Washington, D. C. 20549

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(Mark One)

For the transition period from __________ to __________

Commission file number 0-17321

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(Exact name of small business issuer as specified in its charter)

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(Registrant's telephone number, including area code)

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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

Transitional Small Business Disclosure Format (check one):

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See Notes to Consolidated Financial Statements

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See Notes to Consolidated Financial Statements

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See Notes to Consolidated Financial Statements

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The consolidated financial statements include accounts of TOR Minerals International, Inc. and its wholly owned subsidiaries, TOR Minerals Malaysia, Sdn. Bhd. (TMM) and TOR Processing & Trade BV (TP&T). All significant inter-company transactions are eliminated in the consolidation process.

TMM measures and records its transactions in terms of the local Malaysian currency, the ringgit, which is also the functional currency. Malaysia imposed capital controls and fixed its ringgit currency at 3.8 ringgits per 1 U.S. dollar in September 1998. The Malaysian government has not changed the fixed exchange rate since that time. However, there can be no assurance that the Malaysian government will maintain the fixed rate of currency exchange.

TP&T uses the U.S. dollar as its functional currency. As a result of the changes in the exchange rate, gains and losses due to fluctuations in the value of any Euro denominated transactions are recorded on the Company's consolidated statement of operations.

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from these estimates.

The Company recorded a $65,000 book to physical inventory adjustment during the third quarter 2003 due primarily to a change in raw material yield at its Netherlands operation. This change in estimate will result in a decrease in the gross profit margin of Aluprem TG grades of approximately 6.6%.

The Company has not recorded any federal or foreign income tax expense during 2003 as it expects to utilize net operating loss carry-forwards to offset substantially all taxable income.

The Company has experienced significant growth over the nine months ended September 30, 2003, and anticipates this growth to continue depending on market conditions, our ability to access additional capital to finance this growth and other factors, some of which are beyond our control. The growth has resulted in an increase in the investment in working capital and capital improvements which have strained the Company's liquidity and will require substantial additional funds in the fourth quarter of 2003 in order for the Company to meet its current short term obligations of which approximately $2,498,000 is due in the fourth quarter 2003. We are currently negotiating with our financial institutions to increase and restructure the Company's debt, as well as seeking additional equity financing through a private placement of Preferred Stock, but there can be no assurance that we will obtain this financing or that it will be obtained on terms favorable to the Company. If the Company is not able to obtain additional capital, it will have to draw down on its existing credit facilities and available cash in order to meet its maturing short term obligations, and if these resources are not sufficient, we will have to seek a deferral of our short term payment obligations. This will in turn adversely affect the Company's liquidity and its ability to finance its business plans.

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On January 1, 2003, the Company adopted FASB Statement 148, Accounting for Stock Based Compensation - Transition and Disclosure. Statement 148 amends FASB Statement 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to Statement 123's fair value method of accounting for stock-based employee compensation. Statement 148 also amends the disclosure in the summary of significant accounting policies of the effects of an entity's accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements.

Upon adoption of Statement 148, effective January 1, 2003, the Company elected to change its method of accounting for stock options from the intrinsic value method of Opinion 25 to the fair value method of Statement 123. The Company will utilize the "Modified Prospective Method" of transition as provided for in Statement 148. Under the Modified Prospective Method, the Company has recorded compensation expense of $75,000 for the three-month period ending September 30, 2003 and year to date compensation expense of $288,000 related to all options outstanding through September 30, 2003.

Pro forma information regarding net income and earnings per share is required by Statement 148, which also requires that the information be determined as if the Company had accounted for its employee stock options granted subsequent to December 31, 1994 under the fair value method of that Statement. The fair value of these options was estimated at the date of grant using a Black-Scholes option-pricing model.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information for the three-month and nine-month periods ending September 30, 2002 follows:

Exercise prices on options outstanding at September 30, 2003, ranged from $0.92 to $5.40 per share. The weighted-average remaining contractual life of the options is 7.79 years. The number of options exercisable at September 30, 2003 and 2002 was 431,100 and 332,676, respectfully.

On January 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations. Statement 143 applies to legal obligations associated with the retirement of long-lived assets that result from acquisition, construction, development and/or normal operation of a long-lived asset. Management does not believe adoption of this statement will materially impact the Company's financial position or results of operations.

On January 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. Statement 146 address the accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Terminations Benefits and Other Costs to Exit an Activity." It also substantially nullifies EITF Issue No. 88-10, "Costs Associated with Lease Modification or Termination." Management does not believe that adoption of this statement will materially impact the Company's financial position or results of operations.

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On January 1, 2003, the Financial Accounting Standards Board issued Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"). FIN 46 addresses consolidation of business enterprises of variable interest entities. FIN 46 is effective immediately for all variable interest entities created after January 31, 2003 and for the first fiscal year or interim period ending after December 15, 2003 for variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company has not acquired any variable interest entities subsequent to January 31, 2003 and will therefore adopt FIN 46 for its annual report for the year ending December 31, 2003. Adoption of FIN 46 is not expected to materially impact the Company's financial position or results of operations.

The Company entered into a loan and security agreement on April 5, 2001 with the Company's Chairman of the Board, Bernard Paulson a 17.0% shareholder, through Paulson Ranch, Ltd. under which Paulson Ranch made a loan to the Company in the amount of $600,000. The principal balance outstanding on September 30, 2003 was $231,000. The new loan agreement with the bank limits the payment of principal and interest on the loan with Paulson Ranch.

The majority of the Company's non-related party debt is either floating rate or has been recently negotiated and carrying value approximates fair value.

During 2002, the Company entered into a new loan agreement (the "Agreement") with Bank of America, N.A. (the "Bank"). The Agreement between the Company and the Bank was amended on May 13, 2003. The Amendment to the Loan Agreement (the "Amendment"), which matures on August 31, 2004, increased the Company's line of credit (the "Line") from $3,000,000 to $3,500,000. The interest rate on the Line is the Bank's prime. The amount of credit available to the Company under the Line is limited to the lesser of (a) $3,500,000 or (b) 80% of eligible accounts receivable and 50% of eligible inventory. At September 30, 2003, the Company had $2,775,000 outstanding on the Line and $725,000 was available to the Company on that date. The Company increased its borrowing on the Line to fund the purchase of raw materials.

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The Agreement contains covenants that, among other things, require maintenance of certain financial ratios based on the results of the consolidated operations. The covenants are calculated at the end of each quarter. For the quarter ending September 30, 2003, the Company was in compliance with all of the covenants contained in the Agreement dated May 13, 2003. Under the terms of the Agreement, payment of the Line and the term loan are secured by the Company's property, plant and equipment, as well as inventory and accounts receivable.

The Company has one term loan with the Bank. The loan proceeds of $850,000 were used to refinance the Company's term loan that was due to mature on June 1, 2002. The interest rate for the loan is the Bank's prime rate plus 1% per annum. Monthly principal payments of $14,167 plus interest commenced on June 1, 2002, and continue through May 1, 2007. At September 30, 2003, the balance on the term loan was $623,000.

In April 2001, the Company raised $3,010,000 in a private placement of common stock and convertible debentures. In the private placement, the Company issued 301,000 shares of its common stock and $2,709,000 principal amount of convertible debentures. On April 3, 2003, the Renaissance Group exercised its option to convert the remaining 200,000 debentures into the Company's common stock at the $1.80 per share conversion rate.

The Company's subsidiary, TMM, has loan agreements with two banks in Malaysia, HSBC Bank Malaysia Berhad and RHB Bank Berhad, which provided a total short-term credit facility of $5,921,000. At September 30, 2003, TMM had utilized $2,585,000 of that facility, including $87,000 on the line of credit and $2,498,000 outstanding under the ECR. The ECR, a government supported financing arrangement specifically for exporters, is used by TMM for short-term financing of 180 days or less against customers' purchase orders. Of the $2,498,000 outstanding on the ECR at September 30, 2003, all is due in the fourth quarter of 2003. The borrowings under the short-term credit facility are subject to a demand provision which is customary in Malaysia regarding short-term banking facilities. The facility is subject to annual review and renewal.

TMM has two term loans with HSBC Bank Labuan and RHB Bank Labuan. At September 30, 2003, the outstanding principal balance on each of the two term loans was $87,500 for total outstanding borrowings of $175,000. The loans are secured by TMM's inventory, accounts receivable, and property, plant and equipment and are payable in monthly payments of $17,500 each, plus interest. The term loans are subject to certain subjective acceleration covenants based on the judgement of the banks. Additionally, if repayment of the short-term credit facilities are demanded, these term loans would also become due immediately.

The Company's subsidiary, TP&T, has a loan agreement with a bank in The Netherlands, Rabobank, which provides a total short-term credit facility of EURO 504,000 (587,900 USD at September 30, 2003). The credit facility is secured by TP&T's inventory and accounts receivable. At September 30, 2003, TP&T had utilized EURO 332,000 (388,000 USD at September 30, 2003) of that facility. TP&T's borrowings are also subject to a demand provision.

The Company has experienced significant growth over the nine months ended September 30, 2003, and anticipates this growth to continue depending on market conditions, our ability to access additional capital to finance this growth and other factors, some of which are beyond our control. The growth has resulted in an increase in the investment in working capital and capital improvements which have strained the Company's liquidity and will require substantial additional funds in the fourth quarter of 2003 in order for the Company to meet its current short term obligations of which approximately $2,498,000 is due in the fourth quarter 2003. We are currently negotiating with our financial institutions to increase and restructure the Company's debt, as well as seeking additional equity financing through a private placement of Preferred Stock, but there can be no assurance that we will obtain this financing or that it will be obtained on terms favorable to the Company. If the Company is not able to obtain additional capital, it will have to draw down on its existing credit facilities and available cash in order to meet its maturing short term obligations, and if these resources are not sufficient, we will have to seek a deferral of our short term payment obligations. This will in turn adversely affect the Company's liquidity and its ability to finance its business plans.

The terms of the Company's borrowings contain restrictions and covenants, including covenants based on the performance of the Company, and the failure of the Company to comply with such restrictions and covenants could also adversely affect the Company's financial position.

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The Company has direct operations in The Netherlands and Malaysia. Certain of the Company's foreign operations are measured in their local currencies. As a result, the Company's financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company has operations.

There are claims arising in the normal course of business that are pending against the Company. While it is not feasible to predict or determine the outcome of any case, it is the opinion of management that the ultimate disposition of such claims will have no material effect on the financial statements of the Company.

The Company believes that the plants in Corpus Christi, Texas, Ipoh, Malaysia and Hattem, The Netherlands are in compliance with all applicable federal, state, and local laws and regulations relating to the discharge of substances into the environment. The Company does not expect that any material capital expenditures for environmental control facilities will be necessary in order to continue such compliance.

The Company has no indefinite-lived intangible assets.

The Company adopted the provisions of SFAS 142 effective January 1, 2002. Under the provisions of SFAS 142, the value of the Company's goodwill (with a carrying value of $1,283,000) is no longer subject to amortization but will be reviewed at least annually for impairment or more frequently if impairment indicators exist. The Company completed the first annual impairment test October 1, 2002, and concluded that there was no impairment of recorded goodwill, as the fair value of the reporting unit exceeded the carrying amount as of October 1, 2002. There can be no assurance that future goodwill impairment tests will not result in a charge to net earnings.

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The following table sets forth the computation of basic and diluted earnings per share:

Excluded from the calculation of diluted earnings per share were a total of 15,400 options at September 30, 2003 and 336,025 options at September 30, 2002. The options were not included in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

During the first quarter 2002, the Company had a swap agreement with Coral Energy Holdings, LP ("Coral Energy") to exchange monthly payments on notional quantities amounting to 57,000 MM Btu's. This contract was a derivative that had not been designated as a hedge. Under the swap agreement, the Company paid fixed prices averaging $4.6265 per MM Btu. For the year ended December 31, 2001, the Company marked the gas contract to market, recording a loss of $113,000. The Company recorded the loss as a component of "Cost of Goods Sold" on the income statement. The Company settled this swap agreement during the first quarter 2002, by paying cash of $136,000, recording an additional loss of $23,000.

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On September 3, 2002, the Company entered into natural gas contract with Bank of America, N.A. to achieve the objectives of the hedging program. The Company designated the contract as a cash flow hedge, with the expectation that it would be highly effective in offsetting changes in the price of natural gas. The contract was settled based on natural gas market prices from January 1, 2003 through April 30, 2003. The Company paid fixed prices averaging $3.90 per MM Btu on notional quantities amounting to 60,000 MM Btu's. The fair value of the hedge decreased $56,000 from December 31, 2002, to April 30, 2003 due to the settlement of the hedge.

On September 16, 2003, the Company entered into a new natural gas contract with Bank of America, N.A. to achieve the objectives of the hedging program. The Company designated the contract as a cash flow hedge, with the expectation that it would be highly effective in offsetting the price of natural gas. The contract will be settled based on natural gas market prices from January 1, 2004 through April 30, 2004. The company will pay fixed prices averaging $5.26 per MM Btu on notional quantities amounting to 80,000 MM Btu's.

To protect its exposure to foreign exchange risks, TMM enters into foreign currency forwards contracts. Gains and losses on foreign exchange contracts, designated as hedges of identified exposure, are offset against the foreign currency exchange gains and losses on the hedged financial assets and liabilities. Where the instrument is used to hedge against anticipated future transactions, gains and losses are not recognized until the transaction occurs. For the quarter ended September 30, 2003, the Company marked the foreign currency forwards contracts to market, recording the fair value of the hedge of $20,000 as a component of "Other Comprehensive Income" and also recorded it as an asset on the balance sheet at September 30, 2003. The fair value of the hedge increased $7,000 from December 31, 2002 to September 30, 2003. The recognition of this gain had no effect on the Company's cash flow.

The Company and its subsidiaries operate in one reportable segment of pigment manufacturing and related products. All United States manufacturing is done at the facility located in Corpus Christi, Texas. Foreign manufacturing is done by the Company's wholly owned subsidiaries located in Malaysia and The Netherlands.

Sales from the subsidiary to the parent company are based upon profit margins which represent competitive pricing of similar products. Intercompany sales consist of Synthetic Rutile, HITOX and ALUPREM.

A summary of the Company's manufacturing operations by geographic area is presented below:

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Sales by product for the third quarter 2003 as compared to the same period 2002 are presented below.

For the nine-month period ending September 30, 2003, sales increased $4,582,000 from $12,377,000 for the nine-month period ended September 30, 2002, to $16,959,000 for the same period 2003, a net increase of 37.0%. Net sales at the Malaysian location, TMM, represented $2,836,000 of the increase. TMM's Synthetic Rutile sales accounted for $1,746,000 of the nine-month increase and HITOX sales increased $1,125,000. Sales at the Corpus Christi location, TMI, increased $1,839,000 or 19.4% during the nine-month period ending September 30, 2003, of which Aluprem represented $1,687,000. Sales of Aluprem to third party customers at the Netherlands location, TP&T, decreased $93,000 or 7.7%. The decrease in TP&T's sales is a direct result of shifting the US sales to the Corpus Christi location.

Sales by product for the first nine months of 2003 and 2002 are as follows:

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Cost of sales for the quarter ending September 30, 2003, increased 69.6% or $2,182,000 on higher sales volume. Cost of sales represented 75.4% of sales this quarter compared to 74.3% for the same three-month period 2002. The consolidated gross profit increased $655,000 or 60.4% from $1,084,000 for the quarter ending September 30, 2002 to $1,739,000 for the same period 2003.

The most significant factor affecting the gross profit during the three-month period ending September 30, 2003 was natural gas, the primary source of energy at the Corpus Christi plant. Natural gas increased $247,000 or 117.3% in the third quarter 2003 as compared to the same period 2002. This is due primarily to the price of natural gas increasing from $3.35 per MM/Btu during the third quarter 2002 to $5.18 per MM/Btu for the same period 2003. Equipment repairs at the Corpus Christi plant for the quarter ending September 30, 2003 increased $96,000 compared to the same quarter 2002. Also contributing to the decrease is a $65,000 book to physical inventory adjustment at the Company's Netherlands operation.

For the first nine-months of 2003, cost of sales increased 39.0% or $3,540,000 on higher sales volume. Cost of sales represented 74.3% of sales compared 73.3% for the same nine-month period 2002. The consolidated gross profit increased $1,042,000 or 31.5% from $3,310,000 for the nine-month period ending September 30, 2002 to $4,352,000 for the same period 2003.

During the first nine-months of 2003, the most significant factor affecting the gross profit was the rising cost of natural gas at the Corpus Christi plant. Natural gas expense increased $659,000 or 114.8% during the nine-month period ending September 30, 2003 compared to the same period 2002. This is due primarily to the price of natural gas increasing from $3.18 per MM/Btu during the first nine-months of 2002 to $5.24 per MM/Btu for the same period 2003. Equipment repairs at the Corpus Christi location were $208,000 higher during the first nine-months of 2003 compared to the same period 2002. Also contributing to the decrease is a $65,000 book to physical inventory adjustment at the Company's Netherlands operation.

General, administrative and selling expenses ("SG&A") increased from $878,000 during the third quarter of 2002 to $1,072,000 for the same period 2003, an increase of $194,000 or 22.1%. SG&A for the Corpus Christi operation, which includes the expenses for the Company's corporate headquarters, increased $205,000 or 34.3% compared to the third quarter 2002. The primary factors contributing to the increase in SG&A at the Corpus Christi location during the quarter ending September 30, 2003 include (1) the Company's decision to begin expensing options in 2003, which resulted in the Company recording non-cash option compensation expense of $75,000; (2) increase in employee benefits of $66,000; (3) increase in accounting fees of $26,000; (4) increase in State franchise taxes of $28,000; and (5) an increase of $10,000 in investor relation expense related to the promotion of the Company's stock. SG&A for The Netherlands operation decreased $38,000 or 23.3% and TMM's increased $27,000 or 25.8%.

Year to date, SG&A increased $502,000 or 19.1% from $2,624,000 for the first nine-months of 2002 to $3,126,000 for the same period 2003. SG&A for the Corpus Christi operation, which includes the expenses for the Company's corporate headquarters, increased $587,000 or 33.4% compared to the same period 2002. The primary factors contributing to the increase in SG&A include (1) non-cash option compensation expense of $288,000; (2) termination expenses of $85,000 related to personnel terminations in the second quarter 2003; (3) an increase in employee benefits of $66,000; (4) an increase in accounting fees of $53,000; (5) an increase in building and contents insurance of $15,000; (6) an increase in State franchise taxes of $42,000; and (7) an increase in investor relations expense of $38,000. SG&A for The Netherlands operation decreased $116,000 or 24.4% and TMM's increased $31,000 or 9.3%.

The Company did not recognize any interest income during the first nine-months of 2003 or 2002.

Interest expense decreased $3,000 in the third quarter of 2003 as compared with the same quarter 2002. For the nine-month period ending September 30, 2003, interest expense decreased $36,000. The reduction in interest expense was the result of a reduction in long-term debt at both the Corpus Christi and Malaysian operations and the elimination of short-term debt to the Royal Begemann Group that was repaid in May 2002.

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Due to the utilization of operating loss carry-forwards, the Company recorded no income tax expense during the third quarters of 2003 or 2002.

During the third quarter 2003, working capital increased from $1,236,000 at December 31, 2002 to $1,666,000, an increase of $430,000 or 34.8%, at September 30, 2003. Accounts receivable increased $2,865,000 due to an expanded customer base resulting in higher sales of Synthetic Rutile, Hitox and Aluprem during the third quarter 2003 compared to the fourth quarter 2002. Inventory increased $448,000 due the production of orders scheduled for shipment during the fourth quarter 2003. Accounts payable and accrued expenses increased $1,313,000 due to the timing of inventory and equipment purchases.

Cash decreased $98,000 from $121,000 at December 31, 2002 to $23,000 at September 30, 2003. During the nine-month period ended September 30, 2003, net cash provided by operating activities totaled $34,000, resulting from changes in working capital, with the largest change being the increase in accounts receivable. The Company used $1,587,000 in investing activities for the purchase of production equipment. Financing activities provided $1,455,000 primarily from the domestic line of credit.

During 2002, the Company entered into a new loan agreement (the "Agreement") with Bank of America, N.A. (the "Bank"). The Agreement between the Company and the Bank was amended on May 13, 2003. The Amendment to the Loan Agreement (the "Amendment"), which matures on August 31, 2004, increased the Company's line of credit (the "Line") from $3,000,000 to $3,500,000. The interest rate on the Line is the Bank's prime. The amount of credit available to the Company under the Line is limited to the lesser of (a) $3,500,000 or (b) 80% of eligible accounts receivable and 50% of eligible inventory. At September 30, 2003, the Company had $2,775,000 outstanding on the Line and $725,000 was available to the Company on that date. The Company increased its borrowing on the Line to fund the purchase of raw materials.

The Agreement contains covenants that, among other things, require maintenance of certain financial ratios based on the results of the consolidated operations. The covenants are calculated at the end of each quarter. For the quarter ending September 30, 2003, the Company was in compliance with all of the covenants contained in the Agreement dated May 13, 2003. Under the terms of the Agreement, payment of the Line and the term loan are secured by the Company's property, plant and equipment, as well as inventory and accounts receivable.

The Company has one term loan with the Bank. The loan proceeds of $850,000 were used to refinance the Company's term loan that was due to mature on June 1, 2002. The interest rate for the loan is the Bank's prime rate plus 1% per annum. Monthly principal payments of $14,167 plus interest commenced on June 1, 2002 and continue through May 1, 2007. At September 30, 2003, the balance on the term loan was $623,000.

In April 2001, the Company raised $3,010,000 in a private placement of common stock and convertible debentures. In the private placement, the Company issued 301,000 shares of its common stock and $2,709,000 principal amount of convertible debentures. On April 3, 2003, the Renaissance Group exercised its option to convert the remaining 200,000 debentures into the Company's common stock at the $1.80 per share conversion rate.

The Company's subsidiary, TMM, has loan agreements with two banks in Malaysia, HSBC Bank Malaysia Berhad and RHB Bank Berhad, which provided a total short-term credit facility of $5,921,000. At September 30, 2003, TMM had utilized $2,585,000 of that facility, including $87,000 on the line of credit and $2,498,000 outstanding under the ECR. The ECR, a government supported financing arrangement specifically for exporters, is used by TMM for short-term financing of 180 days or less against customers' purchase orders. Of the $2,498,000 outstanding on the ECR at September 30, 2003, all is due in the fourth quarter of 2003. The borrowings under the short-term credit facility are subject to a demand provision which is customary in Malaysia regarding short-term banking facilities. The facility is subject to annual review and renewal.

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TMM has two term loans with HSBC Bank Labuan and RHB Bank Labuan. At September 30, 2003, the outstanding principal balance on each of the two term loans was $87,500 for total outstanding borrowings of $175,000. The loans are secured by TMM's inventory, accounts receivable, and property, plant and equipment and are payable in monthly payments of $17,500 each, plus interest. The term loans are subject to certain subjective acceleration covenants based on the judgment of the banks. Additionally, if repayment of the short-term credit facilities are demanded, these term loans would also become due immediately.

The Company's subsidiary, TP&T, has a loan agreement with a bank in The Netherlands, Rabobank, which provides a total short-term credit facility of EURO 504,000 (587,900 USD at September 30, 2003). The credit facility is secured by TP&T's inventory and accounts receivable. At September 30, 2003, TP&T had utilized EURO 332,000 (388,000 USD at September 30, 2003) of that facility. TP&T's borrowings are also subject to a demand provision.

The Company has experienced significant growth over the nine months ended September 30, 2003, and anticipates this growth to continue depending on market conditions, our ability to access additional capital to finance this growth and other factors, some of which are beyond our control. The growth has resulted in an increase in the investment in working capital and capital improvements which have strained the Company's liquidity and will require substantial additional funds in the fourth quarter of 2003 in order for the Company to meet its current short term obligations of which approximately $2,498,000 is due in the fourth quarter 2003. We are currently negotiating with our financial institutions to increase and restructure the Company's debt, as well as seeking additional equity financing through a private placement of Preferred Stock, but there can be no assurance that we will obtain this financing or that it will be obtained on terms favorable to the Company. If the Company is not able to obtain additional capital, it will have to draw down on its existing credit facilities and available cash in order to meet its maturing short term obligations, and if these resources are not sufficient, we will have to seek a deferral of our short term payment obligations. This will in turn adversely affect the Company's liquidity and its ability to finance its business plans.

The terms of the Company's borrowings contain restrictions and covenants, including covenants based on the performance of the Company, and the failure of the Company to comply with such restrictions and covenants could also adversely affect the Company's financial position.

Certain portions of this report contain forward-looking statements about the business, financial condition and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation, changes in demand for the Company's products, changes in competition, economic conditions, fluctuations in market price for TiO₂ pigments, interest rate fluctuations, changes in the capital markets, changes in tax and other laws and governmental rules and regulations applicable to the Company's business, and other risks indicated in the Company's filing with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, and, in many cases, the Company cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this report, the words "believes," "estimates," "plans," "expects," "anticipates" and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements.

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During the period covered by this report, there were no significant changes in the Company's internal controls or, to management's knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation.

On October 13, 2003, the Company appointed Lawrence W. "Woody" Haas as Treasurer and Chief Financial Officer. Mr. Haas, 48, was most recently the Vice President Finance of a multi-plant, publicly traded manufacturing company that was acquired by private investors. Prior to that, he held various managerial positions at Honeywell (Allied Signal) and Harris Corporation as well as the international audit firm of Deloitte Touche.

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.

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