----

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| x | ANNUAL REPORT PURSUANT TO      SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|-------------------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO      SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|-----------------------------------------------------------------------------------------------------|

----

----

| FLORIDA                                                                  | 59-1564329                                     | 2842,2899,2891                                                     |
|--------------------------------------------------------------------------|------------------------------------------------|--------------------------------------------------------------------|
| (State      Or Other Jurisdiction Of Incorporation      Or Organization) | (I.R.S.      Employer Identification      No.) | (Primary      Standard Industrial Classification      Code Number) |

----

----

| Large      accelerated filer    o | Accelerated      filer    o |
|-------------------------------------------------------|-------------------------------------------------|
| Non-accelerated      filer    o   | Smaller      reporting company   x    |

----

----

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BSIDIAR

|          |                                                                                                  | Page           |
|---------------|-------------------------------------------------------------------------------------------------------|----------------|
|          |                                                                                                  |           |
|          |                                                                                                  |           |
| PART      I   |                                                                                                  |
| Item      1.  | Business                                                                                              | 4              |
| Item      1A. | Risk Factors                                                                                          | 6              |
| Item      2.  | Properties                                                                                            | 7              |
| Item      3.  | Legal Proceedings                                                                                     | 7              |
| Item      4.  | Submission of Matters to a Vote of Security      Holders                                              | 7              |
|          |                                                                                                  |           |
|          |                                                                                                  |           |
| PART      II  |                                                                                                  |
| Item      5.  | Market for Registrant’s Common Equity and Related Stockholder      Matters                      | 8              |
| Item      6.  | Selected Financial Data                                                                               | 9              |
| Item      7.  | Management’s Discussion and Analysis of Financial Condition and      Results of Operations | 9              |
| Item      7A. | Quantitative and Qualitative Disclosures about Market      Risk                                       | 14             |
| Item      8.  | Financial Statements and Supplementary Data                                                           | 14             |
| Item      9.  | Changes in and Disagreements with Accountants on Accounting and      Financial Disclosure        |        14 |
| Item      9A. | Controls and Procedures                                                                               | 14             |
|          |                                                                                                  |           |
|          |                                                                                                  |           |
| PART      III |                                                                                                  |
| Item      10. | Directors, Executive Officers of the    Registrant                                                    | 15             |
| Item      11. | Executive Compensation                                                                                | 17             |
| Item      12. | Security Ownership of Certain Beneficial Owners and Management      and Related Stockholder Matters   | 17             |
| Item      13. | Certain Relationships and Related Transactions, and Director      Independence                        | 19             |
| Item      14. | Principal Accounting Fees and Services                                                                | 19             |
|          |                                                                                                  |           |
|          |                                                                                                  |           |
| PART      IV  |                                                                                                  |
|          | Item 15. Exhibits and Financial Statements      Schedules                                             | 19             |

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Item1.  Business

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|                          |   |                                |   | Full-time |   |
|-------------------------------|--------|-------------------------------------|--------|-----------|--------|
| Location                      |   | Description                         |   | Employees |   |
| Fort      Lauderdale, Florida |   | Administrative                      |   |      | 23     |   |
| Fort      Lauderdale, Florida |   | Manufacturing      and distribution |   |      | 8      |   |
| Montgomery,      Alabama      |   | Manufacturing      and distribution |   |      | 63     |   |
|                          |   |                                |   |      | 94     |   |

Item1A.  Risk factors

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Item2.  Properties

Item3.  Legal Proceedings

Item4.  Submission of Matters to a Vote of SecurityHolders

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Item5.  Market for the Registrant’s Common Equity and Related StockholderMatters

| Market      Range of   |   |     |   |   |     |   |   |     |   |   |     |   |
|------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Common      Stock Bid: |   | 1st Qtr. |   |   | 2nd Qtr. |   |   | 3rd Qtr. |   |   | 4th Qtr. |   |
|                   |   |     |   |   |     |   |   |     |   |   |     |   |   |
| 2009                   | High   |     | $      | 0.75   |     |   | $      | 1.05     |   |   | $        | 1.17   |   |   | $ | 1.14 |   |
|                   | Low    |     | $      | 0.42   |     |   | $      | 0.46     |   |   | $        | 0.78   |   |   | $ | 0.81 |   |
|                   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| 2008                   | High   |     | $      | 1.50   |     |   | $      | 1.50     |   |   | $        | 1.18   |   |   | $ | 0.95 |   |
|                   | Low    |     | $      | 1.24   |     |   | $      | 1.09     |   |   | $        | 0.93   |   |   | $ | 0.62 |   |

|                                                                                    |   | Number      of securitiesto      be issued uponexercise      of outstandingoptions,      warrants & rights |      |   | Weighted      averageexercise      price ofoutstanding      options,warrants      & rights |   |   | Number      of securitiesremaining      availablefor      future issuanceunder      equity com-pensation      plans |   |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|-----------|--------|------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                    |   |                                                                                                           |      |   |                                                                                           |   |   |                                                                                                                |   |
| Equity      compensation plans approved by security holders:                            |   |                                                                                                           |      |   |                                                                                           |   |   |                                                                                                                |   |
| Plan      stock options granted (1)                                                     |   |                                                                                                           | 839,000   |   |                                                                                           |   | 1.21   |                                                                                                                |   |   | 464,000 |   |
| Non      plan stock options granted (2)                                                 |   |                                                                                                           | 115,000   |   |                                                                                           |   | 0.55   |                                                                                                                |   |   | 0 |   |
|                                                                                    |   |                                                                                                           |      |   |                                                                                           |   |   |                                                                                                                |   |   |   |   |
| Warrants      (3)                                                                       |   |                                                                                                           | 1,000,000 |   |                                                                                           |   | 0.99   |                                                                                                                |   |   | 0 |   |
|                                                                                    |   |                                                                                                           |      |   |                                                                                           |   |   |                                                                                                                |   |   |   |   |
| Total      equity compensation plans approved and not approved by security      holders |   |                                                                                                           | 1,954,000 |   |                                                                                           |   | 1.06   |                                                                                                                |   |   | 464,000 |   |

| (1) | Includes      118,000 options granted under the 2002 Qualified Incentive Stock Option      Plan, 185,000 options under the 2002 Non-Qualified Stock Option Plan, no      options under the 1994 Qualified Stock Option Plan (this plan has expired      and no further awards can be made under its provisions), 326,500 options      under the 2007 qualified incentive stock option plan, 159,500 options      under the 2008 qualified incentive stock option plan, and 50,000 options      under the 2008 Non-Qualified Stock OptionPlan. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes      115,000 options granted to Peter G. Dornau in conjunction with a loan made      to the Company by an entity owned byhim. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes      1,000,000 warrants issued to Peter G. Dornau in connection with a $ 1.5      million Subordinated Revolving Line of Credit he extended to the Company      during 2005. Such warrants are exercisable 500,000 at $ 1.13 per share and      500,000 exercisable at $ .863 per share. The exercise price is equal to      110% of the fair value of the underlying security at the close of business      one day prior to the date ofgrant. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item6.  Selected Financial Data

Criticalaccounting policies and estimates:

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|                            |   | Total  |      |   | 2010   |   |    |   | 2011-2014 |   |      | 2015 and thereafter |   |
|---------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|-----------|--------|-----------|---------------------|--------|
|                            |   |   |      |   |   |   |    |   |      |   |      |                |   |
| Long-term      debt obligations |   | $      | 3,398,352 |   |   | $      | 493,352 |   |      | $      | 1,785,000 |                |   | $ | 1,120,000 |   |
| Line      of credit             |   |   | 250,000   |   |   |   | 250,000 |   |      |   |      |                |   |   |   |   |
| Capital      leases             |   |   | 51,907    |   |   |   | 19,701  |   |      |   | 32,206    |                |   |   | - |   |
| Operating      Leases           |   |   | 913,232   |   |   |   | 101,828 |   |      |   | 428,089   |                |   |   | 383,315 |   |
|                            |   |   |      |   |   |   |    |   |      |   |      |                |   |   |   |   |
| Total                           |   | $      | 4,613,491 |   |   | $      | 864,881 |   |      | $      | 2,245,295 |                |   | $ | 1,503,315 |   |

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Item 7A.Quantitative and Qualitative Disclosure about MarketRisk

Item 8. FinancialStatements and Supplementary Data

Item 9. Changes inand Disagreements with Accountants on Accounting and FinancialDisclosure

Item 9A(T).Controls and Procedures:

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Item 10.Executive Officers and Directors of the Registrant

| NAME                    | OFFICER/DIRECTOR                                                                  | AGE    |
|-------------------------|-----------------------------------------------------------------------------------|--------|
|                    |                                                                              |   |
| Peter      G. Dornau    | President,      Chief Executive Officer, and Director since 1973                  | 70     |
|                    |                                                                              |   |
| Jeffrey      S. Barocas | Vice      President-Finance, Chief Financial Officer and Director since      2007 | 62     |
|                    |                                                                              |   |
| William      W. Dudman  | Vice      President-Operations and Director since 2007                            | 45     |
|                    |                                                                              |   |
| Gregor      M. Dornau   | Executive      Vice President-Sales & Marketing and Director since    2007    | 41     |
|                    |                                                                              |   |
| Edward      Anchel      | Director      since 1998                                                          | 63     |
|                    |                                                                              |   |
| James      M. Kolisch   | Director      since 1998                                                          | 59     |
|                    |                                                                              |   |
| Laz      L. Schneider   | Director      since 1998                                                          | 71     |
|                    |                                                                              |   |
| John      B. Turner     | Director      since 2000                                                          | 63     |
|                    |                                                                              |   |
| Sonia      B. Beard     | Director      since 2002                                                          | 39     |

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Item 11.Executive Compensation

Item 12. SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters

| Title      of Class |   | Name      and Address of Beneficial Owner                                                           |   | Amount      and Nature of Beneficial Ownership |      |   | Percent      of Class |   |
|---------------------|--------|-----------------------------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|--------|-----------------------|--------|
|                |   |                                                                                                |   |                                           |      |   |                  |   |
|                |   |                                                                                                |   |                                           |      |   |                  |   |
| Common              |   | Peter      G. Dornau, President, CEO,Chairman      Board of DirectorsFort      Lauderdale, FL 33317 |   |                                           | 5,602,370 | (1)    |                  |   | 72.8 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | Edward      AnchelDirectorBoynton      Beach, FL 33437                                              |   |                                           | 318,451   | (2)    |                  |   | 4.1 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | Jeffrey      S. BarocasChief      Financial Officer, DirectorWeston,      Fl 33326                  |   |                                           | 33,000    | (3)    |                  |   | .4 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | William      W. DudmanV.      P.-Operations, DirectorFort      Lauderdale, Fl 32314                 |   |                                           | 117,500   | (4)    |                  |   | 1.5 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | Gregor      M. DornauV.P.      Sales & Marketing, DirectorFort      Lauderdale, FL 33315        |   |                                           | 281,560   | (5)    |                  |   | 3.7 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | James      M. KolischDirectorCoral      Gables, FL 33114                                            |   |                                           | 76,167    | (6)    |                  |   | 1.0 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | Laz      L. SchneiderDirectorFort      Lauderdale, FL 33305                                         |   |                                           | 60,000    | (7)    |                  |   | .8 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | John      B. TurnerDirectorMiami,      FL 33186                                                     |   |                                           | 89,463    | (8)    |                  |   | 1.2 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | Sonia      B. BeardDirectorMerritt      Island, FL 32952                                            |   |                                           | 30,000    | (9)    |                  |   | .4 | % |
|                |   |                                                                                                |   |                                           |      |   |                  |   |   |   |
| Common              |   | All      directors and officers as a group 9 individuals                                            |   |                                           | 6,608,511 | (10)   |                  |   | 85.9 | % |

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Item 13. CertainRelationships and Related Transactions

Item 14.Principal Accounting Fees and Services

Item 15.Exhibits, Financial Statements, Schedules and Reports Filed on Form8K

| (A) | Exhibits |
|-----|----------|

|   | Financial      Statements F-1 to F-22 |
|--------|---------------------------------------|

| 3.1 | Articles      of Incorporation (incorporated by reference to the Company’s Registration      Statement on Form S-18 filed with the United States Securities and      Exchange Commission on March 26,1981). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 3.2 | Bylaws      (incorporated by reference to the Company’s Registration Statement on Form      S-18 filed with the United States Securities and Exchange Commission on      March 26, 1981). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Form      of Certificate for Series 1997Bonds* |
|-----|------------------------------------------------|

| 4.2 | Form      of Certificate for Series 2002Bond* |
|-----|-----------------------------------------------|

| 4.3 | Trust      Indenture dated as of December 1, 1996 between the IDB Board and Regions      Bank, as Trustee and Registrar relating to the $4,000,000 1997 IDB      Bonds* |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4 | Supplement      to Trust Indenture for 1997 Bonds dated March 1,  1997*. |
|-----|--------------------------------------------------------------------------|

| 4.5 | Trust      Indenture dated as of July 22, 2002 between the IDB Board and Regions      Bank, as Trustee and Registrar relating to the $3,500,000 Taxable IDB      Bonds Series 2002* |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Restated      Lease Agreement dated as of December 1, 1996 between The Industrial      Development Board of the City of Montgomery (“IDB Board”) and Kinpak,      Inc.* |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | First      Supplemental Lease dated as of March 1, 1997 between the IDB Board and      Kinpak, Inc.* |
|------|------------------------------------------------------------------------------------------------------|

| 10.3 | Second      Supplemental Lease dated as of July 1, 2002 between the IDB Board and      Kinpak, Inc.* |
|------|------------------------------------------------------------------------------------------------------|

| 10.4 | Credit      Agreement dated as of July 1, 2002 by and among the Company, Star-Brite      Distributing, Inc., Star Brite-Automotive, Inc., Star-Brite Distributing      (Canada), Inc., Kinpak Inc. and RegionsBank* |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | Amendment      to Credit Agreement dated June 1, 2004 by and among the Company,      Star-Brite Distributing, Inc., Star-Brite Automotive, Inc., Star Brite      Distributing (Canada), Inc., Kinpak, Inc. and Regions  Bank* |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | Mortgage,      Assignment of Leases and Security Agreement dated as of July 1, 2002      between Kinpak, Inc. and RegionsBank.* |
|------|---------------------------------------------------------------------------------------------------------------------------------|

| 10.7 | Security      Agreement dated as of July 22, 2002 between Kinpak, Inc. and Regions      Bank.* |
|------|------------------------------------------------------------------------------------------------|

| 10.8 | Irrevocable      Letter of Credit dated July 22, 2002 issued by Regions Bank to secure the      Series 1991 Bonds* |
|------|--------------------------------------------------------------------------------------------------------------------|

| 10.9 | Irrevocable      Letter of Credit dated July 22, 2002 issued by Regions Bank to secure the      Series 2002 Bonds* |
|------|--------------------------------------------------------------------------------------------------------------------|

| 10.10 | Extension      to Credit Agreement dated March 31, 2003 by and among the Company,      Star-Brite Distributing, Inc., Star-Brite Automotive, Inc., Star Brite      Distributing (Canada), Inc., Kinpak, Inc. and  Bank* |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 10.11 | Ocean      Bio-Chem, Inc. 1992 Incentive Stock Option Plan (incorporated by reference      to Form S-8 filed with the United States Securities and Exchange      Commission on June 24, 1994). |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12 | Ocean      Bio-Chem, Inc. 1994 Non-Qualified Stock Option Plan (incorporated by      reference to Form S-8 filed with the United States Securities and Exchange      Commission on June 24, 1994). |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13 | Ocean      Bio-Chem, Inc. 2002 Incentive Stock Option Plan (incorporated by reference      to an exhibit contained in the Company’s proxy statement filed with the      United States Securities and Exchange Commission on April 28,      2003). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | Ocean      Bio-Chem, Inc. 2007 Incentive Stock Option Plan (incorporated by reference      to an exhibit contained in the Company’s proxy statement filed with the      United States Securities and Exchange Commission on June 20,      2007). |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.24 | Lease      dated May 1, 1998 between Star Brite Distributing, Inc. and PEJE, Inc      * |
|-------|-----------------------------------------------------------------------------------------|

| 10.26 | Renewal      of Lease dated May 1, 1998 between Star Brite Distributing, Inc. and PEJE,      Inc. ** |
|-------|------------------------------------------------------------------------------------------------------|

| 14.1 | Code      of Ethics (incorporated by reference to an exhibit contained in the      Company’s proxy statement filed with the United States Securities and      Exchange Commission on April 13,2004). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21. | List      of Subsidiaries ** |
|-----|------------------------------|

| 31.1 | Certification      of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley      ** |
|------|-------------------------------------------------------------------------------------------------|

| 31.2 | Certification      of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley      ** |
|------|-------------------------------------------------------------------------------------------------|

| 32. | Certification      of Chief Executive Officer and Chief Financial Officer pursuant to Section      906 of Sarbanes-Oxley ** |
|-----|-----------------------------------------------------------------------------------------------------------------------------|

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|   | OCEAN BIO-CHEM, INC. |
|--------|----------------------|
|   | Registrant           |
|   |                 |   |   |
|   | By:                  | /s/ | Peter      G. Dornau |
|   |                 |   | PETER      G. DORNAU |
|   |                 |   | Chairman      of the Board of Directors and Chief Executive Officer |
|   |                 |   | March      30, 2010 |
|   |                 |   |   |
|   | By:                  | /s/ | Jeffrey      S. Barocas |
|   |                 |   | Jeffrey      S. Barocas |
|   |                 |   | Chief      Financial Officer |
|   |                 |   | March      30, 2010 |

| Signature               | Capacity                                             | Date                |
|-------------------------|------------------------------------------------------|---------------------|
|                    |                                                 |                |
| /s/ Peter G. Dornau     | President,      Chief Executive Officer and Director | March      30, 2010 |
| Peter      G. Dornau    |                                                 |                |
|                    |                                                 |                |
| /s/Jeffrey S. Barocas   | Chief      Financial Officer                         | March      30, 2010 |
| Jeffrey      S. Barocas |                                                 |                |
|                    |                                                 |                |
| /s/Greg M. Dornau       | Vice      President Sales & Marketing            | March      30, 2010 |
| Greg      Dornau        |                                                 |                |
|                    |                                                 |                |
| /s/William W. Dudman    | Vice      President Operations                       | March      30, 2010 |
| William      Dudman     |                                                 |                |
|                    |                                                 |                |
| /s/ Edward Anchel       | Director                                             | March      30, 2010 |
| Edward      Anchel      |                                                 |                |
|                    |                                                 |                |
| /s/ James M. Kolisch    | Director                                             | March      30, 2010 |
| James      M. Kolisch   |                                                 |                |
|                    |                                                 |                |
| /s/ Laz L. Schneider    | Director                                             | March      30, 2010 |
| Laz      L. Schneider   |                                                 |                |
|                    |                                                 |                |
| /s/ John B. Turner      | Director                                             | March      30, 2010 |
| John      B. Turner     |                                                 |                |
|                    |                                                 |                |
| /s/ Sonia B. Beard      | Director                                             | March      30, 2010 |
| Sonia      B. Beard     |                                                 |                |

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|                                                         | Page     |
|--------------------------------------------------------------|----------|
|                                                         |     |
| Report      of independent registered public accounting firm | F-2      |
|                                                         |     |
| Consolidated      balance sheets                             | F-3      |
|                                                         |     |
| Consolidated      statements of operations                   | F-4      |
|                                                         |     |
| Consolidated      statements of shareholders’ equity   | F-5      |
|                                                         |     |
| Consolidated      statements of cash flows                   | F-6      |
|                                                         |     |
| Notes      to consolidated financial statements              | F-7-F-21 |

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|                                                                                                                                                                                       |   | December 31,      2009 |       |   | December 31,      2008 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|-----------------------------|--------|
|                                                                                                                                                                                       |   |                        |       |   |                        |   |
| ASSETS                                                                                                                                                                                     |   |                        |       |   |                        |   |
| Current      Assets:                                                                                                                                                                       |   |                        |       |   |                        |   |
| Cash                                                                                                                                                                                       |   | $                           | 494,973    |   |                        | $      | 527,056 |   |
| Trade      accounts receivable net of allowance for doubtful accounts of      approximately $61,700 and $117,600 at December 31, 2009 and December 31,      2008, respectively             |   |                        | 2,144,265  |   |                        |   | 1,966,223 |   |
| Inventories,      net                                                                                                                                                                      |   |                        | 6,663,246  |   |                        |   | 6,564,909 |   |
| Prepaid      expenses and other current assets                                                                                                                                             |   |                        | 504,384    |   |                        |   | 365,982 |   |
| Total      Current Assets                                                                                                                                                                  |   |                        | 9,806,868  |   |                        |   | 9,424,170 |   |
|                                                                                                                                                                                       |   |                        |       |   |                        |   |   |   |
| Property,      plant and equipment, net                                                                                                                                                    |   |                        | 5,464,356  |   |                        |   | 5,780,395 |   |
|                                                                                                                                                                                       |   |                        |       |   |                        |   |   |   |
| Other      Assets:                                                                                                                                                                         |   |                        |       |   |                        |   |   |   |
|                                                                                                                                                                                       |   |                        |       |   |                        |   |   |   |
| Trademarks,      trade names and patents, net                                                                                                                                              |   |                        | 330,439    |   |                        |   | 330,439 |   |
| Due      from affiliated companies, net                                                                                                                                                    |   |                        | 237,172    |   |                        |   | 910,553 |   |
| Deposits      and other assets                                                                                                                                                             |   |                        | 153,224    |   |                        |   | 184,628 |   |
| Total      Other Assets                                                                                                                                                                    |   |                        | 720,835    |   |                        |   | 1,425,620 |   |
| Total      Assets                                                                                                                                                                          |   | $                           | 15,992,059 |   |                        | $      | 16,630,185 |   |
|                                                                                                                                                                                       |   |                        |       |   |                        |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                                                                                  |   |                        |       |   |                        |   |   |   |
|                                                                                                                                                                                       |   |                        |       |   |                        |   |   |   |
| Current      Liabilities:                                                                                                                                                                  |   |                        |       |   |                        |   |   |   |
| Accounts      payable - trade                                                                                                                                                              |   | $                           | 1,741,309  |   |                        | $      | 894,193 |   |
| Line      of Credit - bank                                                                                                                                                                 |   |                        | 250,000    |   |                        |   | 2,800,000 |   |
| Current      portion of long term debt                                                                                                                                                     |   |                        | 513,053    |   |                        |   | 584,537 |   |
| Accrued      expenses payable                                                                                                                                                              |   |                        | 1,191,987  |   |                        |   | 883,354 |   |
| Total      Current Liabilities                                                                                                                                                             |   |                        | 3,696,349  |   |                        |   | 5,162,084 |   |
|                                                                                                                                                                                       |   |                        |       |   |                        |   |   |   |
| Long      term debt, less current portion                                                                                                                                                  |   |                        | 2,937,206  |   |                        |   | 3,434,491 |   |
| Commitments      and contingencies                                                                                                                                                         |   |                        | -          |   |                        |   | - |   |
| Shareholders'      Equity:                                                                                                                                                                 |   |                        |       |   |                        |   |   |   |
| Common      stock - $.01 par value, 10,000,000 shares authorized; 8,053,816 and      7,886,816 shares issued and outstanding at December 31, 2009 and December      31, 2008, respectively |   |                        | 80,538     |   |                        |   | 78,868 |   |
| Additional      paid in capital                                                                                                                                                            |   |                        | 8,194,917  |   |                        |   | 7,928,269 |   |
| Less      cost of common stock in treasury, 351,503 shares at December 31, 2009 and      2008, respectively                                                                                |   |                        | (288,013   | )      |                        |   | (288,013 | ) |
| Foreign      currency translation adjustment                                                                                                                                               |   |                        | (277,025   | )      |                        |   | (280,123 | ) |
| Retained      earnings                                                                                                                                                                     |   |                        | 1,648,087  |   |                        |   | 594,609 |   |
| Total      Shareholders' Equity                                                                                                                                                            |   |                        | 9,358,504  |   |                        |   | 8,033,610 |   |
| Total      Liabilities and Shareholders' Equity                                                                                                                                            |   | $                           | 15,992,059 |   |                        | $      | 16,630,185 |   |

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|                                          |   | 2009   |       |   | 2008   |   |
|-----------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                          |   |   |       |   |   |   |
| Gross      sales                              |   | $      | 26,281,520 |   |   | $      | 22,898,989 |   |
|                                          |   |   |       |   |   |   |   |   |
| Less:      discounts, returns, and allowances |   |   | 1,648,630  |   |   |   | 1,980,922 |   |
|                                          |   |   |       |   |   |   |   |   |
| Net      sales                                |   |   | 24,632,890 |   |   |   | 20,918,067 |   |
|                                          |   |   |       |   |   |   |   |   |
| Cost      of goods sold                       |   |   | 16,763,401 |   |   |   | 14,918,333 |   |
|                                          |   |   |       |   |   |   |   |   |
| Gross      profit                             |   |   | 7,869,489  |   |   |   | 5,999,734 |   |
|                                          |   |   |       |   |   |   |   |   |
| Operating      Expenses:                      |   |   |       |   |   |   |   |   |
| Advertising      and promotion                |   |   | 1,661,948  |   |   |   | 1,331,568 |   |
| Selling      and administrative               |   |   | 4,216,824  |   |   |   | 3,988,028 |   |
| Interest      expense                         |   |   | 205,626    |   |   |   | 257,020 |   |
|                                          |   |   |       |   |   |   |   |   |
| Total      operating expenses                 |   |   | 6,084,398  |   |   |   | 5,576,616 |   |
|                                          |   |   |       |   |   |   |   |   |
| Operating      income                         |   |   | 1,785,091  |   |   |   | 423,118 |   |
|                                          |   |   |       |   |   |   |   |   |
| Other      income                             |   |   | 23,705     |   |   |   | 21,932 |   |
|                                          |   |   |       |   |   |   |   |   |
| Income      before income taxes               |   |   | 1,808,796  |   |   |   | 445,050 |   |
|                                          |   |   |       |   |   |   |   |   |
| Provision      for income taxes               |   |   | 755,318    |   |   |   | 291,132 |   |
|                                          |   |   |       |   |   |   |   |   |
| Net      income                               |   |   | 1,053,478  |   |   |   | 153,918 |   |
|                                          |   |   |       |   |   |   |   |   |
| Other      comprehensive income, net of tax   |   |   |       |   |   |   |   |   |
| Foreign      currency translation adjustment  |   |   | 3,098      |   |   |   | (71,074 | ) |
|                                          |   |   |       |   |   |   |   |   |
| Comprehensive      income                     |   | $      | 1,056,576  |   |   | $      | 82,844 |   |
|                                          |   |   |       |   |   |   |   |   |
|                                          |   |   |       |   |   |   |   |   |
| Income      per common share - basic          |   | $      | 0.14       |   |   | $      | 0.02 |   |
|                                          |   |   |       |   |   |   |   |   |
| Income      per common share - diluted        |   | $      | 0.14       |   |   | $      | 0.02 |   |
|                                          |   |   |       |   |   |   |   |   |
| Weighted      average shares - basic          |   |   | 7,673,438  |   |   |   | 7,814,466 |   |
| Weighted      average shares - diluted        |   |   | 7,697,100  |   |   |   | 7,814,466 |   |

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|                                           |   | CommonStockShares |      |   | Amount |   |   | Additionalpaid-in      capital |   |   | Foreigncurrencyadjustment/(deficit) |   |   | Retainedearnings |     |   | Treasurystock |   |      | Total  |   |
|------------------------------------------------|--------|-------------------|-----------|--------|--------|--------|--------|--------------------------------|--------|--------|-------------------------------------|--------|--------|------------------|----------|--------|---------------|--------|-----------|--------|--------|
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |
| January      1, 2008                           |   |              | 7,871,816 |   |   | $      | 78,718 |                           |   | $      | 7,780,547                           |   |   | $                | (209,049 | )      |          | $      | 440,691   |   |   | $ | (8,195 | ) |   | $ | 8,082,712 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Net      Income                                |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   | 153,918   |   |   |   |   |   |   |   | 153,918 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Bonus      shares to employees                 |   |              | 15,000    |   |   |   | 150    |                           |   |   | 17,250                              |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   | 17,400 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Stock      based compensation                  |   |              |      |   |   |   |   |                           |   |   | 130,472                             |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   | 130,472 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation adjustment   |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             | (71,074  | )      |          |   |      |   |   |   |   |   |   |   | (71,074 | ) |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Purchase      of treasury stock 343,984 shares |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   | (279,818 | ) |   |   | (279,818 | ) |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| December      31, 2008                         |   |              | 7,886,816 |   |   | $      | 78,868 |                           |   | $      | 7,928,269                           |   |   | $                | (280,123 | )      |          | $      | 594,609   |   |   | $ | (288,013 | ) |   | $ | 8,033,610 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Net      Income                                |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   | 1,053,478 |   |   |   |   |   |   |   | 1,053,478 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Bonus      shares to employees                 |   |              | 167,000   |   |   |   | 1,670  |                           |   |   | 83,623                              |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   | 85,293 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Stock      based compensation                  |   |              |      |   |   |   |   |                           |   |   | 183,025                             |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   | 183,025 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation adjustment   |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             | 3,098    |   |          |   |      |   |   |   |   |   |   |   | 3,098 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |
| December      31, 2009                         |   |              | 8,053,816 |   |   | $      | 80,538 |                           |   | $      | 8,194,917                           |   |   | $                | (277,025 | )      |          | $      | 1,648,087 |   |   | $ | (288,013 | ) |   | $ | 9,358,504 |   |
|                                           |   |              |      |   |   |   |   |                           |   |   |                                |   |   |             |     |   |          |   |      |   |   |   |   |   |   |   |   |   |

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| OCEAN      BIO-CHEM, INC. AND SUBSIDIARIES |
|--------------------------------------------|

| CONSOLIDATED      STATEMENTS OF CASH FLOWS |
|--------------------------------------------|

| YEARS      ENDED DECEMBER 31, 2009 AND 2008 |
|---------------------------------------------|

|                                                                       |   | 2009   |       |   | 2008   |   |
|----------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash      flows from operating activities:                                 |   |   |       |   |   |   |
|                                                                       |   |   |       |   |   |   |
| Net      income                                                            |   | $      | 1,053,478  |   |   | $      | 153,918 |   |
| Adjustment      to reconcile net income to net cash provided byoperations: |   |   |       |   |   |   |   |   |
|                                                                       |   |   |       |   |   |   |   |   |
| Depreciation      and amortization                                         |   |   | 709,855    |   |   |   | 787,460 |   |
| Stock      based compensation                                              |   |   | 268,318    |   |   |   | 147,872 |   |
| Other      operating non cash items                                        |   |   | 216,844    |   |   |   | 259,880 |   |
|                                                                       |   |   |       |   |   |   |   |   |
| Changes      in assets and liabilities:                                    |   |   |       |   |   |   |   |   |
|                                                                       |   |   |       |   |   |   |   |   |
| Accounts      receivable                                                   |   |   | (340,356   | )      |   |   | (75,078 | ) |
| Inventory                                                                  |   |   | (152,462   | )      |   |   | (811,752 | ) |
| Deposits      and other assets                                             |   |   | 31,404     |   |   |   | 69,091 |   |
| Prepaid      expenses                                                      |   |   | (138,402   | )      |   |   | (80,856 | ) |
| Accounts      payable and other accrued liabilities                        |   |   | 1,155,749  |   |   |   | 255,527 |   |
|                                                                       |   |   |       |   |   |   |   |   |
| Net      cash provided by operating activities                             |   |   | 2,804,428  |   |   |   | 706,062 |   |
|                                                                       |   |   |       |   |   |   |   |   |
| Cash      flows from investing activities:                                 |   |   |       |   |   |   |   |   |
|                                                                       |   |   |       |   |   |   |   |   |
| Purchases      of property, plant and equipment                            |   |   | (393,816   | )      |   |   | (332,043 | ) |
|                                                                       |   |   |       |   |   |   |   |   |
| Net      cash used in investing activities                                 |   |   | (393,816   | )      |   |   | (332,043 | ) |
|                                                                       |   |   |       |   |   |   |   |   |
| Cash      flows from financing activities:                                 |   |   |       |   |   |   |   |   |
|                                                                       |   |   |       |   |   |   |   |   |
| Increase/(decrease)      line of credit, net                               |   |   | (2,550,000 | )      |   |   | 1,050,000 |   |
| Amounts      due from affiliates                                           |   |   | 673,381    |   |   |   | (801,243 | ) |
| Payments      of long-term debt                                            |   |   | (568,769   | )      |   |   | (559,856 | ) |
| Purchase      of Treasury Stock                                            |   |   | -          |   |   |   | (279,818 | ) |
|                                                                       |   |   |       |   |   |   |   |   |
| Net      cash used in financing activities                                 |   |   | (2,445,388 | )      |   |   | (590,917 | ) |
|                                                                       |   |   |       |   |   |   |   |   |
| Change      in cash prior to effect of exchange rate on cash               |   |   | (34,776    | )      |   |   | (216,898 | ) |
| Effect      of exchange rate on cash                                       |   |   | 2,693      |   |   |   | (6,947 | ) |
|                                                                       |   |   |       |   |   |   |   |   |
| Net      decrease in cash                                                  |   |   | (32,083    | )      |   |   | (223,845 | ) |
|                                                                       |   |   |       |   |   |   |   |   |
| Cash      at beginning of period                                           |   |   | 527,056    |   |   |   | 750,901 |   |
| Cash      at end of period                                                 |   | $      | 494,973    |   |   | $      | 527,056 |   |
|                                                                       |   |   |       |   |   |   |   |   |
|                                                                       |   |   |       |   |   |   |   |   |
| Supplemental      disclosure of cash transactions:                         |   |   |       |   |   |   |   |   |
| Cash      paid for interest during period                                  |   | $      | 205,626    |   |   | $      | 231,882 |   |
| Cash      paid for income taxes during period                              |   | $      | 714,000    |   |   | $      | (110,395 | ) |

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|                    |   | 2009   |      |   | 2008   |   |
|-------------------------|--------|--------|-----------|--------|--------|--------|
|                    |   |   |      |   |   |   |
| Raw      materials      |   | $      | 3,595,862 |   |   | $      | 3,254,212 |   |
| Finished      goods     |   |   | 3,322,692 |   |   |   | 3,541,908 |   |
|                    |   |   | 6,918,554 |   |   |   | 6,796,120 |   |
|                    |   |   |      |   |   |   |   |   |
| Inventory      Reserves |   |   | (255,308  | )      |   |   | (231,211 | ) |
|                    |   |   |      |   |   |   |   |   |
| Inventory      Net      |   | $      | 6,663,246 |   |   | $      | 6,564,909 |   |

|                                          | Estimated          |   |   |       |   |   |   |
|-----------------------------------------------|--------------------|--------|--------|------------|--------|--------|--------|
|                                          | Useful      Life   |   | 2009   |       |   | 2008   |   |
|                                          | –      Years |   |   |       |   |   |   |
| Land                                          |               |   | $      | 278,325    |   |   | $      | 278,325 |   |
| Building                                      | 30      years      |   |   | 4,402,275  |   |   |   | 4,389,154 |   |
| Manufacturing      and warehouse equipment    | 6-20      years    |   |   | 6,877,940  |   |   |   | 6,592,558 |   |
| Office      equipment and furniture           | 3-5      years     |   |   | 541,449    |   |   |   | 525,734 |   |
| Construction      in process                  |               |   |   | 109,001    |   |   |   | 71,929 |   |
| Leasehold      improvement                    | 10-15      years   |   |   | 122,644    |   |   |   | 122,644 |   |
|                                          |               |   |   | 12,331,634 |   |   |   | 11,980,344 |   |
|                                          |               |   |   |       |   |   |   |   |   |
| Less      accumulated depreciation            |               |   |   | 6,867,278  |   |   |   | 6,199,949 |   |
|                                          |               |   |   |       |   |   |   |   |   |
| Total      property, plant and equipment, net |               |   | $      | 5,464,356  |   |   | $      | 5,780,395 |   |

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| Accrued      expenses consisted of the following:       |   |   |      |   |   |   |
|---------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                    |   |   |      |   |   |   |
|                                                    |   | 2009   |      |   | 2008   |   |
|                                                    |   |   |      |   |   |   |
| Accrued      customer promotions                        |   | $      | 367,453   |   |   | $      | 119,256 |   |
| Accrued      payroll, commissions and employee benefits |   |   | 238,285   |   |   |   | 174,013 |   |
| Accrued      income taxes                               |   |   | 222,055   |   |   |   | 180,737 |   |
| Accrued      insurance                                  |   |   | 160,832   |   |   |   | 132,130 |   |
| Other      accrued expenses                             |   |   | 203,361   |   |   |   | 277,219 |   |
| Totals                                                  |   | $      | 1,191,987 |   |   | $      | 883,354 |   |

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|                              |   | Current      Portion |    |   | Long      Term Portion |   |
|-----------------------------------|--------|----------------------|---------|--------|------------------------|--------|
|                              |   | 2009                 |    |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
|                              |   |                 |    |   |                   |   |   |   |   |   |   |   |
| Industrial      Development Bonds |   |                 | 460,000 |   |                   | $      | 460,000 |   |   | $ | 2,905,000 |   |   | $ | 3,365,000 |   |
| Notes      payable                |   |                 | 33,352  |   |                   |   | 99,996 |   |   |   | - |   |   |   | 33,352 |   |
| Capitalized      equipment leases |   |                 | 19,701  |   |                   |   | 24,541 |   |   |   | 32,206 |   |   |   | 36,139 |   |
|                              |   |                 |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | $                    | 513,053 |   |                   | $      | 584,537 |   |   | $ | 2,937,206 |   |   | $ | 3,434,491 |   |

| Year      ending December 31, |   |   |      |
|-------------------------------|--------|--------|-----------|
| 2010                          |   | $      | 513,053   |   |
| 2011                          |   |   | 478,226   |   |
| 2012                          |   |   | 456,432   |   |
| 2013                          |   |   | 442,548   |   |
| 2014                          |   |   | 440,000   |   |
| Thereafter                    |   |   | 1,120,000 |   |
|                          |   |   |      |   |
| Total                         |   | $      | 3,450,259 |   |

|                                 |   | 2009   |    |   | 2008   |   |
|--------------------------------------|--------|--------|---------|--------|--------|--------|
|                                 |   |   |    |   |   |   |
| Income      tax provision (benefit): |   |   |    |   |   |   |
| Federal      - current               |   | $      | 709,464 |   |   | $      | 291,132 |   |
|        - deferred               |   |   | 45,854  |   |   |   | - |   |
| State                                |   |   | -       |   |   |   | - |   |
|                                 |   |   |    |   |   |   |   |   |
| Total                                |   | $      | 755,318 |   |   | $      | 291,132 |   |

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|                                                      |   | 2009   |    |   |   |   |   | 2008   |   |   |    |   |
|-----------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
|                                                      |   | amount |    |   | %      |   |   | amount |   |   | %       |   |
| Income      Tax computed at statutory rate                |   | $      | 614,991 |   |   |   | 34     | %      |   | $      | 151,317 |   |   |   | 34 | % |
|                                                      |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Increase      (reduction) in income taxes resulting from: |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Share      based compensation                             |   |   | 91,228  |   |   |   | 5      | %      |   |   | 50,276  |   |   |   | 11 | % |
| Change      in deferred taxes & valuation allowance   |   |   | 80,933  |   |   |   | 4      | %      |   |   | 120,754 |   |   |   | 27 | % |
| Other,      permanent adjustments                         |   |   | 10,200  |   |   |   | 1      | %      |   |   | 9,704   |   |   |   | 2 | % |
| Tax      credits and prior year tax adj.                  |   |   | (42,034 | )      |   |   | -2     | %      |   |   | (40,919 | )      |   |   | -9 | % |
|                                                      |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
|                                                      |   | $      | 755,318 |   |   |   | 42     | %      |   | $      | 291,132 |   |   |   | 65 | % |

|                                                         |   | 2009   |     |   | 2008   |   |
|--------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Deferred      tax assets:                                    |   |   |     |   |   |   |
| Depreciation      of property and equipment                  |   | $      | -        |   |   | $      | - |   |
| Reserves      for bad debts, inventories, and other accruals |   |   | (107,793 | )      |   |   | (203,710 | ) |
| Net      operating loss carryforwards                        |   |   | -        |   |   |   | - |   |
|                                                         |   |   |     |   |   |   |   |   |
| Deferred      tax liabilities:                               |   |   |     |   |   |   |   |   |
| Depreciation      of property and equipment                  |   |   | 153,647  |   |   |   | 199,643 |   |
|                                                         |   |   | -        |   |   |   |   |   |
|                                                         |   |   |     |   |   |   |   |   |
| Net                                                          |   |   | 45,854   |   |   |   | (4,067 | ) |
|                                                         |   |   |     |   |   |   |   |   |
| Less      valuation allowance                                |   |   | -        |   |   |   | 4,067 |   |
|                                                         |   |   |     |   |   |   |   |   |
| Net      deferred tax (asset)/liability                      |   | $      | 45,854   |   |   | $      | - |   |

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| 12      month period ending December 31, |   |
|------------------------------------------|--------|
| 2010                                     |   | $ | 101,828 |   |
| 2011                                     |   |   | 103,864 |   |
| 2012                                     |   |   | 105,942 |   |
| 2013                                     |   |   | 108,061 |   |
| 2014                                     |   |   | 110,222 |   |
| Thereafter                               |   |   | 383,315 |   |
|                                     |   | $ | 913,232 |   |

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| 2009      yearend |        |               |               |          |           |                                 |
|-------------------|-------------|--------------------|--------------------|---------------|----------------|--------------------------------------|
| Plan              | Dategranted | Optionsoutstanding | Exercisableoptions | Exerciseprice | Expirationdate | Weighted      Average remaining life |
|              |        |               |               |          |           |                                 |
| NON-PLAN          | 3/25/2009   | 115,000            | 115,000            | 0.55          | 3/24/2014      | 4.2                                  |
| 2002      PLAN    | 11/6/2006   | 118,000            | 70,800             | 0.93          | 11/05/11       | 1.8                                  |
| 2007      PLAN    | 5/17/2007   | 167,500            | 67,000             | 1.66          | 05/16/12       | 2.4                                  |
| 2007      PLAN    | 10/8/2007   | 2,500              | 1,000              | 1.87          | 10/07/12       | 2.8                                  |
| 2007      PLAN    | 12/17/2007  | 156,500            | 62,600             | 1.32          | 12/16/2012     | 3.0                                  |
| 2008      PLAN    | 8/25/2008   | 159,500            | 31,900             | 0.97          | 08/21/13       | 3.6                                  |
| 2002      PLAN NQ | 10/22/2002  | 35,000             | 35,000             | 1.26          | 10/21/12       | 2.8                                  |
| 2002      PLAN NQ | 6/20/2003   | 30,000             | 30,000             | 1.03          | 6/19/2013      | 3.5                                  |
| 2002      PLAN NQ | 5/25/2004   | 30,000             | 30,000             | 1.46          | 5/24/2014      | 4.4                                  |
| 2002      PLAN NQ | 4/3/2006    | 40,000             | 40,000             | 1.08          | 4/2/2016       | 6.3                                  |
| 2002      PLAN NQ | 12/17/2007  | 50,000             | 50,000             | 1.32          | 12/16/17       | 8.0                                  |
| 2008      PLAN NQ | 1/11/2009   | 50,000             | 50,000             | 0.69          | 1/10/2019      | 9.0                                  |
|              |        |               |               |          |           |                                 |
|              |        | 954,000            | 583,300            | 1.13          |           | 3.8                                  |

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| 2008      yearend |        |               |               |          |           |                                 |
|-------------------|-------------|--------------------|--------------------|---------------|----------------|--------------------------------------|
|  Plan        | Dategranted | Optionsoutstanding | Exercisableoptions | Exerciseprice | Expirationdate | Weighted      Average remaining life |
|              |        |               |               |          |           |                                 |
| NON-PLAN:         | 3/25/1999   | 231,000            | 231,000            | 0.7576        | 3/24/09        | -                                    |
| 1994      PLAN    | 10/26/2004  | 154,500            | 131,325            | 1.05          | 10/25/09       | 0.8                                  |
| 2002      PLAN    | 3/2/2004    | 137,000            | 130,150            | 1.62          | 3/01/09        | 0.2                                  |
| 2002      PLAN    | 11/6/2006   | 133,000            | 53,200             | 0.93          | 11/05/11       | 2.9                                  |
| 2007      PLAN    | 5/17/2007   | 162,500            | 44250.2            | 1.66          | 05/16/12       | 4.1                                  |
| 2007      PLAN    | 10/8/2007   | 2,000              | 400                | 1.87          | 10/07/12       | 3.8                                  |
| 2007      PLAN    | 12/17/2007  | 156,500            | 30700              | 1.32          | 12/16/17       | 4.0                                  |
| 2002      PLAN NQ | 10/22/2002  | 35,000             | 35,000             | 1.26          | 10/21/12       | 3.8                                  |
| 2002      PLAN NQ | 6/20/2003   | 30,000             | 30,000             | 1.03          | 6/19/13        | 4.5                                  |
| 2002      PLAN NQ | 5/25/2004   | 40,000             | 40,000             | 1.46          | 5/24/14        | 5.4                                  |
| 2002      PLAN NQ | 4/3/2006    | 30,000             | 30,000             | 1.08          | 4/02/16        | 7.3                                  |
| 2002      PLAN NQ | 12/17/2007  | 50,000             | 50,000             | 1.32          | 12/16/17       | 9.0                                  |
|              |        |               |               |          |           |                                 |
|              |        | 1,321,000          | 806,025            | 1.17          |           | 2.8                                  |

| Plan              | OptionsOutstanding |   | Options      Availablefor      Grant |
|-------------------|--------------------|--------|--------------------------------------|
| NON-PLAN          | 115,000            | shares | N/A                                  |
| 1994      PLAN    | 0                  | shares | None                                 |
| 2002      PLAN    | 118,000            | shares | None                                 |
| 2007      PLAN    | 326,500            | shares | 73,500                               |
| 2008      PLAN    | 159,500            | shares | 240,500                              |
| 2002      PLAN NQ | 185,000            | shares | 15,000                               |
| 2008      PLAN NQ | 50,000             | shares | 150,000                              |
| Totals            | 954,000            | shares | 464,000                              |

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|                                           |   | 2009   |      |   | 2008                  |   |
|------------------------------------------------|--------|--------|-----------|--------|-----------------------|--------|
|                                           |   | Shares |      |   | Weighted      Average |   |   | Shares |   |   | Weighted      Average |   |
|                                           |   |   |      |   | Exercise      Price   |   |   |   |   |   | Exercise      Price |   |
| Options      outstanding beginning of the year |   |   | 1,090,000 |   |                  | $      | 1.26 |   |   |   | 930,500 |   |   | $ | 1.31 |   |
|                                           |   |   |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Options      granted                           |   |   | 50,000    |   |                  |   | 0.69 |   |   |   | 159,500 |   |   |   | 0.97 |   |
| Options      exercised                         |   |   | -         |   |                  |   | - |   |   |   | - |   |   |   | - |   |
| Options      forfeited or expired              |   |   | (301,000  | )      |                  |   | 1.30 |   |   |   | - |   |   |   | - |   |
|                                           |   |   |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Options      outstanding at end of the year    |   |   | 839,000   |   |                  |   | 1.21 |   |   |   | 1,090,000 |   |   |   | 1.26 |   |
|                                           |   |   |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Non      Plan Options                          |   |   | 115,000   |   |                  |   | 0.55 |   |   |   | 231,000 |   |   |   | 0.76 |   |
|                                           |   |   |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Totals                                         |   |   | 954,000   |   |                  | $      | 1.13 |   |   |   | 1,321,000 |   |   | $ | 1.17 |   |

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|                                                                          |   | 2009   |      |   | 2008   |   |
|-------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Basic      weighted-average common shares outstanding                         |   |   | 7,673,438 |   |   |   | 7,814,466 |   |
|                                                                          |   |   |      |   |   |   |   |   |
| Dilutive      effect of stock plans, other options & conversion    rights |   |   | 23,662    |   |   |   | 0 |   |
|                                                                          |   |   |      |   |   |   |   |   |
| Dilutive      weighted-average shares outstanding                             |   |   | 7,697,100 |   |   |   | 7,814,466 |   |

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