Exhibit 10.26


                                 REVOLVING NOTE

$4,500,000.00                                        Elk Grove Village, Illinois
                                                               September 1, 1998
                                                           Loan No. 600804665-67


                  FOR  VALUE   RECEIVED,   the   undersigned,   CTI   Industries
Corporation, a Delaware corporation (the "Borrower"),  hereby promises to pay to
the order of First American Bank, an Illinois banking  corporation (the "Bank"),
the  principal  sum of Four  Million Five  Hundred  Thousand and No/100  Dollars
($4,500,000.00), or so much thereof as may be advanced by the Bank and evidenced
by this Note under the Amended and Restated  Loan and Security  Agreement  dated
May 1, 1998 between the Borrower and the Bank (the "Loan Agreement"),  on May 1,
1999 (or earlier as  hereinafter  provided),  together with interest to maturity
(whether  by  lapse of time,  acceleration,  or  otherwise)  on the  balance  of
principal  remaining  from time to time  outstanding  at a fluctuating  rate per
annum  equal to  one-half  of one  percent  (.5%) per annum  over the Prime Rate
announced from time to time by the Bank (which may not be the Bank's lowest rate
of  interest)  which shall be adjusted  daily when and as the Bank's  Prime Rate
changes.  Interest shall be calculated on the basis of a 360-day year and actual
days.

                  Unless accelerated or prepayable as hereinafter provided or as
otherwise provided in the Loan Agreement, the principal sum outstanding shall be
payable on May 1, 1999.  Accrued  interest shall be paid on the first day of the
month following the month in which the first disbursement evidenced by this Note
is made  under  the Loan  Agreement  and  thereafter  on the  first  day of each
succeeding month until this Note is fully paid, except that the final payment of
interest,  if not  sooner  paid,  shall  be due on May 1,  1999.  If an Event of
Default  (as  defined  in the  Loan  Agreement)  shall  occur,  the  outstanding
principal  of and  accrued  and  unpaid  interest  on  this  Note  shall  become
immediately due and payable as provided in the Loan Agreement without notice.

                  All payments on account of the indebtedness  evidenced by this
Note (other than required  prepayments which shall be applied as provided in the
Loan  Agreement)  shall be applied first to accrued and unpaid  interest and the
remainder  to  principal.  Payments on this Note shall be made at the offices of
the Bank or at such other office as the legal holder of this Note may, from time
to time, designate in writing.

                  Notwithstanding anything to the contrary contained herein, the
undersigned  agrees to pay a late charge of five  percent  (5%) of the amount of
any monthly installment received more than 10 days after the installment is due.
Late charges shall be due and payable on the due date of the next installment of
interest, together with the regular installment then due.

                  Upon and  after the  occurrence  of an Event of  Default,  the
undersigned  shall pay  interest at the rate (the  "Default  Rate") of three and
one-half  percent  (3.5%) per annum  over the Bank's  Prime Rate then in effect,
which shall be adjusted daily when and as the Bank's Prime Rate changes.

                  Except as otherwise provided in the Loan Agreement,  this Note
may be prepaid in whole or in part without premium or penalty at any time at the
option of the undersigned in accordance with the Loan Agreement.



<PAGE>




                                 Revolving Note
                                    Page Two


                  This  Note  is  secured  by  the  Loan   Agreement  and  other
documents,  agreements,  and instruments executed by the Borrower.  This Note is
made and delivered  pursuant to the Loan Agreement and is subject to the further
terms and  conditions  thereof,  including the right of the holder to accelerate
payment of the  principal  of and accrued  and unpaid  interest on this Note and
other  remedies  upon the  occurrence  of an Event of Default  and the  required
prepayment  of  the  principal  of  this  Note  upon  certain  other  events  or
conditions, all of which are hereby incorporated and made a part of this Note by
reference.

                  Any waiver of any payment due  hereunder or the  acceptance by
the Bank of partial payments hereunder shall not, at any other time, be taken to
be a  waiver  of the  terms  of this  Note or the Loan  Agreement  or any  other
agreement between the Borrower and the Bank.

                  The makers, sureties,  guarantors, and endorsers of this Note,
if any,  jointly and severally hereby waive notice of and consent to any and all
extensions  of this Note or any part  thereof  without  notice,  and each hereby
waives demand,  presentment for payment,  notice of nonpayment,  and protest and
any and all  notice of  whatever  kind or  nature  and the  exhaustion  of legal
remedies  herein,  or any  release  of  liability  or any other  indulgences  or
forbearances whatsoever,  without releasing or in any way affecting the personal
liability of any other party hereunder.

                  This Note  shall be the joint and  several  obligation  of all
makers,  sureties,  guarantors,  and  endorsers  and shall be binding upon them,
their heirs, personal representatives, and assigns.

                  In the event the holder of this Note shall  refer this Note to
an attorney for collection, the undersigned agrees to pay, in addition to unpaid
principal and interest,  all of the costs and expenses incurred in attempting or
effecting collection,  including reasonable attorneys' fees, whether or not suit
is instituted.

                  IN WITNESS WHEREOF,  the undersigned has executed this Note as
of the date first written above.

                                                  CTI Industries Corporation


                                                  BY:__________________________
                                                     Stephen M. Merrick
                                                     Chief Executive Officer