FORM 10-Q

                    SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C.  20549


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

For the quarterly period ended December 31, 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 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 the number of shares outstanding of each of the
issuer's classes of common stock, as of December 31, 1998: 
12,570,258 shares of common stock, par value $.01 per share.

                                     
<PAGE>
                                     INDEX




Part I.  Financial Information:


    Item 1.   Financial Statements (Unaudited).                  Page 


    Condensed Consolidated Balance Sheets as of 
    December 31, 1998 and September 30, 1998                     3-4


    Condensed Consolidated Statements of Operations for the
    three months ended December 31, 1998 and 1997                  5


    Condensed Consolidated Statements of Cash Flows 
    for the three months ended December 31, 
    1998 and 1997                                                6-7


    Notes to Condensed Consolidated Financial Statements        8-18


    Item 2.   Management's Discussion and 
              Analysis of Financial Condition 
              and Results of Operations.                       19-21


Part II.  Other Information:


    Item 6.   Exhibits and Reports on Form 8-K                    22


Signatures                                                        23


<PAGE>
                         PART I.  FINANCIAL INFORMATION

                           PENTECH INTERNATIONAL INC.
                                AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

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


                                    December 31, 1998   September 30, 1998
                                       (unaudited)       
    Current Assets:

    Cash                               $     345            $     759
    Accounts receivable, net of
      allowances for doubtful
      accounts of $35 at
      December 31, 1998 and $30
      at September 30,
      1998, respectively                   9,626               14,327
    Inventories (Note 1)                  19,302               20,015
    Income taxes receivable                 -                     448
    Prepaid expenses and other             1,542                1,436
    Deferred Tax Asset (Note 5)             -                    -
    Available-for-Sale Security (Note 7)     622                  622

    Total current assets                  31,437               37,607
                                        
    Furniture and equipment (Note 1)       8,980                8,934
     Less accumulated depreciation        (5,618)              (5,372)
                                        
                                           3,362                3,562

    Other assets:
 
    Deferred tax assets, 
     long-term (Note 5)                     -                    -
    Trademarks, net of amortization  
     (Note 1)                                236                  240
    Due from officer                         174                  174

                                             410                  414

                                       $  35,209            $  41,583
                                      


                                  
         See notes to condensed consolidated financial statements.<PAGE>
    

                      PENTECH INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                                (000's omitted)

                                December 31, 1998    September 30, 1998
                                     (unaudited)

Current liabilities:
  Notes payable, bank
    (Note 2)                         $ 15,050             $ 18,618
  Accounts payable                      1,759                2,455
  Accrued expenses                      1,983                3,352
  Settlement note payable (Note 6)        300                  300
                                     
    Total current liabilities          19,092               24,725
                                     
Other liabilities:
  Royalty payable, long-term (Note 6)      100                  100
  Settlement note payable,
    long-term (Note 6)                   1,900                2,000
                                     
                                         2,000                2,100

Commitments and contingencies
(Note 4)

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 December 31, 1998 
  and September 30, 1998, respectively    125                  125

  Capital in excess of par              6,838                6,838
  
  Retained earnings                     6,532                7,173

  Unrealized gain on available-for-
  sale security (Note 7)                  622                  622
                                     
                                       14,117               14,758
                                      
                                     $ 35,209             $ 41,583
                                  

           See notes to condensed consolidated financial statements.<PAGE>
  

                         PENTECH INTERNATIONAL INC.
                                AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                  (Unaudited)



                                     Three Months Ended
                                        December 31,   

                                  1998               1997


Net sales                             $10,568            $10,888

Cost of sales                           7,297              6,646

Gross profit                            3,271              4,242

Selling, general and                
 administrative expenses                3,538              3,862

Interest expense                          376                349

Interest (income)                          (2)                (1)
                              
                                        3,912              4,210
                             
(Loss) income before 
 taxes                                   (641)                32

Income taxes                             -                    12
                              
Net (loss) income                     $  (641)           $    20
 
Net (loss) income per 
share-basic and diluted 
(Note 1)                                $  (.05)           $    - 




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

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (Unaudited)

                                                Three Months Ended
                                                   December 31,   

                                                1998         1997


Cash flows from operating activities:

     Net (loss) income                        $  (641)      $    20
                                                 
     Adjustments to reconcile net 
     income to net cash provided 
     by operating activities:

     Depreciation and amortization                246           234
     Sale of Cosmetic assets                       -            758
     (Increase) decrease in:
         Accounts receivable                    4,701         5,582
         Note receivable                           -           (508)
         Inventories                              713          (520)
         Prepaid expenses and other              (106)           17
         Income taxes receivable/
              payable                             448          (237)

     Increase (decrease) in:                     
         Accounts payable                        (696)         (111)
         Accrued expenses                      (1,369)       (1,587)
         Deferred income 
              taxes payable/receivable            -             249
         Settlement payable                      (100)         (100)
     Total adjustments                           
                                                3,837         3,777
                                                 

         Net cash provided by 
         operating activities                   3,196         3,797
                                                 
Cash flows from investing activities:

    (Purchase) of furniture/equipment             (46)         (145)
     Decrease in trademarks                         4            16
                                                 
         Net cash (used in) 
         investing activities                     (42)         (129)
                                                 


           See notes to condensed consolidated financial statements.<PAGE>
   

                        PENTECH INTERNATIONAL INC.
                                AND SUBSIDIARIES

          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

                                  (Unaudited)

                                                    Three Months Ended
                                                       December 31,   
                                                    1998          1997


Cash flows from financing activities:

    Net (decrease) in notes
     payable                                     $ (3,568)    $ (3,078)
    Proceeds from issuance of 
        common stock                                 -               2
          
    Net cash (used in) 
     financing activities                          (3,568)      (3,076)
                                                    
Net (decrease) increase in cash 
and cash equivalents                                 (414)         592
                                                                          
Cash and cash equivalents,      
beginning of period                                   759          649
                                                    
Cash and cash equivalents, end of period          $   345     $  1,241

Supplemental disclosures of cash flow 
information and non-cash financing activities:

    Cash paid during the period for:

         Interest                                 $   456     $    345





           See notes to condensed consolidated financial statements.<PAGE>
   

                     PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
      (The information for the three months ended
                 December 31, 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
         Company ("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. to manufacture and distribute
         cosmetic pencils.  During fiscal 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 December 31,
         1998 and the results of operations and the statements of
         cash flows for the three month period ended December 31,
         1998 and 1997.




<PAGE>
                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
      (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)


1.  Summary of significant accounting policies (Cont'd):

    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, 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:

         Costs related to trademarks are being amortized over a
         five year period on a straight-line basis.

    Revenue recognition:

         Revenue is recognized upon shipment of product to the
         customer.

    Fair Value of Financial Instruments:

         The fair value for cash and accounts receivable
         approximate carrying amounts due to the short maturity of
         these instruments.  The fair value amounts for notes
         payable approximate carrying amounts due to the variable
         interest rates.

    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
          
                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
      (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)

1.  Summary of significant accounting policies (Cont'd):


         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.

    (Loss) Earnings per share:

         In February 1997, the Financial Accounting Standards
         Board issued Statement No. 128, Earnings Per Share, which
         was adopted by the Company in the quarter ended December
         31, 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.
<PAGE>
                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
      (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)

1.  Summary of significant accounting policies (Cont'd):

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


                                Three months ended December 31,
                                 1998                    1997
Numerator:
    Net (loss) income        $  (641,000)           $    20,000
                             

Numerator for basic and
  diluted earnings per share $  (641,000)           $    20,000
                                                    

Denominator:
    Denominator for basic
      earnings per share -
      weighted average
      shares                  12,570,258             12,504,925

Effect of dilutive
  securities:
    Employee stock options        0                     484,810
                             

Denominator for diluted
  earnings per share -
  adjusted weighted average
  shares and assumed
  conversions:                     12,570,258             12,989,735
                                        

Basic and diluted (loss) 
  earnings per share              $  (.05)               $     -    
                                         
                             
<PAGE>
                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
      (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)

1.  Summary of significant accounting policies (Cont'd):


    Impact of Recently Issued Accounting Standards:

         In June 1997, the Financial Accounting Stands Board
         issued Statement of Financial Accounting Standards No.
         130 "Reporting Comprehensive Income" ("SFAS No. 130"),
         which is effective for years beginning after December 15,
         1997.  SFAS No. 130 establishes standards for reporting
         and display of comprehensive income and its components
         (revenues, expenses, gain, and losses) in a full set of
         general purpose financial statements.  This Statement
         requires that all items that are required to be
         recognized under accounting standards as components of
         comprehensive income be reported in a financial statement
         that is displayed with the same prominence as other
         financial statements.  The Company will adopt the new
         requirements in Fiscal 1999.  For the quarter ended
         December 31, 1998 no additional comprehensive income was
         recognized (Note 7).

         In June 1997, the Financial Accounting Standards Board
         issued Statement of Financial Accounting Standards No.
         131 "Disclosures about Segments of an Enterprise and
         Related Information" which is effective for years
         beginning after December 15, 1997 and in June 1998, the
         Financial Accounting Standards Board issued Statement of
         Financial Accounting Standards No. 133 "Accounting for
         Derivative Instruments and Hedging Activities" which is
         effective for years beginning after June 15, 1998.  The
         Company has completed its review of both SFAS 131 and
         SFAS 133 and has concluded that the adoption of these
         statements would not have any effect on the Company and
         its reporting.

<PAGE>
                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
      (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)



                                  December 31,      September 30,
                                      1998              1998

2.  Notes Payable bank:
    Revolving line of credit
     interest payable monthly
     at prime plus .5% (8.25%
     at December 31, 1998 and
     9% at September 30, 1998)    $ 1,050,000        $ 4,618,000


    Revolving line of credit
     interest payable at maturity
     at libor plus 2.5% (ranging
     from 7.563% to 7.938% at
     December 31, 1998 and 7.813%
     to 8.188% at September 30, 
     1998)                         14,000,000         14,000,000

                                   $15,050,000        $18,618,000


    (a)  In January 1997, the Company entered into a three year 
         Revolving Credit Agreement with BankAmerica Business
         Credit, Inc. (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.  Borrowing under the
         Credit Agreement accrues interest, at the Company's
         option, at either prime plus .5% or libor plus 2.5%.

         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, interest coverage ratios and cannot declare a cash
         divided without the consent of BankAmerica Business
         Credit, Inc. ("BABC").  The Company was in violation of
         its tangible net worth and interest rate coverage
         covenants at March 31, 1998, June 30, 1998 and September
         30, 1998.




                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
         (The information for the three months ended December 31, 
                       1998 and 1997 is unaudited.)


2.  Notes Payable Bank: (Cont'd)

    (b)  On January 11, 1999, the Company and BABC amended the
         Credit Agreement (the "Amendment").  The Amendment, among
         other things, waived compliance with the aforementioned
         covenants, modified the financial covenants for Fiscal
         1999 to allow the Company to be in compliance based upon
         its current operating plan, lowered the maximum inventory
         advance and allowed for a seasonal over-advance.

3.  Shareholders' Equity:

         In December 1997, options to purchase an aggregate of
         2,000 shares of common stock were exercised at $.75 per
         share resulting in the issuance of 2,000 shares of common
         stock and proceeds of $1,500.

4.  Contingency:

         At December 31, 1998, the Company was contingently liable
         for outstanding letters of credit of $54,380.
<PAGE>
                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
      (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)


5.   Income taxes:                                                
 
                                       Three Months Ended 
                                           December 31       
                                       1998              1997

           Federal:
              Current               $ (186,000)    $     1,000
              Deferred                 186,000           8,000

            State:
              Current                  (58,000)          1,500
                   Deferred             58,000           1,500
                                     
                                    $     -        $    12,000

    Income tax at Federal
      statutory rate applied to
      income before taxes           $ (218,000)    $    11,000

    Add:  state income taxes           (58,000)          3,000

         Less: effect of deduction of
      state income taxes for 
      Federal purposes                  32,000          (2,000)

    Less: effect of increase in
      valuation allowance              244,000               -
                                     
    Income taxes provided           $    -         $    12,000
                                    <PAGE>
                    

                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
                (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)

5.   Income taxes (Cont'd):

    Significant components of the Company's deferred tax assets
and liability as of December 31, 1998 and September 30, 1998 are as
follows:
                                  December 31,   September 30,
                                      1998            1998   
Current deferred tax asset 
  (liability):
   State taxes on deferred
     federal items                $   99,848     $  (68,687)
                                   
Current deferred tax assets:
   Bad debts                          15,262         55,390
   Inventory reserve                 477,300        477,300
   Reserve for returns and
     allowances                      218,121        303,528
   Unicap                              7,787          7,787
       
   Total current deferred
     tax assets                      718,470        844,005

Valuation allowance on current
  deferred tax assets               (818,318)      (775,318)

                                     (99,848)        68,687
     
   Net current deferred tax assets  $      -       $     -   
     
Long-term deferred tax liabilities:
   Depreciation                   $ (932,290)    $ (932,290)
 
Long-term deferred tax assets:
   Reserve for litigation          1,010,500      1,053,500
   State net operating loss
     carryforwards                   593,598        535,598
   Federal net operating loss
     carry forward                 1,368,076      1,182,076

Total long-term deferred
  tax assets                       2,972,174      2,771,174

Valuation allowance on
  long-term deferred tax assets   (2,039,884)    (1,838,884)

                                     932,290        932,290

   Net long-term deferred tax
    assets                        $     -        $     -   

                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
                (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)


6.  Paradise Settlement

    In Fiscal 1997, the Company entered into a settlement
agreement with Leon Hayduchok, All-Mark Corporation and Paradise
Creations, Inc., (collectively, "Paradise") 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 (the
"Note") and enter into a five year non-exclusive license to sell
such products for a 10% royalty, with an aggregate minimum royalty
of $500,000 (the "Paradise Settlement").  The Company paid $500,000
at the date of signing in January 1997 and a required payment
against the Note of 400,000 in February 1997.  In addition, the
Note required $100,000 quarterly principal payments commencing
January 1, 1998 Quarterly principal payments were made in December
1997, April, July and October 1998 and January 1999.  The Company
also paid $300,000 against the minimum royalty.

7.  Sale of Cosmetic Assets/Available-for-Sale Security

    In November 1997, the Company entered into an Agreement to
sell the fixed assets and inventory of its Cosmetics subsidiary to
an outside company, Fun Cosmetics Inc. ("Fun") (significantly owned
by a former employee) for its net book value of $758,000 plus
200,000 shares of Fun.  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.  The terms of the note provided that the principal be
reduced by $150,000 a month commencing February 1998, until paid. 
This note was paid in full in March 1998.  At the time of sale, the
Company assigned no value to the shares received since the
acquiring company was a start-up company with minimal assets and
was still seeking financing.  Since November 1997, Fun has raised
additional equity and funding and has become a non-reporting
company whose shares are listed on the NASD Electronic Bulletin
Board.  The value of this stock (based on quoted market prices) as
of January 29, 1999 was $3.125 a share.  The Company has the right
to begin selling its shares in Fun in January 1999.  However, due
to the historically low level of trading activity, the number of
shares the Company owns and the fact that the shares are
unregistered, there is no assurance the Company will realize the
current market value.  For the quarter ended December 31, 1998, the
Company did not recognize any additional comprehensive income.



                        PENTECH INTERNATIONAL INC.
                             AND SUBSIDIARIES 

           Notes to Condensed Consolidated Financial Statements
                (The information for the three months ended
                 December 31, 1998 and 1997 is unaudited.)


8.  Impact of Year 2000

    With respect to the Year 2000 issue, the Company is in the
process of ensuring that all internal computer, 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 contingency plan. 
The Company utilizes a third party software package to run its
internal operating and accounting systems and has purchased and
installed the Year 2000 compliant version of this software.  In
addition, all telecommunications equipment and computer
applications are Year 2000 compliant.  The Company is also
contacting its vendors and customers in order to asses any third
party risk.  The Company does not expect the costs associated with
becoming Year 2000 compliant to be material and believes that it
will be absorbed, for the most part, in its normal information
technology budget.<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.

    (1)  Material Changes in Results of Operations

    Net sales decreased in the three months ended December 31,
1998 2.9% compared to the same period in 1997.  This decrease was
primarily due to sales from its discontinued line of cosmetics
products in the year ago period.  Sales from its continuing product
lines were up 6.5%, due to increases in its Color Club and basic
product lines offset by a decrease in sales of licensed products
primarily due to the NBA strike.

    Gross profit as a percentage of net sales decreased in the
three month period ended December 31, 1998 to 30.9% from 39.0% for
the three months ended December 31, 1997.  This was due to the
decline in sales of licensed products for which the Company
historically obtained higher gross margins.  In addition, a greater
percentage of sales this year came from basic commodity items and
direct import programs, which generate lower gross profit margins.

    Selling, general and administrative ("SGA") expenses as a
percentage of sales decreased to 33.5% from 35.5% in the three
months ended December 31, 1998 compared to that of the prior
period.  This was due to the inception of a cost reduction program
as well as including a reduction in the head count.  In addition,
royalty costs declined due to the decrease in sales of licensed
products.

    In addition, interest expense increased compared to that of
the same period a year ago due to a higher outstanding loan balance
this year.

    During the three months ended December 31, 1998, the Company
incurred a net loss of $641,000, or $.05 cents per share, as
compared to net income of $20,000, or $.00 per share, for the three
months ended December 31, 1997.  This was due to the decline in
gross profit margins referred to above.

    (2)  Material Changes in Financial Condition

    In January 1998, the Company entered into a three year
$30,000,000 revolving credit facility with BankAmerica Business
Credit Inc. ("BABC") (the "New Credit Agreement").  The amount of
drawings under the facility is subject to limitations based upon
eligible inventory and accounts receivable as described in the New
Credit Agreement.  The New Credit Agreement is collateralized by a
security interest in substantially all of the assets of the
Company.  In addition, in accordance with the New Credit Agreement,
the Company has agreed, among other things, to the maintenance of
certain minimum amounts of tangible net worth and interest coverage
ratios.

    In January 1999, the Company and BABC entered into an
agreement to amend the original loan agreement (the "Amendment"). 
This Amendment, among other things, reduced the revolving credit
facility to $25,000,000, modified the financial covenants, which it
had violated during Fiscal 1998, for Fiscal 1999 to allow the
Company to be in compliance based upon the Company's operating
Plan, lowered the maximum inventory advance and allowed for a
seasonal over-advance.

    The $3,000,000 note (the "Note") issued in connection with the
Paradise Settlement requires $100,000 quarterly principal payments
that commenced January 1, 1998 thru April 1, 2004.  Quarterly
principal payments were made in December 1997, April, July, October
1998 and January 1999.  The Company does not anticipate any
difficulty meeting this payment schedule.

    The Company continued several actions to increase its
liquidity.  It established a policy obtaining thirty to sixty day
open credit to finance a majority of its purchases that
historically have been financed pursuant to letters of credit.  It
continues to reduce the number of items held in inventory, it has
reduced the level of capital expenditures and has begun a cost
reduction program.

    In November 1997, the Company entered into an agreement to
sell the fixed assets and inventory of its Cosmetics subsidiary to
Fun Cosmetics, Inc. ("Fun") (significantly owned by a former
employee) for its net book value of $758,000.  This amount was paid
in Fiscal 1998.  The Company also received 200,000 shares of Common
Stock of Fun.

    Working capital decreased $537,000 to $12,345,000 at December
31, 1998.  As a result of the seasonal nature of the Company's
business, the Company's use of its credit facility increases
significantly in the months of May, June, July and August as the
Company finances its inventory and receivables, and declines in
September and October after the collections of receivables from its
Back-to-School sales.  The change in financial position during the
quarter ended December 31, 1998 reflects primarily this seasonality
due to the decrease in receivables from the collection of its Back-
to-School sales and a decline in inventory.

    The Company anticipates that its revolving credit line under
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.

    With respect to the Year 2000 issue, the Company is in the
process of ensuring that all internal computer equipment,
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
contingency plan.  The Company utilizes a third party software
package to run its internal operating and accounting systems and
has purchased the Year 2000 compliant version of this software
which was placed in operation in December 1998.  In addition, all
telecommunications equipment and computer applications are Year
2000 compliant.  The Company is also contacting its vendors and
customers in order to asses any third party risk.  The Company does
not expect the costs associated with becoming Year 2000 compliant
to be material and believes that it will be absorbed, for the most
part, in its normal information technology budget.

    (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.  there 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 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.  Statement No. 2-95102-
              NY of the Company.


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


         27   Financial Data Schedule.


(b)      Reports on Form 8-K.

         None.      <PAGE>
    

                            SIGNATURES



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

 
                             PENTECH INTERNATIONAL, INC.



Dated: February 16, 1999     By:/s/ William Visone           
                                William Visone,
                                Treasurer and Chief Financial
                                Officer


































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