SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
           FORM 10-KSB/A
               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 1995
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:    (214) 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) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 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 in response to Item
405 of Regulation S-B is contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incor-
porated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.      
                              /    /
                              
Issuer's revenues for the fiscal year ended December 31, 1995
were: $8,393,829

The aggregate market value of issuer's voting stock held by non-
affiliates as of December 31, 1995 was $2,059,125 (*See note on
index page.)  

The number of shares outstanding of each class of the issuer's
common stock as of December 31, 1995, was:  
    Common Stock, par value $0.10 per share, 1,157,600 shares    

Documents Incorporated by Reference: None.

Transitional Small Business Disclosure Format:  Yes       No  X  
PAGE
<PAGE>
                    ARROW-MAGNOLIA INTERNATIONAL, INC.

                      ANNUAL REPORT ON FORM 10-KSB/A


                                   INDEX

Securities and Exchange Commission
Item Number and Description                            Page


                                  PART I

Item 1.   Description of Business .................    1   

Item 2.   Description of Property .................    3  

Item 3.   Legal Proceedings .......................    3  

Item 4.   Submission of Matters to a Vote of
          Security-Holders ........................    3  


                                  PART II

Item 5.   Market for Common Equity and Related 
          Stockholder Matters .....................    4  

Item 6.   Management's Discussion and Analysis or 
          Plan of Operation .......................    5  

Item 7.   Financial Statements ....................    7    

Item 8.   Changes in and Disagreements With 
          Accountants on Accounting and Financial 
          Disclosure ..............................    7  


                                 PART III

Item 9.   Directors, Executive Officers, Promoters
          and Control Persons; Compliance with 
          Section 16(a) of the Exchange Act ........   8
           
Item 10.  Executive Compensation ..................    10

Item 11.  Security Ownership of Certain Beneficial
          Owners and Management ...................    12

Item 12.  Certain Relationships and Related 
          Transactions ............................    12
PAGE
<PAGE>
                          PART IV AND SIGNATURES

Item 13.  Exhibits and Reports on Form 8-K ........    

SIGNATURES ........................................    

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
SCHEDULES .........................................    F-1     

*    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/A and for
     no other purpose.  The aggregate market value indicated is
     based upon the average of the last bid and asked prices of
     the issuer's common stock, as reported by the NASDAQ OTC
     Bulletin Board as of December 31, 1995.  However, the
     issuer's stock is thinly traded, and such prices may not be
     representative of the prices that might result with a more
     widely traded security.  See "Market for Common Equity and
     Related Stockholder Matters."



PAGE
<PAGE>
                    ARROW-MAGNOLIA INTERNATIONAL, INC.

                        Form 10-KSB/A Annual Report
                         For the Fiscal Year Ended
                             December 31, 1995

                                  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 mainte-
nance 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 manufactures and, in addition, purchases products that have
been blended or manufactured and then packaged under the
Company's 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 prod-
ucts, including its nonchemical products, are marketed throughout
the United States, Canada and other countries to a variety of
consumers, including customers in the aircraft industry, the
construction industry and the telecommunications industry, which
collectively accounted for approximately 40% of the Company's
sales during 1995.  No single customer accounted for as much as
10% of its total net sales during 1995 or 1994. 

     The products sold by the Company include aircraft coatings,
cleaners, corrosion preventatives, degreasers, and air freshen-
ers; 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.  Other sanitation and maintenance products sold by
the Company include soaps, deodorants, germicides, insecticides,
disinfectants and miscellaneous janitorial supplies.  Nonchemical
products sold by the Company include mops, brooms, paper products
and poly liners.  The Company's products are designed and pack-
aged for large-scale users rather than individual household
consumers.
<PAGE>
     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 1995
sales expressed in 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 persons and independent contractors and manufacturers'
representatives. In addition, the Company exhibits its products
at trade shows. The Company attends, on a regular basis, approxi-
mately six trade shows.  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.



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 consti-
tutes only a very minor portion of the total available market.

     The principal methods of competition in the business of the
Company are sales personnel, price, quality and delivery capabil-
ity. 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.

<PAGE>

Employees

     As of December 31, 1995, the Company employed approximately  
one hundred (100) full-time employees, including its warehouse
personnel and administrative, accounting, clerical and sales
personnel. 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 build-
ing owned by the Company at 2646 Rodney Lane, Dallas, Texas.
These facilities occupy approximately 40,000 square feet of floor
space, of which 33,000 square feet are devoted to warehousing and
shipping and manufacturing, and 7,000 square feet to
administrative and executive offices.  The Company is currently
evaluating whether to build an additional 30,000 square feet of
warehouse space onto its existing facilities.  A deed of trust
has been granted with respect to this property to secure certain
indebtedness of the Company.

     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.

     The Company is not a party to, nor is any of its property
the subject of, any legal proceedings other than routine litiga-
tion incidental to its business.

     
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, 1995, to a vote of the Company's
security holders, through solicitation of proxies or otherwise.
PAGE
<PAGE>
                                  PART II


ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MAT-
          TERS.

     The Company's common stock is traded in the over-the-counter
market, but such trading occurs sporadically and in relatively
small volumes.  

     Since April 1995, the Company's common stock has been
included for quotation on the NASDAQ OTC Bulletin Board under the
trading symbol "ARWM".  The following table sets forth the high
and low sales prices and volume of trading in the common stock
for each month since such inclusion:



1995 Quarter Ended       High           Low            Volume

December 1995            5              4               4,020
November 1995            4              3 1/2             320
October 1995             4 15/16        3 1/2           4,380
September 1995           4 15/16        3 1/2           1,520
August 1995              4 1/4          3 1/4          17,576
July 1995                4              3 1/4           5,367
June 1995                3 3/4          2 1/2           5,566
May 1995                 4              2 3/8          31,200
April 1995               3 1/2          3 1/2           1,000



     The approximate number of record holders of the Company's
Common Stock as of December 31, 1995, was 400.

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

     The following table sets forth for the periods indicated the
relative percentages which certain items included in the consolidated
statements of earnings 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       1995      1994    
                   Years Ended December 31        vs.       vs.    
                  1995       1994       1993      1994      1993     
<S>               <C>        <C>        <C>       <C>          <C>
Net sales         100.0%     100.0%     100.0%    25.5%      6.8%         
                 
Cost of sales      58.2%      58.6%     61.7%     24.7%      1.4%
          
Gross profit       41.8%      41.4%     38.3%     26.7%     15.5%            
       
General and
 administra-
 tive expenses     28.3%      31.3%     31.9%     13.3%      4.9%         
     
Operating income   13.5%      10.1%      6.4%     68.2%     68.1%         

Interest expense    1.2%       1.5%      1.8%     (4.5)%   (10.0)%            
         
Earnings before
 effect of change
 in  method of
 accounting for
 income taxes      8.1%       5.4%        2.9%    88.1%     96.3%         
 
Effect of change
 in method           -           -        2.0%      -          -          
          
Net earnings       8.1%        5.4%       4.9%    88.1%     16.7%

</TABLE>
<PAGE>     <PAGE>
Comparison of Annual Results

     Net sales for fiscal year 1995 increased by 25.5% from
$6,686,615 to $8,393,829 versus fiscal year 1994 after increasing
6.8% from fiscal 1993 to fiscal 1994.  Cost of sales as a per-
centage of net sales improved from 61.7% to 58.6% to 58.2% from
1993 through 1994 and 1995.  The increase in sales from 1994 to
1995 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 sales combined with cost con-
trol, gross profit increased by 26.7% from $2,769,295 to
$3,508,030 for fiscal 1995 versus fiscal 1994, after increasing
by 15.5% from fiscal 1993 to fiscal 1994.  For the fiscal year,
the gross profit margin reached a record 41.8% of net sales, as
compared to 41.4% for 1994 and 38.3% for 1993.

     General and administrative expenses fell as a percentage of
net sales from 31.3% in 1994 to 28.3% in 1995 as sales volume
improved at a more rapid pace than the modest 13.3% increase in
these expenses from year to year.  These expenses  remained rela-
tively constant as a percentage of net sales from 1993 to 1994.  

     Interest expense fell as a percentage of net sales from 1.8%
to 1.5% to 1.2% from 1993 through 1995 due to application of
funds generated from continued profitability to reduce debt and
reduction in the interest rate paid to the prime rate.
 
     As a result of these factors, for the fiscal year ended
December 31, 1995, net income increased to $679,074 from
$361,064, or 88.1%, versus the same period in 1994.  These
results compare favorably to net earnings for 1993 of $309,482.


Liquidity and Capital Resources

     The Company's working capital (total current assets less
total current liabilities), which was $1,790,794 as of December
31, 1994, improved during 1995 to $2,696,048 as of December 31,
1995.  The Company's current assets increased significantly as
the Company's cash and short-term investments, accounts receiv-
able and inventory increased due to increased sales and profit-
ability.  Current liabilities also increased, but less dramati-
cally, in response to increased sales volumes.

     As shown in the Company's consolidated statements of cash
flows, the Company generated $427,240 in cash flow from opera-
tions as the Company continued to capitalize on its profitabili-
ty, partially offset by increases in receivables and inventories
resulting from its sustained growth.  A total of $718,456 was
used in investing activities as the Company began investing its
excess available funds in short-term investments to improve the
return on its capital.

<PAGE>
     In addition, the Company realized funds from its financing
activities, including $201,600 received from the successful
completion of the public sale of 57,600 shares of its Common
Stock in December 1995.

     Currently the Company is evaluating whether to construct an
additional 30,000 square feet of warehouse space to its existing
facilities.  Based upon its initial review, the Company believes
it has more than adequate funds on hand to complete this addition
if the Company concludes that it is desirable.  The Company be-
lieves 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-13 hereof.



ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AC-
          COUNTING AND FINANCIAL DISCLOSURE.

     None.

PAGE
<PAGE>

                                 PART III

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


     The Directors and executive officers of the Company as of
February 29, 1996, their ages and positions are as follows:

Name                Age  Position With Registrant

Morris Shwiff       74   Chairman of the Board and
                         President

Mark I. Kenner      64   Director and Executive Vice
                         President

Fred Kenner         43   Director and Vice President,
                         Secretary and Treasurer


     Messrs. Shwiff, Mark Kenner and Fred Kenner were elected as
Directors of the Company on June 29, 1988 and will hold their
positions until their successors are elected.

     Each of the above named officers was elected to his respec-
tive offices with the Company by the Board of Directors of the
Company on June 29, 1988, and serve as officers of the Company at
the discretion of the Board of Directors. Mr. Mark I. Kenner is
the father of Mr. Fred Kenner.  No other family relationship
exists between any of the executive officers or Directors of the
Company.

     The principal occupation and employment during the past five
years of the Directors and each of the executive officers of the
Company are as follows:

     Morris Shwiff has served as Chairman of the Board of Direc-
tors and President of the Company since December 1985. For more
than five years prior to December 1985, Mr. Shwiff was a Direc-
tor, President and principal stockholder of Arrow Chemical
Corporation, which corporation was acquired by the Company in
December 1985.  

     Mark I. Kenner has served as Director and Executive Vice
President of the Company since December 1985. For more than five
years prior to December 1985, Mr. Kenner was a Director, Vice
President and stockholder of Arrow Chemical Corporation. 
<PAGE>
     Fred Kenner has served as Director and Vice President,
Secretary and Treasurer of the Company since December 1985. For
more than five years prior to December 1985, Mr. Kenner was a
Director, Secretary, Treasurer and stockholder of Arrow Chemical
Corporation. 

     Directors are elected annually and serve until their succes-
sors are duly elected and qualified.  Officers serve at the
discretion of the Board.  

     Based solely upon a review of Forms 3, 4, and 5 furnished to
the Company and upon written representations received by the
Company, the following persons were all Directors, officers or
beneficial owners of more than 10 percent of the Company's Common
Stock as of December 31, 1995:

          Morris Shwiff
          Mark I. Kenner
          Fred Kenner

Based thereon, each of such persons filed one report under
Section 16(a) of the Exchange Act of 1994 reporting transactions
in December 1994 seven days after it was due and one report for
June 1995 on a timely basis.

PAGE
<PAGE>
ITEM 10.  EXECUTIVE COMPENSATION

     The following tables summarize the monetary and non-monetary
compensation paid by the Company during the three fiscal years
ended December 31, 1995 to the Company's chief executive officer
and to the Company's other executive officers.

                                             
                        SUMMARY COMPENSATION TABLE                    

<TABLE>                                                Long Term
                                                  Compensation 
                                                  Awards         
                                                  Number 
Name and                      Annual              of Shares 
Principal                     Compensation        Subject to
Position            Year      Salary    Bonus     Options Granted 
<S>                  <C>       <C>       <C>           <C>  
Morris Shwiff,      1995      $130,000  $17,940             0
Chairman of         1994      $119,000  $ 8,745        77,000
the Board           1993      $116,600  $     0             0
and President

Mark I. Kenner,     1995      $123,500  $16,887             0
Director and        1994      $112,580  $ 8,208        72,600
Executive           1993      $109,445  $     0             0
Vice President

Fred Kenner,        1995      $117,000  $15,990             0
Director and        1994      $106,600  $ 7,751        70,400
Vice President,     1993      $103,350  $     0             0
Secretary and
Treasurer


</TABLE>
PAGE
<PAGE>
Option Exercises and Fiscal Year End Option Values

     The following table reflects option exercises during the
fiscal year ended December 31, 1995, the number of shares under-
lying both exercisable and unexercisable options as of the fiscal
year end and the value of unexercised "in the money" options as
of the fiscal year end, after giving effect to a 10% stock
dividend declared on April 5, 1995:                           
<TABLE>
                                Number of
        Number                  Shares Underlying      Value of Unexercised
        of Shares               Unexercised Options    In the Money Options
        Acquired                at Fiscal Year End     at Fiscal Year End(1)
        on          Value                    Unexer-               Unexer- 
Name    Exercise    Realized    Exercisable  cisable   Exercisable cisable
<S>      <C>         <C>         <C>         <C>       <C>          <C>
Morris
Shwiff     0          0          77,000        -       $332,063         -

Mark I.
Kenner     0          0          72,600        -       $313,088         -

Fred
Kenner     0          0          70,400        -       $303,600         -
</TABLE>
(1)   For purpose of calculating this value, the Company has utilized the
      average of the last bid and asked prices of the Company's common stock
      as of December 31, 1995 as reported by the NASDAQ OTC Bulletin Board.

PAGE
<PAGE>
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT.

     The following table sets forth information regarding the
Company's Common Stock owned at December 31, 1995 by (i) each
shareholder known to the Company to own beneficially more than 5%
of the Company's Common Stock, (ii) each of the Company's Direc-
tors and executive officers and (iii) all officers and Directors
as a group.  So far as is known to the Company, the persons named
in the table have sole voting and investment power with respect
to all shares of Common Stock shown as beneficially owned by
them, subject to community property laws, where applicable, and
the information contained in the footnotes to the table.
                                                                 
Name and          
Address of        
Beneficial               Number of Shares         Percent
Owner                    Beneficially Owned       of Class

Morris Shwiff            500,501(1)               40.5%
2646 Rodney Lane
Dallas, TX 75229

Mark I. Kenner           303,599(2)               24.7%
2646 Rodney Lane
Dallas, TX 75229

Fred Kenner              185,900(3)               15.1%
2646 Rodney Lane
Dallas, TX 75229

All Directors            990,000(4)               71.9%
and Officers as 
a Group 
(Three Persons)
           
(1)  Includes 77,000 shares which may be acquired upon exercise
     of an option at an exercise price of $1.00 per share.

(2)  Includes 72,600 shares which may be acquired upon exercise
     of an option at an exercise price of $1.00 per share.

(3)  Includes 70,400 shares which may be acquired upon exercise
     of an option at an exercise price of $1.00 per share.

(4)  Includes 220,000 shares which may be acquired upon exercise
     of an option at an exercise price of $1.00 per share.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

          None.
PAGE
<PAGE>
                                  PART IV

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 Magnolia Enterprises, Inc.(2).

         10.19 Arrow-Magnolia International, Inc. Amended and
               Restated Non-Qualified Stock Option Plan(3).

         10.20 Credit Loan Agreement dated August 5, 1994 between
               Arrow-Magnolia International, Inc. and Texas
               Commerce Bank National Association(3).

         10.21 Extension and Modification Agreement dated August
               18, 1994 between Arrow-Magnolia International,
               Inc. and Texas Commerce Bank National Associa-
               tion(3).
     
               

(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 Exhibit 3.2 to Magnolia Chemical Company, Inc. From
     10-Q for the quarter ended June 30, 1982 and incorporated
     herein by reference.

(3)  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.



     (b)  Reports on Form 8-K.

          None.

PAGE
<PAGE>
     ARROW-MAGNOLIA INTERNATIONAL, INC. AND SUBSIDIARY

     Index to Consolidated Financial Statements and Schedule



                                                            Page

Independent Auditors' Report                                F-2

Financial Statements:

     Consolidated Balance Sheets as of December 31, 1995 
     and 1994                                               F-3

     Consolidated Statements of Earnings for the years 
     ended December 31, 1995, 1994 and 1993                 F-4

     Consolidated Statements of Stockholders' Equity for 
     the years ended December 31, 1995, 1994 and 1993       F-5

     Consolidated Statements of Cash Flows for the years 
     ended December 31, 1995, 1994 and 1993                 F-6

     Notes to Consolidated Financial Statements             F-7


Financial Statement Schedule for the years ended 
     December 31, 1995, 1994 and 1993:

          Schedule II - Valuation and Qualifying Accounts   F-13


All other schedules have been omitted as not applicable or not
required.
<PAGE>
INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated financial
statements of Arrow-Magnolia International, Inc. and subsidiary
as listed in the accompanying index.  In connection with our
audits of the consolidated financial statements, we have also
audited the financial statement schedule as listed in the
accompanying index.  These consolidated financial statements and
financial statement schedule are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements and financial
statement schedule 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 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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Arrow-Magnolia International, Inc. and subsidiary as
of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with
generally accepted accounting principles.  Also, in our opinion,
the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the
information set forth therein.

As discussed in note 1(g) to the consolidated financial
statements, the Company changed its method of accounting for
income taxes in 1993 to adopt the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes."

                                   KPMG Peat Marwick LLP

Dallas, Texas
February 7, 1996
<PAGE>
          ARROW-MAGNOLIA INTERNATIONAL, INC. AND SUBSIDIARY
               Consolidated Balance Sheets
               December 31, 1995 and 1994
<TABLE>
                    Assets                   1995      1994  
<S>                                         <C>          <C>
Current assets:       
     Cash                                    $761,419    856,883  
     Short-term investments, at cost          690,051       -   
     Trade accounts receivable, less 
      allowance for doubtful            
      accounts of $269,813 in 1995 and 
      $241,508 in 1994 (note 4)             1,339,408    869,663  
     Other receivables                          5,319     18,583  
     Inventories (note 4)                     681,825    610,613  
     Deferred income taxes (note 6)            91,430     78,368  
     Prepaid expenses                          18,548     19,142
              Total current assets          3,588,000  2,453,252
 
     Property and equipment, net 
      (notes 2 and 5)                         371,320    400,415 
     Intangible assets, net (note 3)          110,560    122,308 
     Note receivable                            40,000     40,000 
     Deferred income taxes (note 6)            24,811     19,056 
     Other assets                               1,000      1.000
                                          $ 4,135,691  3,036,031 

               Liabilities and Stockholders' Equity    

Current liabilities:     
     Current installments of long-term 
      debt (note 5)                          $112,835    108,175  
     Accounts payable                         421,283    294,807  
     Accrued liabilities                       183,080    129,810 
     Income taxes payable                      174,754    129,666
               Total current liabilities       891,952    662,458 
   
Note payable (note 4)                          790,000    690,000 
Long-term debt, excluding current 
 installments (note 5)                         250,844    361,352
     Total liabilities                       1,932,796  1,713,810 

Stockholders' equity (note 7):      
     Preferred stock - par value $.10; 
      authorized 500,000 shares; none issued 
     Common stock - par value $.10; 
      authorized 10,000,000 shares; issued
      and outstanding 1,157,600 shares in 
      1995 and 1,000,000 shares in 1994       115,760    100,000  
     Additional paid-in capital             1,385,840    900,000 
     Accumulated earnings                     701,295    322,221 
          Total stockholders' equity        2,202,895  1,322,221  
                                         $ 4,135,691  3,036,031
</TABLE>
  See accompanying notes to consolidated financial statements.
PAGE
<PAGE>
          ARROW-MAGNOLIA INTERNATIONAL, INC. AND SUBSIDIARY

               Consolidated Statements of Earnings

          Years ended December 31, 1995, 1994 and 1993

<TABLE>
<S>                            <C>           <C>         <C>
                               1995         1994        1993   
Net sales                     $8,393,829    6,686,615   6,262,192
Cost of sales                  4,885,799    3,917,320   3,864,063    
     Gross profit              3,508,030    2,769,295   2,398,129      

General and administrative 
 expenses                      2,371,447    2,093,582   1,996,141    
     Operating income          1,136,583      675,713     401,988     

Other income (expenses):      
 Interest expense                (96,552)    (101,051)   (112,258)     
 Gain (loss) on disposition 
  of assets                        2,500        1,867      (3,337)     
 Other income                     24,166        9,267       9,875      
     Other expenses, net         (69,886)     (89,917)   (105,720)    
     Earnings before income
     taxes and cumulative 
     effect of a change in
     accounting principle      1,066,697      585,796     296,268      

Income taxes (note 6)            387,623      224,732     112,314      
     Earnings before cumulative 
     effect of a change in 
     accounting principle        679,074      361,064     183,954      

Cumulative effect of a change 
 in method of accounting for 
 income taxes (note 6)              -            -        125,528      
     Net earnings             $  679,074      361,064     309,482      

Earnings per common share 
 (note 7):  
 Earnings before cumulative 
  effect of a change in 
  accounting principle        $      .61          .33         .17
 Cumulative effect on 
  prior years (to December
  31, 1992) of change in 
  method of accounting for       
  income taxes                       -             -          .11     
 Net earnings                 $      .61          .33         .28      
 
Weighted average shares 
 outstanding                   1,109,589    1,099,989   1,097,285      
</TABLE>
See accompanying notes to consolidated financial statements.
PAGE
<PAGE>
          ARROW-MAGNOLIA INTERNATIONAL, INC. AND SUBSIDIARY

          Consolidated Statements of Stockholders' Equity

          Years ended December 31, 1995, 1994 and 1993

<TABLE>
                                                               Total
                                         Additional Accumulated Stock-
                              Common     paid-in    earnings  holders'
                             stock      capital   (deficit) equity     
  
<S>                           <C>         <C>       <C>        <C>
Balances at December 31, 1993 $100,000  900,000  (38,843)    961,157   
    
Net earnings                      -          -    361,064    361,064 
Balances at December 31, 1994  100,000    900,000 322,221  1,322,221   

10% stock dividend              10,000    290,000(300,000)      -      
 
Issuance of 57,600 shares at 
 $3.50 per share                 5,760    195,840    -       201,600   
    
Net earnings                      -          -    679,074    679,074 
Balances at December 31, 1995 $115,760  1,385,840 701,295  2,202,895  
</TABLE>
See accompanying notes to consolidated financial statements.
PAGE
<PAGE>
          ARROW-MAGNOLIA INTERNATIONAL, INC. AND SUBSIDIARY

               Consolidated Statements of Cash Flows

          Years ended December 31, 1995, 1994 and 1993

<TABLE>
                                        1995      1994      1993      
<S>                                     <C>       <C>         <C>
Cash flows from operating activities:      
 Net earnings                          $ 679,074  361,064   309,482    
 Adjustments to reconcile net earnings 
  to net cash provided by operating 
  activities:                   
    Depreciation and amortization         74,148 103,751    100,464    
    Loss (gain) on disposition of 
     property and equipment               (2,500)  (1,866)    3,337    
    Deferred income taxes                (18,817)   3,167  (100,591)   
    Provision for doubtful accounts      193,838   187,871  227,975    
    Changes in assets and liabilities:                     
      Decrease (increase) in 
       receivables                      (650,319)(318,738)    2,153   
      Decrease (increase) in 
       inventories                       (71,212) (78,499)   81,420    
      Decrease (increase) in 
       prepaid expenses                   (1,806)   4,601     1,027    
      Decrease in other assets              -        -       20,661    
      Increase (decrease) in 
       accounts payable                  126,476   18,064  (137,018)   
      Increase in accrued 
       liabilities                        53,270   45,111    25,933    
      Increase in income taxes payable    45,088  129,290       376
          Net cash provided by (used in)
           operating activities          427,240  453,816   535,219    
  
Cash flows from investing activities:         
 Purchase of short-term investments     (690,051)     -        -      
 Acquisition of property and equipment   (30,905)  (27,295) (55,970) 
 Proceeds from sale of property and 
  equipment                                2,500    26,428    3,010   
          Net cash used in investing 
            activities                  (718,456)     (867) (52,960)   
   
Cash flows from financing activities:        
 Proceeds from issuance of note 
  payable                                200,000  703,838   725,000    
 Repayments of note payable             (100,000)(738,838) (875,000)   
Proceeds from issuance of long-term 
   debt                                   25,448  495,000    27,525    
 Repayments of long-term debt           (131,296)(552,997)  (86,828)   
 Repayments of capital lease obligation     -     (20,473)   (4,174)   
 Proceeds from issuance of treasury stock   -        -        1,650    
 Proceeds from issuance of common stock  201,600     -         -      
     Net cash provided by (used in) 
      financing activities               195,752 (113,470) (211,827)   
   
 Net increase (decrease) increase in 
  cash                                   (95,464) 339,479   270,432  
Cash at beginning of year                856,883  517,404   246,972 
Cash at end of year                    $ 761,419  856,883   517,404  
</TABLE>
See accompanying notes to consolidated financial statements.
PAGE
<PAGE>
          ARROW-MAGNOLIA INTERNATIONAL, INC. AND SUBSIDIARY

               Notes to Consolidated Financial Statements

                    December 31, 1995, 1994 and 1993

(1)  Summary of Significant Accounting Policies

(a)  Principles of Consolidation and Basis of Presentation

The consolidated 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").  All significant intercompany balances and transactions
have been eliminated in consolidation.

(b)  Nature of the Operations and Use of Estimates

The Company is engaged in the sale and distribution of chemical
products, primarily industrial and institutional cleaning and mainte-
nance 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 geograph-
ic regions.  No single customer accounted for more than 10% of net
sales in 1995, 1994 and 1993.

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 could differ from those estimates.

(c)  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.  There were no cash equivalents
at December 31, 1995 or 1994.

Cash paid for interest during 1995, 1994 and 1993 was $96,552, 101,051
and $117,706, respectively.  Cash paid for federal income taxes during
1995 and 1994 was $204,000 and $65,024, respectively.

(d)  Short-term Investments

Short-term investments, all of which are held to maturity at December
31, 1995, represent investments in bank certificates of deposit and
U.S. Government Treasury Bills.  The investments are recorded at
amortized cost, which approximates market value.

(e)  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.

<PAGE>
(f)  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 betterments are capitalized.

(g)  Intangible Assets

Intangible assets are amortized on a straight-line basis over their
estimated useful lives which range from three to forty years.

The Company assesses the recoverability of goodwill and other intangi-
ble assets by determining whether the amortization of the asset
balance over its remaining life can be recovered through undiscounted
future operating cash flows of the acquired operation.  The amount of
impairment, if any, is measured based on projected discounted future
operating cash flows.

(h)  Income Taxes

In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes.  Statement 109 requires a change from the deferred
method of accounting for income taxes of APB Opinion 11 to the asset
and liability method of accounting for income taxes.  Under the asset
and liability method of Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences attribut-
able to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. 
Deferred tax assets and liabilities are measured using enacted tax
rates that will apply in the years in which those temporary differenc-
es are expected to be recovered or settled.  Under Statement 109, 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.

Effective January 1, 1993, the Company adopted Statement 109 and has
reported the cumulative effect of that change in the method of
accounting for income taxes in the 1993 consolidated statement of
earnings.

(i)  Earnings per Share

Earnings per share is computed on the basis of the weighted average
number of common shares outstanding during each year as adjusted, on a
retroactive basis, for the stock dividend discussed in note 7.

<PAGE>
(2)  Property and Equipment

Property and equipment consist of the following:
<TABLE>
                                                  December 31        
                              Useful lives        1995      1994      
<S>                            <C>                 <C>        <C>
Land                            -                 $ 95,310    95,310 
Buildings and improvements     5 to 40 years       415,591   413,092 
Machinery and equipment        3 to 10 years       276,719   277,842 
Furniture and fixtures        5 to 10 years        210,389   203,415   
                                                   998,009   989,659
Less accumulated depreciation                     (626,689) (589,244)  
                                                 $ 371,320   400,415
  
(3)  Intangible Assets

     Intangible assets consist of the following:

                                                  December 31       
                              Useful lives        1995       1994      
Goodwill                      40 years            $110,500   110,500 
Customer lists                5 years               17,500    17,500 
Sales force                   7 years               82,500    82,500 
Other                         8 years               10,500    10,500   
                                                   221,000   221,000 
Less accumulated amortization                     (110,440)  (98,692)  
                                                  $110,560   122,308  
</TABLE>
(4)  Note Payable

The note payable at December 31, 1995 is a revolving line of credit
($790,000 outstanding at December 31, 1995) with an asset-based lender
due on May 1, 1997.  The credit agreement provides for a commitment
from the lender of the lesser of $1,250,000 or the borrowing base as
defined.  At December 31, 1995, the unused portion of the commitment
was $291,332.  The terms of the credit agreement require the Company
to maintain certain minimum financial criteria.  The note requires
monthly payments of interest at the lender's prime rate (8.5% at
December 31, 1995) and is collateralized by certain accounts receiv-
able and inventories.  As the line of credit bears interest at market
rates, the carrying amount of borrowings outstanding at December 31,
1995 approximates fair value.

PAGE
<PAGE>
(5)  Long-term Debt

     Long-term debt consists of the following:

                                                       December 31    
                                                  1995      1994  
Note payable to a bank, interest at prime 
 (8.5% at December 31, 1995), principal and 
 interest of $8,250 payable monthly, maturing 
 in August 1999, collateralized by the 
 Company's office and warehouse, and guaranteed 
 by the principal stockholders                    $335,000   455,000 
Note payable to a bank in  monthly installments         
 of $765, including interest at 7.9%, maturing     
 in July 1996, and collateralized by an automobile   5,352    14,527 
Note payable to a bank in monthly installments of 
 $707, including interest at 7.9%, maturing 
 September 1998, and collateralized by an 
 automobile                                         23,327      -      
                                                   363,679   469,527 
Less current installments                          112,835   108,175   
                                                  $250,844   361,352  
     
The aggregate maturities of notes payable and long-term debt subse-
quent to December 31, 1995 are as follows:

     1996                                         $112,835  
     1997                                          897,483  
     1998                                          105,361  
     1999                                           38,000  

(6)  Income Taxes

Income tax expense (benefit) for the years ended December 31, 1995,
1994 and 1993 consists of the following:

                                             1995      1994      1993  
     U.S. federal - current                 $378,754   194,315  75,377 
     U.S. federal - deferred                 (18,817)    3,167  24,937 
     State - current                          27,686    27,250  12,000 
                                            $387,623   224,732 112,314


PAGE
<PAGE>
Income tax expense differs from the "expected" tax expense (computed
by applying the 34% U.S. federal corporate rate to earnings before
income taxes, extraordinary item and cumulative effect of a change in
accounting principle) as follows:

                                             1995      1994      1993  
     Computed "expected" tax expense       $362,677   199,171  100,731 
     Amortization of goodwill                 3,994     5,450    5,450
     State income taxes                      18,273    17,985    7,920 
     Other                                    2,679     2,126  (1,787) 
                                           $387,623   224,732  112,314 

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:

                                             December 31    
                                             1995      1994     
Current deferred tax assets -
allowance for doubtful accounts              $91,430    78,368      

Noncurrent deferred tax assets - 
property and equipment depreciation          $24,811    19,056  
     
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.  The
Company expects the net deferred tax assets at December 31, 1995 to be
realized as a result of future taxable income.

(7)  Stockholders' Equity

During 1994, the Company's Board of Directors approved a nonqualified
stock option plan (Plan) covering 220,000 shares of common stock. 
Participants in the Plan 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.

In December 1994, 220,000 stock options were granted to certain
officers of the Company at an option price of $1.00 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, the Plan was amended to provide for an increase in
the number of shares subject to the Plan to 275,000 shares and an
additional 55,000 options were granted to certain key employees. 
These stock options were issued at an option price of $1.00 per share,
the estimated fair market 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.  At December 31, 1995, 11,000
options were exercisable.
PAGE
<PAGE>
At December 31, 1995 and 1994, none of the stock options granted under
the Plan had been exercised.

On April 5, 1995, the Company declared a ten percent stock dividend on
its common stock.  As a result, all share and per share information in
the accompanying financial statements has been retroactively restated
to give effect to the dividend.

On May 15, 1995, the Company issued stock warrants to a certain
service provider.  The stock warrants are exercisable to purchase up
to 25,000 shares of the Company's common stock at $2.50 per share. 
The stock warrants were fully exercisable at the date of the grant. 
The stock warrants expire one year from the date of the issuance.  At
December 31, 1995, none of the warrants had been exercised

In November 1995, the Company issued 57,600 shares of common stock in
a private placement at a price of $3.50 per share.

(8)  Fourth Quarter Adjustments

Net earnings in the fourth quarter of 1995 were reduced by $11,148 for
adjustments in depreciation and amortization expense, $33,000 for
bonus compensation and $13,813 for adjustments in income tax expense.

Net earnings in the fourth quarter of 1994 were reduced by $9,735 for
adjustments in depreciation and amortization expense, $50,817 for
bonus compensation and $15,661 for adjustments in the provision for
doubtful accounts and increased by $14,561 for adjustments in income
tax expense.

<PAGE>
<PAGE>
                                                       Schedule II



               ARROW-MAGNOLIA INTERNATIONAL, INC.

               Valuation and Qualifying Accounts

          Years ended December 31, 1995, 1994 and 1993

<TABLE>
                         Balance       Additions               Balance
                         at         Charged                       at
                         beginning to                             end
                         of        costs and                      of
Description              year      expenses  Other  Deductions(1) year
<S>                       <C>       <C>       <C>     <C>        <C>
Year ended December 31,    
1995:          
 Allowance for doubtful 
  accounts               $241,508 193,838    -    165,533   269,813    
    
Year ended December 31,      
1994:          
 Allowance for doubtful 
  accounts               $236,002 187,871    -    (182,365) 241,508    
    
Year ended December 31, 
1993:          
 Allowance for doubtful 
  accounts               $219,053 227,975    -    (211,026) 236,002    
    
</TABLE>
(1) Charge-off of uncollectible accounts.
<PAGE>
<PAGE>

                         SIGNATURES

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

                              ARROW-MAGNOLIA INTERNATIONAL, INC.



                              By  /s/ Morris Shwiff              
                                 Morris Shwiff, President

Dated:  March 5, 1996

     Pursuant to the requirements of 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, Chairman of the     }
Morris Shwiff       Board and President           }
                    (Principal Executive Officer) }
                                                  }
/s/ Mark I. Kenner  Director and Executive        }
Mark I. Kenner      Vice President                }    March 
                                                  }    5, 1996
                                                  }
/s/ Fred Kenner     Director, Vice President,     }
Fred Kenner         Secretary and Treasurer       }
                    (Principal Financial and      }         
                     Accounting Officer)          }




<PAGE>
<PAGE>

                               INDEX TO EXHIBITS


Number                   Exhibit                            Page


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

3.2       Bylaws of Magnolia Enterprises, Inc.              (2)

10.19     Arrow-Magnolia International, Inc.                (3) 
          Amended and Restated Non-Qualified 
          Stock Option Plan.

10.20     Credit Loan Agreement dated August 5,             (3)
          1994 between Arrow-Magnolia International, 
          Inc. and Texas Commerce Bank National 
          Association.

10.21     Extension and Modification Agreement              (3)
          dated August 18, 1994 between Arrow-Magnolia 
          International, Inc. and Texas Commerce 
          Bank National Association.

               

(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 Exhibit 3.2 to Magnolia Chemical Company, Inc. From 10-Q
     for the quarter ended June 30, 1982 and incorporated herein by
     reference.

(3)  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.