UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                 FORM 10-Q


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1998

                                    OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     
     SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from                to                .

Commission file number 0-15374

                   PENTECH INTERNATIONAL, INC.                   
          (Exact name of registrant as specified in its charter)

          Delaware                                23-2259391     
(State or other jurisdiction of            (IRS Employer 
incorporation or organization)              Identification No.)

195 Carter Drive, Edison, New Jersey                     08817   
(Address of principal executive offices)               (Zip Code)

                           (732) 287-6640                        
           (Registrant's telephone number, including area code)

                                                                 
(Former name, former address and former fiscal year, if changed   
  since last report)

     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 and 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.     [x] Yes  [ ] No

     Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: As of August 3, 1998 there were 12,570,258 shares of common
stock outstanding, par value $.01 per share.



                 Page 1 of 20.  There is no Exhibit Index.






                                   INDEX




Part I.  Financial Information:


     Item 1.   Financial Statements (unaudited).                       Page

     Condensed Consolidated Balance Sheets as of 
     June 30, 1998 and September 30, 1997                               3-4


     Condensed Consolidated Statements of Operations for the
     three and nine months ended June 30, 1998 and 1997                   5


     Condensed Consolidated Statements of Cash Flows 
     for the nine months ended June 30, 1998 and 1997                   6-7


     Notes to Condensed Consolidated Financial Statements              8-15


     Item 2.   Management's Discussion and 
               Analysis of Financial Condition 
               and Results of Operation.                              16-18



Part II.  Other Information:

     Item 5.   Other Information.                                        19

     Item 6.   Exhibits and Reports on Form 8-K.                         19


Signature                                                                20
<PAGE>
                        PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

                         PENTECH INTERNATIONAL, INC.
                               AND SUBSIDIARIES

                    CONDENSED CONSOLIDATED BALANCE SHEETS

                                    ASSETS
                               (000's omitted)
                   (Substantially all pledged or assigned)

                                       June 30, 1998   September 30, 1997
                                       -------------   ------------------
                                        (unaudited)       
     Current Assets:

     Cash                                $     56              $     649
     Accounts receivable, net of
      allowances for doubtful
      accounts of $138 at
      June 30, 1998 and 
      $30 at September 30,
      1997                                 18,863                 16,293
     Inventories (Note 1)                  19,880                 18,481
     Income taxes receivable                  272                    422
     Prepaid expenses and other             1,626                  1,648
     Deferred tax asset (Note 5)              316                    271
                                           ------                 ------
     Total current assets                  41,013                 37,764
                                           ------                 ------

     Furniture and equipment (Note 1)       8,856                  8,895
      Less accumulated depreciation        (5,128)                (4,931)
                                           ------                 ------
                                            3,728                  3,964
                                           ------                 ------
     Other assets:

     Deferred tax assets, long-term
      (Note 5)                                234                    364
     Trademarks, net of amortization
      (Note 1)                                219                    270
     Due from officer                         174                    142
                                           ------                 ------
                                              627                    776
                                           ------                 ------
                                          $45,368                $42,504
                                           ======                 ======


See notes to condensed consolidated financial statements.

                        PENTECH INTERNATIONAL, INC.
                             AND SUBSIDIARIES

              CONDENSED CONSOLIDATED BALANCE SHEETS (CONT'D)

                   LIABILITIES AND SHAREHOLDERS' EQUITY
                              (000's omitted)

                                June 30, 1998        September 30, 1997
                                -------------        ------------------
                                (unaudited)
Current liabilities:
  Notes payable, bank
     (Note 2)                     $ 19,279                  $ 17,238
  Accounts payable                   2,412                     1,334
  Accrued expenses                   3,011                     3,441
  Settlement note payable (Note 6)     300                       300
                                    ------                    ------
  Total current liabilities         25,002                    22,313
                                    ------                    ------
Other liabilities:
  Royalty payable, long-term (Note 6)  200                       300
  Settlement note payable,
   long-term (Note 6)                2,100                     2,300
                                    ------                    ------
Commitments and contin-
gencies (Note 4)                     2,300                     2,600
                                    ------                    ------
Shareholders' equity (Note 3):

  Preferred stock, par value $.10
  per share; authorized 500,000
  shares; issued and outstanding none

  Common stock, par value $.01 per
  share; authorized 20,000,000 shares; 
  12,570,258 shares issued and
  outstanding at June 30, 1998 and
  12,504,258 shares issued and
  outstanding at September 30, 
  1997, respectively                   126                       125

  Capital in excess of par           6,838                     6,789

  Retained earnings                 11,102                    10,677
                                    ------                    ------
                                    18,066                    17,591
                                    ------                    ------
                                   $45,368                   $42,504
                                    ======                    ======


         See notes to condensed consolidated financial statements.
<PAGE>
 
                       PENTECH INTERNATIONAL, INC.
                             AND SUBSIDIARIES
                                (unaudited)

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (000's omitted except for per share amounts)

                         Three Months Ended        Nine Months Ended
                            June 30,                   June 30,     
                         ------------------        -----------------
                           1998       1997          1998      1997
                           ----       ----          ----      ----

Net sales                $21,931   $21,333        $43,299   $44,725

Cost of sales             14,995    13,907         28,954    29,072
                          ------    ------         ------    ------

Gross profit               6,936     7,426         14,345    15,653
                          ------    ------         ------    ------
Selling, general and
 administrative expenses   5,213     5,520         13,590    13,373

(Income) from Lawsuit
  settlement (Note 9)          -         -           (965)        -

Loss on Cosmetics
 operation                     -         -              -       687

Interest expense             362       389          1,043     1,097

Interest (income)              -         -             (9)       (9)
                          ------    ------         ------    ------           
                           5,575     5,909         13,659    15,148 
                          ------    ------         ------    ------
Income before
 taxes                     1,361     1,517            686       505

Income taxes                 517       606            261       202
                          ------    ------         ------    ------
Net income                $  844    $  911         $  425    $  303
                          ======    ======         ======    ======

Net income per share
 basic and diluted 
 (Note 1)                 $  .07    $  .07         $  .03    $  .03
                          ======    ======         ======    ======




         See notes to condensed consolidated financial statements.<PAGE>
    

                      PENTECH INTERNATIONAL, INC.
                             AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (000's omitted)
                                (unaudited)

                                                  Nine Months Ended
                                                      June 30,      
                                                  -----------------
                                                  1998          1997
                                                  ----          ----
Cash flows from operating activities:

     Net income                               $    425      $    303
                                                ------        ------

     Adjustments to reconcile net 
     income to net cash (used in)
     operating activities:

     Depreciation and amortization                 699         1,007
     Sale of Cosmetic assets                       758             -

     (Increase) decrease in:
          Accounts receivable                   (2,655)       (4,482)
          Inventories                           (1,822)         (200)
          Prepaid expenses and other               (71)         (647)
          Income taxes receivable                  150           675
          Due from officer                         (32)          (32) 
          Deferred tax asset                        85           390
     Increase (decrease) in:
          Bankers' acceptances payable               -        (1,489)
          Accounts payable                       1,078             5
          Accrued expenses                        (430)          (75)
          Deferred income taxes payable              -           156
          Settlement payables                     (300)       (1,000)
                                                ------        ------
     Total adjustments                          (2,540)       (5,692)
                                                ------        ------

     Net cash (used in) operating
          activities                            (2,115)       (5,389)
                                                ------        -------
Cash flows from investing activities:

     (Purchase) of furniture/equipment            (620)         (576)
     Decrease (Increase) in trademarks              51            (5)
                                                ------        -------
     Net cash (used in) investing activities      (569)         (581)
                                                ------        -------

         See notes to condensed consolidated financial statements.<PAGE>
       

                        PENTECH INTERNATIONAL, INC.
                             AND SUBSIDIARIES

        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                              (000's omitted)
                                (unaudited)

                                                  Nine Months Ended
                                                       June 30,    
                                                  -----------------
                                                  1998          1997
                                                  ----          ----
Cash flows from financing activities:
  
     Net increase (decrease) in 
       notes payable                             $ 2,041      $(2,014)
     Proceeds from the issuance 
       of Common Stock                                50          963
                                                 -------       ------
     Net cash provided by (used in) 
       financing activities                        2,091       (1,051)
                                                 -------      -------
Net (decrease) in cash 
and cash equivalents                                (593)      (7,021)

Cash and cash equivalents,
beginning of period                                  649        7,064
                                                 -------       ------
Cash and cash equivalents, end of period         $    56     $     43
                                                 =======       ======
Supplemental disclosures of cash flow 
information:

     Cash paid during the period for:

          Interest                               $ 1,031     $ 1,193

     








         See notes to condensed consolidated financial statements.<PAGE>
         
                        PENTECH INTERNATIONAL, INC.
                             AND SUBSIDIARIES
     
           Notes to Condensed Consolidated Financial Statements
           (The information for the three and nine months ended
                   June 30, 1998 and 1997 is unaudited)
     
1.   Summary of significant accounting policies:
                    
Organization:

          Pentech International, Inc. (the "Company") was formed in
April 1984.  A wholly-owned subsidiary, Sawdust Pencil Co.
("Sawdust") was formed in November 1989 and commenced operations in
January 1991.  The Company and its subsidiary are engaged in the
production, design and marketing of writing and drawing
instruments.  In October 1993, the Company formed a wholly-owned
subsidiary, Pentech Cosmetics, Inc. ("Cosmetics"), to manufacture
and distribute cosmetic pencils.  During its fiscal year ended
September 30, 1997, the Company decided to dispose of this product
line.  The Company primarily operates in one business segment:  the
manufacture and marketing of pens, markers, pencils and other
writing instruments and related products to major mass market
retailers located in the United States, under the "Pentech" name or
licensed trademark brand.  The Company's fiscal year ends September
30.
     
     Principles of consolidation:  
                    
     The consolidated financial statements include the accounts of
the Company and its subsidiaries.  All significant intercompany
balances and transactions have been eliminated.
     
Cash Equivalents:
     
          The Company considers all time deposits with a maturity of
three months or less to be cash equivalents.
     
Unaudited Financial Statements:
     
          All unaudited financial information includes all adjustments
(consisting of normal recurring adjustments) which the Company
considers necessary for a fair presentation of the financial
position at June 30, 1998, the results of operations for the three
and nine month periods ended June 30, 1998 and 1997, and cash flows
for the nine months ended June 30, 1998 and 1997.
     
Inventory and Cost of Sales:
                    
     Inventory is stated at the lower of cost or market (first-in,
first-out).  Interim inventories are based on an estimated gross
profit percentage by product, calculated monthly.  Cost of Sales
for imported products includes the invoice cost, duty, freight in,

                        PENTECH INTERNATIONAL, INC.
                             AND SUBSIDIARIES
     
     Notes to Condensed Consolidated Financial Statements (con't)
(The information for the three and nine months ended June 30, 1998
and 1997 is unaudited)


1.   Summary of significant accounting policies (con't):

display and packaging costs.  Cost of domestically manufactured
products includes raw materials, labor, overhead and packaging
costs.
     
Equipment and Depreciation:
     
          Equipment is stated at cost.  Depreciation is provided by the
straight-line method over the estimated useful lives of the assets,
which range from five to ten years.  Major improvements to existing
equipment are capitalized.  Expenditures for maintenance and
repairs which do not extend the life of the assets are charged to
expense as incurred.

Trademarks:

          The costs thereof are being amortized over a five-year period
on a straight-line basis.

Use of Estimates:

     The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

     Stock Based Compensation:

     Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation," encourages, but does not
require companies to record compensation cost for stock-based
employee compensation plans at fair value.  The Company has elected
to follow Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25) and related interpretations
in accounting for its employee stock options.  Under APB 25,
because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized.



                         PENTECH INTERNATIONAL, INC.
                              AND SUBSIDIARIES 

         Notes to Condensed Consolidated Financial Statements (Con't)
      (The information for the three and nine months ended
                    June 30, 1998 and 1997 is unaudited.)

Earnings per Common Equivalent Shares:

     In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which was adopted by the Company
in December, 1997.  The Company is required to change the method
currently used to compute earnings per share and to restate all prior
periods.  Under the new requirements for calculating basic earnings per
share, the dilutive effect of stock options will be excluded.

     The following table sets for the computation of basic and diluted
earnings per share:

                              Three months ended    Nine months ended
                                   June 30,             June 30,
                               1998       1997        1998       1997

Numerator:
     Net Income           $  844,000  $  911,000 $  425,000  $   303,000

Numerator for basic and
  diluted earnings per 
  share                    $  844,000 $  911,000 $  425,000  $  303,000
                           ========== ========== ==========  ==========

Denominator:
     Denominator for basic
       earnings per share -
       weighted average
       shares             12,543,591  12,496,758  12,526,258  11,830,091

Effect of dilutive
  securities:
     Employee stock 
     options                  256,782    383,243    362,063     231,754
                              

Denominator for diluted
  earnings per share -
  adjusted weighted 
  average shares and 
  assumed conversions:     12,800,373 12,880,001 12,888,321  12,061,845
                           ========== ========== ==========  ==========

Basic and diluted income
  per share                      $.07       $.07       $.03        $.03
                           ========== ========== ==========  ==========

                         PENTECH INTERNATIONAL, INC.
                              AND SUBSIDIARIES 

         Notes to Condensed Consolidated Financial Statements (Con't)
      (The information for the three and nine months ended
                    June 30, 1998 and 1997 is unaudited.)

2.   Notes payable, bank:


                     Rates  June 30, 1998  Rates  September 30, 1997
                     -----  -------------  -----  ------------------

Notes payable(a)  8.188% $11,000,000     8.128%   $13,000,000
                  8.125% $ 4,000,000        
                    9.0% $ 4,279,409       9.0%   $ 4,238,066
                           ----------               ----------
                          $19,279,409              $17,238,066
                           ==========               ==========

   Notes payable as of June 30, 1998 and September 30, 1997 were
advanced under a three year $30,000,000 Revolving Credit Agreement with
BankAmerica Business Credit, Inc. ("BABC") (the "Credit Agreement"). 
Borrowings under the Credit Agreement are subject to limitations based
upon eligible inventory and accounts receivable as defined in the Credit
Agreement.

   The Credit Agreement is collateralized by a security interest in
substantially all of the assets of the Company.  In connection with the
Credit Agreement, the Company has agreed, among other things, to the
maintenance of certain minimum amounts of tangible net worth and interest
coverage ratios.  The financial results of the current quarter caused the
Company to be in technical violation of its tangible net worth and its
interest coverage covenants, which violation was waived by BABC.

3. Shareholders' Equity:

   In December 1997, January 1998 and June 1998, options to purchase an
aggregate of 66,000 shares of Common Stock were exercised at $.75 per
share resulting in the issuance of 66,000 shares of Common Stock and
proceeds of $49,500.

4. Contingency:

   At June 30, 1998, the Company was contingently liable for
outstanding letters of credit of approximately $179,390.







                         PENTECH INTERNATIONAL, INC.
                              AND SUBSIDIARIES 

         Notes to Condensed Consolidated Financial Statements (Con't)
      (The information for the three and nine months ended
                    June 30, 1998 and 1997 is unaudited.)




5.    Income taxes:           Three Months Ended  Nine Months Ended
                                June 30, 1998        June 30, 1998
                               ------------------ -----------------

   Federal:
   Current                          $  34,000   $ 134,000
   Deferred                           361,000      65,000
   
   State:
   Current                             11,000      42,000
   Deferred                           111,000      20,000
                                       --------  --------
                                      $ 517,000 $ 261,000
                                       ========  ========
   Income tax at Federal statutory
   rate applied to income before 
   taxes                            $ 463,000   $ 233,000

   Add:  state income taxes           122,000      62,000

   Less: effect of deduction of
   state income taxes for 
   Federal purposes                   (68,000)    (34,000)
                                       --------   -------
   Income taxes                       $ 517,000 $ 261,000
                                       ========   =======
<PAGE>
 
                        PENTECH INTERNATIONAL, INC.
                              AND SUBSIDIARIES 

         Notes to Condensed Consolidated Financial Statements (con't)
      (The information for the three and nine months ended
                    June 30, 1998 and 1997 is unaudited.)

5.    Income taxes (con't):

   Significant components of the Company's deferred tax assets
(liability) as of June 30, 1998 and September 30, 1997 are as follows:
                                         June 30,     September 30,
                                          1998              1997
                                         -------      -------------
Current deferred tax liability:
   State taxes on deferred
    federal items                       $ (143,538)    $ (149,823)
                                        ----------     ----------
Current deferred tax assets:
   Bad debts                            $   59,278     $   12,938
   Inventory reserve                       348,300        520,300
   Reserve for returns and
    allowances                             601,017        313,042
   Unicap                                   12,813         12,813
   Cosmetic fixed asset reserve               -           123,410
                                        ----------     ----------
   Total current deferred
    tax assets                           1,021,408        982,503

Valuation allowance on current
  deferred tax assets                     (561,500)      (561,500)
                                        ----------     ----------
                                        $  459,908     $  421,003
                                        ----------     ----------
   Net current deferred tax assets      $  316,370     $  271,180
                                        ==========     ==========
Long-term deferred tax liability:
   Depreciation                         $ (832,800)    $ (832,800)
                                        ----------     ----------
Long-term deferred tax assets:
   Reserve for litigation               $1,161,000     $1,290,000
   State net operating loss
    carryforwards                          310,700        310,700
                                        ----------     ----------
Total long-term deferred
  tax assets                             1,471,700      1,600,700

Valuation allowance on
  long-term deferred
  tax assets                              (404,065)      (404,065)
                                        ----------     ----------
                                        $1,067,635     $1,196,635
                                        ----------     ----------
   Net long-term deferred tax
    assets                              $  234,835     $  363,835
                                        ==========     ==========
         
                               PENTECH INTERNATIONAL, INC.
                                  AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements (con't)
              (The information for the three and nine months ended
              June 30, 1998 and 1997 is unaudited.)

6. Paradise Settlement:

   In October 1987, the Company commenced an action against Leon
Hayduchok, All-Mark Corporation and Paradise Creations, Inc.,
(collectively, "Paradise") in the United States District Court for the
Southern District of New York which resulted in an adverse multi-
million dollar judgment against Pentech.  In December 1996, the
parties to such litigation entered into a settlement agreement
providing, among other things, for Pentech to pay $500,000, deliver a
$3,000,000 promissory note plus interest at the rate of 7% per annum
and enter into a five year non-exclusive license to sell such products
for a 10% royalty, with a minimum royalty of $500,000 (the "Paradise
Settlement").  The Company paid Paradise $400,000 in February 1997,
$500,000 in January 1997, and $200,000 of the minimum royalty.  In
addition, the note requires $100,000 quarterly principal payments
commencing January 1, 1998.  Quarterly principal payments were made in
December 1997, April 1998 and July 1998.

7. Private Placement:

   In January 1997, the Company completed a private offering of 20
Units, each Unit consisting of 100,000 shares of Common Stock of the
Company for $50,000 per Unit (the "Private Offering").  The Company
received net proceeds of $963,000 from the Private Offering.  Officers
and directors of the Company acquired 52.5% of the Units sold in the
Private Offering and participated on the same terms as the other
investors in the Private Offering.  The terms of the Private Offering
were established by a Special Committee of the Board of Directors who
did not participate in the Private Offering.  The Company was required
by its banks (at that time) to raise funds in the Private Offering in
order to fund the $500,000 payment referred to in Note 6 and to enable
the Company to fund its requirements for capital expenditures.

8. Sale of Cosmetic Assets

   In November 1997, the Company entered into an agreement to sell
fixed assets and inventory of its Cosmetics subsidiary to an outside
company (significantly owned by a former employee) for its book value. 
In December 1997, $100,000 was received as a down payment, $150,000
received at closing and a note was issued for approximately $508,000
bearing interest at a rate of 9% per annum.  The terms of the note
provide that the principal be reduced by $150,000 a month commencing
February 1998, until repaid.  This note was paid in full in March
1998.



                      PENTECH INTERNATIONAL, INC.
                            AND SUBSIDIARIES

      Notes to Condensed Consolidated Financial Statements (con't)
      (The information for the three and nine months ended
      June 30, 1998 and 1997 is unaudited.)


9. Income from Lawsuit Settlement

   In March 1998, the Company executed a settlement agreement
providing for the Company to receive a payment in the amount of
$965,000, net of legal fees, which payment was received in April,
1998.  
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition
and Results of Operations.


   This report on Form 10-Q may contain forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act of
1995.  These forward looking statements are subject to the business
and economic risks faced by the Company and the Company's actual
results could differ materially from those anticipated in these
forward looking statements as a result of certain factors, including
those set forth in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" below.

   (1)  Material Changes in Results of Operations

   Net sales increased in the three months ended June 30, 1998 2.8%
from the same period a year ago as a result of the success of the
children's activity products and an increase in sales to the office
superstores.  Net sales decreased for the nine months ended June 30,
1998 3.2% from the same period a year ago.  This was due to larger
sales of the Company's licensed products and additional holiday
programs in the prior year.

   Gross profit as a percentage of net sales decreased in the three
and nine months ended June 30, 1998 to 31.6% and 33.1% from 34.8% and
35%, respectively in the same 1997 periods.  This was due to an
increase in sales from its direct product offerings, which are sold at
a lower gross profit.  In addition, the Company had a lower percentage
of its sales from licensed products, which historically offer higher
gross profit margins.  The Company also began an aggressive program to
gain shelf space for some of its new products.

   Selling, general and administrative ("SG&A") expenses as a
percentage of sales for the three months ended June 30, 1998 decreased
to 23.8% from 25.9% in the same prior period.  This was partially due
to an aggressive cost reduction program begun in March 1998.  This
program has included reduced salaries at the senior management level
and a reduction in the use of outside consultants.  In addition, there
was a decrease in royalty expenses associated with the lower sales
volume of licensed products.  SG&A expenses as a percentage of sales
for the nine months ended June 30, 1998 increased to 31.4% from 29.9%
in the same prior period.  This was due to incurring a similar level
of fixed costs as in the prior year over a lower sales volume.  In
addition, during the current nine month period the Company recorded a
severance accrual associated with the termination of some high level
employees.  The Company also incurred a higher bad debt expense in the
current nine month period as a result of the bankruptcies of two of
its customers.

   For the three and nine months ended June 30, 1998, interest
expense decreased as compared to the same periods a year ago.  This
was due to lower interest rates and a lower outstanding balance.

   For the three and nine months ended June 30, 1998, the net income
was $844,000 or $.07 per share and $425,000 or $.03 per share,
respectively, as compared to a net income of $911,000 or $.07 per
share and $303,000 or $.03 per share for the same periods in the prior
fiscal year.  The decrease in income for the three months ended June
30, 1998 was primarily due to the lower gross profit.  The increase in
income for the nine months ended June 30, 1998 was due to the income
from the lawsuit settlement and the absence of a loss on Cosmetics
offset by higher SG&A expenses and a lower gross profit margin.

   (2)  Material Changes in Financial Condition

   In January 1997, the Company entered into a three year Credit
Agreement with BABC.  The amount of drawings under the Credit
Agreement are subject to limitations based upon eligible inventory and
accounts receivable as described in the Credit Agreement.  The Credit
Agreement is collateralized by a security interest in substantially
all of the assets of the Company.  In addition, in accordance with the
Credit Agreement, the Company has agreed, among other things, to the
maintenance of certain minimum amounts of tangible net worth and
interest coverage ratios.  The Company was in technical violation of
its tangible net worth and interest coverage covenants at June 30,
1998, which violation was waived by BABC.

   The Paradise Settlement requires $100,000 quarterly principal
payments commencing January 1, 1998, which payments were made.  The
Company does not foresee any difficulty meeting its obligations
pursuant to the Paradise Settlement.  

   In November 1997, the Company entered into an agreement to sell
the fixed assets and inventory of its Cosmetics subsidiary to an
outside company (significantly owned by a former employee) for its
book value.  In December 1997, $100,000 was received as a down
payment, $150,000 was received at closing and a note was issued for
approximately $508,000 bearing interest at a rate of 9% per annum.   
This note was paid in full in March 1998.

   In March 1998, the Company as part of the settlement of a lawsuit
was awarded $965,000, net of legal fees.

   With respect to the Year 2000 issue, the Company is in the
process of ensuring that all internal computer equipment,
telecommunications equipment, computer applications, manufacturing,
distribution and business equipment will be Year 2000 compliant.  Upon
completion of that review, the Company will make a full assessment of
the risk associated with the Year 2000 issue and determine whether the
consequences will have a material effect on the Company's business. 
In addition, if necessary, upon completion of the assessment, the
Company will develop a complete contingency plan.  The Company
utilizes a third party software package to run its internal operating
and accounting systems and has purchased the Year 2k compliant version
of this software which should be operating by December 1998.  The
Company is also contacting its vendors and customers in order to
assess any third party risk.  The Company does not expect the costs
associated with becoming year 2k compliant to be material and believes
that it will be absorbed for the most part in its normal information
technology budget.

   Working capital increased $560,000 to $16,011,000 during the nine
months ended June 30, 1998.

   The Company anticipates that the Credit Agreement together with
anticipated revenues from operations, will be sufficient to provide
liquidity on both a short-term and long-term basis to finance its
future operations.  The Company believes these resources are
sufficient to support its operating expenses.

   (3)  Safe Harbor Statement

   Statements which are not historical facts, including statements
about the Company's confidence and strategies and its expectations
about new and existing products, technologies and opportunities,
market and industry segment growth, demand and acceptance of new and
existing products are forward looking statements that involve risks
and uncertainties.  These include, but are not limited to, product
demand and market acceptance risks; the impact of competitive products
and pricing; the results of financing efforts; the loss of any
significant customers of any business; the effect of the Company's
accounting policies; the effects of economic conditions and trade,
legal, social, and economic risks, such as import, licensing, and
trade restrictions; the results of the Company's business plan and the
impact on the Company of its relationship with its lenders.
<PAGE>
                        PART II.  OTHER INFORMATION


Item 5. Other Information.

   Regarding the potential conflict of interest involving Mr. Norman
Melnick, Chairman of the Board of Directors of the Company, that was
disclosed in the Company's Form 10-Q Quarterly Report for the period
ended March 31, 1998, the Company established a Special Committee
comprised of disinterested directors (the "Committee") to conduct an
independent investigation.  The Committee appointed counsel to assist
it in its investigation.  During the quarter, counsel completed its
review and reported its findings to the Committee.  The Committee met
with Mr. Melnick and advised him of counsel's recommendation that it
found no impropriety, but it recommended that Mr. Melnick disassociate
with his daughter's company to avoid any appearance of impropriety. 
Mr. Melnick has voluntarily agreed to do so.  Counsel also recommended
that the Company adopt and implement a formal policy designed to
reduce potential conflicts of interest in the future.  At a meeting of
the Board held on August 5, 1998, the Company adopted such a policy,
which has been circulated to employees and has been included in the
Company's Employee Policy Manual.


Item 6. Exhibits and Reports on Form 8-K.

(a)     Exhibits

   3.1  Certificate of Incorporation of the Company, as amended,
        incorporated by reference to Exhibit 3.1 to Registration
        Statement No. 2-95102-NY of the Company ("Form S-18").

   3.2  The Company's By-Laws are incorporated by referenced to
        Exhibit 3.2 of Form S-18.

   10.1 The 1989 Stock Option Plan incorporated by reference to the
        Registration Statement No. 33-27009 ("Form S-8").

   10.2 The 1993 Stock Option Plan incorporated by reference to the
        1992 Form 10-K.

   10.3 The 1995 Stock Option Plan incorporated by reference to the
        Registration Statement No. 333-30595 filed on Form S-8.

   27   Financial Data Schedule

(b)     Reports on Form 8-K.

   None.




                                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.


                                 PENTECH INTERNATIONAL, INC.




Dated:  August 12, 1998          By:   /s/ William Visone           
                                 William Visone, Vice-President,      
                                 Finance and Administration
                                 (Duly authorized officer)






























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