International, Inc. and Chase Bank of Texas (2).

10.21 Extension and Modification Agreement dated August 18, 1994
      between Arrow-Magnolia International, Inc. and Chase Bank of Texas (2).

10.22	1998 Stock Bonus Plan (3).

23.1	Consent of Independent Auditors.

23.2	Consent of Independent Auditors.




(1)	Filed as Exhibit 3.1 to Arrow-Magnolia International, Inc. Form 10-K for
the fiscal year ended December 31, 1988 and incorporated herein by reference.

(2)	Filed as Exhibits 10.19, 10.20 and 10.21 to Arrow-Magnolia
International, Inc. Form 10-K for the fiscal year ended December 31, 1994 and
incorporated herein by reference.

(3)	Filed as Exhibit 10.19 to Arrow-Magnolia International, Inc. Form S-8
Registration Statement No. 333-47709 filed on March 10, 1998 and incorporated
herein by reference.