SECURITIES AND EXCHANGE  COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


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



   For the Quarterly Period Ended September 30, 1998

   Commission File No. 1-4436



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



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

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


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


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



                (APPLICABLE ONLY TO CORPORATE ISSUERS)



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




         Shares of Common Stock outstanding as of October 31, 1998:


                              4,725,858                     




                       THE STEPHAN CO. AND SUBSIDIARIES
                    QUARTERLY REPORT PURSUANT TO SECTION 13 
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                              SEPTEMBER 30, 1998


                                    INDEX


                                                               PAGE NO.
PART I.    FINANCIAL INFORMATION

           ITEM 1.  Financial Statements

           Consolidated Balance Sheets as of
           September 30, 1998 and December 31, 1997              4-5

           Consolidated Statements of Operations for the
           Nine months ended September 30, 1998 and 1997          6

           Consolidated Statements of Operations for the
           Quarter ended September 30, 1998 and 1997              7   

           Consolidated Statements of Cash Flows for the
           Nine months ended September 30, 1998 and 1997         8-10

           Notes to Consolidated Financial Statements           11-14

           ITEM 2.    Management's Discussion and Analysis
                      of Financial Condition and 
                      Results of Operations.                    15-17

PART II.   OTHER INFORMATION 
 
           ITEM 4.  Submission of matters to a vote of
                    Security Holders                              18

           ITEM 5.  Other information                             18

           ITEM 6.  Exhibits and Reports on Form 8-K              18

SIGNATURES                                                        19















                                     2


                       THE STEPHAN CO. AND SUBSIDIARIES
                    QUARTERLY REPORT PURSUANT TO SECTION 13 
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                              SEPTEMBER 30, 1998





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



     This report contains certain "forward-looking" statements.  The 
Stephan Co. (the "Company") desires to take advantage of the "safe harbor" 
provisions of the Private Securities Litigation Reform Act of 1995 and is 
including this statement for the express purpose of availing itself of the 
protections of such safe harbor with respect to all such forward-looking 
statements.  Forward-looking statements contained herein include statements 
with respect to the (i) anticipated levels of debt, and (ii) anticipated 
gross profit margins and profitability (or lack thereof) of acquired 
entities.  The Company's ability to predict any such occurrences or the 
effect of other events on the Company's financial condition or operations 
is inherently uncertain.  Therefore, the Company cautions each reader of 
this report to carefully consider the specific factors and qualifications 
discussed herein with respect to such forward-looking statements, as such 
could affect the ability of the Company to achieve its objectives and may 
cause actual results to differ materially from those anticipated herein.
                                     



























                                     3


                       THE STEPHAN CO. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS




                                   ASSETS



                                        September 30,        December 31,
                                            1998                 1997
                                        ____________         ____________
 
CURRENT ASSETS

 Cash and cash equivalents              $  7,770,603         $  8,491,174

 Cash on deposit with trustee                530,019              610,126

 Accounts receivable, net                  5,208,673            4,696,248

 Inventories, net                         19,773,837           11,667,672

 Prepaid expenses and other
  current assets                             375,972              269,304
                                        ____________         ____________

   TOTAL CURRENT ASSETS                   33,659,104           25,734,524

PROPERTY, PLANT AND EQUIPMENT, net         3,371,931            2,760,011

INTANGIBLE ASSETS, net                    27,575,817           26,443,911

OTHER ASSETS                               2,927,071            2,525,948
                                        ____________         ____________

   TOTAL ASSETS                         $ 67,533,923         $ 57,464,394
                                        ============         ============














              See notes to Consolidated Financial Statements

                                (UNAUDITED)

                                     4    


                      THE STEPHAN CO. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS


                           
                   LIABILITIES AND STOCKHOLDERS' EQUITY


                                      September 30,          December 31,
                                          1998                   1997
                                       ___________           ____________
CURRENT LIABILITIES

 Accounts payable and
  accrued expenses                    $  3,225,537           $  3,704,383

 Note payable to bank                      400,000                400,000

 Note payable to trustee                      -                 1,199,700

 Current portion of
  long-term debt                         2,209,338              1,773,788

 Income taxes payable                    1,884,693              1,390,104
                                      ____________           ____________

   TOTAL CURRENT LIABILITIES             7,719,568              8,467,975
                                                                         
DEFERRED INCOME TAXES                      687,907                268,166

LONG-TERM DEBT                          11,291,183              9,078,114
                                      ____________           ____________

   TOTAL LIABILITIES                    19,698,658             17,814,255
                                      ____________           ____________
STOCKHOLDERS' EQUITY

  Common stock, $.01 par value              47,259                 44,188
  Additional paid in capital            19,596,870             15,979,709
  Retained earnings                     29,542,699             24,977,805
                                      ____________           ____________
                                        49,186,828             41,001,702
  LESS 125,000 CONTINGENTLY
    RETURNABLE SHARES                   (1,351,563)            (1,351,563)
                                      ____________           ____________
  TOTAL STOCKHOLDERS' EQUITY            47,835,265             39,650,139
                                      ____________           ____________
TOTAL LIABILITIES AND 
  STOCKHOLDERS' EQUITY                $ 67,533,923           $ 57,464,394
                                      ============           ============



              See notes to Consolidated Financial Statements

                                (UNAUDITED)
                                         
                                     5    


                      THE STEPHAN CO. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS




                                             Nine Months Ended Sept. 30,
                                             ===========================  

                                                 1998             1997
                                             ___________      ___________ 

NET SALES                                    $26,877,396      $21,080,517

COST OF GOODS SOLD                            10,345,268        7,266,564
                                             ___________      ___________ 

GROSS PROFIT                                  16,532,128       13,813,953
                                                                            
SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                      8,953,360        7,235,013
                                             ___________     ____________
  
OPERATING INCOME                               7,578,768        6,578,940

OTHER INCOME(EXPENSE)
  Interest income                                294,552          279,400
  Interest expense                              (719,246)        (444,467)
  Other                                           93,750           93,750
                                             ___________      ___________ 

INCOME BEFORE TAXES                            7,247,824        6,507,623

INCOME TAXES                                   2,411,661        2,213,931
                                             ___________      ___________

NET INCOME                                   $ 4,836,163      $ 4,293,692 
                                             ===========      ===========

BASIC AND DILUTED EARNINGS PER SHARE         $      1.07      $      1.01
                                             ===========      ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING                          4,513,913        4,235,921 
                                             ===========      ===========  









              See Notes to Consolidated Financial Statements

                                (UNAUDITED)
 
                                     6
                

                      THE STEPHAN CO. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS




                                               Quarter Ended Sept. 30,
                                             ===========================  

                                                 1998             1997
                                             ___________      ___________ 

NET SALES                                    $ 9,926,122      $ 7,580,618

COST OF GOODS SOLD                             3,948,229        2,540,924
                                             ___________      ___________ 

GROSS PROFIT                                   5,977,893        5,039,694
                                                                            
SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                      3,303,142        2,532,287
                                             ___________     ____________
  
OPERATING INCOME                               2,674,751        2,507,407

OTHER INCOME(EXPENSE)
  Interest income                                 92,866           88,906
  Interest expense                              (272,440)        (175,062)
  Other                                           31,250           31,250
                                             ___________      ___________ 

INCOME BEFORE TAXES                            2,526,427        2,452,501

INCOME TAXES                                     798,809          845,456
                                             ___________      ___________

NET INCOME                                   $ 1,727,618      $ 1,607,045
                                             ===========      ===========

BASIC AND DILUTED EARNINGS PER SHARE         $       .38      $       .37
                                             ===========      ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING                          4,600,858        4,398,603 
                                             ===========      ===========  









              See Notes to Consolidated Financial Statements

                                (UNAUDITED)
 
                                     7


                      THE STEPHAN CO. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           


                                              Nine Months Ended Sept. 30, 
                                              ==========================

                                                 1998            1997 
                                              __________      __________  
CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income                                  $ 4,836,163     $ 4,293,692
                                              __________      __________
 Adjustments to reconcile net income to
  cash flows used in
  operating activities:

   Depreciation                                  236,451         198,832

   Amortization                                  886,497         738,613

   Deferred income taxes                         419,741         203,402

   Provision for doubtful accounts                44,190          15,616

 Changes in operating assets and
  liabilities, net of effects of
  acquisitions:

   Accounts receivable                           643,385      (1,967,411)
  
   Inventory                                  (5,421,765)     (1,869,997)
  
   Prepaid expenses
    and other current assets                     (32,968)         56,814 
   
   Accounts payable
    and accrued expenses                      (1,359,546)     (2,685,057)

   Income taxes payable                         (494,589)        640,529 
                                             ___________     ___________

    Total adjustments                         (5,078,604)     (4,668,659)
                                             ___________     ___________
Net cash flows used in          
 operating activities                           (242,441)       (374,967)
                                             ___________     ___________





              See Notes to Consolidated Financial Statements

                                (UNAUDITED)
 
                                     8


                       THE STEPHAN CO. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          

 
                                             Nine Months Ended Sept. 30,
                                             ===========================
   
                                                 1998             1997 
                                             ___________      ___________  

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 Cash acquired from acquisition                    5,000             -    

 Change in cash on deposit with trustee           80,107             -
       
 Purchase of property, plant
  and equipment                                 (539,081)        (444,812) 

 Change in intangible assets                     574,428             -
 
 Net changes in other assets                     107,447           91,017 
                                             ___________      ___________

Net cash flows provided by/(used in)
 investing activities                            227,901         (353,795)
                                             ___________      ___________
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 Repayments of long-term debt                 (1,357,125)      (1,447,737)

 Repayment of notes payable                   (3,077,637)            -

 Acquisition of treasury stock                      -            (130,610)

 Proceeds from note payable to bank            4,000,000        2,000,000

 Dividends paid                                 (271,269)        (253,564)
                                             ___________      ___________
Net cash flows (used in)/provided by 
 financing activities                           (706,031)         168,089 
                                             ___________      ___________
NET CHANGE IN CASH AND 
 CASH EQUIVALENTS                               (720,571)        (560,673)

CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                           8,491,174        8,276,976
                                             ___________      ___________ 
CASH AND CASH EQUIVALENTS,
 END OF PERIOD                               $ 7,770,603      $ 7,716,303    
                                             ===========      ===========   

              See Notes to Consolidated Financial Statements

                                (UNAUDITED)

                                     9


                       THE STEPHAN CO. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                 NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997




Supplemental Disclosures of Cash Flow Information:


          Interest Paid                      $   684,624      $   456,442
                                             ===========      ===========  
          Income Taxes Paid                  $ 1,354,424      $ 1,336,000
                                             ===========      ===========   

             

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

In connection with the acquisition of certain assets of Morris-Flamingo, 
L.P., and related parties, on March 18, 1998, the Company acquired cash,  
accounts receivable, inventory, prepaid expenses, fixed and intangible 
assets in exchange for the issuance of Common Stock with an approximate 
value of $3,700,000 and the assumption of certain liabilities.




























              See Notes to Consolidated Financial Statements

                                (UNAUDITED)


                                    10


                      THE STEPHAN CO. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION:    In the opinion of management, all  
adjustments necessary for a fair presentation of financial position and   
results of operations are reflected in the interim financial statements.

         PRINCIPLES OF CONSOLIDATION:  The consolidated financial 
statements include the accounts of The Stephan Co. and its wholly-owned 
subsidiaries, Foxy Products, Inc., Old 97 Company, Williamsport Barber and 
Beauty Supply Corp., Stephan & Co., Scientific Research Products, Inc. of 
Delaware, Trevor Sorbie of America, Inc., Stephan Distributing, Inc. and 
Morris Flamingo-Stephan, Inc. (collectively, the "Company").  All 
significant intercompany balances and transactions have been eliminated in 
consolidation.
          
          NATURE OF OPERATIONS:  The Company is engaged in the manufacture, 
sale, and distribution of personal care grooming products throughout the 
United States.  The Company's business activity constitutes a single 
reportable segment for purposes of Statement of Financial Accounting 
Standards No. 14.  
    
         USE OF ESTIMATES:  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.

         MAJOR CUSTOMERS:  The Company performs ongoing credit evaluations 
of its customers' financial condition and, generally, requires no 
collateral.  The Company does not believe that credit risk represents a 
material risk of loss to the Company.  However, the loss of one or more 
significant customers could have a material adverse effect on the Company.

         LONG-LIVED ASSETS:  The Company adopted SFAS No. 121, "Accounting 
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be 
Disposed Of" in the year ended December 31, 1996.  SFAS No. 121 establishes 
accounting standards for the impairment of long-lived assets, certain 
identifiable intangibles, and goodwill related to those assets to be held 
and used, and for long-lived assets and certain identifiable intangibles to 
be disposed of.  The adoption of SFAS No. 121 has not had a significant 
effect on the Company's financial position or results of operations.

         STOCK-BASED COMPENSATION:  On January 1, 1996, the Company adopted 
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 measure compensation cost for stock-based 
awards using the intrinsic value based method of accounting prescribed by 


                                     11


                      THE STEPHAN CO. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

APB Opinion No. 25, "Accounting for Stock Issued to Employees", and to 
provide pro forma net income and pro forma earnings per share disclosures 
as if the fair value 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 pro forma disclosure provisions in accordance with SFAS 
No. 123. 

         FAIR VALUE OF FINANCIAL INSTRUMENTS:  Statement of Financial 
Accounting Standards No. 107, "Disclosure about Fair Value of Financial 
Instruments," requires disclosure of the fair value of financial 
instruments, both assets and liabilities, recognized and not recognized, in 
the consolidated balance sheets of the Company, for which it is practicable 
to estimate fair value.  The estimated fair values of financial instruments 
which are presented herein have been determined by the Company using 
available market information and what is considered to be appropriate 
valuation methodologies.  However, considerable judgment is often required 
in interpreting market data to develop estimates of fair value.  
Accordingly, the estimates presented herein are not necessarily indicative 
of amounts the Company could realize in a current market exchange.

         The following methods and assumptions were used to estimate fair 
value:

     - the carrying amounts of cash and cash equivalents, accounts 
receivable and accounts payable approximate fair value due to their short 
term nature; and
    
     - discounted cash flows using current interest rates for financial 
instruments with similar characteristics and maturities were used to 
determine the fair value of notes receivable, notes payable and debt.
    
There were no significant differences in the carrying value and fair market 
value of financial instruments as of September 30, 1998 or December 31, 
1997.

         CASH AND CASH EQUIVALENTS:    Cash and cash equivalents include 
cash, certificates of deposit, and short-term municipal bonds having 
maturities of 90 days or less.  Also included in cash and cash equivalents 
is a $400,000 certificate of deposit pledged as collateral against a 
$400,000 note payable to bank.  The Company maintains cash deposits at 
certain financial institutions in amounts in excess of federally insured 
limits of $100,000.  Cash and cash equivalents held in interest-bearing 
accounts as of September 30, 1998 and 1997 were approximately  $ 7,579,000 
and $7,258,000, respectively.

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



                                     12


                      THE STEPHAN CO. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Inventories were as follows:

                                     September 30,            December 31,
                                         1998                     1997
                                      ___________             ____________

Raw Materials                         $ 4,589,772             $  2,880,011
Packaging and components                5,870,132                4,060,389
Work in progress                          464,738                  437,965
Finished goods                          8,849,195                4,289,307
                                      ___________             ____________

  Total Inventories                   $19,773,837             $ 11,667,672
                                      ===========             ============

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

     Included in Other Assets is packaging and components inventory not 
anticipated to be utilized in less than one year. 
       
         PROPERTY, PLANT AND EQUIPMENT:    Property, plant and equipment 
are recorded at cost.  Routine repairs and maintenance are expensed as 
incurred.  Depreciation is provided on a straight line basis over the 
estimated useful lives of the assets as follows:

       Buildings and improvements                        15-30 years
       Machinery and equipment                           5-10 years
       Furniture, fixtures and office equipment          3-5 years       

         INTANGIBLE ASSETS:     Intangible assets are amortized using the 
straight-line method based on the following estimated useful lives:

              Goodwill                           20-40 years
              Covenant not to compete            7 years
              Trademarks                         20-40 years
              Deferred acquisition costs         10 years 

     The amount of impairment, if any, in unamortized Goodwill is measured 
based on projected future results of operations.  To the extent future 
results of operations of those subsidiaries to which the Goodwill relates 
over the period such Goodwill is being amortized are sufficient to absorb 
the amortization of Goodwill, the Company has deemed there to be no 
impairment of Goodwill.

                                     13


                      THE STEPHAN CO. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997



NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         INCOME TAXES:  Income taxes are calculated under the asset and 
liability method of accounting.  Deferred income taxes are recognized by 
applying the enacted statutory rates applicable to future year differences 
between the financial statement carrying amounts and the tax basis of 
existing assets and liabilities.  A valuation allowance is recorded when it 
is more likely than not that some portion or all of the deferred tax asset 
will not be realized.

         BASIC AND DILUTED EARNINGS PER SHARE: Effective December 31, 1997, 
the Company adopted Statement of Financial Accounting Standards No. 128, 
"Earnings Per Share" (SFAS No. 128).  The provisions of SFAS No. 128 
establish standards for computing and presenting earnings per share (EPS) 
and require the Company to restate all prior years' EPS data presented.  
The adoption of SFAS No. 128 has not had a material effect on the Company's 
previously reported EPS.  Basic and diluted EPS are computed by dividing 
net income by the sum of the weighted average number of shares of Common 
Stock outstanding.  The weighted average number of shares outstanding was 
4,513,913 for the nine months ended September 30, 1998 and 4,235,921 for 
the nine months ended September 30, 1997.  For the quarter ended September 
30, 1998, the weighted average number of shares outstanding was 4,600,858  
and such number was 4,398,603 for the quarter ended September 30, 1997. 

         NEW FINANCIAL ACCOUNTING STANDARDS:  In June, 1997, SFAS No. 130, 
"Reporting Comprehensive Income" and SFAS. No. 131, "Disclosures about 
Segments of an Enterprise and Related Information" were issued.  The 
provisions of SFAS No. 130 were adopted by the Company in the first quarter 
of 1998.  This statement establishes standards for the reporting of 
comprehensive income and its components.  Implementation of this disclosure 
standard has not affected the Company's financial position, results of 
operations or the manner in which financial information is currently 
presented.  In accordance with SFAS No. 131, the Company may be required to
modify or expand its financial statement disclosure for operating segments, 
products and services, and geographic areas.  Implementation of this 
disclosure standard, which must be adopted by December 31, 1998, is not 
expected to materially affect the Company's financial position or results 
of operations or its' financial presentation.













                                     14


                   THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 1998 AND 1997

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

RESULTS OF OPERATIONS

     Net sales for the quarter ended September 30, 1998 were up 31% to over 
$9,900,000 when compared to the $7,600,000 achieved in the third quarter of 
1997.  For the nine months ended September 30, 1998, net sales increased 
27%, to $26,877,000 from $21,081,000 for the corresponding period in 1997.  
The increase in sales can be principally attributed to revenues generated 
from the Image and Modern lines acquired from New Image Laboratories, Inc. 
in June, 1997 and the revenues provided from the acquisition of the 
business of Morris-Flamingo on March 18, 1998. 

     Net income for the third quarter of 1998 increased 8%, to $1,728,000 
compared to the $1,607,000 for the quarter ended September 30, 1997. 
Earnings per share for the third quarter was $.38 compared to $.37 for the 
quarter ended September 30, 1997. For the nine months ended September 30, 
1998, net income was up about 13% when compared with the corresponding nine 
month period in 1997, increasing approximately $540,000, to $4,836,000 
while earnings per share rose $.06 cents a share to $1.07, even with the 
additional 307,058 shares issued as a result of the acquisition of Morris 
Flamingo. 

     Gross profit for the quarter ended September 30, 1998 increased 
$938,000, to $5,978,000, and for the nine months ended September 30, 1998, 
gross profit increased to $16,532,000 from $13,814,000 in the corresponding 
period for 1997.  The increase for both the quarter and nine months 
represented a 19% increase over the corresponding periods in 1997 and was 
not only a result of the increased revenues generated from the New Image 
brands and Morris-Flamingo, but also continuing profits generated by the 
retail, ethnic and professional brands.  However, as anticipated and 
discussed in prior reports, the overall gross profit margin of the Company 
decreased as a result of the Morris-Flamingo acquisition. For the quarter 
ended September 30, 1998, the gross profit margin decreased from 66% to 60% 
and for the nine month period ended September 30, 1998, it declined from 
66% to 62% when compared to the corresponding period of 1997.  For the most 
part, Morris-Flamingo has operated at a loss for the past few years.  
Management took this into consideration when evaluating the acquisition and 
while it is expected that in the short term, overall gross profit margins 
will continue to decrease and selling, general and administrative expenses 
will increase, the distribution opportunities the acquisition affords the 
Company are expected to have a positive impact on future operations.  
Efforts and initiatives have been implemented to increase the gross margin 
of this new subsidiary and management believes that a profitability level 
compatible with the Company's other existing results of operations may 
(although there can be no such assurances) be achieved in 12-15 months.

     Selling, general and administrative expenses increased $771,000, or
30%, for the quarter ended September 30, 1998 when compared to the quarter 
ended September 30, 1997 and for the nine months ended September 30, 1998, 

                                     15 
     

                    THE STEPHAN CO. AND SUBSIDIARIES
                QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 1998 AND 1997

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS (con't).

it increased $1,718,000, an increase of almost 24%.  These increases were 
principally due to the additional expenses generated by our recent 
acquisitions.  While there has been an increase from an absolute dollar 
amount in the selling, general and administrative expenses, these expenses 
have actually declined as a percent of net sales.

     Interest expense for the quarter and nine months ended September 30, 
1998 increased $97,000 and $275,000, to $272,000 and $719,000, 
respectively, as a result of interest paid on debt used to acquire the 
Image lines and the Morris-Flamingo acquisition.  Interest expense has also 
increased as a result of income tax audits concluded in the third quarter 
of 1998.  The Internal Revenue Service and the State of Florida completed 
audits of the Company's income tax returns filed for the tax years ended 
December 31, 1996 and 1995.  As a result of the net audit adjustments, and 
the filing of the 1997 Corporate tax returns due in September, 1998, the 
provision for Federal and State income taxes was favorably impacted in the 
third quarter.  Interest income increased slightly for the quarter and nine 
month period.  Other income of $31,250 and $93,750, respectively, 
represents the royalty received in connection with the Frances Denney/Color 
Me Beautiful licensing agreement entered into in January, 1996.  

LIQUIDITY & CAPITAL RESOURCES

     Cash and cash equivalents decreased to $7,770,000, exclusive of funds 
on deposit with the trustee of the Liquidating Trust created in connection 
with the acquisition of the Image brands.  In the first quarter of 1998, 
the Company borrowed an additional $1,000,000 to fund the last payment to 
the Trust, in addition to borrowing $3,000,000 in connection with the 
Morris-Flamingo acquisition, as explained more fully below. Cash on deposit 
with the trustee decreased to $530,000 from $610,000 at December 31, 1997.  
In accordance with the terms of the Liquidating Trust, these funds are to 
be held by the Trustee to settle the remaining liabilities assumed in the 
New Image acquisition.  

     Accounts receivable and inventory have increased significantly from 
December 31, 1997 as a result of acquisitions made by the Company.  In 
addition to the increase in accounts receivable acquired in the Morris-
Flamingo acquisition, increased sales of retail brands acquired from Image 
to large, national drug chains and other major retailers has increased the 
outstanding accounts receivable both from an actual dollar amount due to 
sales, as well as the length of time the receivables remain outstanding.  
Net inventories increased substantially from December 31, 1997 compared to 
September 30, 1998.  This increase is principally due to the Image and 
Morris-Flamingo acquisitions, which have added a significant number of 
Stock Keeping Units (SKU's) the Company manufactures and carries.  As a 
result, many more chemicals, raw materials, components, packaging and 
finished goods are required to be kept in stock in order to ensure product 
availability, however management is attempting to reduce inventory levels 
    
                                     16


                    THE STEPHAN CO. AND SUBSIDIARIES
                QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 1998 AND 1997

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS (con't).

by reducing lead times and eliminating Skis.

Expenditures for new equipment, as well as other additions to fixed assets, 
continued through the third quarter of 1998 in an effort to increase 
production capabilities to meet product and customer requirements.

Total current assets at September 30, 1998 was $33,659,000 compared to
$25,735,000 at December 31, 1997, and approximately $7,500,000 higher than
the total current assets on September 30, 1997.  Working capital increased 
over $8,650,000 when compared to December 31, 1997. The Company is subject 
to various financial covenants with respect to working capital, current 
maturity coverage and funded debt ratios under the loan agreements with 
NationsBank, N.A.  At September 30, 1998, the Company significantly 
exceeded the minimum requirements of the covenants.

     On March 18, 1998, the Company signed an Asset Purchase Agreement (the 
"Agreement") with Morris-Flamingo, L.P., Morris-Flamingo Beauty Products, 
Inc., Shaheen & Co., Inc. and Shouky A. Shaheen, for the acquisition of 
certain assets and liabilities (including the immediate payment of a note 
payable to Fleet Capital Corp. approximating $1,880,000) of Morris-
Flamingo, L.P., in exchange for 307,058 shares of the Company's restricted 
(as provided for by Rule 144 of the Securities Act of 1933) common stock.  
The transaction was recorded as a purchase, and, based upon the net assets 
received, goodwill of approximately $2,400,000 was recorded.  The agreement 
also provides for 30% of the shares issued to be held in escrow, pending 
the final determination of the value of the net assets acquired.  Morris-
Flamingo, L.P. is a large barber and beauty supply distributor.  In 
connection with the acquisition of Morris-Flamingo, L.P., and the related 
agreement to retire its outstanding Fleet Capital Corp. debt, the Company 
secured additional financing from NationsBank, N.A. in the amount of 
$3,000,000, and pledged all of the issued common stock of Morris Flamingo-
Stephan, Inc. to the bank as collateral for the loan.  The principal on the 
loan is payable in equal monthly installments through March, 2005 and bears 
interest at the rate of 6.92% per annum.

     In September, 1998, the Company decided not to pursue a contemplated 
acquisition of the assets of Rex Chemical Corp. (RCC) pursuant to a non-
binding letter of intent signed in July, 1998, 

YEAR 2000 ISSUES
                           
     Included in the Asset Purchase Agreement with Image, the Company 
acquired the computer system used by Image and is in the process of 
converting its existing computer systems to that system.  The software in 
use will be updated by the end of 1998 and is expected to be Year 2000 
compliant.  Management of the Company does not expect costs relating to 
Year 2000 problems to have any material effect on its financial condition, 
results of operations or cash flows.
                               
                                     17


                      THE STEPHAN CO. AND SUBSIDIARIES
                 QUARTERLY REPORT PURSUANT TO SECTION 13
                 OF THE SECURITIES EXCHANGE ACT OF 1934
                       SEPTEMBER 30, 1998 AND 1997



                         PART II.  OTHER INFORMATION



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

         The Company's Annual Meeting of Stockholders was held on Friday, 
August 21, 1998.  The following individuals, constituting all of the 
Company's continuing directors, were nominated and duly elected to be 
directors of the Company by the holders of a majority of the outstanding 
common stock of the Company.
                                                        Votes
                                             __________________________

                                                  For       Withheld
                                              ___________  ___________ 

		Frank F. Ferola                      3,955,081     463,247    
          Thomas M. D'Ambrosio                 3,947,581     470,747
          Leonard Genovese                     3,956,086     462,242

          John DePinto                         3,947,609     470,719
		Curtis Carlson                       3,956,086     462,242 
		Shouky A. Shaheen                    3,952,086     466,242

         In addition to the above, the shareholders approved (1,911,998 
shares of Common Stock voted in favor of the amendment, 1,722,659 shares 
voted against, and 10,113 shares abstained, excluding 773,558 non-voted 
Broker shares) an amendment to the Company's By-Laws that provides for the 
classification of the Board of Directors into three classes in order to 
allow staggered three-year terms for Directors.                                


ITEM 5.  OTHER INFORMATION

       In accordance with Rules 14a-4(c) and 14a-5(e) promulgated under the 
Securities Exchange Act of 1934, the Registrant hereby again notifies its 
stockholders that if the Company does not receive notice by January 19, 
1999 of a proposed matter to be submitted for stockholder vote at the 
Company's 1999 Annual Meeting, then any proxies held by members of the 
Company's management in respect of such Meeting may be voted in the 
discretion of such management members on such matter, without any 
discussion of such proposed matter in the proxy statement to be distributed 
in respect of such Meeting. 

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                          

(a) Exhibit 27:  Financial Data Schedule


                                     18



                                 SIGNATURES



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



THE STEPHAN CO.




   /s/ Frank F. Ferola                                                    
___________________________________
Frank F. Ferola                                                    
President and Chairman of the Board
November 13, 1998




  /s/ David A. Spiegel                                                       
___________________________
David A. Spiegel
Principal Financial and
 Accounting Officer            
November 13, 1998 























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