<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 March 31, 1999          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 May 14, 1999,
16,201,338 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>
                                                                           March 31,               September 30,
                                                                             1999                      1998
                                                                         -----------               -------------
                                                                         (Unaudited)
<S>                                                                       <C>                        <C>
ASSETS
Current assets:
    Cash and cash equivalents                                             $  11,363                  $   8,004
    Marketable securities                                                     6,992                     18,961
    Accounts receivable, less allowance for doubtful accounts
         of $281 and $314, respectively                                      12,800                     14,964
    Inventories                                                              28,060                     24,209
    Prepaid expenses                                                            805                        173
    Other receivables                                                           888                      2,403
    Refundable income taxes                                                      --                        745
                                                                          ---------                  ---------
             Total current assets                                            60,908                     69,459
Property and equipment, net                                                  76,283                     76,861
Other assets                                                                    716                        889
                                                                          ---------                  ---------
             Total assets                                                 $ 137,907                  $ 147,209
                                                                          =========                  =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Short-term notes payable                                              $   1,180                  $      --
    Current maturities of long-term debt                                        795                        817
    Trade accounts payable                                                    5,348                     11,429
    Accrued expenses and other liabilities                                    4,094                      4,155
    Income taxes payable                                                         88                         --
                                                                          ---------                  ---------
             Total current liabilities                                       11,505                     16,401
Other long-term liabilities                                                     919                      1,009
Long-term debt, less current maturities                                       5,443                      5,898
Deferred income taxes                                                         2,132                      2,299
                                                                          ---------                  ---------
                                                                             19,999                     25,607
                                                                          ---------                  ---------
Mandatorily redeemable common stock, 70,000 shares                              525                         --

Nonredeemable stock and other 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,
         16,146,338 and 16,216,338 shares issued, respectively                  161                        162
    Additional paid-in capital                                               99,430                     99,954
    Retained earnings                                                        32,846                     33,827
    Treasury common stock at cost                                              (118)                        --
    Outstanding common stock put warrants                                        67                         --
    Accumulated other comprehensive income: foreign currency
         translation adjustment                                             (15,003)                   (12,341)
                                                                          ---------                  ---------
                                                                            117,383                    121,602
                                                                          ---------                  ---------
             Total liabilities, redeemable common stock, nonredeemable
                 stock and other shareholders' equity                     $ 137,907                  $ 147,209
                                                                          =========                  =========


                 The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


                                    2
<PAGE> 3

<TABLE>
                                                 ZOLTEK COMPANIES, INC.

                                          CONSOLIDATED STATEMENT OF OPERATIONS
                                          ------------------------------------
                                     (Amounts in thousands, except per share data)
                                                      (Unaudited)

<CAPTION>
                                                       Three months ended March 31,    Six months ended March 31,
                                                       ----------------------------    --------------------------
                                                         1999              1998           1999           1998
                                                         ----              ----           ----           ----
<S>                                                   <C>               <C>            <C>            <C>
Net sales                                             $ 16,149          $ 22,566       $ 34,873       $ 44,790
Cost of sales - products sold                           12,876            15,388         26,959         31,137
                                                      --------          --------       --------       --------
    Gross profit                                         3,273             7,178          7,914         13,653
Selling, general and administrative expenses             3,460             2,780          7,213          5,851
Available unused capacity costs                            906                --          1,896             --
                                                      --------          --------       --------       --------
Operating income (loss)                                 (1,093)            4,398         (1,195)         7,802
Other income (expense):
    Interest expense                                      (118)             (131)          (236)          (240)
    Interest income                                        260               714            627          1,557
    Other, net                                             (57)              (65)           (56)          (140)
                                                      --------          --------       --------       --------
Income (loss) before income taxes                       (1,008)            4,916           (860)         8,979
Provision (benefit) for income taxes                       (17)            1,446            121          2,248
                                                      --------          --------       --------       --------
    Net income (loss)                                 $   (991)         $  3,470       $   (981)      $  6,731
                                                      ========          ========       ========       ========

Net income (loss) per share:
    Basic net income (loss) per share                 $  (0.06)         $   0.21       $  (0.06)      $   0.42
    Diluted net income (loss) per share                  (0.06)             0.21          (0.06)          0.41
Weighted average common shares outstanding - basic      16,205            16,216         16,211         16,216
Weighted average common and common equivalent shares
  outstanding - diluted                                 16,294            16,501         16,318         16,530




                 The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


                                    3
<PAGE> 4

<TABLE>
                                                 ZOLTEK COMPANIES, INC.

                                          CONSOLIDATED STATEMENT OF CASH FLOWS
                                          ------------------------------------
                                                 (Amounts in thousands)
                                                      (Unaudited)

<CAPTION>
                                                                                           Six months ended March 31,
                                                                                           --------------------------
                                                                                               1999           1998
                                                                                               ----           ----
<S>                                                                                         <C>           <C>
Cash flows from operating activities:
      Net income (loss)                                                                     $   (981)     $   6,731
      Adjustments to reconcile net income (loss) to net cash used by operating activities:
         Depreciation and amortization                                                         2,814          1,327
         Unrealized foreign exchange (gain) loss                                                 (40)            72
         Other, net                                                                                5             26
      Changes in assets and liabilities:
           (Increase) decrease in accounts receivable                                          1,768           (789)
           Decrease in other receivables                                                       1,420            476
           Increase in inventories                                                            (4,774)        (4,920)
           Increase in prepaid expenses                                                         (654)          (164)
           Decrease in trade accounts payable                                                 (5,657)        (3,616)
           Increase (decrease) in accrued expenses and other liabilities                          41           (792)
           Increase in income and deferred taxes                                                 722            483
           Increase (decrease) in other long-term liabilities                                    (84)           320
                                                                                            --------      ---------
         Total adjustments                                                                    (4,439)        (7,577)
                                                                                            --------      ---------
    Net cash used by operating activities                                                     (5,420)          (846)
                                                                                            --------      ---------

    Cash flows from investing activities:
      Payments for purchase of property and equipment                                         (8,968)       (13,506)
      Proceeds from sale of property and equipment                                             5,036             --
      (Purchase) sale of marketable securities                                                11,969         (8,749)
                                                                                            --------      ---------
    Net cash provided (used) by investing activities                                           8,037        (22,255)
                                                                                            --------      ---------

    Cash flows from financing activities:
      Proceeds from issuance of notes payable                                                  1,259             --
      Purchase of treasury stock                                                                (118)            --
      Proceeds from sale of common stock put warrants                                             67             --
      Decrease in notes receivable                                                                24             51
      Repayment of notes payable                                                                (479)          (415)
                                                                                            --------      ---------
    Net cash provided (used) by financing activities                                             753           (364)
                                                                                            --------      ---------
    Effect of exchange rate changes on cash                                                      (11)           (64)
                                                                                            --------      ---------
    Net increase (decrease) in cash and cash equivalents                                       3,359        (23,529)
    Cash and cash equivalents at beginning of period                                           8,004         41,148
                                                                                            --------      ---------
    Cash and cash equivalents at end of period                                              $ 11,363      $  17,619
                                                                                            ========      =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (refunded) during the period for:
    Interest                                                                                $    207      $     245
    Income taxes                                                                                (712)         1,476


                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 1998 Annual
Report which includes consolidated financial statements and notes thereto for
the fiscal year ended September 30, 1998.  Certain reclassifications have
been made to conform prior year's data to the current presentation.  The
results for the quarter and six months ended March 31, 1999 are not
necessarily indicative of the results which may be expected for the fiscal
year ending September 30, 1999.

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 Intermediates Corporation, Zoltek Properties, Inc. and Zoltek Rt.
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
acrylic and nylon products and fibers to the textile industry and supplies
limited quantities of 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.       COMPREHENSIVE INCOME

Effective with the first quarter 1999, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income."
This Statement requires that the financial statements disclose a new category
entitled "Comprehensive Income" which is the combination of net income and
noncash changes to shareholder's equity.  The adoption of the Statement had
no effect on the Company's results of operations during the periods
presented.

Comprehensive income for the six-month period ended:

<TABLE>
<CAPTION>
                                                                               MARCH 31,
                                                                     1999                    1998
                                                                     ----                    ----
<S>                                                               <C>                      <C>
         Net income (loss)                                        $   (981)                $  6,731
         Foreign currency translation adjustment                    (2,662)                  (2,234)
                                                                  --------                 --------
         Comprehensive income (loss)                              $ (3,643)                $  4,497
                                                                  ========                 ========
</TABLE>

4.       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
$11.1 million and $7.2 million at March 31, 1999 and September 30, 1998,
respectively.


                                    5
<PAGE> 6

5.       INVENTORIES

            Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                          MARCH 31,               SEPTEMBER 30,
                                                                            1999                      1998
                                                                          ---------               -------------
                                                                               (Amounts in thousands)
<S>                                                                      <C>                      <C>
                  Raw materials                                          $   5,694                $   6,464
                  Work-in-process                                            1,435                    1,837
                  Finished goods                                            20,657                   15,509
                  Supplies, spares and other                                   274                      399
                                                                         ---------                ---------
                                                                         $  28,060                $  24,209
                                                                         =========                =========
</TABLE>

6.       PROPERTY AND EQUIPMENT

            Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                          MARCH 31,               SEPTEMBER 30,
                                                                            1999                      1998
                                                                          ---------               -------------
                                                                               (Amounts in thousands)
<S>                                                                      <C>                      <C>
                  Land                                                   $   1,163                $   1,146
                  Buildings and improvements                                28,149                   24,669
                  Machinery and equipment                                   57,474                   59,200
                  Furniture and fixtures                                     3,762                    3,751
                                                                         ---------                ---------
                                                                            90,548                   88,766
                  Less:  accumulated depreciation                          (14,265)                 (11,905)
                                                                         ---------                ---------
                                                                         $  76,283                $  76,861
                                                                         =========                =========
</TABLE>

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

GENERAL
-------

The Company is in the process of building its infrastructure to facilitate
its strategic objective to commercialize the use of carbon fibers.  During
the fourth quarter of fiscal 1997, the Company completed construction and
began operation of five continuous carbon fiber lines, each with an annual
rated capacity of one million pounds, at its Abilene, Texas facility (three
lines) and Zoltek Rt. facilities (two lines). The period of process
verification, product characterization and initial customer qualification
relative to the new carbon fiber capacity additions that began initial
operations at the end of fiscal 1997 was substantially completed by March 31,
1998.

During the first half of fiscal 1998, the Company completed construction of a
secondary processing building (40,000 square feet) at its Abilene, Texas
facility.  The Company plans to utilize the facility to perform intermediate
and secondary processing operations such as specialty packaging, chopping and
milling.

At the end of fiscal 1998, the Company substantially completed two additional
continuous carbonization lines at its Abilene, Texas facility.  The Company
made the two additional lines ready for their intended use during the first
quarter of fiscal 1999.  However, the Company does not plan to fully utilize
these two new lines until product demand increases.

At the end of fiscal 1998, the Company substantially completed construction
of an additional building (288,000 square feet) designed to house up to eight
continuous carbonization lines at its Abilene, Texas facility.  Additionally,
the Company has placed orders for long-lead time equipment items for six
additional continuous carbonization lines, each with an annual capacity of
one million pounds.  The Company plans to house the long-lead time equipment
items at its facility in Abilene, Texas.  The Company does not currently
anticipate initializing construction of the six additional lines during
fiscal 1999 unless demand for carbon fiber increases.  While the additional
operational capacity expands the Company's total capacity for production of
carbon fiber, the Company believes the market


                                    6
<PAGE> 7

will require demonstration of significant available capacity to initiate and
develop large-scale composite applications utilizing its carbon fiber
products.

The recent major additions to the Company's carbon fiber manufacturing
capacity (5.0 million pounds of rated capacity annually, completed in late
fiscal 1997 and 2.0 million pounds of rated capacity annually completed in
the first quarter of fiscal 1999) currently are having little impact on
sales. Carbon fiber sales for the first half of fiscal 1999 were $11.7
million compared to $11.3 million for the first half of fiscal 1998.  The
Company's strategy for initial sales increases was to rely on what had been
two fast-growing markets in conductive plastics used in electronic products,
and sporting goods applications.  As a result of the Asian economic crisis
and its impact on the electronics sector, sales of carbon fiber into that
market fell significantly in fiscal 1998 and continued to be depressed during
the first half of fiscal 1999.  Qualification for the sporting goods
applications and accompanying increases in sales have taken longer than was
originally expected due to the excess supply in the market resulting from
capacity increases by several other carbon fiber manufacturers.

At the end of fiscal 1998 and during the first half of fiscal 1999, the
Company was not operating its new continuous carbonization lines at full
capacity.  The Company currently anticipates that it will not operate its
lines at full capacity during fiscal 1999.  While the Company believes it is
necessary to maintain available capacity to develop significant new
applications, costs related to the unutilized capacity will adversely impact
results of operations during fiscal 1999. The Company anticipates increases
in sales from the new carbon fiber lines at both the U.S. and Hungarian
locations later in 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.

RESULTS OF OPERATIONS
---------------------

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------------------
1998
----

The Company's sales decreased 28.4% to $16.1 million for the second quarter
of fiscal 1999 from $22.6 million for the second quarter of fiscal 1998.
Sales of carbon fibers decreased 6.6% ($0.4 million) to $5.9 million in the
second quarter of fiscal 1999 from $6.3 million in the second quarter of
fiscal 1998.  This decrease was due to product mix changes and sales price
reductions.  This decrease was due to the continued decreased activities of
Zoltek customers that serve electronics markets in the Far East.  In
addition, new large scale applications utilizing significant quantities of
carbon fibers, which involve long lead times, have not yet developed to the
point of increasing Company sales.  The acrylic and other products produced
at Zoltek Rt., generated sales of $10.3 million for the second quarter of
fiscal 1999 compared to $16.3 million for the second quarter of fiscal 1998,
a decrease of 36.8%.  This decrease was principally due to selling price and
volume reductions in the acrylic fiber markets.  The acrylic fiber sales
price reductions resulted from a substantial reduction in acrylonitrile (ACN)
raw material pricing which the acrylic fiber manufacturers pass through to
customers.  The acrylic fiber sales volume reduction was due to an overall
worldwide reduction in demand for acrylic fibers.  Zoltek Rt.'s sales of
acrylic fibers and other products were to the markets Zoltek Rt. had
historically served prior to its acquisition by the Company in December 1995.

Gross profit decreased 54.4% to $3.3 million in the second quarter of fiscal
1999 from $7.2 million in the second quarter of fiscal 1998.  Decreased gross
profit resulted principally from acrylic and other products sold by Zoltek
Rt., which yielded gross profit of $1.5 million or 68.5% less than the prior
year quarter.  Carbon fibers gross profit decreased to $1.8 million in the
second quarter of fiscal 1999 from $2.4 million in the second quarter of
fiscal 1998.  The gross profit percentage on carbon fiber decreased to 30.4%
of sales in the second quarter of fiscal 1999 from 39.0% of sales in the
second quarter of fiscal 1998 due to sales price decreases and product mix
changes.  The gross profit from acrylic and other products decreased to $1.5
million in the second quarter of fiscal 1999 from $4.7 million in the second
quarter of fiscal 1998 due primarily to the decreased selling prices and
volume of acrylic fibers sales.  The gross margin percentage of acrylic
fibers and other products decreased to 14.5% of sales for the second quarter
of fiscal 1999 compared to 29.0% of sales for the second quarter of fiscal
1998 due to reductions in the selling prices and sales volumes.  The gross
margins contributed by the acrylic and other products, which are produced at
Zoltek Rt., have historically generated lower gross margins than the
Company's carbon fiber business.

The Company continued to incur costs related to the underutilized productive
capacity for carbon fibers at the Abilene, Texas and Hungarian facilities.
These costs include the depreciation and other overhead associated with the
unused capacity.  These costs, which were separately identified on the income
statement, were approximately $0.9 million during the second quarter of
fiscal 1999.  The Company believes it is necessary to maintain available
capacity to facilitate development of significant new applications and
anticipates costs associated with the excess capacity will continue during
much of fiscal 1999.


                                    7
<PAGE> 8

Selling, general and administrative expenses increased $0.7 million, or
approximately 24.5%, from $2.8 million in the second quarter of fiscal 1998
to $3.5 million in the second quarter of fiscal 1999.  This increase was
primarily attributable to increased costs related to product and market
development efforts for product trials, additional sales/product development
personnel and related travel.

Interest expense was $0.1 million for the second quarters of fiscal 1999 and
1998.  Interest income was $0.3 million for the second quarter of fiscal 1999
compared to $0.7 million in the second quarter of fiscal 1998.  The decrease
in interest income was due to the use of funds to finance the capital
expansions during fiscal 1999 and 1998.  Capital expenditures totaled $9.0
million in the first half of fiscal 1999 and $17.7 million for second half of
fiscal 1998.

During the second quarter of fiscal 1999, the Company reported a benefit for
income taxes of $17,000 compared to income tax expense of $1.4 million in the
second quarter of fiscal 1998, due to the decreased profit levels.  The
Company recognizes income taxes in both the United States and Hungary based
on the income (loss) before income taxes.  Included in the provision/benefit
for income taxes are gross receipts taxes charged by the Hungarian local
taxing authorities, which were $0.2 million for the second quarters of fiscal
years 1999 and 1998, as well as statutory income taxes.  The statutory income
tax rate for the Zoltek Rt. operation in Hungary is 18%.  During the second
quarter of fiscal 1998, Zoltek Rt. fully utilized 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 in 1998.  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 second quarter of fiscal year 1998, Zoltek Rt.
utilized operating loss carryforwards to reduce the income tax liabilities by
$0.1 million.  Additionally, valuation allowance adjustments of $0.1 million
for the second quarter of fiscal year 1998 were recognized as a reduction of
income tax expense.

The foregoing resulted in a net loss of $1.0 million for the second quarter
of fiscal 1999 compared to a net income of $3.5 million for the second
quarter of fiscal year 1998.  Similarly, the Company reported net income
(loss) per share of ($0.06) and $0.21 on a diluted basis for the second
quarters of fiscal year 1999 and fiscal year 1998, respectively.  The
weighted average common and common equivalent shares outstanding decreased to
16.3 million for the second quarter of fiscal year 1999 compared to 16.5
million for the second quarter of fiscal year 1998 due to a reduction in
common stock equivalents.

SIX MONTHS ENDED MARCH 31, 1999 COMPARED TO SIX MONTHS ENDED MARCH 31, 1998
---------------------------------------------------------------------------

The Company's sales decreased 22.1% to $34.9 million in the first half of
fiscal 1999 from $44.8 million in the first half of fiscal 1998.  Carbon
fiber sales increased 3.6% ($0.4 million) to $11.7 million in the first half
of fiscal 1999 from $11.3 million in the first half of fiscal 1998.  This
increase was due to growth in the aircraft brake business and the impact of
the new capacity additions and related growth in sales to the sporting goods
market.  The increase was primarily in the first quarter of fiscal 1999
compared to the first quarter of 1998 but was offset by product mix changes
and reductions in sales prices during the second quarter of fiscal 1999.  As
discussed above, second quarter carbon fibers sales were adversely affected
by the continued decreased activities of Zoltek customers that serve
electronics markets in the Far East and the lags in the expected development
of new large scale applications utilizing significant quantities of carbon
fibers.  Sales of acrylic and other products produced at Zoltek Rt. decreased
by 30.9% to  $23.1 for the first half of fiscal 1999 compared to $33.5
million for the first half of fiscal 1998.  This decrease was principally due
to selling price and volume reductions in the acrylic fiber markets.  The
acrylic fiber sales price reductions resulted from a substantial reduction in
ACN raw material pricing which the acrylic fiber manufacturers pass through
to customers.  The acrylic fiber sales volume reduction was due to an overall
worldwide contraction in the markets for acrylic fibers.  Zoltek Rt.'s sales
of acrylic fibers and other products were to the markets Zoltek Rt. had
historically served prior to its acquisition by the Company in December 1995.

Gross profit decreased 42.0% to $7.9 million in the first half of fiscal 1999
from $13.7 million in the first half of fiscal 1998.  Decreased gross profit
resulted principally from acrylic and other products sold by Zoltek Rt.,
which yielded gross profit of $4.2 million or 55.1% less than the first half
of 1998 in which these products yielded gross profits of $9.3 million.  The
decrease in gross profit from acrylic and other products was due primarily to
the decreased selling prices and volume of acrylic fibers.  The gross margin
percentage of acrylic fibers and other products decreased to 18.0% of sales
for the first half of fiscal 1999 compared to 27.8% of sales for the first
half of fiscal 1998 due primarily to reductions in the selling prices and
lower volume of sales.  The gross margins contributed by the acrylic and
other products, which are produced at Zoltek Rt., historically have generated
lower gross margins than the Company's carbon fiber business.  The decrease
in acrylic and other products gross margin was compounded by a decrease in
carbon fibers gross margin of 14.3%.  Carbon fibers gross profit decreased to
$3.7 million in the first half of fiscal 1999 from $4.4 million in the first
half of fiscal 1998.  The gross profit percentage on carbon fiber sales
decreased to 31.9% of sales in the first half of fiscal 1999 from 38.6% in
the first half of fiscal 1998 due to sales price decreases and product mix
changes.

The Company incurred costs related to the underutilized productive capacity
for carbon fibers at the Abilene, Texas and Hungarian facilities.  These
costs include the depreciation and other overhead associated with the unused
capacity.  These costs, which were


                                    8
<PAGE> 9

separately identified on the income statement, were approximately $1.9 million
during the first half of fiscal 1999.  The Company believes it is necessary to
maintain available capacity to facilitate development of significant new
applications and anticipates costs associated with the available capacity will
continue during much of fiscal 1999.

Selling, general and administrative expenses increased approximately 23.3%,
or $1.4 million, from $5.9 million in the first half of fiscal 1998 to $7.2
million in the first half of fiscal 1999.  This increase was primarily
attributable to increased costs related to product and market development
efforts for product trials, additional sales/product development personnel
and related travel.

Interest expense was $0.2 million for the first half of fiscal years 1999 and
1998.  Interest income was $0.6 million for the first half of fiscal 1999
compared to $1.6 million in the first half of fiscal 1998.  The decrease in
interest income was due to the use of funds to finance the capital
expenditures during fiscal 1999 and 1998.  Capital expenditures totaled $9.0
million in the first half of fiscal 1999 and $17.7 million for second half of
fiscal year 1998.

During the first half of fiscal 1999, the Company reported an income tax
benefit of $0.1 million compared to income tax expense of $2.2 million in the
first half of fiscal 1998 due to the decreased profit levels.  The Company
recognizes income taxes in both the United States and Hungary based on the
income (loss) before income taxes.  Included in the provision/benefit for
income taxes are gross receipts taxes charged by the Hungarian local taxing
authorities, which were $0.3 million for the first half of fiscal years 1999
and 1998, as well as the statutory income taxes.  The statutory income tax
rate for the Zoltek Rt. operation in Hungary is 18%.  During the first half
of fiscal 1998, Zoltek Rt. was fully utilized 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 in fiscal 1998.  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 first half of fiscal year 1998, Zoltek Rt. utilized
operating loss carryforwards to reduce the income tax liabilities by $0.5
million.  Additionally, valuation allowance adjustments of $0.5 million for
the first half of fiscal year 1998 were recognized as a reduction of income
tax expense.

The foregoing resulted in a net loss of $1.0 million for the first half of
fiscal 1999 compared to a net income of $6.7 million for the first half of
fiscal year 1998.  Similarly, the Company reported net income (loss) per
share of ($0.06) and $0.41 on a diluted basis for the first halves of fiscal
year 1999 and fiscal year 1998, respectively.  The weighted average common
and common equivalent shares outstanding decreased to 16.3 million for the
first half of fiscal year 1999 compared to 16.5 million for the first half of
fiscal year 1998 due to a reduction in common stock equivalents.

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

The Company's primary sources of liquidity historically have been 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 March 31, 1999, the Company
reported working capital of $49.4 million compared to working capital of
$53.1 million at September 30, 1998.  The decrease in working capital from
September 30, 1998 to March 31, 1999 was due primarily to the use of proceeds
from the sale of short-term investments to finance capital expenditures of
$9.0 million, primarily for carbon fiber facility expansion.

Inventories increased from $24.2 million at September 30, 1998 to $28.1
million at March 31, 1999.  Carbon fibers accounted for $2.9 million of the
increase while acrylic fibers and other products accounted for $1.0 million
of the increase.  The increase in carbon fibers inventories resulted from
soft market conditions coupled with the newly added production capacity.  The
increase in the inventories of acrylic fibers and other products was mainly
attributable to the depressed acrylic market conditions in Western and
Eastern Europe.  The Company anticipates that the rate of inventory growth
will decrease during fiscal 1999 as a result of lower production rates and
with expected increases in product demand.

Marketable securities at March 31, 1999 amounted to $7.0 million compared to
$19.0 million at September 30, 1998, a decrease of $12.0 million due to
maturing of the securities and conversion to cash equivalents.  The
marketable securities primarily included U.S. Government Agency Notes with
maturities longer than three months but less than twelve months and preferred
stock.

Other receivables of $.9 million at March 31, 1999 consisted primarily of VAT
and import duty refunds due Zoltek Rt. from the Hungarian taxing authorities
compared to $2.4 million at September 30, 1998.  The decrease was mainly due
to the receipt of cash in transit at September 30, 1998 associated with the
long-term financing by Abilene, Texas.  Other long-term liabilities are
related to various supply agreements between Zoltek Rt. and its vendors.


                                    9
<PAGE> 10

Historically, cash used in investing activities has been expended for
equipment additions and to support research and development of carbon fibers
applications, and the expansion of the Company's carbon fibers production
capacity.  In the first six months of fiscal 1999, the Company made capital
expenditures of $9.0 million compared to $13.5 million for the same period in
fiscal 1998.  Capital expenditures for the fiscal year ended September 30,
1998 totaled $31.2 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 over the long term.  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.  During fiscal 1998, the Company
constructed a 40,000 square foot building and acquired an additional 42 acres
at the Abilene facility.  The Company completed construction (in both the
U.S. and Hungary) of seven continuous carbonization lines during fiscal years
1997 and 1998.  During the first quarter of fiscal 1999, the Company made two
continuous carbonization lines ready for their intended use, but does not
plan to utilize these two lines until product demand increases.

During late fiscal 1998 and during the first quarter of fiscal 1999, the
Company completed construction of a building (288,000 square feet) designed
to house up to eight continuous carbonization lines.  Additionally, the
Company has placed orders for equipment items with long-lead times for six
additional continuous carbonization lines, each with an annual rated capacity
of one million pounds, which the Company plans to temporarily warehouse at
its Abilene, Texas facility.  The Company does not currently anticipate
initiating construction of the six additional lines during fiscal 1999,
unless demand for carbon fibers increases.  The Company's overall strategic
plan calls for total capital expenditures for carbon fibers of approximately
$10 to $15 million during fiscal 1999 to obtain long-lead time equipment
items and fund building construction, of which $8.2 million was spent in the
first half of fiscal 1999.  The Company does not anticipate further
expenditures on continuous carbonization lines in fiscal 1999 other than
those long-lead time items, which it is currently committed to acquire.
These expenditures will be funded with cash and cash equivalents, marketable
securities and internally generated funds.

The Company continues to maintain an excellent relationship with its lead
bank, Southwest Bank of St. Louis.  The Company maintains several credit
commitments with the bank that would allow the Company to borrow
approximately $10 million.  The Company is currently negotiating with several
U.S. and international banks to secure additional lines of credit, should the
need arise for additional borrowings.

In connection with the initial purchase of the Abilene, Texas facility in
fiscal 1997, the Company obtained a $1.8 million short-term non-interest
bearing loan through the City of Abilene.  During fiscal 1998, the Company
purchased additional land and a building from the City of Abilene and
consolidated this purchase with its initial loan for a new $3.1 million
non-interest bearing loan maturing in January 2008, which was discounted. The
long-term loan with the City of Abilene will be repaid with future real
estate and personal property tax abatements granted by the City of Abilene.

Additionally, since the beginning of fiscal 1994, the Company has obtained
long-term financing utilizing its equity in its real estate properties. 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.

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 composites.

Zoltek Rt. had eliminated all debt and short-term financing during fiscal
1997.  Due to the adverse acrylic market conditions during fiscal 1998 and
the first six months of fiscal 1999, Zoltek Rt. obtained short-term financing
consisting of working capital and commercial letters of credit of which $1.2
million was outstanding at March 31, 1999.

In January 1999, the Company sold its nitrogen generation facility in
Abilene, Texas to Southwest Bank for $5.0 million (actual construction cost)
and leased it back under a seven-year operating lease.  The Company plans to
utilize the funds for carbon fiber facility expansion and general corporate
purposes.

In February 1999, the Company's Board of Directors authorized a share
repurchase program for up to 1,000,000 shares of the Company's common stock
in the open market over an unspecified period of time as market conditions
allow.  The purpose of the repurchase plan is to meet the Company's
obligations under its stock option plans, while minimizing dilution to
shareholders.  In connection with the approved repurchase, the Company
purchased 15,000 shares of the Company's common stock in March 1999 and the
Company sold put options for 70,000 shares of the Company's common stock in
February and March 1999.  The put options were sold with a redemption price
of $7.50 per share which allows the purchasers to exercise the options and
sell the shares back to the Company or let the options expire.  The options
will expire on May 22, 1999 (20,000 shares) and July 17, 1999 (50,000
shares).


                                    10
<PAGE> 11

IMPACT OF YEAR 2000
-------------------

The significance of the year 2000 is that computer programs, other business
systems and date-sensitive devices were installed using two digits rather
than four to define the applicable year, thus they could read the year 2000
as 1900.  This could cause disruptions of operations due to system failures
or miscalculations that could result in a temporary inability to process
normal transactions or engage in other business activities.

The Company has completed its review of the internal business systems and is
in the process of modifying or replacing any systems that are not Year 2000
compliant.  The review of manufacturing processes and facility management
systems is underway and any identified systems will be corrected to be Year
2000 compliant.  All modifications and changes in internal business,
manufacturing processes and facility management systems are anticipated to be
completed by June 1999.  Information system maintenance and modifications are
expensed as incurred, while any new software and equipment is capitalized and
amortized over the asset's useful life.  The Company purchased and installed
new business system programs in both the U.S. and Hungarian operations at the
beginning of fiscal 1998 which were Year 2000 compliant at installation.  The
Company has not separately identified the costs incurred to date for system
and program modifications required specifically for Year 2000 compliance but
they have not been material to results of operations or financial position.
The costs of any further changes currently anticipated are also not expected
to be material to either results of operations or financial position.

The Company is currently contacting its key  trading partners (suppliers and
customers) to determine the extent to which the Company may be vulnerable to
their failure to correct their own Year 2000 issues.  Sufficient responses to
its inquiries have not been received from these trading partners to form an
accurate assessment of their Year 2000 readiness.  The Company does not have
control over these third parties and therefore cannot currently determine the
extent future operating results may be adversely effected by their failure to
correct their Year 2000 problems.

Based on the Company's accomplishments to date, no formal contingency plans
are expected to be needed and none have been developed.  Since the Company
anticipates having all Year 2000 issues resolved by June 1999, it believes
that adequate time would be available to develop contingency plans and ensure
that alternatives are developed and implemented.  However, if such
alternatives are not developed and implemented on a timely basis, the
potential does exist,  even though believed to be remote, that the Year 2000
issues could have a material impact on results of operations.

OUTLOOK
-------

Indications from the marketplace are that long-term demand for carbon fibers
eventually will grow as expected.  During the Company's multi-year growth
program, from time to time demand may lag capacity growth, as new markets
take time to develop.  In the Company's view, this is neither unexpected nor
undesirable during the development of significant new applications.
Significant new applications would increase demand in significant quantities,
compared to limited incremental volume increases.  Therefore, the Company
believes it will be necessary to incur costs related to available capacity
during the periods the new applications are being developed.  The Company's
carbon fiber sales expectations are based on a combination of the anticipated
growth of existing customer demand and projected new applications
development.

During the fourth quarter of fiscal 1998 and the first two quarters of fiscal
1999, the acrylic fiber market experienced a sharp downturn in sales prices
and related gross profit, primarily as a result of substantial reductions in
the market prices of acrylonitrile raw material.  The Company expects these
market conditions to continue during much of fiscal 1999.

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

The following accounting standards will be applicable to the Company for its
fiscal year ending September 30, 1999:

SFAS 131, "Disclosure About Segments of an Enterprise and Related
Information", establishes standards for the reporting by public enterprises
of information about operating segments.  It also establishes standards for
disclosure about products and services, geographic areas, and major
customers.  SFAS 131 is not expected to have a material impact on the
Company's consolidated financial condition, results of operations or cash
flows.

                               *  *  *

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 consist 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.


                                    11
<PAGE> 12

<TABLE>
                                                 ZOLTEK COMPANIES, INC.
<CAPTION>
                                                  SEGMENT INFORMATION
                                                 (Amounts in thousands)
                                                      (Unaudited)

                                                                           SIX MONTHS ENDED MARCH 31,
                                                                           --------------------------
                                                                           1999                   1998
                                                                           ----                   ----
<S>                                                                     <C>                     <C>
Net sales
      Carbon fibers                                                     $  11,731               $  11,321
      Acrylic fibers and other products                                    23,142                  33,469
                                                                        ---------               ---------
                                                                        $  34,873               $  44,790
                                                                        =========               =========

Gross profit
      Carbon fibers - product sales                                     $   3,740               $   4,363
      Acrylic fibers and other products                                     4,174                   9,290
                                                                        ---------               ---------
                                                                        $   7,914               $  13,653
                                                                        =========               =========


Total assets (at period-end)
      Carbon fibers                                                     $  82,926               $  58,078
      Acrylic fibers and other products                                    35,349                  35,833
      General corporate                                                    19,632                  45,483
                                                                        ---------               ---------
                                                                        $ 137,907               $ 139,394
                                                                        =========               =========

Capital expenditures
      Carbon fibers                                                     $   8,566               $  11,979
      Acrylic fibers and other products                                       402                   1,527
                                                                        ---------               ---------
                                                                        $   8,968               $  13,506
                                                                        =========               =========


Depreciation and amortization expense
      Carbon fibers                                                     $   2,204               $     719
      Acrylic fibers and other products                                       610                     608
                                                                        ---------               ---------
                                                                        $   2,814               $   1,327
                                                                        =========               =========
</TABLE>


                                    12
<PAGE> 13

                            ZOLTEK COMPANIES, INC.


PART II.    OTHER INFORMATION

            Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                     ---------------------------------------------------

                     The registrant's annual meeting of shareholders was held
                     February 23, 1999.  At such meeting, the shareholders
                     considered and voted upon the following:

                     1.    Charles Dill and Zsolt Rumy were reelected as
                           directors of the registrant, with the results of
                           the voting as follows:

<TABLE>
<CAPTION>
                                            Votes For             Votes Withheld             Abstain
                                            ---------             --------------             -------
<S>                                        <C>                        <C>                    <C>
                           Charles Dill    15,439,844                 2,088                  136,812
                           Zsolt Rumy      15,439,844                 2,088                  136,812
</TABLE>

                           The terms of the following directors of the
                           registrant continued after the meeting: Linn
                           Bealke, James Betts, D. James Dorr and John
                           Kardos.

            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 March 31, 1999.


                                   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:  May 14, 1999                       By:   /s/ DANIEL D. GREENWELL
       ------------                          ---------------------------------
                                                    Daniel D. Greenwell
                                                   Chief Financial Officer

                                    13