UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                 FORM 10-QSB/A

|X|  Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act
     of 1934

                 For the quarterly period ended: March 31, 2007

|_|  Transition Report Under Section 13 or 15(d) of the Exchange Act

               For the transition period from _______ to ________

                           Commission File No. 1-4436

                                 THE STEPHAN CO.
        (Exact Name of Small Business Issuer 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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 |_|

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

YES |_| NO |X|

            Approximate number of shares of Common Stock outstanding
                              as of April 30, 2007:

                                    4,389,805

<PAGE>

                        The Stephan Co. and Subsidiaries
                                 March 31, 2007

EXPLANATORY NOTE: This report is being filed to restate previously reported
operating results and financial position resulting from the unauthorized actions
of a former manager that are more fully described in Note 2 of the financial
statements and in Management's Discussion and Analysis or Plan of Operation. Our
report on Form 10-QSB for the quarter ended March 31,2007, filed on May 21,
2007, reflected overstated revenue, net income and net income per share for the
quarter ended March 31, 2007, of approximately $262,000, $47,000 and $0.01,
respectively. This report on Form 10-QSB/A reflects the corrected results of
operations for the first quarter of 2007. Our report on Form 10-QSB for the
quarter ended March 31, 2007 that was filed on May 21, 2007 should no longer be
relied upon.

INDEX

                                                                            Page
                                                                            ----
PART I.    FINANCIAL INFORMATION

           ITEM 1.  Financial Statements

           Unaudited Condensed Consolidated Balance Sheets
           as of March 31, 2007 and December 31, 2006                         3

           Unaudited Condensed Consolidated Statements
           of Operations for the three months ended
           March 31, 2007 and 2006                                            5

           Unaudited Condensed Consolidated Statements
           of Cash Flows for the three months ended
           March 31, 2007 and 2006                                            6

           Notes to Unaudited Condensed Consolidated
           Financial Statements                                               7

           ITEM 2.   Management's Discussion and Analysis
                     or Plan of Operation                                    11

           ITEM 3.   Controls and Procedures                                 13

PART II.   OTHER INFORMATION

           ITEM 1.   Legal Proceedings                                       14

           ITEM 6.   Exhibits                                                14

SIGNATURES                                                                   15

<PAGE>

                        The Stephan Co. and Subsidiaries
                                 March 31, 2007

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

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

      Words such as "projects," "believe," "anticipates," "estimate," "plans,"
"expect," "intends," and similar words and expressions are intended to identify
forward-looking statements and are based on our current expectations,
assumptions, and estimates about us and our industry. In addition, any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. Although we
believe that such forward-looking statements are reasonable, we cannot assure
you that such expectations will prove to be correct.

      Our actual results could differ materially from those anticipated in such
forward-looking statements as a result of several factors, risks and
uncertainties. These factors, risks and uncertainties include, without
limitation, our ability to satisfactorily address any material weaknesses in our
financial controls; general economic and business conditions; competition; the
relative success of our operating initiatives; our development and operating
costs; our advertising and promotional efforts; brand awareness for our product
offerings; the existence or absence of adverse publicity; acceptance of any new
product offerings; changing trends in customer tastes; the success of any
multi-branding efforts; changes in our business strategy or development plans;
the quality of our management team; costs and expenses incurred by us in
pursuing strategic alternatives; the availability, terms and deployment of
capital; the business abilities and judgment of our personnel; the availability
of qualified personnel; our labor and employee benefit costs; the availability
and cost of raw materials and supplies; changes in or newly-adopted accounting
principles; changes in, or our failure to comply with, applicable laws and
regulations; changes in our product mix and associated gross profit margins; as
well as management's response to these factors, and other factors that may be
more fully described in the Company's literature, press releases and publicly-
filed documents with the Securities and Exchange Commission. You are urged to
carefully review and consider these disclosures, which describe certain factors
that affect our business.

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

<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                        The Stephan Co. and Subsidiaries
                 Unaudited Condensed Consolidated Balance Sheets

                                       March 31,   December 31,
                                         2007         2006
                                     -----------   ------------
                                      (restated)

                                     Assets

CURRENT ASSETS
Cash and cash equivalents            $ 7,666,815    $ 7,064,332
Restricted cash                        1,110,000      1,110,000
Accounts receivable, net               1,678,388      1,716,733
Inventories                            5,163,756      4,792,357
Prepaid expenses and
  other current assets                   159,162        335,429
                                     -----------    -----------
    TOTAL CURRENT ASSETS              15,778,121     15,018,851
Restricted cash                          836,071      1,206,392
Property, plant and equipment, net     1,540,905      1,573,560
Deferred income taxes                    844,615        864,471
Goodwill, net                          2,602,802      2,602,802
Trademarks, net                        3,069,507      3,069,507
Deferred acquisition costs, net           59,655         76,161
Other assets, net                      2,391,959      2,354,295
                                     -----------    -----------
    TOTAL ASSETS                     $27,123,635    $26,766,039
                                     ===========    ===========

       See notes to unaudited condensed consolidated financial statements.

                                       3

<PAGE>

                                      March 31,    December 31,
                                        2007          2006
                                     -----------   ------------
                                     (restated)

                      Liabilities and Stockholders' Equity

CURRENT LIABILITIES
Current portion of
  long-term debt                     $ 1,110,000    $ 1,110,000
Accounts payable and
  accrued expenses                     2,859,053      2,215,449
                                     -----------    -----------
    TOTAL CURRENT LIABILITIES          3,969,053      3,325,449
Long-term debt                           832,500      1,110,000
                                     -----------    -----------
    TOTAL LIABILITIES                  4,801,553      4,435,449
                                     -----------    ------------
Commitments And Contingencies
STOCKHOLDERS' EQUITY
Common stock, $.01 par value              43,898         43,898
Additional paid-in capital            17,668,352     17,646,069
Retained earnings                      4,609,832      4,640,623
                                     -----------    -----------
    TOTAL STOCKHOLDERS' EQUITY        22,322,082     22,330,590
                                     -----------    -----------
    TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY           $27,123,635    $26,766,039
                                     ===========    ===========

       See notes to unaudited condensed consolidated financial statements.


                                        4

<PAGE>

                        The Stephan Co. and Subsidiaries
            Unaudited Condensed Consolidated Statements of Operations

                                       Three Months Ended March 31,
                                       ----------------------------
                                            2007         2006
                                         ----------   ----------
                                         (restated)

Revenue                                  $4,946,952   $5,608,897
Cost Of Goods Sold                        2,858,076    3,378,582
                                         ----------   ----------
Gross Profit                              2,088,876    2,230,315
Selling, General And
  Administrative Expenses                 2,075,452    2,098,334
                                         ----------   ----------
Operating Profit                             13,424      131,981
Other Income (Expense)
  Interest income                            90,554       43,463
  Interest expense on long-term debt         (7,203)     (11,796)
                                         ----------   ----------
Income Before Income Taxes                   96,775      163,648
Income Tax Expense                           39,770       66,592
                                         ----------   ----------
Net Income                               $   57,005   $   97,056
                                         ==========   ==========
Net Income Per Share:
  Basic                                  $      .01   $      .02
  Diluted                                $      .01   $      .02
Dividends Per Share:                     $      .02   $      .02

       See notes to unaudited condensed consolidated financial statements.


                                       5

<PAGE>

                        The Stephan Co. and Subsidiaries
            Unaudited Condensed Consolidated Statements of Cash Flows

                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                       2007            2006
                                                       ----            ----
                                                    (restated)
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income                                           $   57,005   $   97,056
  Adjustments to reconcile net income
    to net cash flows provided by
    operating activities:
      Depreciation                                         34,045       37,454
      Stock-based compensation                             22,283           --
      Amortization                                         16 506       16,506
      Deferred income taxes                                19,856       30,448
  Changes in operating
    assets and liabilities:
      Accounts receivable                                  38,345     (419,302)
      Inventories                                        (371,399)      37,137
      Prepaid expenses
        and other current assets                          176,267      133,889
      Change in other assets                              (37,664)      27,747
      Accounts payable and accrued expenses               643,604      559,385
                                                       ----------    ---------
Net cash flows provided by
  operating activities                                    598,848      520,320
                                                       ----------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Reduction in restricted cash                            370,321      185,470
  Purchase of property, plant
    and equipment                                          (1,390)      (8,716)
                                                       ----------    ---------
Net cash flows provided by
  investing activities                                    368,931      176,754
                                                       ----------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:

  Repayments of long-term debt                           (277,500)    (277,500)
  Dividends paid                                          (87,796)     (87,796)
                                                       ----------    ---------
Net cash flows used in
  financing activities                                   (365,296)    (365,296)
                                                       ----------    ---------
INCREASE IN CASH AND CASH EQUIVALENTS                     602,483      331,778
Cash And Cash Equivalents,
  Beginning Of Period                                   7,064,332    5,602,762
                                                       ----------    ---------
Cash And Cash Equivalents,
  End Of Period                                        $7,666,815   $5,934,540
                                                       ==========   ==========
Supplemental Disclosures of Cash Flow Information:
        Interest paid                                  $    7,990   $   11,798
                                                       ==========   ==========
        Income taxes paid                              $   21,515   $       --
                                                       ==========   ==========

       See notes to unaudited condensed consolidated financial statements.


                                        6

<PAGE>

                        The Stephan Co. and Subsidiaries
         Notes To Unaudited Condensed Consolidated Financial Statements
                     Quarters Ended March 31, 2007 and 2006

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
        ACCOUNTING POLICIES

            NATURE OF OPERATIONS: The Stephan Co. (the "Company") is engaged
principally in the manufacture, sale and distribution of hair and personal care
grooming products throughout the United States. We have allocated substantially
all of our business into three segments: professional hair care products, retail
personal care products and manufacturing/other.

            BASIS OF PRESENTATION: In our opinion, all adjustments (consisting
only of normal accruals) necessary for a fair presentation of the Company's
financial position and results of operations are reflected in these unaudited
interim condensed consolidated financial statements. Certain reclassifications
of prior year amounts have been made to effect comparability with current year
classifications.

            The results of operations for the three-month period ended March 31,
2007 are not necessarily indicative of the results to be achieved for the year
ending December 31, 2007. The December 31, 2006 condensed consolidated balance
sheet was derived from the audited consolidated financial statements, but does
not include all disclosures required by generally accepted accounting principles
in the United States of America. These interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and accompanying notes in our Annual Report on Form 10-K for the year
ended December 31, 2006, previously filed with the Securities and Exchange
Commission.

            USE OF ESTIMATES: The preparation of consolidated financial
statements in conformity with generally accepted accounting principles requires
us to make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the
dates of the consolidated financial statements, and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.

            CASH AND CASH EQUIVALENTS: Cash and cash equivalents include cash,
CDs, money market investments and short-term municipal bonds having maturities
of 90 days or less when acquired. The Company maintains cash deposits at certain
financial institutions in amounts in excess of the federally insured limit.

            REVENUE RECOGNITION: We recognize revenue upon shipment.

            CLASSIFICATION OF CERTAIN COSTS AND EXPENSES: In Cost of Goods Sold,
we include raw materials, packaging, labor and overhead related to
manufacturing, shipping and warehousing our products.


                                        7

<PAGE>

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

                             March 31,   December 31,
                               2007           2006
                           -----------        ----

Raw materials              $ 1,423,855    $1,457,575
Packaging and components     2,196,541     2,138,017
Work-in-process                503,919       605,848
Finished goods               3,361,155     2,872,305
                           -----------    ----------
                             7,485,470     7,073,745
Less: Amount included in
      other assets          (2,321,714)   (2,281,388)
                           -----------   -----------
                           $ 5,163,756    $4,792,357
                           ===========   ===========

      Raw materials include chemicals and fragrances used in the production
process. Packaging and components include cartons, inner sleeves, boxes,
bottles, containers, jars, caps, pumps and similar items. Finished goods are
comprised of manufactured and purchased "wet" goods and purchased "hard" goods
including hair dryers, electric clippers, lather machines, scissors and salon
accessories.

      Packaging, components and finished goods that are not anticipated to be
used within one year are categorized as other assets. We reduce the value of
inventory, included in other assets, to provide for the cost, including the
estimated costs of disposal, of slow moving goods that may ultimately become
unusable or obsolete.

      BASIC AND DILUTED NET INCOME PER SHARE: Basic net income per share was
computed by dividing net income by the weighted average shares of common stock
outstanding (4,389,805 shares). Diluted net income per share was computed by
dividing net income by the weighted average shares of common stock outstanding
increased by shares assumed to be outstanding after the exercise of certain
stock options.

      The inclusion of dilutive stock options in the calculation of diluted net
income per share was not significant for the three-month periods ended March 31,
2007 and 2006. We have approximately 400,000 stock options outstanding, of which
approximately 150,000 are "in the money" and therefore used in the calculation
of diluted net income per share.

      STOCK-BASED COMPENSATION: As a result of adopting FAS 123R on January 1,
2006, we incurred compensation expense related to stock options of $22,000 and
$-0- for the three-month periods ended March 31, 2007 and 2006, respectively.
The impact on basic and diluted net income per share was approximately $.01 and
$.00 for the quarters ended March 31, 2007 and 2006, respectively.

      NEW FINANCIAL ACCOUNTING STANDARDS: In February 2007, the FASB issued SFAS
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("SFAS 159"), which establishes a fair value option under which entities can
elect to report certain financial assets and liabilities at fair value, with
changes in fair value recognized in earnings. SFAS 159 is effective for fiscal
years beginning after November 15, 2007. We are currently evaluating the impact,
if any, that SFAS 159 will have on our financial statements.


                                        8

<PAGE>

      In September 2006, the Securities and Exchange Commission staff published
Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements." SAB No. 108 addresses the effect on current year financial
statements of prior year uncorrected errors. SAB No. 108 was effective for
fiscal years ended after November 15, 2006. The adoption of SAB No. 108 by us in
the fourth quarter of 2006 did not have a material impact on our consolidated
financial statements.

      In July 2006 the FASB issued FASB Interpretation No. 48, ("FIN 48")
"Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement
No. 109". FIN 48 requires that we recognize in our financial statements the
impact of a tax position taken or expected to be taken in a tax return, provided
that such position is more likely than not of being sustained on audit. FIN 48
is effective for fiscal years beginning after December 15, 2006. We do not
anticipate that FIN 48 will have an adverse effect on our financial statements.

NOTE 2: RESTATEMENT OF A PRIOR PERIOD

The unaudited consolidated condensed financial statements have been restated to
correct an error resulting from the unauthorized actions of a former manager
that are more fully described in Management's Discussion and Analysis or Plan of
Operation. Our report on Form 10-QSB for the quarter ended March 31,2007, filed
on May 21, 2007, reflected overstated revenue, net income and net income per
share for the quarter ended March 31, 2007, of approximately $262,000, $47,000
and $0.01, respectively. The following table presents the effect of changes in
the unaudited condensed consolidated financial statements caused by the
restatement:


                                        9

<PAGE>

                                           As Restated
                                                for
                                           Correction
                             As Reported    of Error
                             -----------   -----------
                                 Three Months ended
                                   March 31, 2007
                             -------------------------
Statement of Operations
Revenue                       $5,196,864   $4,946,952
Cost of Goods Sold            $3,042,920   $2,858,076
Gross Profit                  $2,153,944   $2,088,876
Operating Profit              $  105,922   $   13,424
Income Before Income Taxes    $  174,342   $   96,775
Income Tax Expense            $   70,796   $   39,770
Net Income                    $  103,546   $   57,005

Statement of Cash Flows
Net income                    $  103,546   $   57,005
Deferred income taxes         $   50,883   $   19,856
Accounts receivable           $ (229,894)  $   38,345
Inventories                   $ (186,555)  $ (371,399)

                                  At March 31, 2007
                             -------------------------
Balance Sheet
Accounts receivable, net      $1,940,800   $1,678,388
Inventories                   $4,978,912   $5,163,756
Deferred income taxes         $  813,588   $  844,615
Retained earnings             $4,656,373   $4,609,832

NOTE 3: COMMITMENTS AND CONTINGENCIES

      We are involved in litigation matters arising in the ordinary course of
business. It is our opinion that none of these matters, at March 31, 2007, would
likely, if adversely determined, have a material adverse effect on our financial
position, results of operations or cash flows. Additionally, there has been no
material change in the status of any pending litigation since our last filing of
Form 10-K with the Securities and Exchange Commission for the year ended
December 31, 2006.


                                       10

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Adjustments Related to Previously Issued Financial Statements for Interim
Periods of 2007

We recently discovered, with the aid of our system of internal controls, that a
manager at our Midwest subsidiary had caused overstated results to be included
in our previously reported revenue, net income and net income per share to the
extent of $504,000, $124,000, and $.02 per common share, respectively, for the
six months ended June 30, 2007. Cash was unaffected. The actions of the former
manager were unauthorized and unilateral and resulted in the aforementioned
overstatement of revenue and earnings. We do not consider the actions of the
former manager to be indicative of a material weakness in our system of internal
controls, but we are reviewing our control systems at this subsidiary for any
weaknesses or deficiencies. Any needed strengthening of our Internal Controls
over Financial Reporting will be implemented before December 31, 2007.

We are herein amending our report filed on Form 10-QSB for the first quarter of
2007, and plan to amend our previously filed Form 10-QSB for the second quarter
of 2007, as follows:

Quarter Ended March 31, 2007       As Filed    As Restated
                                 -----------   -----------
  Revenue                        $ 5,209,364    $4,946,952
  Net income                         103,546        57,005
  Net income per share           $       .02    $      .01

Quarter Ended June 30, 2007        As Filed    As Restated
                                 -----------   -----------
  Revenue                        $ 5,106,714    $4,864,668
  Net income                         163,750       128,751
  Net income per share           $       .04    $      .03

Six Months Ended June 30, 2007     As Filed    As Restated
                                 -----------   -----------
  Revenue                        $10,316,078    $9,811,620
  Net income                         267,296       185,756
  Net income per share           $       .06    $      .04

The "As Restated" amounts above have been included in this report on Form
10-QSB/A for the first quarter of 2007. Revenue "As Filed" for the quarter ended
March 31, 2007 includes a subsequent reclassification from other income of
$12,500.

Comparison of the Three-Month Periods ended March 31, 2007 and March 31, 2006:

Our revenue was $4.9 million for the three months ended March 31, 2007, a
decrease of 11.8% from the comparable period in 2006 principally due to a
shortfall in our professional segment. Revenue in our professional segment,
consisting principally of lower margin hard goods, accounted for approximately
72.0% of our total revenue for the three-month period ended March 31, 2007 and
declined 16.0% from the comparable period in the prior year. Revenue in the
retail segment, principally comprised of chain stores and mass merchandisers,
accounted for approximately 20.4% of our total revenue for this three-month
period and approximated the revenue for the comparable 2006 period. Revenue for
the remaining product segment was 5.7% above that for the comparable period in
2006. It was not practicable to determine profit or loss by segment; however,
the Company is planning to present such information in our Annual Report on Form
10-KSB for the year ending December 31, 2007.


                                        11

<PAGE>

                               Revenue by Segment
                                ($ in thousands)

                      Three Months   Three Months   % Increase
                          2007           2006       (Decrease)
                      ------------   ------------   ----------
Professional             $3,571         $4,252        (16.0%)
Retail                    1,008          1,009           --
Manufacturing/Other         368            348          5.7%
                         ------         ------
  Total                  $4,947         $5,609        (11.8%)

      Revenue in our largest category, professional hard goods, was below that
in the first quarter of 2006. We believe that several factors contributed to
this shortfall: 1) a decrease in the number of distributors resulting from
industry consolidation, 2) increased competitive pressures, 3) lower beauty
school enrollments and 4) general economic conditions.

      Our operating profit in the first quarter of 2007 was $13,000 compared to
$132,000 in the first quarter of 2006. Lower SG&A expenses and higher gross
margins helped to offset the effect of the revenue decline. SG&A expenses in the
first quarter of 2006 included legal costs of $19,000 classified in previous
reports as a component of interest expense.

      Higher interest income of $47,000 in the first quarter of 2007 compared to
the first quarter of 2006 lessened the decline in income before income taxes.

      Net income for the first quarter of 2007 declined $40,000 due principally
to 1) the unfavorable effect on operating profit of the revenue shortfall from
the first quarter of 2007 compared to the comparable period in 2006, 2) the
favorable effect of higher interest income in the first quarter of 2007 compared
to that in the first quarter of 2006, and 3) lower income taxes.

LIQUIDITY & CAPITAL RESOURCES

      We had $7.7 million cash and cash equivalents at March 31, 2007, up from
$7.1 million at December 31, 2006. Additionally, we had cash of $1.9 million
pledged as security for a bank loan of a like amount. Other than this bank loan,
which has been fully funded by restricted cash, we have no long-term debt.

      During the three-month period ended March 31, 2007, we generated cash
flows from operations sufficient to fund our operating, capital and dividend
requirements. Most of our revenue and cash flow comes from our Professional
market segment. This segment markets non-manufactured barber and beauty supplies
to distributors, barbershops, beauty schools and salons. We do not anticipate
the need for additional long-term debt or capital contributions at this time. We
do not have any off-balance sheet financing or similar arrangements.

      We paid our first dividend of 2007 on March 30, 2007 in the amount of $.02
per share of common stock. We have paid dividends every year since mid-1995.

NEW FINANCIAL ACCOUNTING STANDARDS

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

DISCUSSION OF CRITICAL ACCOUNTING POLICIES

      The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results would differ significantly from those
estimates if different assumptions were used or unexpected events transpire.
Please see Item 7 in our Annual Report on Form 10-K for the year ended December
31, 2006 filed with the Securities and Exchange Commission.


                                        12

<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

      (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES: As of the end of the
period covered by this quarterly report, we, including our principal executive
and financial officers, performed an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that a material weakness existed in our internal controls over financial
reporting and, consequently, that our disclosure controls and procedures were
not effective in timely alerting them as to material information relating to our
Company and our subsidiaries that is required to be included in this quarterly
report.

      The material weakness in our internal controls over financial reporting as
of March 31, 2007 related to the fact that as a small public company, we,
currently, have an insufficient number of personnel with clearly delineated and
fully documented responsibilities and with the appropriate level of accounting
expertise. We also have insufficient documented procedures to identify and
prepare a conclusion on matters involving material accounting issues and to
independently review conclusions as to the application of generally accepted
accounting principles. The lack of a sufficient number of accounting personnel
is not considered appropriate for an internal control structure designed for
external reporting purposes.

      The principal factors management considered in determining whether a
material weakness existed in this regard was based upon management's evaluation
discussed above and advice from our independent registered public accounting
firm. As a result, management has determined that a material weakness in the
effectiveness of the Company's internal controls over financial reporting
existed as of March 31, 2007.

      During the second quarter of 2007 we retained a financial consultant who
acted as our controller and also analyzed procedures and evaluated internal
controls and reported his findings and recommendations for change to the Audit
Committee of the Board. To the extent practicable we will implement these
recommended changes by the end of 2007. The consultant remains with us as our
chief financial officer.

      (b) CHANGES IN INTERNAL CONTROLS: No change in the Company's internal
control over financial reporting occurred during the second quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting. However, the Audit Committee and we recognize
that current staffing levels will have to be enhanced and/or arrangements will
have to be made with other accounting firms to act in a consulting capacity in
an effort to satisfy our reporting obligations and over-all standards of
disclosure controls and procedures.


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<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

      There has been no significant change in the status of litigation since the
issuance of the Annual Report on Form 10-K for the year ended December 31, 2006.

ITEM 6. Exhibits

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

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

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

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


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<PAGE>

                                 SIGNATURES

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

THE STEPHAN CO.


/s/ Frank F. Ferola
-------------------------------------
Frank F. Ferola
President and Chief Executive Officer
January 10, 2008


/s/ Robert C. Spindler
-------------------------------------
Robert C. Spindler
Principal Financial and
Accounting Officer
January 10, 2008


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