SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB-A
                               AMENDMENT NO. 1 TO
                            ANNUAL REPORT PURSUANT TO
                      SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                   For the Fiscal Year Ended October 31, 1998

Commission File Number
          000-23115




                           CTI INDUSTRIES CORPORATION
             (Exact name of Registrant as specified in its charter)


              Delaware                                       36-2848943
              --------                                       ----------
   (State or other jurisdiction of                        (I.R.S. Employer 
   incorporation or organization)                     Identification Number)


        22160 North Pepper Road
          Barrington, Illinois                                 60010
          --------------------                                 -----
  (Address of principal executive offices)                   (Zip Code)


                                 (847) 382-1000
                                 --------------
               Registrant's telephone number, including area code




         Amendment to include  Part III  information.  Portions of  Registrant's
Proxy Statement will not be incorporated by reference into this Form 10KSB-A.





<PAGE>



PART III

Item No. 9        Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act

Directors and Executive Officers

         The Company's current directors and executive  officers and their ages,
as of January 15, 1999, are as follows:

        Name                  Age                Position with Company
-----------------------      -----       -------------------------------------

John H. Schwan                54         Chairman and Director
Stephen M. Merrick            57         Chief Executive Officer, Secretary,
                                         Chief Financial Officer and Director
Howard W. Schwan              44         President and Director
John C. Davis                 65         Director
Sharon Konny                  40         Manager of Finance and Administration
Brent Anderson                32         Vice President of Manufacturing
Stanley M. Brown              52         Director
Bret Tayne                    40         Director

         All directors hold office until the annual meeting of stockholders next
following  their  election  and/or  until  their   successors  are  elected  and
qualified.  Officers are elected annually by the Board of Directors and serve at
the discretion of the Board. Information with respect to the business experience
and  affiliation  of the directors and the executive  officers of the Company is
set forth below.

         John H. Schwan,  Chairman.  Mr. Schwan has been an officer and director
of the Company  since  January,  1996.  Mr.  Schwan has been the  President  and
principal executive officer of Packaging Systems,  Inc. and affiliated companies
for over the last 11 years. Mr. Schwan devotes  approximately 20% of his time to
his position as Chairman of the Company and the balance of his time to Packaging
Systems, Inc. and affiliates. Mr. Schwan has over 20 years of general management
experience,  including manufacturing,  marketing and sales. Mr. Schwan served in
the U.S. Army Infantry in Vietnam from 1966 to 1969,  where he attained the rank
of First Lieutenant.

         Stephen M. Merrick, Chief Executive Officer and Secretary.  Mr. Merrick
was  President of the Company from  January,  1996 to June,  1997 when he became
Chief Executive Officer of the Company. Mr. Merrick devotes approximately 20% of
his time to his position as Chief Executive Officer of the Company.  Mr. Merrick
is a principal  of the law firm of Merrick & Klimek,  P.C. of Chicago,  Illinois
and has been engaged in the  practice of law for more than 30 years.  He is also
Senior Vice President, Director and a member of the Management Committee





                                        1

<PAGE>



of Reliv  International,  Inc.  (NASDAQ),  a manufacturer and direct marketer of
nutritional supplements and food products.

         Howard W. Schwan,  President.  Mr. Schwan has been  associated with the
Company  for 18  years  principally  in the  management  of the  production  and
engineering  operations  of the  Company.  Mr.  Schwan  was  appointed  as  Vice
President of  Manufacturing  in November,  1990,  was appointed as a director in
January,  1996, and was appointed as President in June, 1997. Mr. Schwan manages
administration,  production  and  engineering  functions  as well  as the  sales
function for latex balloons and custom and created films.

         John C. Davis, Director. Mr. Davis has been associated with the Company
since 1975 and has been a director of the Company from that time.  Mr. Davis was
President of the Company from 1975 to January, 1996. In January, 1996, Mr. Davis
became Executive Vice President of Sales for the Company,  and has since retired
from that position,  effective  February 1, 1999. Mr. Davis  currently  provides
consulting on special projects for the Company.

         Sharon Konny, Manager of Finance and Administration. Ms. Konny has been
Manager of Finance and  Administration at the Company since October,  1996. From
November of 1992 to 1996,  she was an Assistant  Vice President of First Chicago
Corporation,  initially  as Loan  Servicing  Manager  of the  Mortgage  Services
Division and in December,  1994,  achieving the position of Manager of Financial
Administration  for the First  Card  Division.  She  became a  Certified  Public
Accountant in 1992.

         Brent Anderson, Vice President of Manufacturing.  Mr. Anderson has been
employed  by  the  Company  since  January,  1989,  and  has  held a  number  of
engineering  positions  with the  Company  including  Plant  Engineer  and Plant
Manager.  In such  capacities Mr.  Anderson was  responsible  for the design and
manufacture of much of the Company's manufacturing  equipment.  Mr. Anderson was
appointed Vice President of Manufacturing in June, 1997.

         Stanley M. Brown,  Director.  Mr. Brown was  appointed as a director of
the Company in January,  1996. Mr. Brown has been President of Inn-Room Systems,
Inc.,  a  manufacturer  and lessor of in-room  vending  systems for hotels since
March, 1996 and, since 1990, has been President of Surface Preparation  Systems,
Inc., a company  engaged in the business of developing  and marketing  equipment
for the preparation, cleaning and profiling of concrete and other surfaces. From
1968 to 1989,  Mr.  Brown was with the United  States  Navy as a naval  aviator,
achieving the rank of Captain.

         Bret Tayne,  Director.  Mr.  Tayne was  appointed  as a director of the
Company in December, 1997. Mr. Tayne has been President of Everede Tool Company,
a manufacturer of industrial cutting tools, since January,  1992. Prior to that,
Mr Tayne was Executive Vice President of Unifin,  a commercial  finance company,
since  1986.  Mr.  Tayne  received  a  Bachelor  of  Science  Degree  from Tufts
University and an MBA from Northwestern University.

         John H. Schwan and Howard W. Schwan are brothers.


                                                       




                                       2

<PAGE>





Section 16(a) Beneficial Ownership Reporting Compliance

         There were no late  filings  required by Section  16(a) during the most
recent fiscal year or prior years by any officer, director or 10% shareholder.

Item No. 10       Executive Compensation

Executive Compensation

     The  following  table sets forth  certain  information  with respect to the
compensation  paid or accrued by the Company to its President,  Chief  Executive
Officer and any other  officer who received  compensation  in excess of $100,000
("Named Executive Officers").


                           Summary Compensation Table

                                                       Long Term
                             Annual Compensation    Compensation   
                            ----------------------   ------------
                                                      Securities    All Other
     Name and                Salary   Other Annual    Underlying   Compensation
Principal Position   Year      ($)    Compensation      Options        ($) 
------------------   ----   --------  ------------   -----------   ------------
  
Stephen M. Merrick   1998   $ 75,000      ----         40,000(3)       ----
Chief Executive      1997   $ 63,750      ----           ----          ----
Officer              1996   $ 45,000      ----           ----          ----

                                                       
Howard W. Schwan     1998   $135,000   $ 6,145(1)      40,000(4)    $ 1,551(5)
President            1997   $121,600   $ 6,145(1)        ----       $ 1,115(5)
                     1996   $108,500   $ 6,957(1)        ----       $ 1,250(5)
                                                                      
       
John C. Davis        1998   $132,115   $ 6,562(2)        ----       $ 1,800(5) 
Executive Vice       1997   $150,000   $ 8,374(2)        ----       $ 1,666(5) 
President-Sales      1996   $195,177   $11,438(2)        ----       $ 3,252(5) 
                                                                    
    
----------------------

(1)      Perquisites include country club membership ($5,000).
(2)      Perquisites  include  country club  membership  ($5,000) and  allocated
         personal use of Company vehicles  ($1,562 in 1998,  $3,374 in 1997, and
         $5,158 in 1996).
(3)      Stock options to purchase  40,000 shares of the Company's  Common stock
         at $2.75 per share, 36,000 shares exercisable on grant and 4,000 shares
         exercisable on September 15, 1999.
(4)      Stock options to purchase 40,000 shares of the  Company's Common  Stock
         at $2.50 per share.
(5)      Company contribution to  the  Company 401(k)  Plan  as  pre-tax  salary
         deferral.






                                                       


                                        3

<PAGE>



         Certain Named  Executive  Officers  have received  warrants to purchase
Common Stock of the Company in connection  with their  guarantee of certain bank
loans secured by the Company and in  connection  with their  participation  in a
private offering of notes and warrants conducted by the Company. See Item 12. In
addition to these  warrants,  the  following  table sets forth  those  executive
officers who were granted  individual grants of stock options in connection with
their employment under the terms of the Company's 1997 Stock Option Plan.


                        OPTION GRANTS IN LAST FISCAL YEAR
                                Individual Grants

                             Name of       Percent of   
                           Securities    Total Options 
Name and                   Underlying      Granted to    Exercise or
Principal                    Options      Employees in    Base Price  Expiration
Position                   Granted (#)     Fiscal Year     $/Share       Date 
-----------------------    -----------     -----------     -------    ----------
    
Stephen M. Merrick
Chief Executive Officer       40,000          17.86%        $2.75     09/15/2003
                                                  
Howard W. Schwan
President                     40,000          17.86%        $2.50     09/15/2008
                                                      
                                          
             
                                                  
    Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values


<TABLE>
<CAPTION>

                                                 Number of Securities Underlying  Value of Unexercised In-    
                          Shares       Value          Unexercised Options at          the-Money Options        
                       Acquired on   Realized              Year End (#)           at Fiscal Year End ($)      
Name                   Exercise (#)     ($)         Exercisable/Unexercisable     Exercisable/Unexercisable   
---------------------  -----------   --------    -------------------------------  ------------------------- 
<S>                        <C>           <C>                <C>    <C>                      <C>    
Stephen M. Merrick         0             0                  36,000/4,000                    $0/0(1)
                                                     
Howard W. Schwan           0             0                    40,000/0                      $0/0(1)
                                                    
-----------------------
<FN>

(1)      The  value  of  unexercised   in-the-money  options  is  based  on  the
         difference  between the exercise price and the fair market value of the
         Company's Common Stock on October 31, 1998.
</FN>
</TABLE>

Employment Agreements

         In April,  1996, the Company entered into an employment  agreement with
John C. Davis as Executive  Vice  President-Sales,  which provided for an annual
salary of $150,000.  The term of the agreement was through  January 31, 1998. On
June 27, 1997, the agreement was amended to extend the term through  January 31,
2000,  and to provide for an annual  salary of $120,000 per year.  The agreement
contains  covenants  of  Mr.  Davis  not  to  use  the  Company's   confidential
information  while such  information  remains  confidential and establishing the
Company's  rights  to  inventions  created  by Mr.  Davis  during  the  term  of
employment. Mr. Davis' agreement does

                                                        




                                        4

<PAGE>



not contain a covenant  not to compete.  Effective  February 1, 1999,  Mr. Davis
retired from his position as Executive  Vice  President-Sales  with the Company,
and currently  provides services to the Company as a special project  consultant
under the terms of his Employment Agreement, as it was amended on June 27, 1997.

         In June,  1997, the Company  entered into an Employment  Agreement with
Howard W. Schwan as President,  which  provides for an annual salary of not less
than $135,000. The term of the Agreement is through June 30, 2002. The Agreement
contains  covenants  of Mr.  Schwan  with  respect  to the use of the  Company's
confidential information,  establishes the Company's right to inventions created
by Mr. Schwan during the term of his employment,  and includes a covenant of Mr.
Schwan not to compete  with the  Company  for a period of three  years after the
date of termination of the Agreement.


Director Compensation

         Directors are not  compensated  for their  services as directors.  John
Schwan was  compensated in the amount of $48,000 in fiscal 1998 for his services
as Chairman of the Board of  Directors.  Mr.  Schwan  also  received  options to
purchase up to 40,000  shares of the  Company's  Common Stock at $2.75 per share
under the  Company's  1997  Stock  Option  Plan.  Mr.  Tayne and Mr.  Brown each
received options to purchase up to 5,000 shares of the Company's Common Stock at
$2.50 per share under the Company's 1997 Stock Option Plan.


Item No. 11       Security Ownership of Certain Beneficial Owners and Management

Principal Stockholders

         The following table sets forth certain  information with respect to the
beneficial  ownership of the Company's  capital stock, as of January 15, 1999 by
(i) each  stockholder who is known by the Company to be the beneficial  owner of
more than 5% of the Company's  Common Stock or Class B Common  Stock,  (ii) each
director  and  executive  officer of the  Company  who owns any shares of Common
Stock or Class B Common Stock, and (iii) all executive officers and directors as
a group. Except as otherwise indicated, the Company believes that the beneficial
owners of the shares  listed  below have sole  investment  and voting power with
respect to such shares.



                                                      




                                        5

<PAGE>

<TABLE>
<CAPTION>


                                         Shares of Class B           Shares of Common
                                         Common Stock               Stock Beneficially
 Name and Address(1)                 Beneficially Owned(2)(3)            Owned(2)            Percent of Common Stock(4)
-----------------------------       -------------------------      -------------------       ---------------------------
<S>                                         <C>                          <C>                          <C>  
Stephen M. Merrick                          219,781                      361,411(5)                   14.37

John H. Schwan                              329,670                      216,707(6)                   13.51

Howard W. Schwan                            164,835                      139,553(7)                    7.67

John C. Davis                                  --                        445,514(8)                   11.47

Sharon Konny                                   --                         12,000(9)                     *

Brent Anderson                                 --                         12,000(9)                     *

Stanley M. Brown                               --                         10,000(10)                    *
 747 Glenn Avenue
 Wheeling, Illinois

Frances Ann Rohlen                          274,725                        --                          7.16
 c/o Cheshire Partners
 1504 Wells
 Chicago, Illinois 60610

Philip W. Colburn                           109,890                      118,266(11)                   5.95

Bret Tayne                                     --                          8,510(12)                    *
 6834 N. Kostner Avenue
 Lincolnwood, Illinois 60646

All directors and executive                 714,286                    1,205,695                      42.88
officers as a group (8 persons)
--------------

*less than one percent
<FN>

(1)      Except as otherwise  indicated,  the address of each stockholder listed
         above is c/o CTI  Industries  Corporation,  22160  North  Pepper  Road,
         Barrington, Illinois 60010.

(2)      A person is deemed to be the beneficial owner of securities that can be
         acquired  within  60 days  from the date set forth  above  through  the
         exercise  of any  option,  warrant  or right.  Shares  of Common  Stock
         subject to options,  warrants or rights that are currently  exercisable
         or exercisable  within 60 days are deemed  outstanding  for purposes of
         computing the percentage  ownership of the person holding such options,
         warrants  or rights,  but are not deemed  outstanding  for  purposes of
         computing the percentage ownership of any other person.



                       (footnotes continued on next page)


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<PAGE>



(3)      Figures  below   represent  all  Class  B  Common  Stock   outstanding.
         Beneficial  ownership  of  shares of Class B Common  Stock for  Messrs.
         Merrick,  John Schwan,  Howard Schwan and Ms. Rohlen  include  indirect
         ownership of such shares through CTI Investors, L.L.C.
         See "Certain Transactions."

(4)      Assumes conversion of all shares of Class B Common Stock into shares of
         Common Stock.

(5)      Includes  warrants to purchase up to 72,527  shares of Common  Stock at
         $.91 per share,  warrants to  purchase  up to 100,961  shares of Common
         Stock at $3.12 per share and options to purchase up to 36,000 shares of
         Common stock at $2.75 per share granted under the Company's  1997 Stock
         Option Plan.

(6)      Includes  warrants to purchase up to 61,923 of Common Stock at $.91 per
         share,  warrants to purchase  up to 112,180  shares of Common  Stock at
         $3.12 per share and options to  purchase up to 36,000  shares of Common
         stock at $2.75 per share granted under the Company's  1997 Stock Option
         Plan.

(7)      Includes  warrants to purchase up to 76,923  shares of Common  Stock at
         $.91 per share,  warrants  to  purchase  up to 16,026  shares of Common
         Stock at $3.12 per share,  and options to purchase up to 40,000  shares
         of Common Stock at $2.50 per share  granted  under the  Company's  1997
         Stock Option Plan.

(8)      Includes  warrants to purchase up to 48,077  shares of Common  Stock at
         $3.12  per  share,  and  212,002  shares  of Common  Stock  subject  to
         redemption by the Company. See "Certain Transactions."

(9)      Includes  options to  purchase up to 12,000  shares of Common  Stock at
         $2.50 per share granted under the Company's 1997 Stock Option Plan.

(10)     Includes  options to  purchase  up to 5,000  shares of Common  Stock at
         $2.50 per share and options to  purchase  up to 5,000  shares of Common
         Stock at $4.00 per share,  both granted under the Company's  1997 Stock
         Option Plan.

(11)     Includes shares held by immediate family members.

(12)     Includes  options to  purchase  up to 5,000  shares of Common  Stock at
         $2.50 per share granted under the Company's 1997 Stock Option Plan.
</FN>
</TABLE>



Item No. 12       Certain Relationships and Related Transactions

Certain Transactions

         In March 1996, the Company  entered into a Stock  Redemption  Agreement
with John C. Davis  which was  subsequently  amended  June 27,  1997.  Under the
amended Stock  Redemption  Agreement the Company was obligated to redeem 102,564
shares of Common Stock and has the

                                                    




                                        7

<PAGE>



right, but not the obligation,  to redeem up to an additional  230,769 shares of
Common  Stock  owned by Mr.  Davis at the  price of $1.95  per share at any time
through January 31, 1998.  Commencing  March 1, 1998 through  February 28, 2000,
the Company is obligated to pay to Mr.  Davis,  for the  redemption of shares at
$1.95 per share (i) an amount equal to 2% of the Company's  pretax  profits each
fiscal quarter  (beginning with the quarter ended February 28, 1998) and (ii) an
amount  equal to 2% (but not to exceed  $8,000) of the amount by which latex and
mylar  balloon  revenues  exceed  $1.3  million  in  any  month.  The  Company's
obligations  terminate  once a total of 333,333 shares of Common Stock have been
redeemed under the Stock Redemption Agreement. The Company also has the right to
redeem  additional  shares of Common  Stock from Mr. Davis during this period at
$1.95 per share,  provided that the total number of shares subject to redemption
under the Stock Redemption  Agreement does not exceed 333,333.  As of January 1,
1999,  121,331  shares of Common Stock had been  redeemed  pursuant to the Stock
Redemption Agreement.

         In  March  and  May of  1996,  a group  of  investors  made  an  equity
investment  of  $1,000,000  in the  Company  in return for  1,098,901  shares of
Preferred Stock,  $.91 par value.  Each share of Preferred Stock was entitled to
an annual cumulative  dividend of 13% of the purchase price, and was convertible
into one share of Common Stock. The shares of Preferred Stock, voting separately
as a  class,  were  entitled  to  elect  four of the  Company's  directors.  CTI
Investors,  L.L.C., an Illinois limited liability company,  invested $900,000 in
the shares of Preferred Stock.  Members of CTI Investors,  L.L.C. include Howard
W. Schwan,  John H. Schwan and Stephen M. Merrick,  members of  management,  and
Frances Ann Rohlen.

         In  December,  1996,  Howard W.  Schwan,  John H. Schwan and Stephen M.
Merrick were each issued  warrants to purchase  76,923  shares of the  Company's
Common Stock at an exercise  price of $.91 per share in  consideration  of their
facilitating  and  guaranteeing a bank loan to the Company in the amount of $6.3
million.  The warrants have a term of six years.  In July,  1998, John H. Schwan
and Stephen M. Merrick exercised 15,000 and 4,396 warrants, respectively.

         In June,  1997, the Company issued in a private  placement notes in the
principal  amount of $865,000,  together with warrants to purchase up to 277,244
shares of the  Company's  Common Stock at an exercise  price of $3.12 per share.
The  warrants  have a term of five  years.  Howard W.  Schwan,  John H.  Schwan,
Stephen M. Merrick and John C. Davis, members of management,  purchased $50,000,
$350,000 and $315,000 and $150,000, respectively, of the notes and warrants. Mr.
John Schwan and Mr.  Merrick  applied  advances of  $200,000  each,  made to the
Company in January, 1997, toward the purchase of notes and warrants.

         Stephen  M.  Merrick,  Chief  Executive  Officer of the  Company,  is a
principal  of the law firm of Merrick & Klimek,  P.C.,  which  serves as general
counsel of the Company.  Mr. Merrick was a principal in the law firm of Fishman,
Merrick,  Miller,  Genelly,  Springer,  Klimek & Anderson,  P.C., which formerly
served as general  counsel to the Company  until  December 1, 1998. In addition,
Mr. Merrick is a principal  stockholder of the Company. (See Item No. 11). Other
principals  of the firm of  Merrick  &  Klimek,  P.C.  own  less  than 1% of the
Company's  outstanding  Common  Stock.  Legal  fees  incurred  from  the firm of
Fishman,  Merrick,  Miller,  Genelly,  Springer,  Klimek & Anderson,  P.C.  were
$236,071 and $195,200 for the years ended October 31, 1997 and October 31, 1998,
respectively. No fees were paid to Merrick & Klimek,

                                                       





                                        8

<PAGE>



P.C.  during the years ended October 31, 1997 and October 31, 1998.  Mr. Merrick
is also an officer and director of Reliv International, Inc. (NASDAQ-RELV).

         John H. Schwan is President  and a  shareholder  of Packaging  Systems,
Inc. and affiliated companies. The Company made purchases of packaging materials
from these  entities in the amount of $233,842 and  $458,347  during each of the
years ended October 31, 1997 and October 31, 1998, respectively.

         The Company believes that each of the transactions set forth above were
entered into, and any future related party transactions will be entered into, on
terms as fair as those  obtainable from independent  third parties.  All related
party transactions, including loans and forgiveness of debt, must be approved by
a majority of disinterested directors.

































                                        9

<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or  15(d)  of the  Exchange  Act  the
Registrant  caused  this  report to be signed on its  behalf by the  undersigned
thereunto duly authorized on February 26, 1999.


                                   CTI INDUSTRIES CORPORATION



                                   By:     /s/ Howard W. Schwan
                                      ---------------------------- 
                                      Howard W. Schwan, President

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  Registrant in the  capacities and on
the dates indicated.

Signatures                    Title                          Date
----------                    -----                          ----

 /s/ Howard W. Schwan         President and Director         February 26, 1999
------------------------- 
Howard W. Schwan

 /s/ John H. Schwan           Chairman and Director          February 26, 1999
------------------------- 
John H. Schwan

 /s/ Stephen M. Merrick       Chief Executive Officer,       February 26, 1999
------------------------- 
Stephen M. Merrick            Secretary, Chief Financial
                              Officer and Director

 /s/ John C. Davis            Vice President and Director    February 26, 1999
------------------------- 
John C. Davis

 /s/ Stanley M. Brown         Director                       February 26, 1999
------------------------- 
Stanley M. Brown


 /s/ Bret Tayne               Director                       February 26, 1999
------------------------- 
Bret Tayne


                                               





                                       10