UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549
                                
                                
                            FORM 10-Q
                                
         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
        For The Quarterly Period Ended September 30, 1998
                               OR
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
         For the Transition Period From _____ to ______
                                
                                
                 Commission File Number 0-29048
                                
                   ACCENT COLOR SCIENCES, INC.
     (Exact name of registrant as specified in its charter)
         Connecticut                         06-1380314
(State or other jurisdiction of           (I.R.S. Employer
incorporation or organization)          Identification No.)
                                
800 Connecticut Boulevard, East Hartford, Connecticut 06108
         (Address of principal executive office)  (Zip Code)
 Registrant's telephone number, including area code:  (860) 610-4000

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
                                
The number of shares outstanding of the registrant's common stock
              as of October 30, 1998 was 12,680,806
                                
                                
                   ACCENT COLOR SCIENCES, INC.
                                
                            FORM 10-Q

        For The Quarterly Period Ended September 30, 1998

                              INDEX

Part I.  Financial Information

Item 1. Financial Statements                                      3
Item 2. Management's Discussion and Analysis of Financial 
        Condition and Results of Operations                      10

Part II.  Other Information

Item 1. Legal Proceedings                                        14
Item 2. Changes in Securities and Use of Proceeds                14
Item 3. Defaults Upon Senior Securities                          14
Item 4. Submission of Matters to a Vote of Security Holders      14
Item 5. Other Information                                        14
Item 6. Exhibits and Reports on Form 8-K                         14

Signatures                                                       15

<TABLE>
<CAPTION>

                               ACCENT COLOR SCIENCES, INC.
                              (a development stage company)
                                CONDENSED BALANCE SHEETS
                                
                                
                                
                                   September 30,   December 31,
                                       1998           1997
                                   (unaudited)  
<S>                               <C>              <C>        
Assets                                           
Current assets:                                  
  Cash and cash equivalents         $2,096,540      $4,005,563
  Accounts receivable                1,004,521         439,934
  Inventories (Note 3)               6,617,194       4,611,216
  Prepaid expenses and other                  
  assets                               121,589         323,306
                                                 
    Total current assets             9,839,844       9,380,019
                                                 
Fixed assets, net                    2,224,469       2,974,422
Other assets, net                       70,220          52,698
                                                 
    Total assets                   $12,134,533     $12,407,139
                                                 
Liabilities and Shareholders'                    
Equity
Current liabilities:                             
  Obligations under capital
  leases                                68,000          61,360
  Accounts payable                     857,184         859,693
  Accrued expenses                     625,974       1,041,383
  Customer advances and deposits            -           85,600
  Deferred revenue                   4,280,600       2,496,000
                                                 
    Total current liabilities        5,831,758       4,544,036
                                                 
Obligation under capital leases         40,310          91,937
Long-term debt, net of discount
(Note 5)                             2,202,542              -
Other long-term liabilities            557,715         501,644
                                                 
    Total non-current                      
    liabilities                      2,800,567         593,581
                                                 
Shareholders' equity:                            
  Preferred stock, no par value,              
  500,000 shares authorized, 3,800                 
  and 0 shares issued and           
  outstanding  (Note 4)              3,311,093              -
  Common stock, no par value,                 
  35,000,000 and 25,000,000
  shares authorized,                       
  12,450,404 and 11,989,855
  shares issued and            
  outstanding                       46,094,203      45,114,633
  Deficit accumulated during the              
  development stage                (45,903,088)    (37,845,111)
                                                 
    Total shareholders'                    
    equity                           3,502,208       7,269,522
                                                 
Total liabilities and                 
shareholders' equity               $12,134,533     $12,407,139
</TABLE>
                                
                                
 The accompanying notes are an integral part of these financial statements.    

 
<TABLE>
<CAPTION>
                              ACCENT COLOR SCIENCES, INC.
                             (a development stage company)
                      CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)


                                                                For the
                                                                 period
                                                                  from
                       Three months ended   Nine months ended   inception
                          September 30,       September 30,    May 21,1993)
                                                                 through
                                                               September 30,
                         1998      1997      1998      1997        1998
<S>             <C>          <C>         <C>         <C>        <C>            
Revenue              $664,689   $738,775  $2,002,939 $1,285,182 $3,580,447
                                                      
Costs and expenses:                                              
 Costs of production  861,495  1,914,893   3,638,749  4,443,353 12,307,934
                                                            
 Research and
 development          895,614  2,369,070   3,423,716  6,735,083 23,016,841   
 Marketing, general                                           
 and administrative   885,268    978,753   3,004,740  3,468,964 13,307,533
                                                                
                    2,642,377  5,262,716  10,067,205 14,647,400 48,632,308
                                                                 
Other (income) expense:                                          
 Interest expense      81,740     59,702      96,833    201,399  1,093,213
 Interest income                                             
                      (31,427)  (103,788)   (103,122)  (457,746)  (815,289)  
                       50,313    (44,086)     (6,289)  (256,347)   277,924
                                                                 
Net loss before    (2,028,001)(4,479,855) (8,057,977) (13,105,871)(45,329,785)
extraordinary item     
                                                                 
Extraordinary item:                                              
 Loss on early                                                   
extinguishment of debt,
 net of income taxes of                                          
nil                       -           -          -            -    (573,303)
                                                                 
Net loss           (2,028,001)(4,479,855)(8,057,977) (13,105,871)(45,903,088)
                                                                              
Imputed dividend on                                              
preferred stock (Note 4)  -           -     (920,000)         -    (920,000)  

Net loss applicable to   
common stock    $(2,028,001)$(4,479,855)$(8,977,977)$(13,105,871)$(46,823,088)
                                                                 
Net loss (basic &                                                
diluted) per common      
share (Note 2)          $(.16)     $(.44)     $(.74)      $(1.29)
                                                                 
Weighted average
common shares outstanding
(Note 2)            12,440,308 10,198,422 12,212,415  10,159,539

</TABLE>

The accompanying notes are an integral part of these financial statements.    

<TABLE>
<CAPTION>
                              ACCENT COLOR SCIENCES, INC.
                             (a development stage company)
                      CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                                              
                                                                
                                                              For the
                                                            period from
                                                             inception
                                                           (May 21, 1993)
                                                               through
                          Nine months ended September 30,   September 30,
                                   1998           1997           1998
<S>                                                                 
Cash flows from operating                                   
activities:
  Net loss before imputed      <C>           <C>             <C>   
  dividend                     $(8,057,977)  $(13,105,871)   $(45,903,088)
  Adjustments to reconcile                                  
  net loss to net cash used in
  operating activities:                                   
    Depreciation and
    amortization                   893,588        806,212       3,110,620
    Write-off of deferred   
    offering costs                      -              -           47,264
    Expense related to      
    stock and options                   -         345,230         363,630
    granted
    Debenture issued for    
    services                            -              -           50,000
    Loss on disposal of                
    fixed assets                    15,706         11,460         119,235
    Conversion of accrued   
    interest  to common stock           -              -          231,147
    Extraordinary loss on   
    extinguishment of debt              -              -          573,303
  Changes in assets and                                     
  liabilities:
    Accounts receivable           (564,587)      (430,279)     (1,004,521)
    Inventories                 (2,005,978)    (1,632,660)     (6,617,194)
    Prepaid expenses and    
    other assets                   201,717         91,182        (121,589)
    Accounts payable and    
    accrued expenses              (417,918)       239,878       1,305,637
    Customer advances and   
    deposits                       (85,600)      (943,000)             -
    Deferred revenue             1,784,600        656,000       4,280,600
    Other long-term                                       
    liabilities                     56,071        228,836         557,715
                                                            
  Net cash used in                                      
  operating activities          (8,180,378)   (13,733,012)    (43,007,241)
                                                            
Cash flows from investing                                   
activities:
  Proceeds from sale of fixed 
  assets                             6,875             -           12,399
  Purchases of fixed assets       (138,374)    (1,186,459)     (4,560,622)
  Cost of patents                  (17,825)       (19,553)        (72,591)
                                                            
  Net cash used in                                     
  investing activities            (149,324)    (1,206,012)     (4,620,814)
                                                            
Cash flows from financing                                   
activities:
  Payment of capital lease    
  obligations                      (44,984)       (49,787)       (186,083)
  Net proceeds from issuance  
  of debentures                         -              -        4,839,101
  Proceeds from issuance of   
  warrants                         325,000             -          643,113
  Net proceeds from issuance  
  of common stock                       -              -       38,407,134
  Proceeds from exercise of   
  options & warrants                44,625      1,783,587       2,523,172
  Net proceeds from issuance                                
  of preferred
  stock through offerings        
  and conversion of debt         3,921,038             -        5,351,672
  Increase in long term debt     2,175,000             -        4,398,750
  Repayment of debentures               -      (1,840,830)     (6,205,000)
  Deferred offering costs               -              -          (47,264)     
                             
                                                            
  Net cash provided by                                 
 (used in) financing           
  activities                     6,420,679       (107,030)     49,724,595
                                                            
Net increase           
(decrease) in cash and cash
equivalents                     (1,909,023)   (15,046,054)      2,096,540   
                                                            
Cash and cash                                      
equivalents at beginning of   
period                           4,005,563     20,288,535              -
                                                            
Cash and cash       
equivalents
at end of period                $2,096,540     $5,242,481      $2,096,540

</TABLE>

The accompanying notes are an integral part of these financial statements.   

<TABLE>
<CAPTION>

                              ACCENT COLOR SCIENCES, INC.
                             (a development stage company)
              CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
             


                                                      Deficit
                                                     Accumulated 
                                                     During the
                   Common Stock     Preferred Stock  Development
                  Shares   Amount   Shares   Amount    Stage      Total
<S>              <C>       <C>       <C>    <C>         <C>       <C>
Proceeds from                
sale                 3,900   $21,800    -       $ -       $  -      $21,800
Net loss                -         -     -         -      (45,398)   (45,398)
                                                                
December 31, 1993    3,900    21,800    -         -      (45,398)   (23,598)
                                                                
Stock split      1,751,100       -      -         -           -          -
Conversion of     
debentures              -        -   74,360   371,804         -     371,804
Proceeds from    
sale                    -        -  160,000   643,770         -     643,770
Conversion of                                                   
promissory
notes               42,000   50,000     -         -           -      50,000
Reclassification        -   (20,500)    -         -           -     (20,500)
Shares issued for 
services                -        -   15,000    75,000         -      75,000
Net loss                -        -      -         -     (1,153,533)(1,153,533) 
December 31, 1994 1,797,000  51,300  249,360  1,090,574 (1,198,931)  (57,057)
                                                                
Proceeds from           
sale                    -        -    75,000   340,060        -     340,060
Exercise of       
warrants           297,840  694,960     -         -           -     694,960
Options granted                                                 
to service
Provider                -    18,400     -         -           -      18,400
Warrants issued   
with debt               -    56,631     -         -           -      56,631
Net loss                -        -      -         -     (4,216,955)(4,216,955) 
                                                                                
December 31, 1995 2,094,840 821,291  324,360 1,430,634  (5,415,886)(3,163,961)
                                                                 
Warrants issued   
with debt               -   138,032     -         -            -     138,032
Proceeds from    
sale              2,625,000 9,460,044   -         -            -   9,460,044
Warrants issued   
with debt               -   123,450     -         -            -     123,450
Proceeds from                                                   
initial public
Offering          3,450,000 24,409,464  -         -            -  24,409,464
Conversion of                                                   
Series III
Debentures          607,626  2,116,575  -         -            -   2,116,575
Conversion of                                                   
Preferred
Stock             1,362,309  1,430,634 (324,360)(1,430,634)    -         -
Net loss                -         -     -         -      (13,738,661)(13,738,661)
                                                                
December 31, 1996 10,139,775 38,499,490 -         -      (19,154,547) 19,344,943
                                                                
Exercise of 
options              92,250    465,067  -         -            -        465,067
Exercise of      
warrants            394,091  1,445,000  -         -            -       1,445,000
Shares issued in                                                
connection with   
the Xerox
agreement            50,000    218,750  -         -            -         218,750
Proceeds from    
sale              1,313,739  4,486,326  -         -            -       4,486,326
Net loss                 -         -    -         -      (18,690,564)(18,690,564)
                                                                
December 31, 1997 11,989,855 45,114,633 -         -      (37,845,111)  7,269,522
                                                                
Proceeds from 
sale                    -          -  4,500  3,921,038         -       3,921,038
Exercise of       
options              37,500     44,625  -         -            -          44,625
Conversion of                                                   
Series B          
Preferred    
Stock               423,049    609,945 (700)  (609,945)        -              -
Warrants issued   
with debt                -     325,000   -        -            -         325,000
Net loss before                                                 
imputed dividend         -          -    -        -     (8,057,977)    (8,057,977)

September 30,     
1998 (unaudited) 12,450,404 $46,094,203 3,800 $3,311,093 $(45,903,088) $3,502,208

</TABLE>

The accompanying notes are an integral part of these financial statements.    
                              
                                
1.   Interim Condensed Financial Statements
In the opinion of the Company, the accompanying unaudited
condensed financial statements contain all adjustments,
consisting only of normal recurring adjustments, necessary to
present fairly its financial position as of September 30, 1998
and the results of operations and cash flows for the three and
nine months ended September 30, 1998 and 1997 and the period from
inception (May 21, 1993) through September 30, 1998.  The
December 31, 1997 balance sheet has been derived from the
Company's audited financial statements at that date. These
interim condensed financial statements should be read in
conjunction with Management's Discussion and Analysis and
financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.

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

2. Summary of Significant Accounting Policies
Significant accounting policies followed in the preparation of
these financial statements are as follows:

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

Revenue Recognition
Revenue is generally recognized upon product shipment and
customer acceptance.  The Company has established warranty
policies that, under specific conditions, enable customers to
return products.  The Company establishes liabilities for
estimated returns and allowances at the time of revenue
recognition.  Until such time that the Company has adequate
information to estimate future returns, revenue resulting from
Truecolor Systems is deferred until the end of the warranty
period.

Net Loss Per Common Share
In the fourth quarter of 1997, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings per Share," for
all periods presented.  Basic earnings per share computations are
determined based on the weighted average number of shares
outstanding during the period. The effect of the exercise and
conversion of all securities, including stock options and
warrants would be antidilutive and thus is not included in the
diluted earnings per share calculation.

3.   Inventories
Inventories consist of the following:


                             September 30,  December 31,
                                 1998          1997
                                             
Raw materials and components  $1,924,150    $1,590,386                     
Work-in-process                  291,808       403,585
Finished goods                 4,401,236     2,617,245
                              ----------    ----------
                              $6,617,194    $4,611,216   
                              ==========    ==========                   


4. Shareholders' Equity
On January 13, 1998 the Company completed a private equity
financing providing net proceeds to the Company of $3.9 million.
In connection with the financing, the Company issued 4,500 shares
of Series B Convertible Preferred Stock at a price of $1,000 per
share and warrants to purchase the Company's common stock.  The
warrants issued are exercisable into 300,000 shares of common
stock with an exercise price of $2.75 and an expiration date of
January 9, 2003.  Additionally, warrants exercisable into 115,385
shares of common stock with an exercise price of $2.50 and an
expiration date of January 9, 2003 were issued to the placement
agent for services provided.  In connection with the sale of the
units, the Company agreed to register the common stock issuable
upon the conversion of the Series B Convertible Preferred Stock
and the execution of the warrants.

The Series B Convertible Preferred Stock ("Series B Stock"), no
par value per share, is convertible into such number of shares of
common stock as is determined by dividing the stated value
($1,000) of each share of Series B Stock (as such value is
increased by an annual premium of 6%) by the then current
conversion price of the Series B Stock (which is determined,
generally, by reference to 85% of the average of the closing
market price of the common stock during the five consecutive
trading days immediately preceding the date of determination)
subject to certain restrictions and adjustments.  The Series B
Stock has voting rights as defined in the Company's Certificate
of Incorporation, bears no dividends and ranks prior to the
Company's Common Stock and Series A Preferred Stock. In the event
of any voluntary or involuntary liquidation of the Company, the
Series B holders shall be entitled to a liquidation preference
equal to the stated value of the stock plus the accrued premium
through the date of final distribution.  Upon occurrence of
specific events, as defined in the agreement, the holder may
redeem the Series B Stock for cash or shares at the option of the
Company.  The Company also has optional redemption rights.

The Company initially reserved 6,300,000 shares of common stock
for issuance pursuant to the conversion of the Series B Stock.
This number of shares represents an estimate based on 200% of the
number of common shares that would have been issuable upon
conversion with an exercise price of $1.875 per share (4,800,000)
and 1,500,000 shares issuable under the terms of the Certificate
of Designation in the event of certain failures by the Company to
comply with various provisions thereof.  In addition, 415,385
shares of common stock, subject to adjustments in accordance with
the terms of each warrant, were reserved for issuance pursuant to
the exercise of the warrants described above.

On August 10, 1998, pursuant to the terms of the Certificate of
Designation and approval by the Board of Directors, the Company
increased the number of reserved shares of common stock for
issuance upon the conversion of the Series B Stock by 2,567,652
shares.  This was done because the reserved amount had fallen
below 135% of the number of shares of common stock issuable upon
conversion of the then outstanding shares of Series B Stock for
three consecutive trading days.  As a result, at September 30,
1998, there were 8,444,603 shares of common stock reserved for
issuance pursuant to the conversion of the remaining 3,800 shares
of Series B Stock issued and outstanding.  The actual number of
shares issuable upon conversion could be materially less or more
than this number depending on factors that cannot be predicted by
the Company.  The number of shares issuable upon conversion is
dependent on (a) the market price of the common stock at the time
of the conversion and (b) the Company's ability to maintain its
NASDAQ listing.  As of September 30, 1998, 700 shares of Series B
Stock were converted into 423,049 shares of common stock at an
average conversion price of $1.60 per share.

The terms of conversion of the Series B Stock issued in January
1998 afforded the holders a conversion price lower than the
market price of the common stock at the time of issuance.  The
difference between the conversion price and market price was
treated as an imputed (non-cash) dividend for purposes of
calculating net loss per common share, although no assets of the
Company were expended.  The imputed dividend is approximately
$920,000 and has the effect of increasing the net loss per common
share by $.08 per share for the nine months ended September 30,
1998.  The imputed dividend will be given no other accounting
treatment in the 1998 financial statements of the Company and
beyond.

Depending on the number of shares of Series B Stock converted
into common shares and the timing of such conversions, the
transactions may result in further Section 382 annual limitations
of net operating loss carryforwards.


5. Long-term Debt
On July 21, 1998, the Company entered into a loan agreement with
International Business Machines Corporation ("IBM") to borrow
$2.5 million at a fixed interest rate of 10% per year.  Interest
payments are due quarterly beginning October 1, 1998.  The loan
is due in full on December 31, 2000 and is secured by the assets
and intellectual property of the Company.  As part of the loan
agreement, the Company issued a warrant to IBM that provides the
right to purchase 500,000 shares of common stock at an exercise
price of $2.50 per share, until the warrant expires on July 21,
2003.  The warrant was valued at $325,000, which was allocated to
common stock with an equivalent discount on the loan.  The
discount is being amortized over the life of the loan resulting
in a non-cash charge to interest expense.  Amortization expense
was $27,542 for the quarter ended September 30, 1998.

6. Stock Option Modification
On September 21, 1998, in an effort to retain key personnel, the
Board of Directors approved a modification of the outstanding
options under the 1995 Stock Option Plan for all active employees
and directors of Accent Color Sciences, Inc.  Each option holder
could elect to continue to hold their existing options or could
have the Company re-price their options to an exercise price of
$1.00 per share, the fair market value of the common stock as of
September 29, 1998.  In return for a lower exercise price, the
vesting period for such options was extended for one year.  The
weighted average exercise price of all options outstanding was
reduced from $2.90 per share at June 30, 1998 to $1.26 per share
after the re-pricing.  No compensation expense was recognized
pursuant to this modification because the exercise price of the
modified stock option equaled the market price of the common
stock on the date of the re-pricing.

7. Nasdaq Listing Requirement
As of September 30, 1998, the Company was not in compliance with
the net tangible asset requirement for continued listing on the
Nasdaq National Market.  The Company is reviewing various
strategies to increase its net tangible assets and restore
compliance with this requirement.  If its common stock cannot
remain listed on the Nasdaq National Market, the Company would
seek to have it listed on the Nasdaq Small Capitalization Market,
although the Company can give no assurance that this will occur.



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

Results of Operations
Quarter Ended September 30, 1998 compared to Quarter Ended
September 30, 1997.

System Shipments.  A total of sixteen systems were shipped in the
quarter ended September 30, 1998 compared to thirteen systems in
the quarter ended September 30, 1997.  Shipments for the third
quarter of 1998 included fifteen Truecolor System upgrades and
one new system.  These systems were recorded as deferred revenue
in accordance with the revenue recognition policy of the Company.
Backlog of Truecolor Systems as of September 30, 1998, consisted
of thirty-six systems totaling approximately $4,300,000 of which
nineteen are scheduled to be shipped during the fourth quarter.

Revenue Recognized.  The Company currently sells its Truecolor
System with a 90-day warranty.  Until such time that the Company
has adequate history to estimate future warranty costs, revenue
resulting from the shipment of Truecolor Systems will be deferred
until the end of the warranty period.  The Company expects to
obtain a sufficient amount of history to estimate future warranty
costs by the end of the fourth quarter of 1998, which will then
allow the Company to recognize revenue on Truecolor Systems upon
shipment.  Revenue recognition on consumables and spare parts
occurs upon shipment.  The Company recognized revenue on one
system, totaling $140,000, for the quarter ended September 30,
1998 compared to three systems, totaling $450,000, for the
quarter ended September 30, 1997.  As of September 30, 1998,
there were twenty-eight new systems and twenty-three upgrades,
totaling $4,280,000, in deferred revenue yet to be recognized as
revenue by the Company.

Consumables and spare parts sales were $525,000 for the quarter
ended September 30, 1998 compared to $289,000 for the quarter
ended September 30, 1997.  Sales of consumables and spare parts
were higher in the third quarter of 1998 compared to the third
quarter of 1997 as our OEM customers have continued to fill their
sales and support channels for the wide-head version of the
Truecolor System.

Costs of Production.  Costs of production decreased 55% from
$1,915,000 for the quarter ended September 30, 1997 to $861,000
for the quarter ended September 30, 1998.  This decrease was
primarily attributed to (i) a decrease in system sales in the
third quarter of 1998 compared to the third quarter of 1997, (ii)
less manufacturing overhead payroll costs due to the reduction in
personnel, and (iii) a reduction in various operating costs
associated with production.  These items were partially offset by
an increase in cost of sales for consumables and spare parts
totaling approximately $100,000 due to higher sales in the third
quarter of 1998 compared to the third quarter of 1997.

Research and Development Expenses.  Research and development
expenses decreased 62% from $2,369,000 for the quarter ended
September 30, 1997 to $896,000 for the quarter ended September
30, 1998 as the Company directed its efforts toward production,
sales and market development with a less significant emphasis on
research and development.  The decrease in research and
development expenses was primarily attributed to four major
factors: (i) a reduction in payroll related costs due to the
reduction in personnel during 1998, (ii) the Company's completion
of payments, in 1997, to Spectra, Inc. ("Spectra") to maintain
exclusivity rights, (iii) a reduction in design and development
costs paid to Spectra associated with the development of the ink
jet printheads for the enhanced wide-head version of the
Truecolor System, and (iv) a decrease in general design and
development expenses.

Marketing, General and Administrative Expenses.  Marketing,
general and administrative expenses decreased 10% from $979,000
for the quarter ended September 30, 1997 to $885,000 for the
quarter ended September 30, 1998.  This decrease was primarily
due to less payroll related costs as a result of the reduction in
personnel in addition to a reduction in professional fees and
other administrative expenses.  These items were offset by an
increase in Marketing and Service costs of approximately
$140,000, which primarily encompassed costs incurred for travel
and consultants to support the increased sales and marketing
efforts and a reclassification of service related costs.  Service
costs, consisting primarily of technical support, were classified
as costs of production during 1997.  Beginning in the second
quarter of 1998, such costs are now classified as marketing,
general and administrative.

Interest Expense and Other (Income) Expense.  Interest expense
increased 37% from $60,000 for the quarter ended September 30,
1997 to $82,000 for the quarter ended September 30, 1998.  This
increase was primarily attributed to interest expense and
amortization of the debt discount associated with the loan
obtained from IBM in July 1998.  Interest income decreased 70%
from $104,000 for the quarter ended September 30, 1997 to $31,000
for the quarter ended September 30, 1998.  This decrease was
attributed to a greater amount of cash available for investment
in the third quarter of 1997 as compared to the third quarter of
1998, as the Company still retained funds from the initial public
offering in December 1996.

Nine Months Ended September 30, 1998 compared to Nine Months
Ended September 30, 1997.

System Shipments. A total of thirty-two systems were shipped in
the nine months ended September 30, 1998 compared to seventeen
systems in the nine months ended September 30, 1997.  Shipments
for the first nine months of 1998 included twenty-three Truecolor
System upgrades and nine new systems.  Upon shipment, such
systems were recorded as deferred revenue in accordance with the
revenue recognition policy of the Company.

Revenue Recognized.  System sales were $827,000 for the nine
months ended September 30, 1998 compared to $450,000 for the nine
months ended September 30, 1997.  Sales for the first nine months
of 1998 consisted of revenue recognized on nine systems, of which
two were Truecolor System upgrades.

Consumables and spare parts sales were $1,176,000 for the nine
months ended September 30, 1998 compared to $835,000 for the nine
months ended September 30, 1997.  This increase was attributed to
our OEM customers continuing to fill their sales and support
channels for the enhanced wide-head Truecolor System.

Costs of Production.  Costs of production decreased 18% from
$4,443,000 for the nine months ended September 30, 1997 to
$3,639,000 for the nine months ended September 30, 1998.  This
decrease was primarily attributed to less payroll costs due to
the reduction in personnel in addition to a decrease in
recruiting costs and other production related expenses.  These
items were partially offset by an increase in cost of sales for
systems and spare parts totaling approximately $605,000 due to
higher sales in the first nine months of 1998 compared to the
first nine months of 1997.

Research and Development Expenses.  Research and development
expenses decreased 49% from $6,735,000 for the nine months ended
September 30, 1997 to $3,424,000 for the nine months ended
September 30, 1998 as the Company directed its efforts toward
production, sales and market development with a less significant
emphasis on research and development.  The decrease in research
and development expenses was primarily attributed to four major
factors: (i) a reduction in payroll related costs due to the
reduction in personnel during 1998, (ii) the Company's
completion, in 1997, of payments to Spectra to maintain
exclusivity rights, (iii) a reduction in design and development
costs paid to Spectra related to the development of the ink jet
printheads for the enhanced wide-head version of the Truecolor
System, and (iv) a decrease in design and development expenses
and materials procured for research and development.

Marketing, General and Administrative Expenses.  Marketing,
general and administrative expenses decreased 13% from $3,469,000
for the nine months ended September 30, 1997 to $3,005,000 for
the nine months ended September 30, 1998.  This decrease was
primarily attributed to a reduction in related payroll costs due
to the  reduction in personnel during 1998 in addition to a
decrease in costs incurred for professional services, primarily
legal and consulting fees.  Marketing and Service costs, however,
increased by approximately $390,000, which encompassed costs
incurred for trade shows, travel and consultants to support the
increased sales and marketing efforts in 1998 and a
reclassification of service related costs.  Service costs,
consisting primarily of technical support, were classified as
costs of production during 1997.  Beginning in the second quarter
of 1998, such costs are now classified as marketing, general and
administrative.

Interest Expense and Other (Income) Expense.  Interest expense
decreased 52% from $201,000 for the nine months ended September
30, 1997 to $97,000 for the nine months ended September 30, 1998.
This decrease was primarily attributed to the elimination of
interest expense resulting from the final payment of outstanding
debt with Xerox Corporation in the second half of 1997.  Interest
income decreased 78% from $458,000 for the nine months ended
September 30, 1997 to $103,000 for the nine months ended
September 30, 1998.  This decrease in interest income was
attributed to a greater amount of cash available for investment
in the first nine months of 1997 as compared to the first nine
months of 1998, primarily due to the Company's initial public
offering in December 1996.

Liquidity and Capital Resources
The Company's need for funding has continued from period to
period as it has increased its marketing and sales efforts,
continued its research and development activities for the
enhancement of Truecolor Systems and increased production of
Truecolor Systems.  To date, the Company has financed its
operations through customer payments, borrowings and sale of
equity securities.

Through September 30, 1998, the Company had received $7.8 million
from the delivery of Truecolor Systems to customers, net proceeds
of $10.3 million from borrowings and the sale of debt securities,
net proceeds of $2.5 million from the exercise of warrants and
stock options and net proceeds of $43.4 million from the sale of
equity securities.  Of the net equity proceeds, $24.4 million was
raised in the Company's initial public offering in December 1996
and the balance of $19.0 million was raised through the private
placement of equity securities.

As of September 30, 1998, the Company's primary source of
liquidity was cash and cash equivalents totaling $2.1 million.

Operating activities consumed $8.2 million in cash during the
first nine months of 1998 compared to $13.7 million in the first
nine months of 1997.  This decrease was primarily attributed to a
decrease in the net loss of the Company, a reduction in prepaid
expenses and an increase in deferred revenue due to system
shipments.  This was partially offset by an increase in
inventories and a decrease in accounts payable and other long-
term liabilities.

Capital expenditures decreased 89% from $1.2 million for the nine
months ended September 30, 1997 to $138 thousand for the nine
months ended September 30, 1998.  This decrease was primarily
attributed to leasehold improvements made in the first quarter of
1997 to occupy the second floor of the facility currently leased
by the Company and purchases of manufacturing and test equipment
throughout the first nine months of 1997 to support the Company's
development and manufacturing efforts.  The Company's planned
capital expenditures for the remainder of 1998 are approximately
$415,000 and will be primarily to support the manufacturing
capabilities of the Company.

On July 21, 1998, the Company entered into a loan agreement with
IBM to borrow $2.5 million at a fixed interest rate of 10% per
year.  Interest payments are due quarterly beginning October 1,
1998.  The loan is due in full on December 31, 2000 and is
secured by the assets and intellectual property of the Company.
As part of the loan agreement, the Company issued a warrant to
IBM that provides the right to purchase 500,000 shares of common
stock at an exercise price of $2.50 per share, until the warrant
expires on July 21, 2003.  The warrant was valued at $325,000,
which was allocated to common stock with an equivalent discount
on the loan.  The discount is being amortized over the life of
the loan resulting in a non-cash charge to interest expense.
Amortization expense was $27,542 for the quarter ended September
30, 1998.

As of September 30, 1998, the Company was not in compliance with
the net tangible asset requirement for continued listing on the
Nasdaq National Market.  The Company is reviewing various
strategies to increase its net tangible assets and restore
compliance with this requirement.  If its common stock cannot
remain listed on the Nasdaq National Market, the Company would
seek to have it listed on the Nasdaq Small Capitalization Market,
although the Company can give no assurance that this will occur.

Based on the current operating plan of the Company, the primary
requirements for cash through the remainder of 1998 will be to
fund operating losses, marketing and sales efforts, commercial
production of the enhanced Truecolor System and the further
development and enhancement of the Company's products. The
Company's currently planned research and development activities
are focused on value engineering to improve system profit margin
and developing higher resolution ink jet printing.

Under the current operating plan, the Company believes that its
existing cash resources and the funds obtained through the loan
agreement with IBM will be sufficient for the financing of its
operations and capital expenditures through the fourth quarter of
1998.  In the event the Company is unsuccessful in achieving its
operating plan, the Company would expect to reduce costs and
capital acquisitions in order to fund cash requirements through
the end of 1998.  The Company is continuing to review various
financing strategies, both debt and equity, that would enable it
to fund operations in 1999.  The Company is a development stage
company and it is expected that quarterly net losses will
continue through at least the third quarter of 1999.


Year 2000
The Year 2000 date issue arises from the fact that many computer
programs use only two digits rather than four to define the
applicable year.  The Company is currently assessing its major
internal management systems for Year 2000 readiness.  This
assessment includes identification of all critical information
management systems, testing Year 2000 readiness of such systems
and making corrective fixes or replacing non-compliant systems.
The Company's plan also includes obtaining compliance
verification from third party vendors supplying critical
software, and communication with significant suppliers to
determine their plans to address their own Year 2000 issues.  The
Company has not completed its assessment, but intends to make any
corrective action necessary as a result of such review.  All
costs associated with internal Year 2000 readiness has not been,
and is not expected to be, material to the Company's business,
financial condition or results of operations.  The Company
expects to complete its Year 2000 assessment by June 1999.

The Company presently believes that with modifications of current
software and conversions to new software, the Year 2000 issues
can be mitigated.  However, the Company may not timely identify
and remediate all significant Year 2000 problems and remedial
efforts may involve significant time and expense.  There can be
no assurance that the Year 2000 compliance problems of the
Company or its customers or suppliers will not have a material
effect on the Company's business, financial condition or results
of operation.


Forward-Looking Statements
The foregoing statements and analysis contain forward-looking
statements and information including information with respect to
the Company's plans and strategy for its business.  Such forward-
looking statements are made pursuant to the "safe harbor"
provisions of Section 21E of the Securities Exchange Act of 1934,
as amended, which were enacted as part of the Private Securities
Litigation Reform Act of 1995.  Forward-looking statements
contained in the foregoing analysis include marketing, revenue
and expenditure expectations, and other strategies and
anticipated events. Without limiting the foregoing, the words
"believes", "anticipates", "plans", "expects" and similar
expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause actual
events or the Company's actual results to differ materially from
those indicated by such forward-looking statements.  These
factors include, without limitation, (i) the level of customer
acceptance of the Company's products; (ii) the ability of the
Company to raise capital sufficient to support its business plan;
(iii) the ability of the Company to remain listed on the Nasdaq
National Market; (iv) the dependence of the Company on third
party suppliers for certain key technology elements; (v) the
dependence of the Company on third party marketing, distribution
and support, including the control by the Company's OEM customers
over the timing of the introduction of its products and the need
for the Company to complete and satisfy extensive testing
requirements of its products on a timely basis; (vi) the
potential fluctuations in the Company's quarterly results of
operations; and (vii) the ability of the Company to identify and
remediate significant internal Year 2000 problems and ensure that
corrective action, if necessary, is being taken by the Company's
customers and suppliers.  Further information on factors that
could cause actual results to differ from those anticipated is
detailed in the Company's Annual Report on Form 10-K for 1997 as
filed with the Securities and Exchange Commission.  Any forward-
looking information contained herein should be considered in
light of these factors.
Part II.  Other Information

Item 1.  Legal Proceedings

The Company is not a party to any material legal proceedings.

Item 2.  Changes in Securities and Use of Proceeds

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to a Vote of Security Holders
None.
Item 5.  Other Information
None.
Item 6.  Exhibits and Reports on Form 8-K
(a)  Exhibits
Exhibit 10.1 - Loan Agreement between the Company and
International Business Machines Corporation.
Exhibit 10.2 - Promissory Note between the Company and
International Business Machines Corporation.
Exhibit 10.3 - Security Agreement between the Company and
International Business Machines Corporation.
Exhibit 27 - Financial data schedule

(b)  Reports filed on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
September 30, 1998.

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.

                                   ACCENT COLOR SCIENCES, INC.
   
   
   Dated     November 16, 1998     By /s/ Charles E. Buchheit
                                     Charles E. Buchheit
                                        President and Chief
                                        Executive Officer
   
                                   By /s/ Patrick J. Pedonti
                                     Patrick J. Pedonti
                                        Vice President and Chief
                                        Financial Officer
                                       (Principal Financial and
                                        Accounting Officer)