10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q


QUARTERLY REPORT UNDER SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED

September 30, 2006


Commission File No. 001-13458


SCOTT'S LIQUID GOLD-INC.
4880 Havana Street
Denver, CO  80239
Phone:  303-373-4860



       Colorado                                84-0920811
State of Incorporation	            I.R.S. Employer Identification No.

	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  [ ]

	Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of "accelerated filer and large accelerated filer"
in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [X]

	Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12-B-2 of the Exchange Act.
Yes [ ]   No [X]

	As of September 30, 2006, the Registrant had 10,503,000 shares
of its $0.10 par value common stock outstanding.







PART I.   FINANCIAL INFORMATION

Item 1.        Financial Statements

SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)

                           Three Months                 Nine Months
                         Ended September 30,         Ended September 30,
                     -------------------------    -------------------------
                         2006          2005           2006          2005
                     -----------   -----------    -----------   -----------
Net sales            $ 3,842,400   $ 6,506,000    $12,131,500   $17,753,300

Operating costs
 and expenses:
   Cost of sales       2,069,300     3,513,600      6,880,200     9,752,500
   Advertising           360,900       151,800      1,062,200       630,300
   Selling             1,353,400     1,455,700      4,189,100     4,422,000
   General and
    administrative       791,400       757,100      2,566,700     2,779,100
                     -----------   -----------    -----------   -----------
                       4,575,000     5,878,200     14,698,200    17,583,900
                     -----------   -----------    -----------   -----------

Income (loss)
 from operations        (732,600)      627,800     (2,566,700)      169,400

Gain on disposal
 of assets                67,100          -            67,100          -
Interest income           35,300         9,900         62,200        30,200
Interest expense        (110,800)      (54,000)      (211,200)     (149,300)
                     -----------   -----------    -----------   -----------
Income (loss) before
 income taxes           (741,000)      583,700     (2,648,600)       50,300

Income tax expense
 (benefit)                -               -              -             -
                     -----------   -----------    -----------   -----------

Net income (loss)    $  (741,000)  $   583,700    $(2,648,600)  $    50,300
                     ===========   ===========    ===========   ===========

Net income (loss) per
 common share
(Note 3):
   Basic             $     (0.07)  $      0.06    $     (0.25)  $      0.00
                     ===========   ===========    ===========   ===========
   Diluted           $     (0.07)  $      0.06    $     (0.25)  $      0.00
                     ===========   ===========    ===========   ===========

Weighted average
 shares outstanding:
   Basic              10,503,000    10,494,800     10,503,000    10,478,900
                     ===========   ===========    ===========   ===========
   Diluted            10,503,000    10,560,400     10,503,000    10,500,800
                     ===========   ===========    ===========   ===========

SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Balance Sheets

                                         September 30,   December 31,
                                              2006           2005
                                         ------------   -------------
                                          (Unaudited)
ASSETS
Current assets:
   Cash and cash equivalents              $ 3,349,000    $ 2,260,700
   Investment securities                       51,100         51,900
   Trade receivables, net of allowance
    for doubtful accounts of $62,000          740,400      1,633,100
   Other receivables                           75,700         55,300
   Inventories, net                         3,841,200      3,184,600
   Prepaid expenses                           402,100        326,900
                                          -----------    -----------
     Total current assets                   8,459,500      7,512,500

Property, plant and equipment, net         13,270,100     13,725,200

Other assets                                   60,800         11,800
                                          -----------    -----------
          TOTAL ASSETS                    $21,790,400    $21,249,500
                                          ===========    ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current  liabilities:
   Line of credit                         $    -         $   570,000
   Accounts payable                         2,398,600      1,745,700
   Accrued payroll and benefits               818,500        939,400
   Other accrued expenses                     464,400        454,600
   Current maturities of long-term debt       187,800        956,000
                                          -----------    -----------
      Total current liabilities             3,869,300      4,665,700

Long-term debt, net of current maturities   4,925,100        938,400
                                          -----------    -----------
                                            8,794,400      5,604,100

Commitments and contingencies
Shareholders' equity:
   Common stock; $.10 par value, authorized
     50,000,000 shares; issued and
     outstanding 10,503,000 shares          1,050,300      1,050,300
   Capital in excess of par                 4,994,200      4,994,200
   Accumulated comprehensive income             1,100          1,900
   Retained earnings                        6,950,400      9,599,000
                                          -----------    -----------
      Shareholders' equity                 12,996,000     15,645,400
                                          -----------    -----------

          TOTAL LIABILITIES AND
           SHAREHOLDERS' EQUITY           $21,790,400    $21,249,500
                                          ===========    ===========

SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)

                                                       Nine Months Ended
                                                         September 30,
                                                   --------------------------
                                                       2006          2005
                                                   -----------    -----------
Cash flows from operating activities:
Net income (loss)                                  $(2,648,600)   $    50,300
                                                   -----------    -----------
  Adjustments to reconcile net income (loss) to net
   cash provided (used) by operating activities:
    Depreciation and amortization                      533,000        553,700
    Stock issued to ESOP                                48,700         16,800
    Gain on disposal of assets                         (67,100)          -
    Changes in assets and liabilities:
       Trade and other receivables, net                872,400        352,800
       Inventories, net                               (656,600)    (1,855,400)
       Prepaid expenses and other assets               (80,000)       225,300
       Accounts payable and accrued expenses           541,800       (327,400)
                                                   -----------     ----------
    Total adjustments to net income (loss)           1,192,200     (1,034,200)
                                                   -----------    -----------
       Net Cash Used by Operating Activities        (1,456,400)      (983,900)
                                                   -----------    -----------
Cash flows from investing activities:
  Purchase of investment securities                       -          (248,400)
  Proceeds from sale or maturity
   of investment securities                               -           250,000
  Proceeds from disposal of assets                      93,800           -
  Purchase of property, plant & equipment              (84,200)       (16,000)
                                                   -----------    -----------
       Net Cash Provided (Used) by
        Investing Activities                             9,600        (14,400)
                                                   -----------    -----------

Cash flows from financing activities:
  Proceeds from long-term borrowings                 5,156,600           -
  Short-term borrowings (payments), net               (570,000)       240,000
  Purchase of stock for contribution to ESOP           (48,700)          -
  Principal payments on long-term borrowings        (1,938,200)      (683,400)
  Loan origination fees and other costs                (64,600)          -
                                                   -----------    -----------
       Net Cash Provided (Used) by
        Financing Activities                         2,535,100       (443,400)
                                                   -----------    -----------
Net Increase (Decrease) in Cash and
 Cash Equivalents                                    1,088,300     (1,441,700)
Cash and Cash Equivalents, beginning of period       2,260,700      3,354,600
                                                   -----------    -----------
Cash and Cash Equivalents, end of period           $ 3,349,000    $ 1,912,900
                                                   ===========    ===========
Supplemental disclosures:
  Cash paid during period for:
    Interest                                       $   215,900    $   145,500
                                                   ===========    ===========
    Income taxes                                   $     1,100    $       600
                                                   ===========    ===========


SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)

Note 1. Summary of Significant Accounting Policies

(a)	Company Background
	Scott's Liquid Gold-Inc. (a Colorado corporation) was incorporated
on February 15, 1954.  Scott's Liquid Gold-Inc. and its wholly owned
subsidiaries (collectively, "we" or "our") manufacture and market quality
household and skin care products.  Since the first quarter of 2001, we
have acted as a distributor in the United States of beauty care products
contained in individual sachets and manufactured by Montagne Jeunesse.
Our business is comprised of two segments, household products and skin
care products.

(b)	Principles of Consolidation
	Our consolidated financial statements include our accounts and
those of our subsidiaries.  All intercompany accounts and transactions
have been eliminated.

(c)	Use of Estimates
	The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.  Significant estimates
include, but are not limited to, realizability of deferred tax assets,
reserves for slow moving and obsolete inventory, customer returns and
allowances, and bad debts.

(d)	Cash Equivalents
	We consider all highly liquid investments with an original maturity
of three months or less at the date of acquisition to be cash equivalents.

(e)	Investments in Marketable Securities
	We account for investments in marketable securities in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities", which
requires that we classify investments in marketable securities according
to management's intended use of such investments.  We invest our excess
cash and have established guidelines relative to diversification and
maturities in an effort to maintain safety and liquidity.  These
guidelines are periodically reviewed and modified to take advantage of
trends in yields and interest rates.  We consider all investments as
available for use in our current operations and, therefore, classify
them as short-term, available-for-sale investments.  Available-for-sale
investments are stated at fair value, with unrealized gains and losses,
if any, reported net of tax, as a separate component of shareholders'
equity and comprehensive income (loss).  The cost of the securities sold
is based on the specific identification method. Investments in corporate
and government securities as of September 30, 2006, are scheduled to
mature within one year.

(f)	Inventories
	Inventories consist of raw materials and finished goods and are
stated at the lower of cost (first-in, first-out method) or market.  We
record a reserve for slow moving and obsolete products and raw materials.
We estimate reserves for slow moving and obsolete products and raw
materials based upon historical and anticipated sales.

	Inventories were comprised of the following at:

                                 September 30, 2006   December 31, 2005
                                 ------------------   -----------------
      Finished goods                $ 2,662,600         $ 2,149,100
      Raw materials                   1,507,600           1,344,500
      Inventory valuation reserve      (329,000)           (309,000)
                                  -----------------   -----------------
                                    $ 3,841,200         $ 3,184,600
                                  =================   =================

(g)	Property, Plant and Equipment
	Property, plant and equipment are recorded at historical cost.
Depreciation is provided using the straight-line method over estimated
useful lives of the assets ranging from three to forty-five years.
Building structures and building improvements are estimated to have
useful lives of 35 to 45 years and 3 to 20 years, respectively.
Production equipment and production support equipment are estimated to
have useful lives of 15 to 20 years and 3 to 10 years, respectively.
Office furniture and office machines are estimated to have useful lives
10 to 20 and 3 to 5 years, respectively.  Carpeting, drapes and company
vehicles are estimated to have useful lives of 5 to 10 years.
Maintenance and repairs are expensed as incurred.  Improvements that
extend the useful lives of the assets or provide improved efficiency
are capitalized.

(h)	Financial Instruments
	Financial instruments which potentially subject us to concentrations
of credit risk include cash and cash equivalents, investments in marketable
securities, and trade receivables.  We maintain our cash balances in the
form of bank demand deposits with financial institutions that management
believes are creditworthy.  We establish an allowance for doubtful accounts
based upon factors surrounding the credit risk of specific customers,
historical trends and other information.  We have no significant financial
instruments with off-balance sheet risk of accounting loss, such as
foreign exchange contracts, option contracts or other foreign currency
hedging arrangements.

	The recorded amounts for cash and cash equivalents, receivables,
other current assets, and accounts payable and accrued expenses approximate
fair value due to the short-term nature of these financial instruments.
The fair value of investments in marketable securities is based upon quoted
market value.  Our long-term debt bears interest at a fixed rate that
adjusts annually on the anniversary date to the then prime rate.  The
carrying value of long-term debt approximates fair value as of September 30,
2006 and December 31, 2005.

(i)	Long-Lived Assets
	We account for long-lived assets in accordance with the provisions
of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets."  This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.  Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset.  If such assets
are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the fair
value of the assets.  Assets to be disposed of are reported at the lower
of the carrying amount or fair value less costs to sell.

(j)	Income Taxes
	We account for income taxes in accordance with the provisions of
SFAS No. 109, "Accounting for Income Taxes", which requires the
recognition of deferred tax assets and liabilities for the expected
future tax consequences attributable to differences between the financial
statement carrying amounts of assets and liabilities and their respective
income tax bases.  A valuation allowance is provided when it is more
likely than not that some portion or all of a deferred tax asset will
not be realized.  The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the period
in which related temporary differences become deductible.  Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled.

(k)	Revenue Recognition
	Revenue is generally recognized upon delivery of products to
customers, which is when title passes.  Reserves for estimated market
development support, pricing allowances and returns are provided in the
period of sale as a reduction of revenue.  Reserves for returns and
allowances are recorded as a reduction of revenue, and are maintained
at a level that management believes is appropriate to account for amounts
applicable to existing sales.  Reserves for coupons and certain other
promotional activities are recorded as a reduction of revenue at the
later of the date at which the related revenue is recognized or the date
at which the sales incentive is offered.  At September 30, 2006 and
December 31, 2005 approximately $790,900 and $794,000, respectively, had
been reserved as a reduction of accounts receivable, and approximately
$50,000 and $35,000, respectively, had been reserved as current
liabilities. Co-op advertising, marketing funds, slotting fees and
coupons are deducted from gross sales and total $1,804,000 and $1,447,900
for the nine months ended September 30, 2006 and September 30, 2005,
respectively.

(l)	Advertising Costs
	We expense advertising costs as incurred.

(m)	Stock-based Compensation
	At September 30, 2006, we had four stock-based employee
compensation plans. During the first quarter of fiscal 2006, we adopted
the provisions of, and account for stock-based compensation in accordance
with, the Financial Accounting Standards Board's ("FASB") Statement of
Financial Accounting Standards No. 123-revised 2004 ("SFAS 123R"),
"Share-Based Payment" which replaced Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation"
and supersedes APB Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued to Employees."  Under the fair value recognition provisions of
this statement, stock-based compensation cost is measured at the grant
date based on the fair value of the award and is recognized as expense
on a straight-line basis over the requisite service period, which is the
vesting period. We elected the modified-prospective method, under which
prior periods are not revised for comparative purposes. The valuation
provisions of SFAS 123R apply to new grants and to grants that were
outstanding as of the effective date and are subsequently modified.
No grants have occurred subsequent to the adoption of SFAS 123R and all
outstanding options were fully vested as of December 31, 2005.

	Prior to January 1, 2006, we accounted for the plans described
above under the recognition and measurement principles of APB Opinion
No. 25, Accounting for Stock Issued to Employees, and related
Interpretations.  No stock-based employee compensation cost is reflected
in net income, as all options granted under those plans had an exercise
price not less than the market value of the underlying common stock on
the date of grant.   The effect on net income and earnings per share if
we had applied the fair value recognition provisions of FASB Statement
No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation for the three to nine months ended September 30, 2005 was as
follows:

	We granted 720,000 options for shares of our common stock during
the nine months ended September 30, 2005 with an average exercise price
equal to $0.55.  Had compensation cost been recorded based on the fair
value of options granted by us, our pro-forma net income (loss) and net
income (loss) per share would have been as follows:

                          Three Months Ended         Nine Months Ended
                          September 30, 2005         September 30, 2005
                       -------------------------  -----------------------
                       As Reported   Pro Forma    As Reported   Pro Forma
                       -----------  -----------   -----------  ----------
Net income (loss)      $   583,700  $   526,200   $    50,300  $  (98,200)
Basic loss per share   $      0.06  $      0.05   $      -     $    (0.01)
Diluted loss per share $      0.06  $      0.05   $      -     $    (0.01)

	The fair value of options granted has been estimated as of the date of
grant using the following assumptions as of:

                          Three Months Ended           Nine Months Ended
                          September 30, 2005           September 30, 2005
                        ------------------------    ------------------------
Dividend rate                  $  -                        $  -
Expected volatility                65%                         65%
Risk-free interest rate          3.80%                       3.80%
Expected life (in years)          4.5                         4.5

(n)	Comprehensive Income
	We follow SFAS No. 130, "Reporting Comprehensive Income" which
establishes standards for reporting and displaying comprehensive income
and its components. Comprehensive income includes all changes in equity
during a period from non-owner sources.


	The following table is a reconciliation of our net income (loss)
to its total comprehensive income (loss) for the three months and nine
months ended September 30, 2006 and 2005:

                         Three Months Ended           Nine Months Ended
                            September 30,               September 30,
                       ------------------------  ------------------------
                          2006         2005         2006          2005
                       ----------   ----------   -----------   ----------
Net income (loss)      $ (741,000)  $  583,700   $(2,648,600)  $   50,300
Unrealized gain
 (loss) on investment
 securities                   400         (900)         (800)      (1,700)
                       ----------   ----------   -----------   ----------
Comprehensive
 income (loss)         $ (740,600)  $  582,800   $(2,649,400)  $   48,600
                       ==========   ==========   ===========   ==========

(o)	Operating Costs and Expenses Classification

	Cost of sales includes costs associated with manufacturing and
distribution including labor, materials, freight-in, purchasing and
receiving, quality control, internal transfer costs, repairs, maintenance
and other indirect costs, as well as warehousing and distribution costs.
We classify shipping and handling costs comprised primarily of freight-out
and nominal outside warehousing costs as a component of selling expense on
the accompanying Consolidated Statement of Operations.  Shipping and
handling costs totaled $1,106,800 and $1,153,200 for the nine months ended
September 30, 2006 and 2005, respectively.

	Selling expenses consist primarily of shipping and handling costs,
wages and benefits for sales and sales support personnel, travel, brokerage
commissions, promotional costs, as well as other indirect costs.

	General and administrative expenses consist primarily of wages and
benefits associated with management and administrative support departments,
business insurance costs, professional fees, office facility related
expenses, and other general support costs.

(p)	Recently Issued Accounting Pronouncements

	In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("SFAS No. 157"). This
Statement defines fair value as used in numerous accounting pronouncements,
establishes a framework for measuring fair value in generally accepted
accounting principles ("GAAP") and expands disclosure related to the use
of fair value measures in financial statements. SFAS No. 157 does not
expand the use of fair value measures in financial statements, but
standardizes its definition and guidance in GAAP. The Standard emphasizes
that fair value is a market-based measurement and not an entity-specific
measurement based on an exchange transaction in which the entity sells an
asset or transfers a liability (exit price). SFAS No. 157 establishes a
fair value hierarchy from observable market data as the highest level to
fair value based on an entity's own fair value assumptions as the lowest
level.   SFAS No. 157 is effective in fiscal years beginning after
November 15, 2007. Adoption of this statement is not expected to
materially impact our results of operations or financial position.

	Also in September 2006, the FASB released Statement of Financial
Accounting Standards No. 158, "Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements
No. 87, 88, 106, and 132(R)" ("SFAS No. 158"). Under the new standard,
companies must recognize a net liability or asset to report the funded
status of their defined benefit pension and other postretirement benefit
plans on their balance sheets. The recognition and disclosure provisions
of SFAS No. 158 will be required to be adopted as of December 31, 2006.
We do not expect the adoption of SFAS No. 158 to have a material impact
on our results of operations or financial position.

	The Financial Accounting Standards Board (FASB) has issued Statements
of Financial Accounting Standards No. 155, "Accounting for Certain Hybrid
Financial Instruments-an amendment of FASB Statements No. 133 and 140" and
SFAS No. 156, "Accounting for Servicing of Financial Assets-an amendment
of FASB Statement No. 140" - but they will not have a relationship to the
operations of the Company.  Therefore a description and its impact for
each on the Company's operations and financial position have not been
disclosed.

	In May 2005, the FASB issued Statement of Financial Accounting
Standard No. 154, "Accounting Changes and Error Corrections (SFAS No. 154)."
  This statement replaces APB Opinion No. 20, "Accounting Changes", and
FASB Statement No. 3, "Reporting Accounting Changes in Interim Financial
Statements", and changes the requirements for the accounting for and
reporting of a change in accounting principle.  SFAS No. 154 applies to
all voluntary changes in accounting principle.  Opinion No. 20 previously
required that most voluntary changes in accounting principle be recognized
by including in net income for the period of the change the cumulative
effect of changing to the new accounting principle.  SFAS No. 154 requires
retrospective application to prior periods' financial statements of a
change in accounting principle, unless it is impracticable to determine
either the period-specific effects or the cumulative effect of the
change.  When it is impracticable to determine the cumulative effect of
applying a change in accounting principle to all prior periods, SFAS
No. 154 requires that the new accounting principle be applied as if it
were adopted prospectively from the earliest date practicable.  SFAS No.
154 also requires that a change in depreciation, amortization, or
depletion method for long-lived, nonfinancial assets be accounted for as
a change in accounting estimate affected by a change in accounting
principle.  SFAS No. 154 is effective in fiscal years beginning after
December 15, 2005.  Adoption of this statement did not have a material
impact our results of operations or financial position.

	In December 2004, the FASB issued Statement of Financial Accounting
Standards No. 153, "Exchanges of Nonmonetary Assets, an amendment of APB
Opinion No. 29" ("SFAS No. 153"). This Statement amends APB Opinion No. 29
to permit the exchange of nonmonetary assets to be recorded on a carryover
basis when the nonmonetary assets do not have commercial substance. This
is an exception to the basic measurement principle of measuring a
nonmonetary asset exchange at fair value. A nonmonetary asset exchange has
commercial substance if the future cash flows of the entity are expected
to change significantly as a result of the exchange. SFAS No. 153 is
effective for nonmonetary asset exchanges occurring in fiscal periods
beginning after June 15, 2005.  We have not entered into exchanges of
nonmonetary assets in the past and do not expect to enter into any
nonmonetary assets exchanges in the foreseeable future; however, if we
enter into significant nonmonetary asset exchanges in the future, SFAS
No. 153 could have a material effect on our consolidated financial
position, results of operations or cash flows.

(q)	Reclassifications
	Certain reclassifications have been made to the 2005 financial
statements to conform to the current period presentation.

Note 2.	Basis of Preparation of Financial Statements

	We have prepared these unaudited interim consolidated financial
statements in accordance with the rules and regulations of the Securities
and Exchange Commission.  Such rules and regulations allow the omission of
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles as long as the statements are not misleading.  In the opinion of
management, all adjustments necessary for a fair presentation of these
interim statements have been included and are of a normal recurring nature.
These interim financial statements should be read in conjunction with our
financial statements included in our 2005 Annual Report on Form 10-K.

Note 3.	Earnings per Share

	Per share data was determined by using the weighted average number
of common shares outstanding.  Potentially dilutive securities, including
stock options, are considered only for diluted earnings per share, unless
considered anti-dilutive. The potentially dilutive securities are comprised
of outstanding stock options of 1,680,600 and 1,780,000 at September 30,
2006 and 2005 respectively.  The 2006 options were excluded from the
computation of weighted average shares outstanding due to their anti-
dilutive effect.

	A reconciliation of the weighted average number of common shares
outstanding for the three and nine months ended September 30, 2006 follows:

                                                               Total
                            Three Months     Nine Months       Shares
                            ------------     -----------     ----------
Common shares outstanding
 beginning of period         10,503,000      10,503,000      10,503,000
Stock issued to ESOP             -               -               -
                             ----------      ----------      ----------

Weighted average number
 of common shares
 outstanding                 10,503,000      10,503,000      10,503,000

Dilutive effect of
 common share equivalents        -               -               -
                             ----------      ----------      ----------

Diluted weighted average
 number of common shares
 outstanding                 10,503,000      10,503,000      10,503,000
                             ==========      ==========      ==========

	At September 30, 2006, there were authorized 50,000,000 shares of
our $0.10 par value common stock and 20,000,000 shares of preferred stock
issuable in one or more series.  None of the preferred stock was issued or
outstanding at September 30, 2006.

Note 4.	Segment Information

	We operate in two different segments: household products and skin
care products. Our products are sold in the United States and
internationally (primarily Canada), directly and through independent
brokers, to mass merchandisers, drug stores, supermarkets, wholesale
distributors and other retail outlets. Our Management has chosen to
organize our business around these segments based on differences in the
products sold. The household products segment includes: "Scott's Liquid
Gold" for wood, a wood cleaner which preserves as it cleans; a wood wash;
"Mold Control 500", a mold remediation product; and "Touch of Scent", a
room air freshener. The skin care segment includes: "Alpha Hydrox", alpha
hydroxy acid cleansers and lotions; a retinol product, "Diabetic Skin
Care", a healing cream and moisturizer developed to address skin conditions
of diabetics; and skin care and other sachets of Montagne Jeunesse
distributed by us.

	The following table provides information related to our segments
as of and for the three and nine months ended September 30:

                                Three Months Ended September 30,
                     -----------------------------------------------------
                                2006                        2005
                     -------------------------   -------------------------
                      Household     Skin Care     Household     Skin Care
                      Products      Products      Products      Products
                     -----------   -----------   -----------   -----------
Net sales to
 external customers  $ 1,897,300   $ 1,945,100   $ 1,874,400   $ 4,631,600
                     ===========   ===========   ===========   ===========
Income (loss) before
 profit sharing,
 bonuses, and
 income taxes        $  (136,600)  $  (604,400)  $   (91,000)  $   674,700
                     ===========   ===========   ===========   ===========
Identifiable Assets  $ 3,763,100   $ 5,908,900   $ 3,420,400   $ 7,797,600
                     ===========   ===========   ===========   ===========

                                   Nine Months Ended September 30,
                     -----------------------------------------------------
                                2006                        2005
                     -------------------------   -------------------------
                      Household     Skin Care     Household     Skin Care
                      Products      Products      Products      Products
                     -----------   -----------   ----------    -----------
Net sales to
 external customers  $ 6,523,300   $ 5,608,200   $ 6,027,900   $11,725,400
                     ===========   ===========   ===========   ===========
Income (loss) before
 profit sharing,
 bonuses and
 income taxes        $  (510,400)  $(2,138,200)  $  (845,600)  $   895,900
                     ===========   ===========   ===========   ===========
Identifiable Assets  $ 3,763,100   $ 5,908,900   $ 3,420,400   $ 7,797,600
                     ===========   ===========   ===========   ===========


       The following is a reconciliation of segment information to
consolidated information as of and for the three and nine months ended
September 30:

                        Three Months Ended             Nine Months Ended
                            September 30,                September 30,
                     -------------------------    -------------------------
                         2006          2005          2006          2005
                     -----------   -----------    -----------   -----------
Net sales to
 external customers  $ 3,842,400   $ 6,506,000    $12,131,500   $17,753,300
                     ===========   ===========    ===========   ===========
Income (loss) before
 profit sharing,
 bonuses and income
 taxes               $  (741,000)  $   583,700    $(2,648,600)  $    50,300
                     ===========   ===========    ===========   ===========
Identifiable assets  $ 9,672,000   $11,218,000    $ 9,672,000   $11,218,000
Corporate assets      12,118,400    11,068,100     12,118,400    11,068,100
                     -----------   -----------    -----------   -----------
Consolidated total
 assets              $21,790,400   $22,286,100    $21,790,400   $22,286,100
                     ===========   ===========    ===========   ===========

	Corporate assets noted above are comprised primarily of our cash and
investments, and property and equipment not directly associated with the
manufacturing, warehousing, shipping and receiving activities.

Item 2.	Management's Discussion and Analysis of Financial Condition
        and Results of Operations (Unaudited)

Results of Operations

       During the first nine months of 2006, we experienced an increase in
sales of our household chemical products primarily because of our
introduction of our new mold control product Mold Control 500, while
experiencing decreases in sales of our Montagne Jeunesse line of skin care
products and our Alpha Hydrox skin care products.  Our net loss for the
first nine months of 2006 was $2,648,600 versus income of $50,300 in the
first nine months of 2005.  The loss for 2006 was primarily due to lower
sales of the Montagne Jeunesse product line and reduced sales of our Alpha
Hydrox skin care line.

Summary of Results as a Percentage of Net Sales

                                     Year Ended        Nine Months Ended
                                     December 31,        September 30,
                                     ------------     -------------------
                                        2005            2006       2005
                                     ------------     -------    --------
Net sales
   Scott's Liquid Gold and other
    household products                  34.8%           53.8%      34.0%
   Neoteric Cosmetics                   65.2%           46.2%      66.0%
                                       ------          ------     ------
Total net sales                        100.0%          100.0%     100.0%
Cost of sales                           56.1%           56.7%      54.9%
                                       ------          ------     ------
Gross profit                            43.9%           43.3%      45.1%
Other revenue                            0.2%            1.1%       0.2%
                                       ------          ------     ------
                                        44.1%           44.4%      45.3%
                                       ------          ------     ------

Operating expenses                      44.2%           64.5%      44.2%
Interest expense                         0.8%            1.7%       0.8%
                                       ------          ------     ------
                                        45.0%           66.2%      45.0%
                                       ------          ------     ------

Income (loss) before income taxes       (0.9%)         (21.8%)      0.3%
                                       ======         =======     ======

	Our gross margins may not be comparable to those of other entities,
because some entities include all of the costs related to their
distribution network in cost of sales and others, like us, exclude a
portion of them (freight out to customers and nominal outside warehouse
costs) from gross margin, including them instead in the selling expense
line item. See Note 1(o), Operating Costs and Expenses Classification, to
the Consolidated Financial Statements in this Report.


Comparative Net Sales

                                     Nine Months Ended         Percentage
                                        September 30,           Increase
                                    2006           2005        (Decrease)
                                -----------    -----------     ----------
Scott's Liquid Gold and
 other household products       $ 5,476,400    $ 4,683,000        16.9%
Touch of Scent                    1,046,900      1,344,900       (22.2%)
                                -----------    -----------       ------
     Total household
      chemical products           6,523,300      6,027,900         8.2%
                                -----------    -----------       ------

Alpha Hydrox and
 other skin care                  2,836,400      4,863,500       (41.7%)
Montagne Jeunesse skin care       2,771,800      6,861,900       (59.6%)
                                -----------    -----------       ------
     Total skin care product      5,608,200     11,725,400       (52.2%)
                                -----------    -----------       ------

          Total net sales       $12,131,500    $17,753,300       (31.7%)
                                ===========    ===========       ======

Nine Months Ended September 30, 2006
Compared to Nine Months Ended September 30, 2005

	Consolidated net sales for the first nine months of the current year
were $12,131,500 versus $17,753,300 for the first nine months of 2005, a
decrease of $5,621,800 or about (31.7)%.  Average selling prices for the
first nine months of 2006 were down by $142,700 over those of the comparable
period of 2005, prices of household products being up by $410,000, while
average selling prices of skin care products were down by $552,700.  This
decrease was primarily due to price promotions on selected cosmetic
products.  Co-op advertising, marketing funds, slotting fees and coupon
expenses (promotional allowances) paid to retailers were subtracted from
gross sales in accordance with current accounting policies totaling
$1,804,000 in the first nine months of 2006 versus $1,447,900 in the
same period in 2005, an increase of $356,100 or 24.6%.  This increase
consisted of an increase in coupon expense of $302,000, an increase in
co-op marketing funds of $183,900 and a decrease in slotting fee
expenses of $129,800.

	During the first nine months of 2006, net sales of skin care
products accounted for 46.2% of consolidated net sales compared to 66.0%
for the first nine months of 2005.  Net sales of these products for those
periods were $5,608,200 in 2006 compared to $11,725,400 in 2005, a
decrease of $6,117,200 or (52.2)%.  During the first quarter of 2005 we
began introduction of four new items in our Alpha Hydrox line of cosmetic
products.  This resulted in "pipeline" orders of the new items in 2005
that were not repeated in 2006.  The new items accounted for approximately
45.1% of our sales of Alpha Hydrox and other skin care sales (which does
not include Montagne Jeunesse sales) in the first nine months of 2006
versus 54.7% in the first nine months of 2005. These new items accounted
for approximately 40.4% of our sales of Alpha Hydrox and other skin care
sales in the third quarter of 2006 versus 67.0% in the third quarter of
2005. Net sales of the new Alpha Hydrox products declined in the second and
third quarters of 2006 compared to the same quarters in 2005 as a result
of returns from one retailer in the second quarter, the filling of store
shelves with the introduction of the product in 2005, and higher couponing
and co-op advertising costs that are deducted from gross sales.  It is
still too early to tell the consumer acceptance of these products
which is necessary for reorders of these products and expanding the
distribution of these products.

	We have continued to experience a drop in unit sales of our earlier-
established alpha hydroxy acid-based products due primarily to maturing
in the market for alpha hydroxy acid-based skin care products, intense
competition from producers of similar or alternative products, many of
which are considerably larger than Neoteric Cosmetics, Inc. and reduced
distribution of these products at retail stores in current and prior
periods. For the third quarter of 2006 and the first nine months of 2006,
the sales of our Alpha Hydrox products accounted for 22.9% and 35.5% of
net sales of skin care products and 7.2% and 16.5% of total net sales,
compared to 46.0% and 32.9% of net sales of skin care products and 32.7%
 and 21.7% of total net sales for the three and nine months ended
September 30, 2005.

	Net sales of Montagne Jeunesse products were $2,771,800 in the nine
months ended September 30, 2006 versus $6,861,900 for the comparable
period of 2005, a decrease of $4,090,100 or 59.6%.  The decrease reflects
changes in product positioning at several key retailers in 2006 as they
have revised the amount of shelf and floor space allocated to these types
of products, including the elimination in the first quarter of 2006 at
approximately 1,500 Wal-Mart stores of the department in which Montagne
Jeunesse products were previously displayed.

	Sales of household products for the first nine months of this year
accounted for 53.8% of consolidated net sales compared to 34.0% for the
same period of 2005.  These products are comprised primarily of Scott's
Liquid Gold wood care products (Scott's Liquid Gold for wood, a wood wash
and wood wipes), mold remediation products and Touch of Scent.  During
the nine months ended September 30, 2006, sales of household products were
$6,523,300, as compared to sales of $6,027,900 for the same nine months
of 2005, an increase of $495,400 or 8.2%.  This increase in sales is due
to somewhat higher net sales of our Scott's Liquid Gold for wood and our
wood wash products, plus sales during the second quarter of 2006 of a
promotional combination package of Scott's Liquid Gold for wood and either
the wood wash or wood wipes, offset by a decrease in the sale of wood
wipes.  The primary reason for the increase in wood care sales is increased
distribution of the wood wash product.  In the second quarter of 2005 we
began introducing a wood wash under the Scott's Liquid Gold product line.
It is too early to determine if the wood wash product introduction will be
successful. During the second quarter of 2006 we began the introduction
of our mold remediation product "Mold Control 500" with sales of $125,200
during the third quarter of 2006 and $558,000 during the first nine months
of 2006. It is too early to determine if this introduction will be
successful. Sales of "Touch of Scent" were down by $298,000 or 22.2%,
primarily due to decreases in distribution prior to the third quarter
of 2006.

	As sales of a consumer product decline, there is the risk that
retailers will stop carrying the product.  The loss of any significant
customer for any skin care products, "Scott's Liquid Gold" wood care or
mold remediation products or "Touch of Scent", could have a significant
adverse impact on our revenues and operating results.  We believe that
our future success is highly dependent on favorable acceptance in the
marketplace of Montagne Jeunesse products, of our new Alpha Hydrox
products and of our "Scott's Liquid Gold" wood care and mold remediation
products.

	We also believe that the introduction of successful new products,
including line extensions of existing products, such as the wood wash
and our new mold remediation product, using the name "Scott's Liquid
Gold", are important in our efforts to maintain or grow our revenue.  We
currently plan to make one or two additional product introductions during
the fourth quarter of 2006.  To the extent that we manufacture a new product
rather than purchase it from external parties, we are also benefited by
the use of existing capacity in our facilities.  We are using our
facilities to fill and package the mold control products.  The actual
introduction of additional products, the timing of any additional
introductions and any revenues realized from new products is uncertain.

       On a consolidated basis, cost of goods sold was $6,880,200 during
the first nine months of 2006 compared to $9,752,500 for the same period
of 2005, a decrease of $2,872,300 (29.5% on a sales decrease of 31.7%).
As a percentage of consolidated net sales for the first nine months of
2006, cost of goods sold was 56.7% compared to 54.9% in 2005, an increase
of 1.8%.  This was essentially due to our decrease in plant utilization,
resulting from decreased sales of our Alpha Hydrox cosmetic products
during 2006 and the increase in sales promotion expenses which lowered our
revenues and thus affected our margins particularly in the skin care line
of products.

Operating Expenses, Interest Expense and Other Income

                                        Nine Months Ended      Percentage
                                           September 30,         Increase
                                       2006            2005     (Decrease)
                                   -----------    -----------   ----------
Operating Expenses
    Advertising                    $ 1,062,200    $   630,300      68.5%
    Selling                          4,189,100      4,422,000      (5.3%)
    General & Administrative         2,566,700      2,779,100      (7.6%)
                                   -----------    -----------     ------
         Total operating expenses  $ 7,818,000    $ 7,831,400      (0.2%)
                                   ===========    ===========     ======

Interest and Other Income          $   129,300    $    30,200     328.1%
                                   ===========    ===========     ======

Interest Expense                   $   211,200    $   149,300      41.5%
                                   ===========    ===========     ======

       Operating expenses, comprised of advertising, selling and general
and administrative expenses, decreased by $13,400 or (0.2)% in the first
nine months of 2006, when compared to the first nine months of 2005.  The
various components of operating expenses are discussed below.  We have
initiated limited cost reductions in the third and fourth quarters of
2006, including a reduction in the number of employees and salary
reductions for officers and certain employees.  These measures will result
in a cost savings of approximately $700,000 on an annualized basis.

	Advertising expenses for the first nine months of 2006 were
$1,062,200 compared to $630,300 for the comparable nine months of 2005,
an increase of $431,900 or 68.5%.  That increase was spread evenly over
both household chemical products and our Alpha Hydrox skin care products.
We will be advertising both our household chemical products and our skin
care products in the fourth quarter.  As a result, our advertising
expenses for 2006 will likely exceed last year's totals and, depending
on the sales benefit of that advertising, may lower operating results
in the fourth quarter.

       Selling expenses for the first nine months of 2006 were $4,189,100
compared to $4,422,000 for the comparable nine months of 2005, a decrease
of $232,900 or (5.3)%.  That decrease was comprised of a decrease in
freight and brokerage expenses of $128,000, a decrease in salaries and
fringe benefits and related travel expense of $207,900 primarily because
of staffing changes in 2006 versus 2005, a decrease in depreciation and
royalty expense of $69,500 offset by an increase in promotional goods and
related expenses of $85,200, an increase in internet and web design costs
of $58,300 and by a net increase in other selling expenses, none of which
by itself is significant, of $29,000.

       General and administrative expenses for the first nine months of
2006 were $2,566,700 compared to $2,779,100 for the comparable nine months
of 2005, a decrease of $212,400 or (7.6)%.  That decrease was primarily
attributable to a decrease in salaries and fringe benefits resulting
from a reduction in both personnel and net health care costs of $147,000,
and a net decrease in other general and administrative expenses of
$65,000.

       Interest expense for the first nine months of 2006 was $211,200
versus $149,300 for the comparable period of 2005.  Interest expense
increased because of higher interest rates and increased borrowing levels.
Interest and other income for the nine months ended September 30, 2006
was $129,300 which was comprised of $67,100 of gain on sale of assets
(that is, the sale of our plastic molding equipment and related machinery
in July 2006 as described in our Form 10-Q Report for the quarter ended
June 30, 2006) and $62,200 of interest income as compared to $30,200 of
interest income for the same period of 2005. Interest income consists of
interest earned on our cash reserves in 2006 and 2005.


       During the third quarter of 2006 and of 2005, expenditures for
research and development were not material (under 2% of revenues).

Three Months Ended September 30, 2006
Compared to Three Months Ended September 30, 2005

                            Comparative Net Sales

                              Three Months Ended September 30,
                           -----------------------------------------
                                                          Percentage
                                                           Increase
                               2006           2005        (Decrease)
                           -----------    -----------     ----------
Scott's Liquid Gold and
 other household products  $ 1,545,600    $ 1,434,400          7.8%
Touch of Scent                 351,700        440,000        (20.1%)
                           -----------    -----------        ------
  Total household products   1,897,300      1,874,400          1.2%
                           -----------    -----------        ------

Alpha Hydrox and
 other skin care             1,155,300      2,462,700        (53.1%)
Montagne Jeunesse
 skin care                     789,800      2,168,900        (63.6%)
                           -----------    -----------        ------
  Total skin care
   products                  1,945,100      4,631,600        (58.0%)
                           -----------    -----------        ------

     Total net sales       $ 3,842,400    $ 6,506,000        (40.9%)
                           ===========    ===========        ======

       Consolidated net sales for the third quarter of the current year
were $3,842,400 versus $6,506,000 for the comparable quarter of 2005, a
decrease of $2,663,600, or 40.9%. Average selling prices for the third
quarter of 2006 were down by $167,800 over those of the comparable period
of 2005, prices of household products being up by $70,900, while average
selling prices of skin care products were down by $238,700.  Co-op
advertising, marketing funds, slotting fees and coupon expenses
(promotional allowances) paid to retailers were subtracted from gross
sales in accordance with current accounting policies totaling $651,200
in the third quarter of 2006 versus $592,400 in the same period in 2005,
an increase of $58,800.

	During the third quarter of 2006, net sales of skin care products
accounted for 50.6% of consolidated net sales compared to 71.2% for the
third quarter of 2005.  Net sales of these products for those periods were
$1,945,100 in 2006 compared to $4,631,600 in 2005, a decrease of $2,686,500
or (58.0)%.  Net sales of Montagne Jeunesse were approximately $789,800
in the third quarter of 2006 compared to $2,168,900 in the third quarter
of 2005.  Please see the discussion above for the first nine months of
2006 for additional information regarding sales of skin care products,
which is also applicable to sales of skin care products in the third
quarter of 2006.

       Sales of household products for the third quarter of this year
accounted for 49.4% of consolidated net sales compared to 28.8% for the
same period of 2005. These products are comprised of Scott's Liquid Gold
wood care products (Scott's Liquid Gold for wood, a wood wash and wood
wipes), mold remediation products and Touch of Scent.  During the third
quarter of 2006, sales of household products were $1,897,300, as compared
to sales of $1,874,400 for the same three months of 2005.  Sales of
"Scott's Liquid Gold" and other household products (excluding Touch of
Scent) were up by $111,200, an increase of 7.8%, as a result of our sales
of the mold remediation product.  Sales of "Touch of Scent" were down by
$88,300 or 20.1%, primarily due to a decrease in distribution.  Please
see the discussion above for the first nine months of 2006 for additional
information regarding sales of household products, which is also applicable
to sales of household products in the third quarter of 2006.

       On a consolidated basis, cost of goods sold was $2,069,300 during
the third quarter of 2006 compared to $3,513,600  for the same period of
2005, a decrease of $1,444,300 (41.1% on a sales decrease of 40.9%).  As a
percentage of consolidated net sales for the period, cost of goods sold was
53.9% compared to 54.0% in 2005, a decrease of 0.1%.

Operating Expenses, Interest Expense and Other Income

                                                                 Percentage
                                                                  Increase
                                        2006           2005      (Decrease)
                                    -----------    -----------   ----------
Operating Expenses
   Advertising                      $   360,900    $   151,800       137.7%
   Selling                            1,353,400      1,455,700        (7.0%)
   General & Administrative             791,400        757,100         4.5%
                                    -----------    -----------    ---------
        Total operating expenses    $ 2,505,700    $ 2,364,600         6.0%
                                    ===========    ===========    =========

Interest and Other Income           $   102,400    $     9,900     9,449.0%

Interest Expense                    $   110,800    $    54,000       105.6%

       Operating expenses, comprised of advertising, selling and general
and administrative expenses, increased by $141,100 or 6.0% in the third
quarter of 2006, when compared to the same period during 2005.  The
various components of operating expenses are discussed below.

	Advertising expenses for the third quarter of 2006 were $360,900
compared to $151,800 for the comparable quarter of 2005, an increase of
$209,100 or 137.7%. Advertising expenses applicable to household products
increased by $275,100 (968.7%), and advertising expenses for Alpha Hydrox
products decreased for the comparative three-month period by $66,000
(53.5%).

       Selling expenses for the three months ended September 30, 2006 were
$1,353,400 compared to $1,455,700 for the comparable three months of
2005, a decrease of $102,300 or (7.0)%.  This decrease resulted primarily
from a decrease in brokerage and freight expense of $80,800, a decrease
in depreciation and amortization expense of $69,200, a net decrease in
other selling expenses, none of which by itself is significant of $4,900,
offset by an increase in promotional expenses of $52,600.

       General and administrative expenses for the third quarter of 2006
were $791,400 compared to $757,100 for the comparable period of 2005, an
increase of $34,300 or 4.5%.  Such increase was attributable to a net
increase in several administrative expenses, none of which by itself is
significant.

       Interest expense for the third quarter of 2006 was $110,800 versus
$53,900 for the comparable period of 2005. Interest expense increased
because of higher interest rates and increased borrowing levels.  Interest
and other income for the three months ended September 30, 2006 was $102,400
which was comprised of $67,100 of gain on the sale of assets and $35,300 of
interest income as compared to $9,800 of interest income for the same
period of 2005.

       During the third quarter of 2006 and of 2005, expenditures for
research and development were not material (under 2% of revenues).

Liquidity and Capital Resources

	On June 28, 2006, we entered into a new loan with a fifteen year
amortization with Citywide Banks for $5,156,600 secured by the land,
building and fixtures at our Denver, Colorado facilities.  This loan
replaces the bank loan with Citywide Banks, secured by the facilities,
in the principal amount of approximately $1,582,900.  Interest on the
bank loan (8.0% at
September 30, 2006) is at the prime rate as published in The Wall Street
Journal, adjusted annually each June.  Part of the proceeds of the new
loan was used to pay off the prior loan, and the remaining proceeds have
been or will be used in business operations, including the development and
introduction of new products.  This loan requires 180 monthly payments of
approximately $49,500, which commenced on July 28, 2006.  As did the prior
bank loan, the loan agreement contains a number of covenants, including
the requirement for maintaining a current ratio of at least 1:1 and a ratio
of consolidated long-term debt to consolidated net worth of not more than
1:1.  We may not declare any dividends that would result in a violation of
either of these covenants. The foregoing requirements were met at the end
of the first nine months of 2006.

	In connection with the new loan, we agreed with Citywide Banks to
reduce the amount available under our line of credit with Citywide Banks
from $1,800,000 to $1,300,000.  In August of 2006 we paid off the balance
remaining on our line of credit.  We chose not to renew the line of credit
when it matured on August 8, 2006.

	During the first nine months of 2006, our working capital increased
by $1,743,400, and concomitantly, our current ratio (current assets
divided by current liabilities) increased from 1.6:1 at December 31, 2005
to 2.2:1 at September 30, 2006.  This increase in working capital is
attributable to an increase in long-term debt of $3,986,700, depreciation
in excess of capital additions and disposals of $455,100, offset by a net
loss in the first nine months of 2006 of $2,648,600, an increase in other
assets of $49,000, and a decrease in accumulated comprehensive income
of $800.

	At September 30, 2006, trade accounts receivable were $740,400
versus $1,633,100 at year-end, largely because sales in the quarter
ended September 30, 2006 were less than those of the quarter ended
December 31, 2005.  Accounts payable increased from the end of 2005
through September of 2006 by $652,900 corresponding primarily with the
increase in inventory over that period.  At September 30, 2006
inventories were $656,600 more than at December 31, 2005, primarily due
to an increase in household products inventory, including inventory for
our new mold remediation product, to support sales of these products in
the upcoming quarters.  Prepaid expenses increased from the end of 2005 by
$75,200 primarily due to prepaid promotional costs related to our new mold
product.  Accrued payroll and benefits decreased $120,900 from December 31,
2005 to September 30, 2006 primarily because only one week of wages were
outstanding at September 30, 2006 compared to two weeks at December 31, 2005.

	We have no significant capital expenditures planned for the remainder
of 2006 and have no current plans for any external financing, other than
our existing bank loan.  We expect that our available cash and cash flows
from operating activities will fund the next twelve months' cash
requirements.

	Our dependence on operating cash flow means that risks involved in
our business can significantly affect our liquidity.  Any loss of a
significant customer, any further decreases in distribution of our skin
care or household products, any new competitive products affecting sales
levels of our products, or any significant expense not included in our
internal budget could result in the need to raise cash, such as through a
bank financing.  We have no arrangements for any additional external
financing of debt or equity, and we are not certain whether any such
financing would be available on acceptable terms.  Please also see other
risks summarized in "Forward Looking Statements" below.  In order to
improve our operating cash flow, we need to achieve profitability.

Quantitative and Qualitative Disclosures About Market Risk

	Market risk represents the risk of loss due to adverse changes in
financial and commodity market prices and rates.  We are not materially
exposed to market risks regarding interest rates. The interest on our
long-term debt is at the lender's base rate, which approximates the prime
rate, adjustable yearly.  Our investments in debt and equity securities
are short-term and not subject to significant fluctuations in fair
value.  If interest rates were to rise 10% from year-end levels, the
fair value of our debt and equity securities would have decreased by
approximately $600.  Further, we do not use foreign currencies in our
business.  Currently, we receive payments for sales to parties in foreign
countries in U.S. dollars.  Additionally, we do not use derivative
instruments or engage in hedging activities.  As a result, we do not
believe that near-term changes in market risks will have a material effect
on results of operations, financial position or our cash flows.

Forward-Looking Statements

	This report may contain "forward-looking statements" within the
meaning of U.S. federal securities laws. These statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.  Forward-looking statements and our
performance inherently involve risks and uncertainties that could cause
actual results to differ materially from the forward-looking statements.
Factors that would cause or contribute to such differences include, but
are not limited to, continued acceptance of each of our significant
products in the marketplace; the degree of success of any new product or
product line introduction by us; the uncertainty of consumer acceptance
of the new Alpha Hydrox, mold control and wood wash products; competitive
factors; any decrease in distribution of (i.e., retail stores carrying)
our significant products; continuation of our distributorship agreement
with Montagne Jeunesse; the need for effective advertising of our
products; limited resources available for such advertising; new
competitive products and/or technological changes; dependence upon third
party vendors and upon sales to major customers; changes in the regulation
of our products, including applicable environmental regulations;
continuing losses which could affect our liquidity; adverse developments
in pending litigation; the loss of any executive officer; and other
matters discussed in our 2005 Annual Report on Form 10-K.  We undertake no
obligation to revise any forward-looking statements in order to reflect
events or circumstances that may arise after the date of this report.

Item 3.	Quantitative and Qualitative Disclosures About Market Risk

	Please see "Market Risks" in Item 2 of Part I of this Report which
information is incorporated herein by this reference.

Item 4.	Controls and Procedures

	As of September 30, 2006, we conducted an evaluation, under the
supervision and with the participation of the Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures.  Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in reports that we file or
submit under the   Securities Exchange Act of 1934 is recorded,
processed, summarized, and reported within the time periods specified
in Securities and Exchange Commission rules and forms as of September 30,
2006.  There was no change in our internal control over financial
reporting during the quarter ended September 30, 2006 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financing reporting.

PART II	OTHER INFORMATION

Item 1.	Not Applicable

Item 1A.	Risk Factors

		We have previously stated a risk factor that our cash flow was
dependent upon operating cash flow and our existing bank line of credit.
As indicated in this Report, we obtained a new 15-year bank loan and
repaid and terminated our bank line of credit.  Please see the last two
paragraphs in Part I, Item 2 Management's Discussion and Analysis of the
Financial Condition and Results of Operations - Liquidity and Capital
Resources for risks involved in our dependence on available cash and
cash flows from operating activities.

Item 2.	Not applicable.

Item 3.	Not Applicable

Item 4.	Not Applicable

Item 5.	Not Applicable

Item 6.	Exhibits

(b)	Exhibits

31.1	Rule 13(a)-14(a) Certification of the Chief Executive Officer
31.2	Rule 13(a)-14(a) Certification of the Chief Financial Officer
	32.1	Section 1350 Certifications

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.

				SCOTT'S LIQUID GOLD-INC.


				BY:	/s/ Mark E. Goldstein
November 10, 2006		-----------------------------------
Date 				Mark E. Goldstein
				President and Chief Executive Officer


				BY:	/s/ Jeffry B. Johnson
November 10, 2006		-----------------------------------
Date				Jeffry B. Johnson
				Treasurer and Chief Financial Officer


EXHIBIT INDEX

Exhibit No.       Document
   31.1	Rule 13(a)-14(a) Certification of the Chief Executive Officer
   31.2	Rule 13(a)-14(a) Certification of the Chief Financial Officer
   32.1	Section 1350 Certification

EX-31

									EXHIBIT 31.1

CERTIFICATION

I, Mark E. Goldstein, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the quarter
ended September 30, 2006 of Scott's Liquid Gold-Inc.;

2.	Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3.	Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
 and have:

a)	designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

b)	evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and;

(c)	disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and

5.	The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a)	all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and


b)	any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.



DATE:  November 10, 2006

                                   /s/ Mark E. Goldstein
                                   ----------------------------------
                                   Mark E. Goldstein
                                   President, Chief Executive Officer,
                                    And Chairman of the Board
                                   Principal Executive Officer

EX-31

										EXHIBIT 31.2

CERTIFICATION

I, Jeffry B. Johnson, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the
quarter ended September 30, 2006 of Scott's Liquid Gold-Inc.;

2.	Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3.	Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:

a)	designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;

b)	evaluated the effectiveness of the registrant's disclosure controls
and procedures and  presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and;

(c)	disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and

5.	The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a)	all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial  information; and


b)	any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.



DATE:  November 10, 2006

                                  /s/ Jeffry B. Johnson
                                  -------------------------------------
                                  Jeffry B. Johnson
                                  Treasurer and Chief Financial Officer
                                  Principal Financial Officer

EX-32

                                                            EXHIBIT 32.1

CERTIFICATION OF 10-Q REPORT
OF
SCOTT'S LIQUID GOLD-INC.

FOR THE QUARTER SEPTEMBER 30, 2006

1.   The undersigned are the Chief Executive Officer and the Chief
Financial Officer of Scott's Liquid Gold-Inc. ("Scott's Liquid Gold").
This Certification is made pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.  This Certification accompanies the 10-Q Report of Scott's
Liquid Gold for the quarter ended September 30, 2006.

2.   We certify that such 10-Q Report fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that
the information contained in such 10-Q Report fairly presents, in all
material respects, the financial condition and results of operations of
Scott's Liquid Gold.

This Certification is executed as of November 10, 2006.


/s/ Mark E. Goldstein
- -----------------------------------
Mark E. Goldstein
President, Chief Executive Officer
 and Chairman of the Board
Principal Executive Officer


/s/ Jeffry B. Johnson
- -----------------------------------
Jeffry B. Johnson
Treasurer and Chief Financial Officer
Principal Financial Officer