<PAGE> 1
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, DC   20549


                               -----------------


                                   FORM 10-Q



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



                           ------------------------



For the quarter ended June 30, 1998          Commission File No. 0-20600
                      -------------                              -------


                             ZOLTEK COMPANIES, INC.
                             ----------------------
            (Exact name of registrant as specified in its charter)

        Missouri                                                  43-1311101
        --------                                                  ----------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification No.)

3101 McKelvey Road, St. Louis, Missouri                                63044
---------------------------------------                                -----
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code:  (314) 291-5110

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes  x   No
                                                    ---     ---

Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of the latest practicable date:  As of August 14, 1998,
16,216,338 shares of Common Stock, $.01 par value, were outstanding.



<PAGE> 2

PART I.     FINANCIAL INFORMATION
Item 1.     FINANCIAL STATEMENTS

<TABLE>
                                            ZOLTEK COMPANIES, INC.
                                         CONSOLIDATED BALANCE SHEET
                                         --------------------------
                         (Amounts in thousands, except share and per share amounts)
<CAPTION>
                                                                                 JUNE 30,        SEPTEMBER 30,
                                                                                   1998              1997
                                                                                -----------      -------------
                                                                                (Unaudited)
<S>                                                                              <C>               <C>
ASSETS
Current assets:
     Cash and cash equivalents                                                   $  8,203          $ 41,148
     Marketable securities                                                         26,969            18,302
     Accounts receivable, less allowance for doubtful accounts of $277 and
       $331, respectively                                                          14,142            14,163
     Inventories                                                                   20,707            12,487
     Prepaid expenses                                                                 598               402
     Other receivables                                                              1,406             1,636
                                                                                 --------          --------
         Total current assets                                                      72,025            88,138
Property and equipment, net                                                        68,006            51,382
Other assets                                                                          793               442
                                                                                 --------          --------
         Total assets                                                            $140,824          $139,962
                                                                                 ========          ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Short-term notes payable                                                    $  1,853          $  1,853
     Current maturities of long-term debt                                             907               907
     Trade accounts payable                                                         8,263            10,599
     Accrued expenses and other liabilities                                         3,820             5,099
     Income taxes payable                                                             254               124
                                                                                 --------          --------
         Total current liabilities                                                 15,097            18,582
Other long-term liabilities                                                           272               243
Long-term debt, less current maturities                                             3,665             4,295
Deferred income taxes                                                               1,427             1,006
                                                                                 --------          --------
                                                                                   20,461            24,126
                                                                                 --------          --------
Shareholders' equity:
     Preferred stock, $.01 par value, 1,000,000 shares authorized,
       no shares issued or outstanding                                                  -                 -
     Common stock, $.01 par value, 50,000,000 shares authorized,
       16,216,338 shares issued and outstanding                                       162               162
     Additional paid-in capital                                                    99,954            99,954
     Cumulative translation adjustment                                            (12,415)           (8,512)
     Retained earnings                                                             32,662            24,232
                                                                                 --------          --------
                                                                                  120,363           115,836
                                                                                 --------          --------
         Total liabilities and shareholders' equity                              $140,824          $139,962
                                                                                 ========          ========

           The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>


                                    2
<PAGE> 3
                                                 ZOLTEK COMPANIES, INC.
<TABLE>
                                            CONSOLIDATED STATEMENT OF INCOME
                                            --------------------------------
                                     (Amounts in thousands, except per share data)
                                                      (Unaudited)
<CAPTION>
                                                                                THREE MONTHS            NINE MONTHS
                                                                               ENDED JUNE 30,          ENDED JUNE 30,
                                                                              ----------------        ---------------
                                                                              1998        1997        1998        1997
                                                                              ----        ----        ----        ----
<S>                                                                         <C>         <C>         <C>         <C>
Net sales                                                                   $18,868     $22,945     $63,658     $67,828
Cost of sales                                                                13,103      16,059      44,241      48,723
                                                                            -------     -------     -------     -------
        Gross profit                                                          5,765       6,886      19,417      19,105
Selling, general and administrative expenses                                  3,482       3,471       9,333       9,598
                                                                            -------     -------     -------     -------
Operating income                                                              2,283       3,415      10,084       9,507
Other income (expense):
        Interest expense                                                       (129)       (130)       (368)       (687)
        Interest income                                                         593       1,053       2,150       3,027
        Other, net                                                              (16)          2        (155)        (47)
                                                                            -------     -------     -------     -------
Income before income taxes                                                    2,731       4,340      11,711      11,800
Provision for income taxes                                                    1,032       1,087       3,281       2,889
                                                                            -------     -------     -------     -------
        Net income                                                          $ 1,699     $ 3,253     $ 8,430     $ 8,911
                                                                            =======     =======     =======     =======

Net income per share:
        Basic net income per share                                          $  0.10     $  0.20     $  0.52     $  0.55
        Diluted net income per share                                           0.10        0.19        0.51        0.54

Weighted average common shares outstanding                                   16,216      16,210      16,216      16,210
Weighted average common and common equivalent shares outstanding             16,487      16,683      16,524      16,647


                 The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>


                                    3
<PAGE> 4

                                                 ZOLTEK COMPANIES, INC.
<TABLE>
                                          CONSOLIDATED STATEMENT OF CASH FLOWS
                                          ------------------------------------
                                                 (Amounts in thousands)
                                                      (Unaudited)
<CAPTION>
                                                                                            NINE MONTHS ENDED JUNE 30,
                                                                                            --------------------------
                                                                                               1998           1997
                                                                                               ----           ----
<S>                                                                                          <C>            <C>
Cash flows from operating activities:
       Net income                                                                            $  8,430       $  8,911
       Adjustments to reconcile net income to net cash provided by operating activities:
            Depreciation and amortization                                                       2,419          1,994
            Unrealized foreign exchange (gain) loss                                               133           (277)
            Other, net                                                                             66             99
       Changes in assets and liabilities:
               Increase in accounts receivable                                                   (868)        (3,597)
               (Increase) decrease in other receivables                                            35           (757)
               Increase in inventories                                                         (9,222)          (697)
               Increase in prepaid expenses and other assets                                     (656)          (261)
               Increase (decrease) in trade accounts payable                                   (1,807)         3,746
               Increase (decrease) in accrued expenses and other liabilities                     (491)           483
               Increase in income taxes payable and deferred taxes                                602            827
               Increase (decrease) in other long-term liabilities                                  30           (507)
                                                                                             --------       --------
         Total adjustments                                                                     (9,759)         1,053
                                                                                             --------       --------
   Net cash provided (used) by operating activities                                            (1,329)         9,964
                                                                                             --------       --------

   Cash flows from investing activities:
       Payments for purchase of property and equipment                                        (22,385)       (14,473)
       Purchase of marketable securities                                                       (8,667)       (43,130)
                                                                                             --------       --------
   Net cash used by investing activities                                                      (31,052)       (57,603)
                                                                                             --------       --------

   Cash flows from financing activities:
       Exercise of stock options                                                                    -             11
       Proceeds from issuance of notes payable                                                      -          5,647
       Increase in notes receivable                                                                80            131
       Repayment of notes payable                                                                (629)        (7,891)
                                                                                             --------       --------
   Net cash used by financing activities                                                         (549)        (2,102)
                                                                                             --------       --------
   Effect of exchange rate changes on cash                                                        (15)           (24)
                                                                                             --------       --------
   Net decrease in cash                                                                       (32,945)       (49,765)
   Cash and cash equivalents at beginning of period                                            41,148         75,447
                                                                                             --------       --------
   Cash and cash equivalents at end of period                                                $  8,203       $ 25,682
                                                                                             ========       ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
   Interest                                                                                  $    359       $    786
   Income taxes                                                                                 2,679          2,061

                 The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>


                                    4
<PAGE> 5


                        ZOLTEK COMPANIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             ------------------------------------------

1.    UNAUDITED FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments of a normal and recurring nature
necessary for a fair presentation of the financial position and results of
operations as of the dates and for the periods presented.  These financial
statements should be read in conjunction with the Company's 1997 Annual
Report which includes consolidated financial statements and notes thereto as
of and for the fiscal year ended September 30, 1997.  Certain
reclassifications have been made to conform prior year's data to the current
presentation.  The results for the quarter and nine months ended June 30,
1998 are not necessarily indicative of the results which may be expected for
the fiscal year ending September 30, 1998.


2.    PRINCIPLES OF CONSOLIDATION

Zoltek Companies, Inc. (the "Company") is a holding company, which owns the
stock of the Company's operating subsidiaries, Zoltek Corporation ("Zoltek"),
Zoltek Rt. (formerly known as Zoltek Magyar Viscosa Rt.), Zoltek Properties,
Inc. and Composite Intermediates Corporation.  Zoltek is an applied
technology and materials company primarily focused on the low cost
manufacturing and application of carbon fibers used as reinforcement in
composite materials.  Zoltek Rt.. manufactures and markets carbon fibers,
acrylic and nylon products and fibers to the textile industry and has begun
to supply acrylic fiber precursor to the Company's carbon fiber manufacturing
operations.

Zoltek Rt.'s consolidated balance sheet was translated from Hungarian Forints
to U.S. Dollars at the exchange rate in effect at the balance sheet date,
while its consolidated statement of income was translated using the average
exchange rates in effect during the period.  Adjustments resulting from
foreign currency transactions are recognized in income, whereas adjustments
resulting from the translation of financial statements are reflected as a
separate component of shareholders' equity.  These financial statements have
been prepared in accordance with U.S. generally accepted accounting
principles.  All significant intercompany transactions and balances have been
eliminated upon consolidation.


3.    CASH AND CASH EQUIVALENTS

All highly liquid investments purchased with a maturity of three months or
less are considered to be cash equivalents.  Such investments amounted to
$4.2 million and $41.1 million at June 30, 1998 and September 30, 1997,
respectively.

4.    INVENTORIES

            Inventories consist of the following:

<TABLE>
<CAPTION>
                                                   JUNE 30,     SEPTEMBER 30,
                                                     1998           1997
                                                   --------     -------------
                                                   (Amounts in thousands)
                  <S>                              <C>            <C>
                  Raw materials                    $ 5,543        $ 5,886
                  Work-in-process                    1,212          1,008
                  Finished goods                    13,570          5,076
                  Supplies, spares and other           382            517
                                                   -------        -------
                                                   $20,707        $12,487
                                                   =======        =======
</TABLE>


                                    5
<PAGE> 6

5.    PROPERTY AND EQUIPMENT

            Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                    JUNE 30,       SEPTEMBER 30,
                                                      1998             1997
                                                    --------       -------------
                                                     (Amounts in thousands)
            <S>                                    <C>                <C>
            Land                                   $  1,083           $ 1,176
            Buildings and improvements               24,512            22,467
            Machinery and equipment                  49,609            33,591
            Furniture and fixtures                    3,597             3,315
                                                   --------           -------
                                                     78,801            60,549
            Less:  accumulated depreciation         (10,795)           (9,167)
                                                   --------           -------
                                                   $ 68,006           $51,382
                                                   ========           =======
</TABLE>

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

GENERAL
-------

The Company achieved substantial growth in its carbon fibers business from
fiscal 1992 to fiscal 1997.  The Company's sales of carbon fibers grew from
$3.0 million to $23.2 million during this period.  Most of the sales were for
specialty applications, however, the Company believes that the market for its
low-cost carbon fibers for broader applications presents its greatest
opportunities.  The Company presently is pursuing a strategic expansion plan
to capitalize on the perceived growth potential for low-cost carbon fibers.

The Company began its current strategic expansion program in fiscal 1996.  To
support the Company's growth strategy, it completed a secondary stock
offering in September 1996.  The Company sold 2.3 million shares of Common
Stock and received net proceeds of $68.9 million.  The Company is utilizing
the net proceeds, together with internally generated funds, to finance the
planned expansion of its carbon fibers manufacturing capacity, from its
year-end 1996 annual rated capacity of approximately 3.5 million pounds to an
aggregate of 40 million pounds in the United States and Hungary by the end of
fiscal year 2000.  The Company has developed a standardized continuous
carbonization line design to optimize the technical process capabilities,
reduce equipment cost and shorten lead time for future expansion between the
decision to add capacity and when lines become operational.

During the fourth quarter of fiscal 1997, the Company completed construction
of five continuous carbon fiber lines, each with an annual rated capacity of
1.0 million pounds.  The Company has begun operation of the new continuous
carbonization lines at its Abilene, Texas facility  (three lines) and Zoltek
Rt. facilities (two lines).   The Company  planned to supply two existing and
fast growing applications, the conductive plastics and sporting goods, with
its new capacity until significant additional applications developed. The
transition period of process verification, product characterization and
customer qualification relative to the new carbon fiber capacity additions
that began startup operations at the end of fiscal 1997 was substantially
completed by March 31, 1998.  The Company anticipates that its new carbon
fiber production lines will be functioning at operational capacity as current
customers complete their process verification, product characterization and
testing. While the additional operational capacity expands the Company's
total capacity for production of carbon fiber, the Company plans to further
expand its rated capacity to meet the indicated and forecasted demand for its
carbon fiber products.

The recent major additions to the Company's carbon fibers manufacturing
capacity (5.0 million pounds of rated capacity annually, completed in late
fiscal 1997) currently are having little impact on sales.  Carbon fiber sales
for the first nine months of fiscal 1998 were $17.0 million compared to $17.4
million for the first nine months of fiscal 1997. The Company anticipates
increases in sales and earnings from the new carbon fiber lines at both the
U.S. and Hungarian locations beginning in the first half of fiscal 1999.

As part of its strategic plan, the Company is pursuing various initiatives to
facilitate development of product and process applications to increase demand
for low-cost carbon fiber, including possible acquisitions of selected
technology for the enhancement of its operations and to lead the
commercialization of selected large-scale carbon fiber composites.


                                    6
<PAGE> 7

RESULTS OF OPERATIONS
---------------------
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
-----------------------------------------------------------------------------

The Company's net sales decreased by 17.8% to $18.9 million for the third
quarter of fiscal 1998 from $22.9 million for the third quarter of fiscal
1997.  Net sales from carbon fibers decreased by 12.7% for the third quarter
of 1998 compared to the third quarter 1997 due principally to activities of
customers that serve electronics markets in the Far East.   Sales of acrylic
fibers and other products decreased by 19.8% in third quarter of 1998
compared to the third quarter of 1997 due principally to selling price
reductions in the acrylic fiber markets. The acrylic fiber sales price
reduction resulted from a significant reduction in raw material pricing (ACN)
which is expected to continue into the fourth quarter of fiscal 1998.  The
Company is currently experiencing a transition period in which recent major
additions to capacity are only beginning to have an impact on carbon fiber
sales.  This transition period resulted from the additional time needed for
process verification, production characterization, and customer qualification
relative to the five new continuous carbonization lines which came into
operation at the end of fiscal 1997.  Although this process has taken longer
than the Company originally anticipated, this is expected to be only a
temporary delay until significant sales from the new continuous carbonization
facilities are generated. The textile operations at Zoltek Rt. are also
producing near capacity and future sales increases are also dependent on the
newly installed carbon fiber operations.

Gross profit decreased 16.3% to $5.8 million in the third quarter of fiscal
1998 from $6.9 million in the third quarter of fiscal 1997.  Decreased gross
profit resulted from a decrease of $0.5 million, or 18.8%, in carbon fiber
gross profit for the third quarter of fiscal 1998 and a decrease of $0.6
million, or 14.8%, in acrylic and other products gross profit sold by Zoltek
Rt. in the third quarter of fiscal 1998.  The Company's overall gross margin
percentage on sales improved slightly to 30.5% of sales for the third quarter
of fiscal 1998 compared to 30.0% of sales for the third quarter of fiscal
1997.  Carbon fibers gross margin decreased to 37.0% of sales in the third
quarter 1998 from 40.0% of sales in the third quarter of 1997, due primarily
to a shift in product mix. The gross margin from acrylic fibers and other
products increased to 27.8% of sales for the third quarter of fiscal 1998
compared to 26.2% of sales for the third quarter of fiscal 1997.  This
increase in gross margin from acrylic and other products was principally
attributable to continued improvements in manufacturing productivity, sales
and product rationalization.  Even though the gross margin from acrylic and
other products, which are produced at Zoltek Rt., continued to improve, such
products have historically generated lower gross margins than the carbon
fiber business.

Selling, general and administrative expenses remained constant at $3.5
million in the third quarters of fiscal 1997 and fiscal 1998. These expenses
increased $0.7 million from the second quarter of fiscal 1998 and $0.4
million from the first quarter of fiscal 1998. These increases were primarily
attributable to additional market promotion costs and a slight change in
certain employee benefits.   The components of selling, general and
administrative expenses have remained relatively constant and the Company
anticipates these costs will  approximate current levels in succeeding
quarters.

Interest expense remained constant at $0.1 million for the third quarters of
fiscal 1998 and fiscal 1997.  Interest income was $0.6 million for the third
quarter of fiscal 1998 compared to $1.1 million for the third quarter of
fiscal 1997.  The decrease in interest income was due to the use of the cash
and cash equivalents and proceeds from the maturity of marketable securities
to finance the capital expansions during the fourth quarter of fiscal 1997
and the first three quarters of fiscal 1998 that have amounted to
approximately $34.5 million.  The capital expenditures were financed by both
internally generated cash and funds derived from the Company's secondary
offerings.

During the third quarter of fiscal 1998, the Company reported income tax
expense of $1.0 million compared to $1.1 million in the third quarter of
fiscal 1997. Income before taxes was $2.7 million in the third quarter of
fiscal 1998 compared to $4.3 million in the third quarter of fiscal 1997.
The increase in the effective tax rate was due principally to the recognition
of income tax expense on Zoltek Rt.'s earnings during the third quarter of
fiscal 1998. The statutory rate for the Zoltek Rt. operation in Hungary is
18%.  The effective tax rate remained relatively constant between the years
for the U.S. operations. During all of fiscal 1997, Zoltek Rt. was able to
utilize net operating loss carryforwards arising from losses incurred prior
to the Company's acquisition.  These net operating loss carryforwards
resulted in a reduced income tax liability.  However, due to the uncertainty
of the availability of these operating loss carryforwards to reduce Zoltek
Rt.'s future income tax liability, the Company recognized a full valuation
allowance against these net operating loss carryforwards at the date of
acquisition.  During the third quarter of fiscal 1997, Zoltek Rt. utilized
operating loss carryforwards to reduce the income tax liabilities by $0.4
million.  Additionally, a valuation allowance adjustment of $0.4 million for
the third quarter of 1997 was recognized as a reduction of income tax
expense.

The foregoing resulted in a decrease in net income of 47.8% to $1.7 million
for the third quarter of fiscal 1998 compared to $3.3 million for the third
quarter of fiscal 1997.  Similarly, the Company reported net income per share
of $0.10 and $0.19 on a diluted basis for the third quarters of fiscal 1998
and fiscal 1997, respectively.  The weighted average common and common
equivalent shares outstanding decreased to 16.5 million for the third quarter
of  fiscal 1998 compared to 16.7 million for the third quarter of  fiscal
1997.


                                    7
<PAGE> 8

NINE MONTHS ENDED JUNE 30, 1998 COMPARED TO NINE MONTHS ENDED JUNE 30, 1997
---------------------------------------------------------------------------

The Company's net sales decreased by 6.1% to $63.7 million for the nine
months ended June 30, 1998 from $67.8 million for the nine months ended June
30, 1997.  Zoltek's carbon fiber sales decreased by 2.7% to $17.0 million for
the first nine months of fiscal 1998 compared to $17.4 million for the first
nine months of fiscal 1997.  This decrease was due principally to activities
of customers which serve electronics markets in the Far East.  Zoltek Rt.'s
acrylic and other products sales decreased 7.3% on sales of $46.7 million for
the nine months ended June 30, 1998 compared to $50.4 million for the nine
months ended June 30, 1997 due principally to selling price reductions in the
acrylic fiber markets.  The acrylic fiber sales price reduction resulted from
a significant reduction in raw material pricing (ACN) which is expected to
continue into the fourth quarter of fiscal 1998.  The Company is currently
experiencing a transition period in which recent major additions to capacity
are only beginning to have an impact on carbon fiber sales.  This transition
period resulted from the additional time needed for process verification,
production characterization, and customer qualification relative to the five
new continuous carbonization lines which came into operation at the end of
fiscal 1997.  Although this process has taken longer than the Company
originally anticipated, this is expected to be only a temporary delay until
significant sales from the new continuous carbonization facilities are
generated. The textile operations at Zoltek Rt. are also producing near
capacity and future sales increases are also dependent on the newly installed
carbon fiber operations.

Gross profit increased 1.6% to $19.4 million for the nine months ended June
30, 1998 from $19.1 million for the nine months ended June 30, 1997.
Zoltek's carbon fiber business gross profit decreased by 5.6% to $6.4 million
for the nine months ended June 30, 1998 from $6.8 million for the nine months
ended June 30, 1997.  The carbon fiber gross profit decrease was due
principally to activities of customers which serve electronics markets in the
Far East.  Zoltek Rt.'s acrylic and other products business gross profit
increased 5.6% to $13.0 million for the nine months ended June 30, 1998 from
$12.3 million for the nine months ended June 30, 1997.  The Company's overall
gross margin percentage was 30.5% for the nine months ended June 30, 1998
compared to 28.2% for the nine months ended June 30, 1997.  Zoltek Rt.'s
acrylic fiber and other products gross profit margin percentage was 27.8% for
the nine months ended June 30, 1998 compared to 24.4% for the comparable
period in fiscal 1997.  The gross margin percentage increase at Zoltek Rt.
resulted from improved operating efficiencies. The gross margin percentage of
Zoltek's carbon fibers business decreased to 38% for the nine months ended
June 30, 1998 from 39.1% for the nine months ended June 30, 1997.  This was
due principally  to product mix changes.  Historically, Zoltek Rt.'s acrylic
and other products have generated significantly lower gross profits than the
carbon fiber business.  However, Zoltek Rt.'s productivity and gross profits
have significantly improved compared to its operations prior to the
acquisition.

Selling, general and administrative expenses decreased $0.3 million (or
approximately 2.8%) from $9.3 million for the nine months ended June 30, 1998
compared to $9.6 million for the nine months ended June 30, 1997.  This
slight decrease was primarily attributable to a reduction in market promotion
costs and a change in certain employee benefits.  The components of selling,
general and administrative expense remained relatively constant.

Interest expense was $0.4 million for the nine months ended June 30, 1998
compared to $0.7 for the same period of 1997.  This decrease was due
primarily to the elimination of bank debt at Zoltek Rt. in the second half of
fiscal 1997.  Interest income was $2.2 for the nine months ended June 30,
1998 compared to $3.0 million for the nine months ended June 30, 1997.  The
decrease in interest income was due to the use of the cash and cash
equivalents and proceeds from the maturity of marketable securities to
finance the capital expansions during the fourth quarter of fiscal 1997 and
the first three quarters of fiscal 1998 that have amounted to approximately
$34.5 million.  The capital expenditures were financed by both internally
generated cash and funds derived from the Company's secondary offerings.

During the first nine months of fiscal 1998, the Company reported income tax
expense of $3.3 million compared to $2.9 million for the first nine months of
fiscal 1997. Income before taxes was $11.7 million for  the nine months of
fiscal 1998 compared to $11.8 million for the nine months of fiscal 1997.
The increase in the effective tax rate was due principally to the recognition
of income tax expense on Zoltek Rt.'s earnings during the third quarter of
fiscal 1998.   Zoltek Rt. fully utilized the net operating loss carryforwards
in the second quarter of fiscal 1998 and recorded tax expense for the entire
third quarter of fiscal 1998.  The statutory rate for the Zoltek Rt.
operation in Hungary is 18%.   During all of the first quarter and a portion
of the second quarter of fiscal 1998 and all of fiscal 1997, Zoltek Rt. was
able to utilize net operating loss carryforwards arising from losses incurred
prior to the Company's acquisition.  These net operating loss carryforwards
resulted in a reduced income tax liability.  However, due to the uncertainty
of the availability of these operating loss carryforwards to reduce Zoltek
Rt.'s future income tax liability, the Company recognized a full valuation
allowance against these net operating loss carryforwards at the date of
acquisition.  During the nine months of fiscal 1998 and fiscal 1997, Zoltek
Rt. utilized operating loss carryforwards to reduce the income tax
liabilities by $0.5 million and $0.9 million, respectively.  Additionally,
valuation allowance adjustments of $0.5 million and $0.9 million for the
first nine months of fiscal 1998 and 1997, respectively, were recognized as a
reduction of income tax expense.

The foregoing resulted in a decrease in net income of 5.4% to $8.4 million
for the nine months ended June 30, 1998 from $8.9 million for the nine months
ended June 30, 1997.  Similarly, the Company reported net income per share of
$0.51 and $0.54 on a  diluted basis for the first nine months of fiscal 1998
and fiscal 1997, respectively.  The weighted average common and common
equivalent shares outstanding decreased to 16.5 million for the first nine
months of fiscal 1998 compared to 16.6 million for the first nine months of
fiscal 1997.


                                    8
<PAGE> 9

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's primary sources of liquidity historically have been and
continue to be cash flow from operating activities and available borrowing
capacity under credit facilities, supplemented with the net proceeds from
equity offerings and long-term debt financing utilizing the equity in the
Company's real estate properties.

The Company's financial position remains strong and sufficient to support the
execution of its strategic expansion plans.  At June 30, 1998, the Company
reported working capital of $56.9 million compared to working capital of
$69.6 million at September 30, 1997.  The decrease in working capital from
September 30, 1997 to June 30, 1998 was due primarily to the use of temporary
investments to finance $22.4 million of capital expenditures for further
expansion of the carbon fiber production capacity, partially offset by the
net increase in short-term operating accounts.  Inventories increased from
$12.5 million at September 30, 1997 to $20.7 million at June 30, 1998,
reflecting operations of newly added carbon fiber lines during the
transitional period while customers and potential customers were qualifying
their products.

Marketable securities at June 30, 1998 amounted to $27.0 million compared to
$18.3 million at September 30, 1997.  The marketable securities primarily
included U.S. Treasury and Government Agency Notes.  The increase in
marketable securities resulted from the reinvestment of the proceeds from
matured securities previously classified as cash equivalents.

Other receivables of $1.4 million consisted primarily of VAT and import duty
refunds due Zoltek Rt.. from the Hungarian taxing authorities.  Other
long-term liabilities are related to various supply agreements between Zoltek
Rt. and its vendors.

Historically, cash used in investing activities has been expended for
equipment additions and to support research and development of carbon fibers
applications, the expansion of the Company's carbon fibers production
capacity and the acquisition of Zoltek Rt..  In the first nine months of
fiscal 1998, the Company made capital expenditures of $22.4 million compared
to $14.5 million for the corresponding period in fiscal 1997.  Capital
expenditures for the fiscal year ended September 30, 1997 totaled $26.6
million. These expenditures were financed principally with cash from the
secondary offering in September 1996 and from cash generated from operations.

The Company continues to believe that identified and forecasted customer
demand for carbon fibers products will require additional substantial
increases in capacity.  In June 1997, the Company acquired a 100,000 square
foot newly constructed building and 11 acres in Abilene, Texas for its
planned capacity expansion.  The Company plans to acquire an additional 39
acres in fiscal 1998 at the Abilene facility. The Company completed
construction (in both the U.S. and Hungary) of five continuous carbonization
lines in the fourth quarter of fiscal 1997 and currently is constructing
additional lines.  The additional continuous carbonization lines planned for
construction during fiscal  1998 and  mid-calendar year 1999 are currently
anticipated to require capital expenditures of approximately $50 million that
will be funded with cash and cash equivalents and marketable securities on
hand, together with internally generated funds and, possibly, borrowings.

The Company maintains several credit commitments from its lead bank,
Southwest Bank of St. Louis, which would allow the Company to borrow up to
approximately $10 million.  However, the Company has no plans to borrow under
these commitments in the immediate future.  The Company currently has
outstanding a term loan with a principal balance of $0.9 million that matures
in 1999.  The Company expects to repay this loan during fiscal 1998 to reduce
interest expense.

In connection with the purchase of the Abilene facility, the Company obtained
a $1.8 million short-term non-interest bearing loan through the City of
Abilene.  The Company is currently in the process of refinancing this
short-term loan with a non-interest bearing term loan due in approximately 10
years.

Since the beginning of fiscal 1994, the Company has obtained long-term
financing utilizing its equity in its real estate properties.  The applicable
loan agreements prohibit the payment of dividends without the consent of the
lenders.  These loans are non-recourse loans secured by mortgages on the
Company's headquarters and St. Charles manufacturing facility.  Based on the
interest rates and the nature of the loans, the Company plans to repay these
loans in accordance with their stated long-term amortization schedules.

At the date of acquisition of Zoltek Rt., liabilities related to a
governmental grant received by Zoltek Rt.. to finance salary payments prior
to the acquisition, but subject to repayment by the Company under certain
conditions relative to employment levels, and other additional costs related
to the acquired operations were recorded.  Zoltek Rt.. has received
notification from the Hungarian Labor Office that the labor grant would not
have to be repaid.  Unused accrued liabilities for the wage grant,
established under purchase accounting, will be allocated to reduce property
and equipment during fiscal 1998.

As part of its strategic plan, the Company is pursuing various initiatives to
facilitate development of product and process applications to increase demand
for low-cost carbon fiber, including possible acquisitions of selected
technology for the enhancement of its operations and to lead the
commercialization of selected large-scale carbon fiber composites.


                                    9
<PAGE> 10

NEW ACCOUNTING STANDARD
-----------------------

The following recently issued accounting standard will be applicable to the
Company for its fiscal year ending September 30, 1998: SFAS 128, "Earning Per
Share," which is effective with the Company's first quarter of 1998.  Under SFAS
128, the Company has presented two earnings per share amounts.  Basic earnings
per share is calculated based on income available to common shareholders and the
weighted-average number of shares outstanding during the reported period.
Diluted earnings per share include additional dilution from potential common
stock, such as stock issuable pursuant to the exercise of stock options
outstanding.  SFAS 128 does not and is not expected to have a material impact on
the Company's consolidated financial condition or results of operations.

                               *  *  *

The forward-looking statements contained in this report are inherently
subject to risks and uncertainties.  The Company's actual results could
differ materially from those in the forward-looking statements.  Potential
risks and uncertainties consists of a number of factors, including the
Company's ability to manage rapid growth and increase its carbon fibers
production capacity and markets on a timely basis.


                                    10
<PAGE> 11

                                 ZOLTEK COMPANIES, INC.

<TABLE>
                                       SEGMENT INFORMATION
                                     (Amounts in thousands)
                                           (Unaudited)
<CAPTION>

                                                              NINE MONTHS ENDED JUNE 30,
                                                              --------------------------
                                                                  1998        1997
                                                                  ----        ----
<S>                                                             <C>         <C>
Net sales
      Carbon fibers and composite materials                     $ 16,962    $ 17,439
      Acrylic fibers and other products                           46,696      50,389
                                                                --------    --------
                                                                $ 63,658    $ 67,828
                                                                ========    ========

Gross profit
      Carbon fibers and composite materials                     $  6,448    $  6,827
      Acrylic fibers and other products                           12,969      12,278
                                                                --------    --------
                                                                $ 19,417    $ 19,105
                                                                ========    ========


Total assets
      Carbon fibers and composite materials                     $ 71,432    $ 27,760
      Acrylic fibers and other products                           37,404      41,714
      General corporate                                           31,988      69,623
                                                                --------    --------
                                                                $140,824    $139,097
                                                                ========    ========

Capital expenditures
      Carbon fibers and composite materials                     $ 20,266    $ 11,509
      Acrylic fibers and other products                            2,119       2,964
                                                                --------    --------
                                                                $ 22,385    $ 14,473
                                                                ========    ========


Depreciation and amortization expense
      Carbon fibers and composite materials                     $  1,518    $  1,042
      Acrylic fibers and other products                              901         952
                                                                --------    --------
                                                                $  2,419    $  1,994
                                                                ========    ========
</TABLE>


                                    11
<PAGE> 12

                                 ZOLTEK COMPANIES, INC.


PART II.    OTHER INFORMATION

            Item 6.  EXHIBITS AND REPORTS ON FORM 8-K
                     --------------------------------

                     (a)   Exhibits:

                           27    Financial Data Schedule

                     (b)   Reports on Form 8-K:  No reports on Form 8-K were
                           filed during the three months ended June 30, 1998.


                                   SIGNATURE
                                   ---------

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.


                                             Zoltek Companies, Inc.
                                                  (Registrant)



Date:  August 14, 1998                    By:   /s/ DANIEL D. GREENWELL
       ---------------                       ---------------------------
                                                 Daniel D. Greenwell
                                               Chief Financial Officer

                                    12