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, 2001

                        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 Registrant's
classes of common stock, as of the latest practicable date.



         Approximate number of shares of Common Stock outstanding
                        as of October 31, 2001:


                              4,410,577



                       THE STEPHAN CO. AND SUBSIDIARIES
                    QUARTERLY REPORT PURSUANT TO SECTION 13
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                              SEPTEMBER 30, 2001


                                    INDEX


                                                               PAGE NO.
PART I.    FINANCIAL INFORMATION

           ITEM 1.  Financial Statements

           Unaudited Condensed Consolidated Balance Sheets
           as of September 30, 2001 and December 31, 2000        4-5

           Unaudited Condensed Consolidated Statements
           of Operations for the nine months ended
           September 30, 2001 and 2000                            6

           Unaudited Condensed Consolidated Statements
           of Operations for the three months ended
           September 30, 2001 and 2000                            7

           Unaudited Condensed Consolidated Statements
           of Cash Flows for the nine months ended
           September 30, 2001 and 2000                           8-10

           Notes to Unaudited Condensed Consolidated
           Financial Statements                                 11-15

           ITEM 2.    Management's Discussion and Analysis
                      of Financial Condition and
                      Results of Operations                     16-19

           ITEM 3.    Quantitative and Qualitative
                      Disclosure About Market Risk                19


PART II.   OTHER INFORMATION

           ITEM 1.  Legal Proceedings                             20


SIGNATURES                                                        21







                                  2


                        THE STEPHAN CO. AND SUBSIDIARIES
                    QUARTERLY REPORT PURSUANT TO SECTION 13
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                             SEPTEMBER 30, 2001



          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.  Such forward-looking statements involve known and unknown
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, performance, condition, trends or achievements projected,
anticipated or implied by such forward-looking statements.

     Such factors include, but are not limited to, the following: general
economic and business conditions; competition; success of operating
initiatives; development and operating costs; advertising and promotional
efforts; brand awareness; the existence or absence of adverse publicity;
acceptance of new product offerings; changing trends in customer tastes;
the success of multi-branding; changes in business strategy or development
plans; quality of management; costs and expenses incurred by the Company in
pursuing strategic alternatives; availability, terms and deployment of
capital; business abilities and judgment of personnel; availability of
qualified personnel; labor and employee benefit costs; availability and
cost of raw materials and supplies; changes in, or failure to comply with,
laws; the ability to successfully integrate new businesses and the ability
to reduce costs; changes in product mix and associated gross profit
margins; and other factors or events referenced in this Form 10-Q.  The
Company does not undertake any obligation to publicly release the results
of any revisions which may be made to any forward-looking statements to
reflect events or circumstances occurring after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events.

          Therefore, the Company cautions each reader of this report to
carefully consider the specific factors and qualifications discussed herein
with respect to such forward-looking statements, as such factors could
affect the ability of the Company to achieve its objectives and may cause
actual results to differ materially from those projected, anticipated or
implied herein.




                                  3


                       THE STEPHAN CO. AND SUBSIDIARIES
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                   ASSETS



                                             September 30,   December 31,
                                                 2001            2000
                                             ____________    ____________

CURRENT ASSETS

 Cash and cash equivalents                   $  6,672,887    $ 13,559,268

 Certificates of deposit                          832,500            -

 Accounts receivable, net                       2,478,365       3,026,553

 Inventories                                   10,209,535      10,377,851

 Income taxes receivable                          812,457       1,028,112

 Prepaid expenses and
  other current assets                            372,894         207,061
                                             ____________    ____________

   TOTAL CURRENT ASSETS                        21,378,638      28,198,845

CERTIFICATE OF DEPOSIT                          7,307,500            -

PROPERTY, PLANT AND EQUIPMENT, net              2,438,307       2,617,521

INTANGIBLE ASSETS, net                         23,892,996      24,736,603

OTHER ASSETS, net                               3,084,134       3,215,848
                                             ____________    ____________

   TOTAL ASSETS                              $ 58,101,575    $ 58,768,817
                                             ============    ============









    See notes to unaudited condensed consolidated financial statements


                                  4


                      THE STEPHAN CO. AND SUBSIDIARIES
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                   LIABILITIES AND STOCKHOLDERS' EQUITY


                                           September 30,     December 31,
                                               2001              2000
                                            ___________      ____________
CURRENT LIABILITIES

 Accounts payable and
  accrued expenses                         $  2,929,612      $  3,001,720

 Current portion of
  long-term debt                              1,416,528         1,519,277
                                           ____________      ____________

   TOTAL CURRENT LIABILITIES                  4,346,140         4,520,997

DEFERRED INCOME TAXES, net                    1,799,660         1,677,805

LONG-TERM DEBT                                8,161,172         9,123,929
                                           ____________      ____________

   TOTAL LIABILITIES                         14,306,972        15,322,731
                                           ____________      ____________

COMMITMENTS AND CONTINGENCIES (NOTE 4)

STOCKHOLDERS' EQUITY

  Common stock, $.01 par value                   44,106            44,269
  Additional paid in capital                 18,417,080        18,477,341
  Retained earnings                          26,684,980        26,336,463
                                           ____________      ____________
                                             45,146,166        44,858,073
  LESS:
   125,000 CONTINGENTLY
    RETURNABLE SHARES                        (1,351,563)       (1,351,563)
   TREASURY STOCK (16,320 shares
    at December 31, 2000)                          -              (60,424)
                                           ____________      ____________
  TOTAL STOCKHOLDERS' EQUITY                 43,794,603        43,446,086
                                           ____________      ____________
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                     $ 58,101,575      $ 58,768,817
                                           ============      ============


    See notes to unaudited condensed consolidated financial statements

                                  5


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



                                             Nine Months Ended Sept. 30,
                                            _____________________________

                                                 2001             2000
                                            ____________     ____________

NET SALES                                    $21,997,742      $24,131,072

COST OF GOODS SOLD                            12,568,110       13,708,603
                                             ___________      ___________

GROSS PROFIT                                   9,429,632       10,422,469

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                      8,481,498        8,396,863
                                             ___________     ____________

OPERATING INCOME                                 948,134        2,025,606

OTHER INCOME(EXPENSE)
  Interest income                                511,621          508,199
  Interest expense                              (563,373)        (648,486)
  Royalty income                                 131,250          131,250
                                             ___________      ___________

INCOME BEFORE INCOME TAXES                     1,027,632        2,016,569

INCOME TAXES                                     414,481          765,043
                                             ___________      ___________

NET INCOME                                   $   613,151      $ 1,251,526
                                             ===========      ===========

BASIC AND DILUTED EARNINGS PER SHARE         $       .14      $       .28
                                             ===========      ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING                          4,285,577        4,418,128
                                             ===========      ===========







    See notes to unaudited condensed consolidated financial statements


                                  6


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




                                             Three Months Ended Sept. 30,
                                            _____________________________

                                                 2001             2000
                                            ____________     ____________

NET SALES                                    $ 6,584,155      $ 7,802,962

COST OF GOODS SOLD                             3,725,830        4,920,235
                                             ___________      ___________

GROSS PROFIT                                   2,858,325        2,882,727

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                      3,063,569        2,922,956
                                             ___________     ____________

OPERATING LOSS                                  (205,244)         (40,229)

OTHER INCOME(EXPENSE)
  Interest income                                186,638          180,651
  Interest expense                             ( 157,753)        (209,576)
  Royalty income                                  43,750           43,750
                                             ___________      ___________

LOSS BEFORE INCOME TAX BENEFIT                  (132,609)         (25,404)

INCOME TAX BENEFIT                               (42,648)          (8,429)
                                             ___________      ___________

NET LOSS                                     $   (89,961)     $   (16,975)
                                             ===========      ===========

BASIC AND DILUTED LOSS PER SHARE             $      (.02)     $      (.00)
                                             ===========      ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING                          4,285,577        4,384,065
                                             ===========      ===========






    See notes to unaudited condensed consolidated financial statements


                                  7


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



                                             Nine Months Ended Sept. 30,
                                             ___________________________

                                                 2001            2000
                                             ___________     ____________

CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income                                  $   613,151     $ 1,251,526
                                             ___________     ____________

 Adjustments to reconcile net income to
  cash flows used in operating activities:

   Depreciation                                  283,825         318,229
   Amortization                                  893,514         879,462
   Amortization of other assets                  101,461          89,520
   Deferred income taxes                         121,855          41,998
   Provision for doubtful accounts                17,068         100,903

   Changes in operating assets and
   liabilities:

     Certificate of deposit, collateralizing
      refinanced loan                         (8,140,000)           -
     Accounts receivable                         531,120        (124,765)
     Inventories                                 168,316         268,634
     Income taxes receivable                     215,655        (750,594)

     Prepaid expenses
      and other current assets                  (165,833)       (114,873)
     Other assets                                 30,253       1,076,036
     Accounts payable and accrued expenses       (72,108)        188,755
                                             ___________     ___________

     Total adjustments                        (6,014,874)      1,973,335
                                             ___________     ___________
Net cash flows (used in)/provided
 by operating activities                      (5,401,723)      3,224,861
                                             ___________     ___________








                                  8


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




                                             Nine Months Ended Sept. 30,
                                             ____________________________

                                                 2001             2000
                                             ____________     ___________

CASH FLOWS FROM INVESTING ACTIVITIES:

 Purchase of property, plant
  and equipment                                 (104,611)        (260,698)

 Purchase of intangible assets                   (49,907)        (146,698)
                                              ___________      ___________

Net cash flows used in
 investing activities                           (154,518)        (407,396)
                                             ___________      ___________
CASH FLOWS FROM FINANCING ACTIVITIES:

 Repayments of long-term debt                 (9,205,506)        (938,170)

 Proceeds from note payable to bank            8,140,000             -

 Acquisition of treasury stock                      -            (657,292)

 Dividends paid                                 (264,634)        (273,471)
                                             ___________      ___________
Net cash flows used in
 financing activities                         (1,330,140)      (1,868,933)
                                             ___________      ___________
(DECREASE)/INCREASE IN CASH AND
 CASH EQUIVALENTS                             (6,886,381)         948,532

CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                          13,559,268       12,079,204
                                             ___________      ___________
CASH AND CASH EQUIVALENTS,
 END OF PERIOD                               $ 6,672,887      $13,027,736
                                             ===========      ===========





    See notes to unaudited condensed consolidated financial statements


                                  9


                       THE STEPHAN CO. AND SUBSIDIARIES
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001







Supplemental Disclosures of Cash Flow Information:



          Interest Paid                      $   550,232      $   604,688
                                             ===========      ===========


          Income Taxes Paid                  $      -         $ 1,350,500
                                             ===========      ===========



     For the nine months ended September 30, 2001, 16,320 shares of
treasury stock, with a cost of $60,424, were retired, and for the nine
months ended September 30, 2000, 230,400 shares of treasury stock, with a
cost of $915,280, were retired.

     For the nine months ended September 30, 2000, equipment valued at
$99,340 was purchased from a customer and the purchase price was applied
against a portion of the outstanding account receivable.




















    See notes to unaudited condensed consolidated financial statements

                                  10


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  QUARTERS ENDED SEPTEMBER 30, 2001 AND 2000


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 these unaudited interim financial
statements.

     The results of operations for the nine and three-month periods ended
September  30, 2001 are not necessarily indicative of the results to be
expected for the year ending December 31, 2001.  The December 31, 2000
condensed consolidated balance sheet was derived from the audited
consolidated financial statements, but does not include all disclosures
required by accounting principles generally accepted in the United States
of America ("generally accepted accounting principles").  These interim
financial statements should be read in conjunction with the audited
consolidated financial statements and accompanying notes thereto for the
year ended December 31, 2000 appearing in the Company's Form 10-K filed
with the Securities and Exchange Commission.

     NATURE OF OPERATIONS:  The Company is engaged in the manufacture, sale
and distribution of hair and personal care grooming products principally
throughout the United States. Statement of Financial Accounting Standards
("SFAS") No. 131, "Disclosures About Segments of an Enterprise and Related
Information", requires the reporting of segment information using a
"management approach" as it relates to the operating segments of a
business.  The Company has allocated its business into three segments,
which are professional hair care products and distribution, retail personal
care products and manufacturing.

         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 as of 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.

         REVENUE RECOGNITION:  Revenue is recognized when all significant
contractual obligations have been satisfied, which involves the delivery of
manufactured goods and reasonable assurance as to the collectability of the
resulting account receivable.  In December 1999, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" ("SAB 101"), providing guidance on
recognition of income, presentation and disclosure of revenues in the
financial statements.  The Company believes that its revenue recognition
policies are in conformity with the guidance provided in SAB 101.


                                  11


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  QUARTERS ENDED SEPTEMBER 30, 2001 AND 2000


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         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.  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, 2001 and December 31, 2000 were approximately
$6,060,000 and $12,995,000, respectively.

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

                                      September 30,        December 31,
                                          2001                 2000
                                      ____________         ____________
Raw materials                         $  2,525,897         $  2,620,048
Packaging and components                 3,340,232            3,700,758
Work in progress                           712,029              703,571
Finished goods                           6,304,352            6,284,531
                                      ____________         ____________
                                        12,882,510           13,308,908
Less: Amount included in
      other assets                      (2,672,975)          (2,931,057)
                                      ____________         ____________

                                      $ 10,209,535         $ 10,377,851
                                      ============         ============

     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
become part of the finished product.  Finished goods also include hair
dryers, electric clippers, lather machines, scissors and salon furniture.
Included in other assets are raw materials, packaging and components
inventory not anticipated to be utilized in less than one year.

         BASIC AND DILUTED EARNINGS PER SHARE:  Basic and diluted earnings
per share are computed by dividing net income by the weighted average
number of shares of common stock outstanding.  The weighted average number
of shares outstanding was 4,285,577 for the nine months ended September 30,
2001 and 4,418,128 for the nine months ended September 30, 2000.  The
weighted average number of shares outstanding was 4,285,577 for the quarter
ended September 30, 2001 and 4,384,065 for the quarter ended September 30,
2000.  For the quarters and nine months ended September 30, 2001 and 2000,

                                  12


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  QUARTERS ENDED SEPTEMBER 30, 2001 AND 2000


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

the Company had 739,524 outstanding stock options.  None of these options
were included in the calculation of earnings per share because their
inclusion would be anti-dilutive.

         NEW FINANCIAL ACCOUNTING STANDARDS:  In June 1998, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities."  Among other provisions, SFAS No. 133
establishes accounting and reporting standards for derivative instruments
and for hedging activities.  It also requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value.  In July 1999, the
FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB No. 133" and, in
June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", which are effective for
financial statements for fiscal years beginning after June 15, 2000.  The
adoption of these statements on January 1, 2001 did not have a significant
effect on the Company's financial position, results of operations or cash
flows.

     In July, 2001, FASB issued SFAS No. 141, "Business Combinations", and
SFAS No. 142, "Goodwill and Other Intangible Assets".  These standards make
changes to the accounting for business combinations, goodwill and
intangible assets.  SFAS No. 141 requires all business combinations entered
into subsequent to June 30, 2001 to be accounted for using the purchase
method of accounting.  SFAS No. 142 provides that goodwill and other
intangible assets with indefinite lives will not be amortized, but will be
tested for impairment on an annual basis.  SFAS No. 142 is effective for
years beginning after December 15, 2001.  Goodwill and intangible assets
acquired subsequent to June 30, 2001 are immediately subject to the
provisions of SFAS No. 142.  The Company is performing a review of SFAS No.
142, which will be adopted on January 1, 2002, to determine the impact on
the financial statements.

     In August, 2001, FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which supersedes, but does
not replace, SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets to be Disposed Of", as well as other earlier related pronouncements,
either in whole or in part.  SFAS No. 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years.  Earlier application is
encouraged and the adoption of these statements will not have a significant
effect on the Company's financial position, results of operations or cash
flows.

                                  13


                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  QUARTERS ENDED SEPTEMBER 30, 2001 AND 2000


NOTE 2: SEGMENT INFORMATION

     In accordance with the guidelines established by SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," the
Company has identified three reportable operating segments based upon how
management evaluates its business.  These segments are Professional Hair
Care Products and Distribution ("Professional"), Retail Personal Care
Products ("Retail") and Manufacturing.  The Professional segment generally
has as a customer base distributors that purchase the Company's hair
products and beauty and barber supplies for sale to salons and barber
shops.  The customer base for the Retail segment is mass merchandisers,
chain drug stores and supermarkets that sell products to end-users. The
Manufacturing segment manufactures products for different subsidiaries of
the Company, and also manufactures private label brands for customers.

     The Company conducts operations primarily in the United States and
sales to international customers are not material to its consolidated
revenues. Income/(Loss) Before Income Taxes as shown below reflects an
allocation of corporate overhead expenses incurred by the Manufacturing
segment.  The following tables, in thousands, summarize Net Sales and
Income Before Income Taxes by reportable segment:



                                 NET SALES           NET SALES
                              _______________     _______________
                                Nine Months         Three Months
                              Ended Sept. 30,     Ended Sept. 30,
                                2001    2000        2001     2000
                              _______________     _______________
Professional                  $14,752 $16,023     $ 5,087 $ 5,675
Retail                          5,232   6,630       1,273   1,747
Manufacturing                   7,660   6,309       2,187   2,230
                              _______ _______     _______ _______
   Total                       27,644  28,962       8,547   9,652

Intercompany
  Manufacturing                (5,646) (4,831)     (1,963) (1,849)
                              _______ _______     _______ _______
   Consolidated               $21,998 $24,131     $ 6,584 $ 7,803
                              ======= =======     ======= =======







                                  14

                       THE STEPHAN CO. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  QUARTERS ENDED SEPTEMBER 30, 2001 AND 2000

NOTE 2: SEGMENT INFORMATION (continued)

                            INCOME/(LOSS) BEFORE  INCOME/(LOSS) BEFORE
                               INCOME TAXES           INCOME TAXES
                              _______________        _______________
                                Nine Months            Three Months
                              Ended Sept. 30,        Ended Sept. 30,
                                2001    2000           2001     2000
                              _______________        _______________
Professional                  $   478 $   980        $  (42) $    33
Retail                            280     764           (61)      15
Manufacturing                     270     273           (30)     (73)
                              _______ _______        ______  _______

   Consolidated               $ 1,028 $ 2,017        $ (133) $   (25)
                              ======= =======        ======  =======
NOTE 3: LONG TERM DEBT

     On August 9, 2001, the outstanding debt payable to a bank was
refinanced with another bank.  The loan has the same payment terms as the
previous loan, and is collateralized by certificates of deposit.  The new
loan bears an interest rate of 50 basis points (currently 3.78%) above the
certificate of deposit rate for the term of the loan, which is 3.28%, and
resets annually.  The certificate of deposit that collateralizes the long-
term portion of the note payable has been classified as a non-current
asset.  The new loan does not have any financial covenants that the Company
must comply with.

NOTE 4: COMMITMENTS AND CONTINGENCIES

     On March 5, 2001, the Company announced that its Board of Directors
had formed a two-person, special committee to explore various strategic
alternatives to enhance shareholder value, including the consideration of a
possible bid by several members of the Company's management and directors,
exclusive of the committee members, forming a group to purchase all of the
Company's outstanding capital stock in a going-private transaction.  This
group expects to continue the Company's business generally as it is
currently operated.  The strategic review process involved retaining
independent legal counsel and investment banking advisors to advise and
assist in the evaluation.  It is estimated that remaining costs associated
with this process will be in excess of $400,000.  On July 30, 2001, the
Special Committee of the Board of Directors selected SunTrust Robinson
Humphrey Capital Markets as its investment bankers in respect of such
transaction.

     In September 2001, the United States District Court for the Southern
District of Florida dismissed the Class Action lawsuit, with prejudice.
See Part II, Item 1, Legal Proceedings.  Other than the foregoing, there
has been no change in the status of other pending litigation since last
reported in the financial statements for the year ended December 31, 2000.

                                  15



                   THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2001 AND 2000

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

RESULTS OF OPERATIONS

     Net income of $613,000 for the nine months ended September 30, 2001
declined from the $1,252,000 achieved in the nine months ended September
30, 2000, largely as a result of a decrease in net sales as discussed
below. For the nine months ended September 30, 2001, net sales were
$21,998,000, compared to $24,131,000 achieved in the nine months ended
September 30, 2000, a decline of $2,133,000.  Principally as a result of
the decline in net sales, gross profit for the nine months ended September
30, 2001 was $9,430,000,  compared to gross profit of $10,422,000 achieved
for the corresponding nine month period in 2000. Basic and diluted earnings
per share were $0.14 for the nine months ended September 30, 2001, compared
to $.28 for the nine months ended September 30, 2000.

     The Company experienced a decline in net sales for the Professional
and Retail segments of the business in the nine-month period ended
September 30, 2001, with the Professional and Retail segments each
declining approximately $1,300,000.  Private label manufacturing partially
offset this decline by increasing over $450,000 from the corresponding
nine-month period in 2000.  The sales decline referenced above in the
Professional and Retail segments was primarily due to continued industry
wide consolidation described in previous reports.  The increase in private
label manufacturing was the result of continued production for a customer
from the prior year; however management does not anticipate that private
label manufacturing from this customer will continue through the fourth
quarter.  The gross profit margin for the nine months ended September 30,
2001 declined slightly due to the continuing change in the mix of business,
with higher margin "wet goods" sales in the Professional and Retail
segments declining more than other "hard goods" sales.

     Selling, general and administrative expenses for the nine months ended
September 30, 2001 increased by $84,000 from $8,397,000 to $8,481,000, when
compared to the corresponding nine-month period of 2000.  This increase was
a result of expenses incurred in connection with the activities associated
with the pursuit of strategic alternatives for the Company as more fully
explained below and an increase in selling expenses relating to maintaining
existing professional and retail branded products.

     For the three months ended September 30, 2001, the Company had a net
loss of $90,000, compared to the net loss of $17,000 for the three months
ended September 30, 2000.  Net sales for the three months ended September
30, 2001 declined $1,219,000, to $6,584,000 compared to net sales of
$7,803,000 for the corresponding third quarter of 2000.  This decline in
net sales was due principally to the reasons indicated above relative to

                                  16


                   THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2001 AND 2000

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

the sales decline for the nine months ended September 30, 2001.  For the
quarter ended September 30, 2001, gross profit declined $24,000 to
$2,858,000 when compared to the same three-month period in 2000. Basic and
diluted earnings per share for the three months ended September 30, 2001
was a loss of ($.02), compared to a loss of ($.00) per share for the three
month period ended September 30, 2000.

     For the quarter ended September 30, 2001, selling, general and admin-
istrative expenses increased to $3,064,000, compared to $2,923,000 for the
corresponding quarter of 2000.  While the Company continues in its efforts
generally to control selling, general and administrative expenses, the
impact of increased spending in the legal, professional and promotional
areas has not been fully offset by savings in other categories.

     Interest income for the nine months ended September 30, 2001 increased
slightly over the corresponding nine-month period of 2000 as a net result
of approximately $40,000 of interest income from income tax refunds and
having more cash invested, despite significantly lower interest rates.  For
these same reasons, interest income for the third quarter of 2001 showed an
increase of $6,000 when compared to the quarter ended September 30, 2000.
Interest expense for the nine months ended September 30, 2001 decreased
approximately $85,000 from the corresponding nine-month period of 2000.
For the three months ended September 30, 2001, interest expense decreased
almost $52,000 from the three-month period ended September 30, 2000.  These
declines were due to not only decreased amounts of outstanding debt, but
also because the Company refinanced its note payable to a bank in August
2001, obtaining a more favorable interest rate by pledging certificates of
deposit as collateral for the new loan.  Other income is comprised of a
$43,750 quarterly royalty fee from the licensing of Frances Denney
products.

     The provision for income taxes for the nine-months ended September 30,
2001 was $414,000, a decrease of $351,000 from the $765,000 provided for
the nine-months ended September 30, 2000.  For the three-months ended
September 30, 2001, the Company had a tax benefit as a result of the loss
for the quarter ended September 30, 2001.

LIQUIDITY & CAPITAL RESOURCES

     Cash and cash equivalents decreased $6,886,000 from December 31, 2000,
to $6,673,000 at September 30, 2001, as a result of the refinancing
described above.  Total cash of $14,813,000 includes cash invested in
certificates of deposit pledged as collateral for a bank loan.  Accounts
receivable decreased $531,000 as the result of a

                                  17


                   THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2001 AND 2000

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

decrease in sales.  Inventories were relatively constant, decreasing by
approximately $168,000 from the amount of inventory on hand at December 31,
2000, to $10,210,000 at September 30, 2001.

     Total current assets at September 30, 2001 were $21,379,000 compared
to $28,199,000 at December 31, 2000.  As a result of the purchase of
certificates of deposit to collateralize the refinancing of the outstanding
note payable, working capital decreased $6,645,000 when compared to
December 31, 2000 due to the required classification of a substantial
portion of the certificates of deposit as long term assets.  Under the
terms of the new debt arrangement, the Company is no longer subject to any
financial covenants.

     On March 5, 2001, the Company announced that the Board of Directors
had formed a two-person, special committee to explore various strategic
alternatives to enhance shareholder value, including the consideration of a
possible bid by four members of the Company's management and directors,
exclusive of the committee members, forming a group to purchase all of the
Company's outstanding capital stock in a going-private transaction.  This
group expects to continue the Company's business generally as is currently
operated.  The strategic review process involved retaining independent
legal counsel and investment banking advisors to advise and assist in the
evaluation.  It is estimated that remaining costs associated with this
process will be in excess of $400,000.  On July 30, 2001, the Special
Committee of the Board of Directors selected SunTrust Robinson Humphrey
Capital Markets as its investment bankers in respect of such transaction.

NEW FINANCIAL ACCOUNTING STANDARDS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities."  Among other provisions, SFAS No. 133  establishes accounting
and reporting standards for derivative instruments and for hedging
activities.  It also requires that an entity recognize all derivatives as
either assets or liabilities in its statement of financial position and
measure those instruments at fair value. In July 1999, the FASB issued SFAS
No. 137, "Accounting for Derivative Instruments and Hedging Activities-
Deferral of the Effective Date of FASB No. 133" and, in June 2000, the FASB
issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities", which are effective for financial statements
for fiscal years beginning after June 15, 2000.  The adoption of these
statements on January 1, 2001 did not have a significant effect on the
Company's financial position, results of operations or cash flows.


                                  18


                   THE STEPHAN CO. AND SUBSIDIARIES
               QUARTERLY REPORT PURSUANT TO SECTION 13
                OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2001 AND 2000


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

     In July 2001, FASB issued SFAS No. 141, "Business Combinations", and
SFAS No. 142, "Goodwill and Other Intangible Assets".  These standards make
changes to the accounting for business combinations, goodwill and
intangible assets.  SFAS No. 141 requires all business combinations entered
into subsequent to June 30, 2001 to be accounted for using the purchase
method of accounting.  SFAS No. 142 provides that goodwill and other
intangible assets with indefinite lives will not be amortized, but will be
tested for impairment on an annual basis.  SFAS No. 142 is effective for
years beginning after December 15, 2001.  Goodwill and intangible assets
acquired subsequent to June 30, 2001 are immediately subject to the
provisions of SFAS No. 142.  The Company is performing a review of SFAS No.
142, which it will  adopt on January 1, 2002, to determine the impact on
the financial statements.

     In August 2001, FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which supersedes, but does
not replace, SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets to be Disposed Of", as well as other earlier related pronouncements,
either in whole or in part.  SFAS No. 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years.  Earlier application is
encouraged and the adoption of these statements is not expected to have a
significant effect on the Company's financial position, results of
operations or cash flows.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


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










                                  19




                     THE STEPHAN CO. AND SUBSIDIARIES
                 QUARTERLY REPORT PURSUANT TO SECTION 13
                 OF THE SECURITIES EXCHANGE ACT OF 1934
                      SEPTEMBER 30, 2001 AND 2000



                         PART II.  OTHER INFORMATION



 ITEM 1.  LEGAL PROCEEDINGS


     On April 1, 1999, the Company announced that it would be restating its
financial statements for the second and third quarters of 1998 and that
results of operations for the year ended December 31, 1998 would be
substantially less than expected.  On or about April 9, 1999, three class
action lawsuits were filed against the Company, as well as certain of its
officers.  The lawsuit alleged, among other things, certain violations of
Federal securities laws and sought an unspecified amount of damages.  The
class action claims were consolidated and the Company moved to dismiss the
class action complaint.  By final order of dismissal, dated March 30, 2000,
the Court dismissed the complaint.  Subsequent to such dismissal, the class
action plaintiffs moved to amend the judgment or for reconsideration.  The
plaintiffs were granted an opportunity to file a second complaint and on
September 1, 2000, the Company moved to dismiss the second amended
complaint.  In September 2001, the United States District Court for the
Southern District of Florida dismissed the class action lawsuit, with
prejudice.

     Other than the above, there has been no change in the status of any
other pending litigation since the date that the Company's Form 10-K was
filed with the Securities and Exchange Commission for the year ended
December 31, 2000.


















                                  20





                                 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
November 19, 2001




  /s/ David A. Spiegel
___________________________
David A. Spiegel
Principal Financial and
 Accounting Officer
November 19, 2001




















                                  21



                                 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.





_____________________________________
Frank F. Ferola
President and Chief Executive Officer
November 19, 2001





___________________________
David A. Spiegel
Principal Financial and
 Accounting Officer
November 19, 2001




















                                  21