U.S. Securities and Exchange Commission
Washington, D.C.  20549
Form 10-QSB

(Mark One)
  X  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1998

____ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE         
EXCHANGE ACT 

For the transition period from __________ to ___________          
      

Commission File Number  1-4142      

TENNEY ENGINEERING, INC.                     
(Exact name of small business issuer as 
specified in its charter)

           NEW JERSEY                             22-1323920    
  (State or other jurisdiction                  (IRS Employer
of incorporation or organization)            Identification No.)

1090 Springfield Road, Union, New Jersey 07083          
(Address of principal executive offices)

(908) 686-7870      
(Issuer's telephone number)

NONE                              
(Former name, former address and former fiscal year, if changed   
          since last report.)

     Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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   
   
     State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 
          Class                     Outstanding at June 30, 1998
Series A Common Stock $.01 par 
value                                         3,800,592
Series B Common Stock $.01 par
value                                         3,728,053     

     Transitional Small Business Disclosure Format:
         Yes ____   No   X  
TENNEY ENGINEERING, INC.

FORM 10-QSB

QUARTER ENDED JUNE 30, 1998

I N D E X 


                                                            PAGE

Part I - Financial Information

  Item 1.  Financial Statements

    Consolidated Condensed Balance Sheet - June 30, 1998       3
 
    Consolidated Condensed Statements of Operations  - 
      Three and six months ended June 30, 1998 and 1997        4

    Consolidated Condensed Statements of Cash Flows -   
      Six months ended June 30, 1998 and 1997                  5 
  
    Notes to Consolidated Condensed Financial Statements       6 
 
  Item 2.  Management's Discussion and Analysis

    Management's Discussion and Analysis of Financial             
    
      Condition and Results of Operations                     17 

Part II - Other Information                                   19 
   

TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 1998
(In thousands of dollars - unaudited)

          ASSETS
Current Assets:
     Cash and cash equivalents                          $    53
     Accounts receivable - net                            1,329
     Inventories                                            592
     Prepaid expenses and other current assets               64
     Deferred tax asset                                      95
          Total Current Assets                            2,133
     Plant and equipment, net                               426
     Other assets                                           210
     Deferred tax asset - long term                         185
          Total Assets                                    2,954

     LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
     Notes Payable Bank                                 $   750
     Accounts payable and other accrued liabilities       1,108
     Current portion of long-term capital leases             58
     Accrued payroll and payroll taxes                      155
     Billings in excess of estimated revenue on 
       long-term contracts                                  232
     Pension obligation, current portion                     79
          Total Current Liabilities                       2,382

Long-term debt, net of current portion                      463
          Total Liabilities                               2,845

Commitments and contingencies

Stockholders Equity:
     Preferred stock $.01 par value:
          Authorized 10,000,000 shares
          Issued and outstanding - none
     Common stock $.01 par value:
          Authorized 10,000,000 shares - Series A
          Issued 3,824,980 shares                             38
          Authorized 40,000,000 shares - Series B
          Issued 3,824,980 shares                             38
     Additional paid-in-capital                            2,284
     Retained earnings (deficit)                          (2,191)
          Total                                              169

Less treasury stock:
     Series A Common Stock, 24,388 shares at cost    23         
     Series B Common Stock, 96,927 shares at cost    37         
     Total at cost                                            60
          Total Stockholders Equity                          109
          Total Liabilities and Stockholders Equity      $ 2,954

See Notes to Consolidated Financial Statements.
<TABLE>
TENNEY ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited)
<CAPTION>
                                        (In thousands of dollars -
                                          except per share amounts)

                                 Three Months Ended      Six Months Ended      
                                      June 30,                June 30,    
                                  1998        1997        1998     1997
<S>                                <C>         <C>         <C>      <C> 
Net Revenue: 
  Product and product related   $1,589      $  919      $3,320    $2,902
  Service                          229         276         522       489
  Parts                            120         152         249       277
Totals                           1,938       1,347       4,091     3,668

Cost of Sales:
  Product and product related    1,235       1,140       2,664     2,675
  Service                          183         164         318       314
   Parts                            39          98         134       166
        Totals                   1,457       1,402       3,116     3,155

Gross Profit (Loss)                481         (55)        975       513

Selling and administrative
  expenses                         443         549         887     1,075

Income (Loss) from operations       38        (604)         88      (562)

Other expense (income):
  Interest expense                  27           5          47         9
  Other income, net                ( 4)         (1)        ( 6)      ( 9)
        Totals                      23           4          41         0

Income (Loss) before 
  income taxes                      15      $ (608)         47     $ (562)
Income taxes (benefit)               -        ( 27)          -       ( 30)
Net Income (Loss)                   15      $ (581)         47     $ (532)

Net Income (Loss)per common share 
  Series A                      $ .001      $(0.08)     $ .003     $(0.07)
  Series B                        .001       (0.08)     $ .003      (0.07)
</TABLE>
Exercise of options would not be dilutative.
See Notes to Consolidated Condensed Financial Statements.

TENNEY ENGINEERING, INC.
AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(In thousands of dollars - unaudited)

                                                  1998      1997
Operating activities:
  Net income (Loss)                              $  47   $  (532)
  Adjustments to reconcile income (loss)to
  net cash provided by (used in) operations:
     Depreciation and amortization                  52        44
     Tax asset                                               (30)
  Changes in operating assets and liabilities:
     Accounts and installments receivables         253       233
     Inventories                                    35      ( 94)
     Prepaid expenses and other current assets    ( 26)       55
     Other assets                                    3        13
     Accounts payable and other accrued
      liabilities                                 ( 89)     (666)
     Accrued payroll and payroll taxes            ( 16)     ( 30)
     Billings in excess of estimated revenues     (182)     ( 60)
  Net cash provided by (used in)operating 
     activities                                     77    (1,067)

Investing activities:
  Acquisition of equipment                           0      (107)
     Cash used in investing activities               0      (107)

Financing activities:
  Exercise of options and issuance of 
     common stock                                    3         2
  Proceeds from working capital line of credit       0       645
  Pension obligation                              ( 33)
  Payments of note payable  and long-term
      capital leases                              ( 41)      (45)
Net cash provided by (used in)
      financing activities                         (71)      602
     
Net increase (decrease) in cash and cash
 equivalents                                         6      (572)
Cash and cash equivalents, beginning of year        47       661

Cash and cash equivalents, end of period         $  53    $   89

Supplemental disclosure of cash flow
 information:
   Interest paid                                 $  47    $    9
   Income taxes paid                                      $    0

See Notes to Consolidated Condensed Financial Statements.



Note 1:

Summary of Accounting Policies:

The financial information enclosed herewith as at June 30, 1998 and
for the three months and six months ended June 30, 1998 is
unaudited, and, in the opinion of the Company, reflects all
adjustments (which included only normal recurring accruals)
necessary for a fair presentation of the financial position as of
June 30, 1998, the changes in cash flow for the six months ended
June 30, 1998 and 1997 and the results of operation for these
periods.

This quarterly report should be read in conjunction with the
Company's 1997 Annual Report and the June 30, 1998 Management's
Discussion and Analysis of Financial Condition and Results of
Operations.


Note 2: 

Results of Operations:

The results of operations for the six months ended June 30, 1998
are not necessarily indicative of the results to be expected for
the full year.


Note 3:

Financial Condition and Results of Operation:

As shown in the accompanying consolidated financial statements, the
Company has earned net income for the first two quarters ending
June 30, 1998, which has improved the Company's financial position,
and incurred losses for the comparable periods in 1997. 

On September 12, 1996, the Company and Summit Bank (the "Bank")
entered into a Loan and Security Agreement ("Term Note") for a
$300,000 renewable working capital line of credit expiring May 31,
1997. At April 23, 1997 the Term Note was renewed until May 31,
1998, and increased to the amount of $750,000. The Bank was granted
a security interest in substantially all the Company's assets. As
at December 31, 1997, the Company had borrowed $750,000 under the
Term Note. On November 5, 1997 the Bank notified the Company that
covenants under the Credit Agreement to maintain certain levels of
debt to tangible net worth and current assets to current
liabilities were not met on the Company's financial statements.
Payments of interest have been made in accordance with the terms of
the Note.  On June 5, 1998, the Company received a letter from the
Bank demanding payment of the Note in 30 days.  Subsequent to June
30, 1998 the Company and the Bank have reached an agreement in
principle which provides that the maturity of the Term Note be
extended to July 15, 1999 provided that the Company make a
principal payment of $100,000 due upon execution of definitive
documentation, three monthly payments of $10,000 principal plus
accrued interest beginning on August 15, 1998 and, commencing on
November 15, 1998 eight monthly payments of $20,000 principal plus
accrued interest through June 15, 1999, with the balance being
payable on July 15, 1999.  Interest will be calculated at the rate
of 1.75% above the Bank's prime lending rate.  The Company has a
commitment from certain shareholders to lend it $100,000 concurrent
with the execution of the definitive Bank documents.  The
shareholders' loan is to be evidenced by a Demand Note bearing
interest at a rate of 1.75% above the Bank's prime lending rate
with interest payable monthly.


Note 4:

Accounts receivable:

Accounts receivable consist of the following:
                                                                  
   
                                                  June 30,    
                                                    1998    
                                               (In thousands
                                                 of dollars)
                                                              
Accounts receivable, billed                  $   887
Accounts receivable, unbilled                    470
Allowance for doubtful accounts               (   28)

          Totals                             $ 1,329

At June 30, 1998, sales recognized on the percentage of completion
method approximated $3,213,000.  



Note 5:

Inventories:

Inventories consist of the following: 
                                                 June 30,         
                                                                  
                                       
                                                   1998
                                              (In thousands
                                                of dollars)
                                                                  
                                                                  
                                                                  
                                                                 
Raw materials                               $   744     

Less:
 Provision for write-downs to estimated
 realizable value                               152 

     Totals                                 $   592

Accumulated costs on long-term contracts recognized by the
percentage of completion method (see Note 4) were approximately 
$2,603,000.


Note 6:

Property and Equipment:

Property and equipment, which is stated at cost, is summarized as
follows at June 30,
                                                    1998
                                               (In thousands
                                                 of dollars)

     Leasehold Improvements                       $    70         
        
     Equipment                                      1,432
     Equipment under capital leases                   399
                                                    1,901         
                                                                  
                                     
     Accumulated depreciation                      (1,475)

          Total property and equipment - net      $   426 


The Company leases certain equipment for use in its operations
under capital leases. Property and equipment at June 30, 1998,
included capital leases of $399,000 and related accumulated
depreciation of $171,000.

DynaTenn, Inc. (d/b/a "DynaVac"), a wholly owned subsidiary which
manufactures diversified industrial vacuum equipment, leases its
27,900 square-foot facility in Hingham, Massachusetts, under an
operating lease which became effective on January 1, 1997, for a
term of six years. Rent charged to operations under this lease for
the first two quarters of 1998 approximated $90,180, and $57,100
for the first two quarters of 1997.

Tenney Engineering, Inc. leases its facility in Union, New Jersey,
under an operating lease which expires in December 1998. Rent
charged to operations under this lease approximated $47,000 in 1998
and 1997, respectively.

At June 30, 1998, the aggregate minimum rental commitments under
non-cancelable leases for the period shown are as follows:


                  Year       Capital Leases     Operating Leases
                                   (In thousands of dollars)
                  1998           $   64             $  241
                  1999              110                157
                  2000               87                163
                  2001               37                169
                  2002               21                176      
                  Total          $  319             $  906  

  Less imputed interest              34 
  Present value of net
    lease payments               $  265 
  Less current installments          58 
  Long-term debt obligation 
    at June 30, 1998            $   207

Imputed interest was calculated using rates between 7.06% - 9.76%


Note 7:

Debt:

Debt  maturing  within  one  year consists of  the  following  at 
June 30,
                                           1998      1997
                                            (In thousands
                                              of dollars)

Notes payable - bank                       $ 750   $  645
Current portion of capital leases             58       43
Current portion of pension obligation         79       73  
     Total                                $  887   $  761 



On September 12, 1996, the Company and Summit Bank (the "Bank")
entered into a Loan and Security Agreement ("Term Note") for a
$300,000 renewable working capital line of credit expiring May 31,
1997. At April 23, 1997 the Term Note was renewed until May 31,
1998, and increased to the amount of $750,000. The Bank was granted
a security interest in substantially all the Company's assets. As
at December 31, 1997, the Company had borrowed $750,000 under the
Term Note. On November 5, 1997 the Bank notified the Company that
covenants under the Credit Agreement to maintain certain levels of
debt to tangible net worth and current assets to current
liabilities were not met on the Company's financial statements.
Payments of interest are being met in accordance with the terms of
the Note. On June 5, 1998, the Company received a letter from the
Bank demanding payment of the Note in 30 days.  Subsequent to June
30, 1998 the Company and the Bank have reached an agreement in
principle which provides that the maturity of the Term Note be
extended to July 15, 1999 provided that the Company make a
principal payment of $100,000 due upon execution of definitive
documentation, three monthly payments of $10,000 principal plus
accrued interest beginning on August 15, 1998 and, commencing on
November 15, 1998 eight monthly payments of $20,000 principal plus
accrued interest through June 15, 1999, with the balance being
payable on July 15, 1999.  Interest will be calculated at the rate
of 1.75% above the Bank's prime lending rate.  The Company has a
commitment from certain shareholders to lend it $100,000 concurrent
with the execution of the definitive Bank documents.  The
shareholders' loan is to be evidenced by a Demand Note bearing
interest at a rate of 1.75% above the Bank's prime lending rate
with interest payable monthly.




Long-term debt consists of the following at June 30, 1998
                                                   (In thousands
                                                     of dollars)

     Capital lease obligations                        $  265
     Multi-employer pension obligation                   335 

          Total long-term debt including
           current maturities                            600 
          Less:  current maturities                      137 

           Total long-term debt                       $  463 


One new capital lease was entered into for vehicle equipment during
the second quarter of 1998.

The Company formerly had employees who were members of a union and
contributed to multi-employer pension plan for such employees in
accordance with a collective bargaining agreement based on monthly
hours worked. Due to the cessation of manufacturing operations at
the Company's Union Facility, the Company ceased being a
participant in the multi-employer pension plan in February 1993. 
Under the Multi-Employer Pension Plan Amendments Act of 1980, the
Company may, under certain circumstances, become subject to
liabilities in excess of contributions made under its collective
bargaining agreement.

The Company received a demand from the Sheet Metal Workers'
National Pension Fund (the "Fund") for payment of a withdrawal
liability in quarterly installments of $502,665 plus interest on
overdue installments, statutory liquidated damages, attorneys' fees
and injunctive relief.

The Company negotiated with the Fund the amount of the liability
and an installment payment schedule.  

On September 6, 1996, the Company agreed to a settlement of the
matter proposed by the Fund and it executed a Settlement
Agreement(the "Agreement"). Among other matters, the Agreement
provides that the Company shall pay the Fund $720,090 (the "Settled
Amount") on account of the withdrawal liability, statutory interest
and counsel fees; provided, however, that if the Company pays to
the Fund the amount of $397,330 principal, plus interest of
$74,455, totaling $471,785 -- $75,000 upon signing and sixty (60)
monthly payments of $6,613.09 commencing October 1, 1996 -- the
Fund would accept the total of $471,785 in satisfaction of the
total withdrawal liability.  

The Agreement contains various representations and warranties by
the Company.  In the event that timely payments are not made or the
Company otherwise defaults under the Agreement, the Settled Amount
will be due the Fund, less any payments received. The Company has
made all payments to the Fund when they are due, and continues to
do so.  

The Company had reserved on its balance sheet as at December 31,
1995, the sum of $581,835 for the withdrawal liability to the Fund.
The Company will charge all the payments made to the Fund to this
reserve account; and if all payments are made in accordance with
the provisions of the Agreement, any balance in the reserve will be
recognized as forgiveness of indebtedness when payments are
complete. At June 30, 1998, the reserve approximated $335,000.


Note 8:

Net Revenue:

Product and product-related net revenue includes revenue from the
Company's manufacturing operation, sales of reconditioned equipment
and rental income. Service revenue includes revenue from the
servicing and installation of equipment. Parts revenue includes
revenue from the sale of replacement and spare parts for equipment
previously manufactured by the Company, as well as equipment
currently being manufactured under the "Tenney" name and
competitors' equipment.
  

Note 9:

Income taxes:
     
The Company accounts for income taxes in accordance with the
Statement of Financial Accounting Standards ("SFAS No. 109"),
"Accounting for Income Taxes," which requires an asset and
liability approach to financial accounting and reporting for income
taxes. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and income
tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change
during the period in deferred tax assets and liabilities. 

A reconciliation of the Company's income tax provision that would
be provided based on a statutory federal income tax rate of 34% to
the Company's effective rate is as follows:

                                          1998         1997
                                            (In Thousands 
                                              of Dollars)
   Income taxes computed at the 
     federal statutory rates             $   0        $   0
   State taxes (net of federal benefit)      0            0
   Realization of benefits of tax loss
     carryforwards                           0          (30)
   Reduction of valuation allowance          0            0

          Net income tax (benefit)       $   0        $ (30)


     Deferred income taxes are provided for temporary differences
between the financial reporting and income tax basis of the
Company's assets and liabilities. Temporary differences, net
operating loss carryforwards and valuation allowances comprising
the net deferred taxes on the balance sheet at June 30, 1998, are
as follows:

                                             (In Thousands
                                               of Dollars)

             Deferred tax assets:
               Inventory reserve                $    52 
               Accounts receivable reserve           10
               Deferred revenue                      79
               Deferred compensation                 24
               Deferred pension obligation           12
               Tax loss carryforward              1,542 

                 Total deferred tax assets        1,719

             Deferred tax liabilities:
               Depreciation                         (10)

               Valuation allowance               (1,429)

             Total net deferred tax assets      $   280


     The ultimate realization of the deferred tax asset depends on
the Company's ability to generate sufficient taxable income in the
future.

     At June 30, 1998, the Company has available income tax net
operating loss carryforwards of approximately $4,560,000, which
expire through 2009.

Note 10:

Common stock:

On March 11, 1997 the Board of Directors resolved to amend the
Certificate of Incorporation to provide that Common Stock, $0.01
par value, be issued in two series, denominated Series A and Series
B, both series having the same rights, powers and privileges,
except that Series A has ten (10) votes per share.

The Board also resolved that all issued shares of Common Stock on
April 10, 1997 be classified as Series B Common Stock, $0.01 par
value.

In addition the Board resolved that a stock distribution of one (1)
share of Series A Common Stock, $0.01 par value, be distributed for
each share of Series B Common Stock owned by shareholders of record
on April 10, 1997. The distribution was paid on May 27, 1997.  

This transaction was accounted for as a stock split.

Outstanding options were adjusted effective the close of business
April 10, 1997, so that Optionees have the right to buy a unit
consisting of one share of Series A Common Stock and one share of
Series B Common Stock for each share of Common Stock to which the
option relates at a price per unit equal to the price per share of
Common Stock specified in the outstanding option. The 1995
Incentive Stock Option Plan was amended to relate to an additional
330,000 shares of Series A Common Stock.

On May 26, 1995, at the annual meeting, a new ten-year incentive
stock option plan for officers and key employees was approved and
adopted relating to 400,000 share of Common Stock. The plan
provided that options could be granted from time to time at a price
of not less than 100% of the fair market value of the Common Stock
as of the date of grant for officers and employees who own less
than 10% of the voting stock of the Company and 110% of fair market
value for those officers and employees who own more than 10% of the
voting stock (affiliate employees). Options granted are exercisable
immediately and terminate no later than ten years from date of
grant (five years from date of grant for affiliate employees). 

The fair value of each option granted is estimated on the grant
date using the Black-Scholes model. The following assumptions were
made in estimating fair value:

          Assumption                    1995 Plan
          Dividend Yield                      0%
          Risk-free Interest Rate          7.50%
          Expected Life                  3 Years
          Expected Volatility                13%

The Company applies APB Option 25 in accounting for its stock
compensation plan. Accordingly, no compensation cost has been
recognized for the 1995 Plan in 1998 or 1997. Had compensation cost
been determined on the basis of fair value pursuant to FASB
Statement No. 123, net income and earnings per share would have
been reduced as follows:


                                          1998            1997
Net income (loss)
  As reported                            47,000        (532,000)
  Pro forma                              47,000        (539,000)

Primary earnings per share
  As reported                              0.003          (0.14)
  Pro forma                                0.003          (0.14)

                                 Shares/Units        Price  

Outstanding at 1/1/98               307,000       $ 0.608968   

Granted                                                     
Exercised                           (97,000)        0.23437  
Expired                              25,000         0.23437 

Outstanding at 6/30/98              185,000       $ 0.608968

Options exercisable at 6/30/98      185,000       $ 0.608968

Weighted average fair value
of options granted during 1998    $       0


                                 Shares/Units        Price    

Outstanding at 1/1/97               290,000       $ 0.24420    

Granted                              50,000         0.704688
Exercised                           (23,000)        0.23437  
Canceled                            (10,000)        0.89789   

Outstanding at 12/31/97             307,000       $ 0.608968

Options exercisable at 12/31/97     307,000       $ 0.608968

Weighted average fair value
of options granted during 1997    $       0


<TABLE>
     Following is a summary of the status of options outstanding at
June 30, 1998:
<CAPTION>
                      Outstanding Units            Exercisable Units
                                Weighted
                                 Average    Weighted              Weighted
                                Remaining    Average              Average
  Exercise                     Contractual  Exercise             Exercise
Price Range            Number     Life        Price    Number    Price 
<S>                     <C>        <C>         <C>       <C>      <C>
$0.85937-$0.94531     135,000    1 year     $0.89789   135,000  $0.89789

$0.704688              50,000    2 years    $0.704688   50,000  $0.704688
</TABLE>

Note 11:

Commitments and contingencies:

Lease commitments:

DynaTenn, Inc. (d/b/a "DynaVac"), a wholly owned subsidiary which
manufactures diversified industrial vacuum equipment, leases its
27,900 square-foot facility in Hingham, Massachusetts, under an
operating lease which became effective on January 1, 1997, for a
term of six years. Rent charged to operations under this lease for
the first two quarters of 1998 approximated $90,180, and $57,100
for the first two quarters of 1997.

Tenney Engineering, Inc. leases its facility in Union, New Jersey,
under an operating lease which expires in December 1998. Rent
charged to operations under this lease approximated $47,000 in 1998
and 1997, respectively.

Contingencies:

The Company is not a party to any material pending legal
proceeding.

               
 *   *   * 
 

MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

LIQUIDITY 

As shown in the accompanying consolidated financial statements, the
Company has earned net income from operations for the first two
quarters of 1998 and had incurred losses during the comparable 1997
periods. 

On September 12, 1996, the Company and Summit Bank (the "Bank")
entered into a Loan and Security Agreement ("Term Note") for a
$300,000 renewable working capital line of credit expiring May 31,
1997. At April 23, 1997 the Term Note was renewed until May 31,
1998, and increased to the amount of $750,000. The Bank was granted
a security interest in substantially all the Company's assets. As
at December 31, 1997, the Company had borrowed $750,000 under the
Term Note. On November 5, 1997 the Bank notified the Company that
covenants under the Credit Agreement to maintain certain levels of
debt to tangible net worth and current assets to current
liabilities were not met on the Company's financial statements.
Payments of interest are being met in accordance with the terms of
the Note.  On June 5, 1998, the Company received a letter from the
Bank demanding payment of the Note in 30 days.  Subsequent to June
30, 1998 the Company and the Bank have reached an agreement in
principle which provides that the maturity of the Term Note be
extended to July 15, 1999 provided that the Company make a
principal payment of $100,000 due upon execution of definitive
documentation, three monthly payments of $10,000 principal plus
accrued interest beginning on August 15, 1998 and, commencing on
November 15, 1998 eight monthly payments of $20,000 principal plus
accrued interest through June 15, 1999, with the balance being
payable on July 15, 1999.  Interest will be calculated at the rate
of 1.75% above the Bank's prime lending rate.  The Company has a
commitment from certain shareholders to lend it $100,000 concurrent
with the execution of the definitive Bank documents.  The
shareholders' loan is to be evidenced by a Demand Note bearing
interest at a rate of 1.75% above the Bank's prime lending rate
with interest payable monthly.  If the agreement is not consummated
with the Bank, and there can be no assurance that it will be, this
would have a material adverse effect which may cause the Company to
seek relief from creditors' claims under insolvency laws.


At June 30, 1998, the Company's cash and cash equivalents totaled
$53,000, an addition of $6,000 from the balance of $47,000 as at
December 31, 1997. Net cash provided by operations totaled $77,000.
Cash was provided primarily by the collection in full of the
outstanding note receivable of approximately $270,000. The primary
use of cash amounting to approximately $105,000 was due to the
payments of operating liabilities.


The Company is engaged in one industry segment: the engineering,
marketing and manufacturing of diversified high-technology vacuum
systems for space simulation, optic coating and sputtering; and
provides service, refurbishing, upgrading, installation and sale or
rental of reconditioned test equipment. 


RESULTS OF OPERATIONS

Total net revenue for the second quarter and year-to-date periods
ended June 30, 1998, of $1,938,000 and $4,091,000 compares to net
revenue of $1,347,000 and $3,668,000 in the corresponding 1997
period.

Product and product-related net revenue for the second quarter and
year-to-date periods ended June 30, 1998 was $1,589,000 and
$3,320,000, respectively, and compares to 1997 revenue of $919,000
and $2,900,000 in the corresponding periods, respectively. The
change is due to the increased amount of revenue recognized under
the percentage of completion for long-term projects that were being
worked on in our DynaVac subsidiary.    

Service-related revenue of $229,000 for the second quarter and
$522,000 for the year-to-date periods ended June 30, 1998, compares
to the same periods in 1997 of revenue of $276,000, and $489,000,
respectively. The year to date increase is due primarily to an
increase in retrofit and upgrade revenues.

Revenue related to the sale of parts totaled $120,000 and $249,000
for the second quarter and year-to-date periods ended June 30,
1998, respectively. For the second quarter and year-to- date
periods ended June 30, 1997, revenue related to the sale of parts
was $152,000 and $277,000, respectively.  The decrease was due to
receiving fewer parts orders.  

The Company's order backlog at June 30, 1998, December 31, 1997 and
June 30, 1997 was approximately $1,300,000, $2,200,000 and
$1,400,000, respectively. The decrease is due primarily to a
slow-down in receiving orders at the Company's DynaVac subsidiary.

The total cost of sales as a percentage of net revenue was 75%, and
76% for the second quarter and year-to-date periods ended June 30,
1998, and compares to 104% and 86% for the corresponding 1997
periods. 

The second quarter and year-to-date periods ended June 30 ,1998,
cost of sales percentage of product and product-related sales was
77% and 80%, respectively, and compares to a cost of sales of  124%
and 92% during the corresponding 1997 period. The decrease is due
mainly to cost reductions at our DynaVac subsidiary.

Service cost of sale as a percentage of sales was 80% and 60% for
the 1998 second quarter and year-to-date periods ended June 30,
1998. This compares to 80% and 64% for the 1997 periods ended June
30, 1997. The year-to-date decrease is due to an increase in
service revenue and a reduction of overhead fixed costs.

Cost of sales as a percentage of sales for the second quarter and
year-to-date periods ended June 30, 1998 for parts was 33% and 54%,
respectively, and compares to 64% and 60% for the 1997
corresponding  periods. The decrease was due to the product mix.

Selling and administrative expenses for the second quarter and
year-to-date for the periods ended June 30, 1998 was $443,000 and
$887,000, and compares to expenses of $549,000 and $1,075,000 in
the 1997 periods.  The decrease is due to cost reductions
implemented during the last quarter of 1997.

Interest expense was $27,000 and $47,000, respectively, for the
second quarter and year-to-date periods ended June 30, 1998, and
compares to expense of $5,000 and $9,000, respectively, in the 1997
periods.

The second quarter and year-to-date periods ended June 30, 1998 net
income was $15,000 and $47,000, respectively, and compares to net
loss of $(581,000) and $(532,000) for the corresponding periods
ended June 30, 1997. 


PART II - OTHER INFORMATION


Item 6.  Exhibits

(a)  Exhibits


     (27)      Financial Data Schedule


(b)  Reports on Form 8-K

A report on Form 8K for an event occurring on June 5, 1998 was
filed, Item 5, reporting the receipt of a 30 day demand to pay
Summit Bank the balance due under the Term Note.  An amended Form
8K-A filed on July 23, 1998 reported the agreement in principle
with the Bank to extend the maturity of the Term Note.





SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                   Tenney Engineering, Inc.      
                                        (Registrant)



                                   /s/Martin Pelman
                                   _________________________
                                   Martin Pelman
                                   Vice President, Finance
                                   Principal Finance Officer



Dated:  August 11, 1998




20TENNEY ENGINEERING, INC.AND SUBSIDIARIESNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS