SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q
(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003.


[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 FOR THE TRANSITION PERIOD FROM                TO
                                            --------------    ----------------


                          Commission File No. 333-22997

                         SPECTRUM ORGANIC PRODUCTS, INC.
              ----------------------------------------------------
             (Exact name of Registrant as specified in its Charter)

            California                                         94-3076294
      ----------------------                               -------------------
     (State of incorporation)                             (I.R.S. Employer
                                                          Identification Number)

                       5341 Old Redwood Highway, Suite 400
                           Petaluma, California 94954
                     --------------------------------------
                    (Address of principal executive offices)

                                 (707) 778-8900
                           -----------------------------
                          (Registrant's telephone number)

Check whether the registrant (1) has 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.
Yes [X} No [ ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.  Yes [ ]  No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: Common Stock, no par value,
45,999,795 shares outstanding as of November 3, 2003.
Transitional Small Business Disclosure Format: Yes [ ]  No [X]

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<CAPTION>


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
-----------------------------

                                    SPECTRUM ORGANIC PRODUCTS, INC.
                                             BALANCE SHEETS



                                              ASSETS
                                                                     (Unaudited)
                                                                    September 30,   December 31,
                                                                        2003            2002
                                                                    ------------    ------------
Current Assets:
   <S>                                                             <C>             <C>
   Cash                                                             $     83,200    $      1,000
   Accounts receivable, net                                            4,293,000       3,075,200
   Inventories, net (Note 2)                                           8,826,600       5,269,600
   Prepaid expenses and other current assets                             236,800          79,600
                                                                    ------------    ------------
     Total Current Assets                                             13,439,600       8,425,400

Property and Equipment, net (Note 3)                                   4,380,200       3,447,400

Other Assets:
   Intangible assets (Note 5)                                            588,200          42,000
   Other assets, net                                                     203,200         271,900
                                                                    ------------    ------------
Total Assets                                                        $ 18,611,200    $ 12,186,700
                                                                    ============    ============

                               LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Bank overdraft                                                   $     15,500    $    589,300
   Line of credit (Note 4)                                             5,423,600       2,479,800
   Accounts payable, trade                                             5,343,400       3,330,000
   Accrued expenses (Note 7)                                             774,000         722,500
   Income taxes payable                                                     --           176,000
   Current maturities of notes payable and
     capitalized lease obligations                                       311,500         256,000
   Current maturities of notes payable, former stockholder               187,500         187,500
   Current maturities of notes payable, stockholders                      94,900          87,600
                                                                    ------------    ------------
     Total Current Liabilities                                        12,150,400       7,828,700

Notes payable and capitalized lease obligations, less
   current maturities                                                  1,190,300         278,900
Notes payable, former stockholder, less current maturities               550,500         676,800
Notes payable, stockholders, less current maturities                      56,300         128,400
Deferred rent                                                             42,200            --
                                                                    ------------    ------------
Total Liabilities                                                     13,989,700       8,912,800
                                                                    ------------    ------------

Stockholders' Equity:
   Preferred stock, 5,000,000 shares authorized, no shares issued
     or outstanding                                                         --              --
   Common stock, without par value, 60,000,000 shares authorized,
     45,984,795 and 45,705,571 issued and outstanding at
      September 30, 2003 and  December 31, 2002, respectively          9,500,800       9,430,100
   Accumulated deficit                                                (4,879,300)     (6,156,200)
                                                                    ------------    ------------
Total Stockholders' Equity                                             4,621,500       3,273,900
                                                                    ------------    ------------
Total Liabilities and Stockholders' Equity                          $ 18,611,200    $ 12,186,700
                                                                    ============    ============


                            The accompanying notes are an integral part
                                    of the financial statements

                                                2
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<CAPTION>


                                     SPECTRUM ORGANIC PRODUCTS, INC.
                                        STATEMENTS OF OPERATIONS



                                                   (Unaudited)                     (Unaudited)
                                                Three Months Ended              Nine Months Ended
                                             Sept. 30,       Sept. 30,       Sept. 30,      Sept. 30,
                                               2003             2002            2003           2002
                                           ------------    ------------    ------------    ------------

<S>                                        <C>             <C>             <C>             <C>
Net Sales                                  $ 12,168,900    $  9,718,200    $ 33,858,000    $ 31,075,200

Cost of Goods Sold                            9,069,100       6,972,100      24,719,800      23,059,000
                                           ------------    ------------    ------------    ------------
Gross Profit                                  3,099,800       2,746,100       9,138,200       8,016,200
                                           ------------    ------------    ------------    ------------
Operating Expenses:

   Sales and Marketing                        1,634,200       1,437,300       4,699,000       4,601,400

   General and Administrative                   959,300         735,100       2,774,500       2,317,000
                                           ------------    ------------    ------------    ------------
Total Operating Expenses                      2,593,500       2,172,400       7,473,500       6,918,400
                                           ------------    ------------    ------------    ------------

Gain on Sales of Product Lines (Note 6)            --            97,700            --           139,800
                                           ------------    ------------    ------------    ------------

Income from Operations                          506,300         671,400       1,664,700       1,237,600
                                           ------------    ------------    ------------    ------------
Other Income (Expense):

   Interest Expense                            (164,200)        (94,400)       (317,200)       (391,000)
   Other                                           --            10,500          10,600          21,100
                                           ------------    ------------    ------------    ------------
Total Other Expenses                           (164,200)        (83,900)       (306,600)       (369,900)
                                           ------------    ------------    ------------    ------------

Income Before Income Taxes                      342,100         587,500       1,358,100         867,700

Provision for Income Taxes                       16,800          12,700          81,200          12,700
                                           ------------    ------------    ------------    ------------
Net Income                                 $    325,300    $    574,800    $  1,276,900    $    855,000
                                           ============    ============    ============    ============

Basic and Fully Diluted Income Per Share   $       0.01    $       0.01    $       0.03    $       0.02
                                           ============    ============    ============    ============

Weighted Average Shares Outstanding          45,911,672      45,698,661      45,775,026      45,698,661
                                           ============    ============    ============    ============


                               The accompanying notes are an integral part
                                      of the financial statements

                                                     3
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<CAPTION>


                                     SPECTRUM ORGANIC PRODUCTS, INC.
                                        STATEMENTS OF CASH FLOWS



                                                                                   (Unaudited)
                                                                                Nine Months Ended
                                                                          September 30,   September 30,
                                                                              2003            2002
                                                                          ------------    ------------
<S>                                                                       <C>             <C>
Net Income                                                                $  1,276,900    $    855,000
  Adjustments to Reconcile Net Income to Net Cash Provided by (Used in)
      Operating Activities:
         Depreciation and amortization expense                                 350,200         319,600
         Provision for allowances against receivables                           77,900         135,500
         Provision for reserves for inventory obsolescence                     132,000         167,200
         Write-down of bottling equipment due to reconfiguration                53,000            --
         (Gain) Loss on sales of product lines                                    --          (139,800)
         Imputed interest on notes payable                                      14,200          16,800
         Imputed interest on stock warrants issued                                --            44,700

  Changes in Assets and Liabilities:
         Accounts receivable                                                (1,295,700)         32,200
         Inventories                                                        (3,689,000)       (122,700)
         Prepaid expenses and other assets                                    (148,500)        (21,300)
         Accounts payable                                                    1,618,400          23,500
         Accrued expenses                                                      (82,300)        (86,900)
                                                                          ------------    ------------
Net Cash Provided by (Used in) Operating Activities                         (1,692,900)      1,223,800
                                                                          ------------    ------------
Cash Flows from Investing Activities:
  Purchase of property and equipment                                        (1,152,200)       (401,300)
  Purchase of intellectual property                                           (275,000)           --
  Proceeds from sale of product lines and related inventories                     --         3,068,300
  Transaction fees on sale of product lines                                       --          (134,000)
                                                                          ------------    ------------
Net Cash Provided by (Used in) Investing Activities                         (1,427,200)      2,533,000
                                                                          ------------    ------------
Cash Flows from Financing Activities:
  Increase (decrease) in checks drawn against future deposits                 (573,800)       (108,700)
  Proceeds from line of credit                                              31,762,000      32,838,000
  Repayment of line of credit                                              (28,818,000)    (35,911,800)
  Proceeds from notes payable                                                1,495,200            --
  Repayment of notes payable                                                  (491,300)       (238,100)
  Repayment of notes payable, former stockholder                              (140,600)       (187,500)
  Repayment of notes payable to stockholders                                   (65,000)        (96,300)
  Proceeds from common stock warrants exercised                                 70,700            --
  Repayment of capitalized lease obligations                                   (36,900)        (52,600)
                                                                          ------------    ------------
Net Cash Provided by (Used in) Financing Activities                          3,202,300      (3,757,000)
                                                                          ------------    ------------
Net Increase (Decrease) In Cash                                                 82,200            (200)

Cash, beginning of the year                                                      1,000           1,200
                                                                          ------------    ------------
Cash, end of the period                                                   $     83,200    $      1,000
                                                                          ============    ============

Supplemental Disclosure of Cash Flow Information:
  Cash paid for income taxes                                              $    311,000    $     12,700
  Cash paid for interest                                                  $    313,900    $    341,400

Non-Cash Financing Activities:
   Purchase of intellectual property with debt                            $    275,000    $       --


                               The accompanying notes are an integral part
                                      of the financial statements

                                                     4
</TABLE>

<PAGE>


SPECTRUM ORGANIC PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS

1. Basis of Presentation:

     These are unaudited interim financial statements and include all
     adjustments that, in the opinion of Management, are necessary in order to
     make the financial statements not misleading. The financial statements have
     been prepared in accordance with the instructions to Form 10-Q and do not
     include certain disclosures required by accounting principles generally
     accepted in the United States of America. Accordingly, the statements
     should be read in conjunction with Spectrum Organic Products, Inc.
     financial statements and notes thereto included in the Company's Annual
     Report on Form 10-K for the year ended December 31, 2002. Operating results
     for the nine-month period ended September 30, 2003 are not necessarily
     indicative of the results that may be expected for the entire year ending
     December 31, 2003 or future periods.

     Certain reclassifications have been made to the prior year unaudited
     interim financial statements to be consistent with the presentation at
     September 30, 2003. These reclassifications had no impact on net income or
     retained earnings.

2. Inventories:

     Inventories consisted of the following:

                                              September 30,      December 31,
                                                  2003               2002
                                              ------------       ------------
     Finished goods                             $6,147,300         $4,409,500
     Raw materials                               1,930,700          1,350,500
     Deposits on inventory                         990,400             57,600
                                              ------------       ------------
     Total Inventories                           9,068,400          5,817,600
     Less: Reserve for obsolete inventory         (241,800)          (548,000)
                                              ------------       ------------
     Net Inventories                            $8,826,600         $5,269,600
                                              ============       ============

     Deposits on inventory consist primarily of flaxseed paid for prior to its
     receipt at the Company's production facility.

3. Bottling Equipment Relocation and Reconfiguration:

     On July 14, 2003 the Company disassembled its bottling line at its leased
     manufacturing facility located at 133 Copeland Street, Petaluma, California
     and relocated and reconfigured the line at its new co-packer, Interpac
     Technologies, Inc. ("Interpac"), also located in Petaluma, California.
     Interpac provides custom bottling services to the Company under contract,
     utilizing the Company's bottling equipment. As a result, there were
     thirteen positions eliminated from the Company's bottling and warehouse
     operation at Copeland Street. Of those thirteen positions, eight people
     accepted similar positions at Interpac, three accepted severance packages
     and two people were on a leave of absence at the time. The severance
     payments were included in cost of sales for the third quarter and were not
     significant.

     The bottling line was reconfigured for better efficiency and higher
     bottling speeds and included a new labeler and new conveying equipment. As
     a result, there was $30,600 in net book value of equipment at Copeland
     Street which was scrapped rather than being relocated. Additionally, the
     Company recorded a writedown of $22,400 to reduce the net book value of two
     pieces of equipment that are being held for sale down to their estimated
     market value. The combined amount of $53,000 was included in cost of sales
     for the third quarter.

4. Change in Primary Banking Relationship:

     On July 11, 2003 the Company entered into a Loan and Security Agreement
     (the "Credit Facility") with Comerica Bank-California ("Comerica"). The
     Credit Facility consists of a $7,000,000 revolving line of credit, a
     $1,250,000 term loan and a $1,000,000 capital expenditure term loan. The
     Credit Facility is secured by substantially all assets of the Company and
     matures on June 30, 2005 unless renewed earlier.

     The revolving line of credit is subject to a borrowing base consisting of
     certain eligible accounts receivable and inventory and bears interest at
     the prime rate or LIBOR plus 2.25%, at the Company's option. As of
     September 30, 2003 the Company had $1,515,200 in available borrowing
     capacity under the line of credit.

     The $1,250,000 term loan is secured by property and equipment, bears
     interest at the prime rate plus 25 basis points (0.25%) and features a
     sixty-month amortization schedule.

                                       5

<PAGE>


     The $1,000,000 capital expenditure term loan will finance the purchase of
     additional new or used property and equipment, bears interest at the prime
     rate plus 25 basis points (0.25%) and features a 12 month interest only
     draw down period, converting to a 48 month amortization schedule
     thereafter. As of September 30, 2003 the Company had $754,800 available to
     be drawn down against the capital expenditure term loan.

     The Credit Facility calls for continued satisfaction of various financial
     covenants for 2003 and beyond in order to remain in compliance. As of
     September 30, 2003 the company was in technical default under one of the
     three financial covenants called for under the Credit Agreement. That
     covenant was the ratio of total liabilities to effective net worth, which
     measured 3.06 to one at September 30, 2003 versus a covenant that it not
     exceed 2.75 to one. The ratio was in excess of the covenant as a result of
     higher than expected levels of trade accounts payable and borrowings under
     the line of credit in order to finance the above-normal inventory levels.
     Inventories were above normal as a result of higher levels of finished
     goods maintained while the new bottling location comes up to full speed,
     higher levels of flaxseed inventory as a result of a short crop which
     necessitated buying and taking seed in advance of production requirements,
     and higher levels of raw materials as a result of the longer lead times
     required for the importation of food products as a result of the
     Bioterrorism Act of 2003. Comerica has granted the Company a waiver of its
     rights as a result of this covenant violation.

     The Credit Facility with Comerica replaced a similar arrangement with Wells
     Fargo Business Credit, Inc. ("WFBC"), the Company's former primary lender.
     All amounts due to WFBC were retired on July 11, 2003 in the amount of
     $5,023,600. Included in that amount was an early termination fee of $62,400
     paid to WFBC for terminating that credit facility prior to its maturity
     date of October 6, 2004. The early termination fee and the remaining
     unamortized loan fee of $8,000 associated with the WFBC agreement were
     recorded as interest expense in the third quarter.

5. Intellectual Property Purchase:

     On April 15, 2003 the Company entered into an intellectual property
     purchase agreement (the "IP Agreement") with Tenere Life Sciences, Inc.
     ("Tenere") and Mr. Rees Moerman, both unaffiliated third parties. Mr.
     Moerman is an engineer and lipid scientist who developed proprietary
     techniques for the benign extraction of oil from oil-bearing vegetable
     seeds. The Company has utilized Mr. Moerman's techniques under the
     SpectraVac and LOCET Technology License Agreement (the "License Agreement")
     for the production of flax oil and other nutritional oils since 1990. Under
     the License Agreement, the Company paid royalties to Mr. Moerman on its
     sales of products that were manufactured utilizing the intellectual
     property. Mr. Moerman assigned his rights to the intellectual property to
     Tenere on January 21, 2003.

     In accordance with the IP Agreement, the Company purchased the intellectual
     property for $550,000 which was paid in two equal installments on April 30,
     2003 and October 7, 2003. As a result, the Company is no longer obligated
     to pay royalties to Tenere effective April 1, 2003. Royalties paid during
     the years ended December 31, 2002 and 2001 were $162,500 and $152,000,
     respectively.

     In accordance with Statement of Financial Accounting Standard No. 142,
     "Goodwill and Other Intangible Assets" ("SFAS 142"), the Company has
     determined that the IP Agreement has an indefinite useful life since it
     represents trade secrets utilized in the manufacture of flax oil and other
     nutritional oils. Accordingly, there is no periodic amortization expense.
     The Company will evaluate the intangible asset carrying value of $550,000
     for impairment in relation to the anticipated future cash flows of its
     nutritional oils at least annually.

6. Sales of Product Lines:

     On April 25, 2002 the Company entered into an Asset Purchase Agreement with
     Acirca, Inc. pursuant to which the Company sold certain product lines from
     the Company's Aptos, California-based industrial ingredients business. The
     product lines sold included the Organic Ingredients ("OI") business in
     fruits, vegetables, concentrates and purees. The Spectrum Ingredients
     product lines consisting of culinary oils, vinegars and nutritional
     supplements were not part of the sale.

     The total consideration was $3,167,000 in cash, which included $1,417,000
     for saleable inventory sold to Acirca. Also included in the total
     consideration received was $250,000 that was deposited into an escrow
     account to be applied towards indemnity claims of Acirca or, to the extent
     not utilized for any indemnity claims of Acirca, released to the Company in
     two equal installments on August 30, 2002 and December 31, 2002. The first

                                       6

<PAGE>


     installment of $125,000 was received in full on September 3, 2002. The
     final installment of $124,700 (which was accrued at December 31, 2002) was
     received on January 31, 2003 and consisted of $125,000 plus interest earned
     on the escrowed funds less the escrow agent fees.

     Since the product line sale comprised all of the remaining assets of OI,
     the remaining net goodwill associated with the reverse acquisition of OI in
     October 1999 was written off. Accordingly, the Company recorded the
     following gain on the product line sales for the nine months ended
     September 30, 2002:




     Total cash consideration                                       $ 3,167,000
     Less escrowed funds included above                                (125,000)
                                                                    -----------
     Net cash proceeds from sale                                      3,042,000

     Assets sold:
     Inventories                                                     (1,417,000)
        Fixed assets, net of accumulated depreciation                    (8,600)
        Goodwill, net of accumulated amortization                    (1,470,200)
        Other assets                                                     (6,300)
     Transaction fees                                                  (134,000)
     Reserve for remaining inventories not purchased                    (39,300)
                                                                    -----------
     Loss before collection of other previously escrowed funds          (33,400)
     Collection of escrowed funds from June 2001 sale of product
     lines                                                              173,200
                                                                    -----------
     Net Gain on Sales of Product Lines                             $   139,800
                                                                    ===========

     The Company applied the cash proceeds received against the outstanding
     borrowing under its revolving line of credit.

     The transaction fees represented investment banking, legal and accounting
     fees associated with closing the sale. An investment banking fee of $79,000
     was paid on the sale of the OI product lines to Moore Consulting, a sole
     proprietorship owned and operated by Phillip Moore, a non-executive
     Director of the Company. The fee paid represented 2.5% of the total
     consideration received from the sale and, in the opinion of Management, was
     fair, reasonable and consistent with terms the Company could have received
     from an unaffiliated third party.

     Included in accounts receivable at September 30, 2002 was $146,900 of the
     cash consideration for salable OI inventories, which was received on
     October 11, 2002. The reserve for remaining inventories represented losses
     incurred or anticipated on inventories previously sold by the Company under
     the disposed product lines that were not purchased by Acirca.

     The $173,200 collection of other previously escrowed funds was the final
     installment of the escrowed funds in connection with the June 2001 sale of
     the Company's tomato-based consumer product lines, which were also divested
     in order to raise working capital and focus the Company's resources on its
     core business in healthy oils, butter substitutes and essential fatty acid
     nutrition.



7. Commitments and Contingencies:

     Pending Litigation

     In October 2000 the Company was notified by counsel for GFA Brands, Inc.
     ("GFA") that nutritional claims pertaining to Spectrum Naturals(R) Organic
     Margarine were infringing upon two patents issued in the United States that
     pertain to particular fat compositions suitable for human consumption. The
     patent holder exclusively licensed each of these patents to GFA. Management
     believes that the margarine does not infringe upon either patent, and
     further, that the patents are unenforceable. Management engaged legal
     counsel that specializes in this area and received an opinion letter in
     February 2001 confirming that, in the opinion of counsel, the manufacture
     or sale of Spectrum Naturals(R) Organic Margarine does not infringe upon
     the GFA patents, either literally or under the doctrine of equivalents.

     The Company filed a complaint against GFA for declaratory judgment of
     non-infringement and invalidity of the two patents on August 28, 2001 in
     the U.S. District Court for Northern California. The Complaint requests a
     declaratory judgment that the margarine does not infringe either patent, a
     declaratory judgment that both patents are invalid, that GFA be enjoined
     from threatening or asserting any action for infringement of either patent,
     and attorney's fees.

                                        7

<PAGE>


     GFA subsequently filed a motion to transfer venue to the U.S. District
     Court for New Jersey (the "court"). The Company filed an opposition to that
     motion; however, the motion to transfer venue was granted in January 2002.

     A Settlement hearing between GFA, its counsel, the Company and its counsel
     took place on July 31, 2003. There was discussion amongst the parties
     regarding a potential resolution of the case without resorting to a trial.
     As of the date of this report, further negotiations were necessary with GFA
     before a potential settlement could be reached.

     Markman briefs, in which each side presents its arguments on how the patent
     claims should be construed, were submitted by both GFA and Spectrum in July
     2003. In most patent infringement cases, the court's determination of how
     the patent claims should be interpreted is the central issue. A Markman
     hearing was held by the court on October 16, 2003. The court is expected to
     issue a ruling on the Markman hearing soon, however, there had been no
     ruling issued as of the date of this report.

     Management believes the Company has meritorious defenses and that a loss is
     not probable on the patent infringement complaint at this time.
     Accordingly, no provision for loss has been recorded at September 30, 2003.

     Safety Violations and Worker's Compensation Appeals

     On April 25, 2002 a tragic industrial accident occurred at the Company's
     manufacturing facility located in Petaluma, California in which two
     employees died from asphyxiation during regular routine maintenance of
     empty oil tanks. An investigation has been completed by the State of
     California Division of Occupational Safety and Health ("CAL-OSHA") and the
     Petaluma Police Department. On October 18, 2002 Management met with
     representatives of CAL-OSHA and received their notice of nine citations for
     safety violations and total proposed penalties of $137,900. All of the
     safety violations had been completely abated before the Company's meeting
     with CAL-OSHA. The Company has retained separate legal counsel that
     specialize in CAL-OSHA matters and has filed an appeal in the hopes of
     reducing the citations and proposed penalties.

     In addition, the estates of the deceased employees have both filed
     applications to the Workers' Compensation Appeals Board of the State of
     California for an increased death benefit for serious and willful
     misconduct by the Company. These two applications are for an additional
     death benefit of $107,500, to be paid by the Company, should the estates
     successfully establish that the Company intentionally and willfully allowed
     unsafe working conditions to exist. The report from CAL-OSHA did not
     include any willful citations against the Company, therefore, the Company
     intends to defend itself vigorously and believes it has meritorious
     defenses.

     As of September 30, 2003 the Company had an industrial accident reserve
     remaining of $142,000. Based upon the advice of its attorneys, the Company
     believes the remaining reserve will be sufficient to cover the anticipated
     settlement of the CAL-OSHA citations for safety violations, the worker's
     compensation appeals and the related attorney's fees.

     Finally, the Sonoma County District Attorney has the right to file criminal
     charges against the Company and certain employees, asserting violations of
     the California Labor Code which entail a maximum fine of $3,000,000, for up
     to three years from the date of the accident. The Company has engaged
     separate legal counsel that specializes in this area. The remaining
     industrial accident reserve does not cover the potential fines and expenses
     associated with criminal charges nor the potential settlement of these
     issues with the District Attorney. There have been no criminal charges
     filed against the Company or any of its employees as of the date of this
     report, and Management is unable to reasonably estimate the potential
     financial impact of a criminal filing or a negotiated settlement in lieu of
     a criminal filing. Attorney's fees incurred during the nine months ended
     September 30, 2003 in connection with the potential criminal charges were
     $26,900 and were included in general and administrative expenses.

8. Stock-based Compensation:

     Statement of Financial Accounting Standard No. 123, "Accounting for
     Stock-Based Compensation" ("SFAS 123"), established a fair value method of
     accounting for stock-based compensation plans and for transactions in which
     an entity acquires goods or services from non-employees in exchange for
     equity instruments. As permitted under SFAS 123, the Company has chosen to
     continue to account for employee stock-based compensation using the
     intrinsic value method prescribed in Accounting Principles Board Opinion
     No. 25, "Accounting for Stock Issued to Employees". Accordingly,
     compensation expense for employee stock options is measured as the excess,
     if any, of the fair market price of the Company's stock at the date of
     grant over the amount an employee must pay to acquire the stock.
     Compensation expense arising from options granted to non-employees is
     recorded over the service period at the estimated fair value of the options
     granted.

                                       8

<PAGE>
<TABLE>
<CAPTION>

     All stock options issued to employees have an exercise price equal to the
     fair market value of the Company's common stock on the date of grant.
     Therefore, in accordance with the accounting for such options utilizing the
     intrinsic value method, there is no related compensation expense recorded
     in the Company's financial statements. Had compensation expense for
     stock-based compensation been determined based on the fair value of the
     options at the grant dates consistent with SFAS 123, the Company's net
     income and net income per share for the three and nine-month periods ended
     September 30, 2003 and 2002 would have been adjusted to the pro-forma
     amounts presented below:

                                                       Three Months Ended        Nine Months Ended
                                                    -----------------------   -----------------------
                                                     Sept. 30,    Sept. 30,    Sept. 30,    Sept. 30,
                                                       2003         2002         2003         2002
                                                    ----------   ----------   ----------   ----------
<S>                                                 <C>          <C>          <C>          <C>
Net income as reported                              $  325,300   $  574,800   $1,276,900   $  855,000

Less: Total compensation expense under fair value
method for all stock-based awards, net of related
tax effects                                             74,300       52,400      226,600      153,900
                                                    ----------   ----------   ----------   ----------
Pro-Forma net income                                $  251,000   $  522,400   $1,050,300   $  701,100
                                                    ==========   ==========   ==========   ==========
Basic and diluted income per share:
  As reported                                       $     0.01   $     0.01   $     0.03   $     0.02
  Pro-forma                                         $     0.01   $     0.01   $     0.02   $     0.02


   The fair value of option grants for 2003 was estimated on the date of grant
     utilizing the Black-Scholes option-pricing model, with the following
     assumptions: expected life of five years, risk-free interest rate of 2.5%,
     no dividend yield and volatility of 115%.

   The fair value of option grants for 2002 was estimated on the date of grant
     utilizing the Black-Scholes option-pricing model, with the following
     assumptions: expected life of five years, risk-free interest rate of 2.5%,
     no dividend yield and volatility of 214%.


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

The following discussion should be read in conjunction with the financial
statements and related notes and other information included in this report. The
financial results reported herein are not necessarily indicative of the
financial results that may be achieved by the Company in any future period.

Investors should carefully consider the following information as well as other
information contained in this report. Information included in this report
contains "forward-looking statements" which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "should" or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy. No assurance can be given that the
future results covered by the forward-looking statements will be achieved. The
following matters constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties that could cause actual results to vary materially from the future
results covered in such forward-looking statements. Other factors could also
cause actual results to vary materially from the future results covered in such
forward-looking statements.

The Company's operating results could vary from period to period as a result of
a number of factors. These factors include, but are not limited to, the
purchasing patterns of significant customers, the timing of new product
introductions by the Company and its competitors, the amount of slotting fees,
new product development and advertising expenses incurred by the Company,
variations in sales by distribution channel, fluctuations in market prices and
availability of raw materials, competitive pricing policies and situations that
the Company cannot foresee. These factors could cause the Company's performance
to differ from investor expectations, resulting in volatility in the price of
the Company's common stock.

Introduction:

Spectrum Organic Products, Inc. ("SPOP", the "Company", or the "Registrant")
competes primarily in three product categories: natural and organic foods sold
under the Spectrum Naturals(R) brand, nutritional supplements sold under the
Spectrum Essentials(R) brand, and industrial ingredients sold by the Spectrum
Ingredients sales force for use by other manufacturers. The vast majority of the
Company's products are oil-based and the Company has positioned itself as "The
Good Fats Company".

                                       9
</TABLE>
<PAGE>

Within the Spectrum Naturals(R) brand, the Company's products include olive oils
and other culinary oils, salad dressings, condiments and butter-substitutes such
as Spectrum Organic Margarine(R) and Spectrum Spread(R). All of the Company's
culinary products feature healthy oils, contain no hydrogenated fats and are
offered in a variety of sizes and flavors in both organic and conventional
offerings.

Within the Spectrum Essentials(R) brand, the Company's products include organic
flax oil, borage oil, Norwegian fish oil and other essential fatty acids in both
liquid and capsule forms. The Spectrum Essentials(R) products are cold-pressed,
nutritionally rich sources of Omega-3 and Omega-6 essential fatty acids and are
also offered in a variety of sizes and styles.

The Spectrum Ingredients (formerly known as Spectrum Commodities, Inc.) sales
force offers organic culinary oils, vinegar and nutritional oils to other
manufacturers for use in their products. In addition, they bring incremental
purchasing power to the Company resulting in higher margins for the consumer
branded product lines.

The Company was formed on October 6, 1999 by the four-way reverse merger of
Spectrum Naturals, Inc. ("SNI"), its affiliate Spectrum Commodities, Inc.
("SCI"), Organic Ingredients, Inc. ("OI"), with and into Organic Food Products,
Inc. ("OFPI"). OFPI was the Registrant prior to the merger, but since a
controlling interest in the Company is held by former SNI stockholders, the
merger was accounted for as a reverse acquisition, with SNI and SCI as the
acquirer and OI and OFPI as acquirees.

On June 11, 2001 the Company sold the OFPI tomato-based product lines to Acirca,
Inc., an unrelated third party. On April 25, 2002 the Company sold the OI
industrial ingredient business in fruits, vegetables, concentrates and purees to
Acirca. Accordingly, results for the nine months ended September 30, 2002
include the operating results associated with the OI disposed product lines
until the date of sale.

The two dispositions have significantly strengthened the Company from a
liquidity and working capital standpoint. The Company now plans to focus its
resources on its core business in healthy oils, butter substitutes and essential
fatty acid nutrition.

Critical Accounting Policies and Estimates

The following discussion and analysis of the Company's financial condition and
results of operations is based upon the Company's financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses. The Company bases its
estimates on historical experience and various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for the carrying values of assets and liabilities that are not readily
apparent from other sources. On an on-going basis, the Company re-evaluates all
of its estimates, including those related to accounts receivable allowances,
inventory reserves, the industrial accident reserve and the deferred tax asset
valuation allowance. Actual results may differ materially from these estimates
under different assumptions or conditions and as additional information becomes
available in future periods.

The Company believes the following are the more significant judgments and
estimates used in the preparation of its financial statements:

Accounts Receivable Allowances - The Company provides allowances against
accounts receivable for estimated bad debts, returns and deductions by customers
for trade promotions and programs. These allowances are based upon the Company's
historical experience with bad debt write-offs and customer deductions, customer
creditworthiness, payment trends and general economic conditions. Allowances for
bad debts and customer deductions were $493,900 at September 30, 2003 on gross
trade accounts receivable of $4,744,900. While this estimate is one of the more
significant estimates the Company makes in the preparation of its financial
statements, Management does not consider it to be highly uncertain.

Inventory Reserves - The Company establishes reserves for obsolete, excess and
slow-moving inventories in order to properly value its inventory at the lower of
cost or market. The reserve estimates are based upon historical inventory usage,
spoilage, current market conditions, and anticipated future demand. Reserves for
obsolete inventories were $241,800 at September 30, 2003 on total gross
inventories of $9,068,400. While this estimate is one of the more significant
estimates the Company makes in the preparation of its financial statements,
Management does not consider it to be highly uncertain.

                                       10

<PAGE>


Deferred Tax Asset Valuation Allowance - As of December 31, 2002 the Company had
net deferred tax assets of $1,997,900 primarily resulting from net operating
loss carryforwards ("NOLs"), which consisted of $5,200,000 of Federal NOLs that
expire at various times through 2021, and $2,800,000 of state NOLs that expire
at various times through 2012. The majority of the NOLs originated from the
pre-merger operations of OFPI. As a result of OFPI's acquisition by SNI, OFPI
experienced an ownership change in excess of 50% for federal and state income
tax purposes. Therefore, an annual limitation is placed by the taxing
authorities on the Company's right to realize the benefit of the pre-merger
NOLs. Management is unable to determine whether it is more likely than not that
the net deferred tax assets will be realized. Accordingly, Management has
maintained a 100% valuation allowance against the net deferred tax assets for
all periods presented in the financial statements. This valuation allowance is
uncertain because its value depends upon the future taxable income of the
Company. It will continue to be evaluated during 2003 in light of the Company's
operating results to determine whether it should be fully or partially reversed
at some future point.

Industrial Accident Reserve - During the second quarter of 2002, the Company
established a reserve of $200,000 to cover anticipated future expenses
associated with an industrial accident that occurred on April 25, 2002 (see Note
7). The reserve was established to cover anticipated citations and fines from
CAL-OSHA, applications to the Workers' Compensation Appeals Board of the State
of California for serious and willful misconduct penalties levied against the
Company, and attorney's fees. As of September 30, 2003 there was $142,000
remaining in the industrial accident reserve. This reserve is highly uncertain
because the CAL-OSHA proposed fines of $137,900 have been appealed and the
applications to the Workers' Compensation Appeals Board for serious and willful
misconduct penalties, if litigated, are an all-or-nothing proposition under
which the Company will either be liable for $107,500 in total or nothing. The
Company does not anticipate that the Workers' Compensation Appeals will be
litigated, based upon the advice of its attorneys. Furthermore, the reserve does
not cover potential criminal penalties against the Company which the Sonoma
County District Attorney's office can levy for up to three years following the
accident. There have been no criminal actions filed against the Company as of
the date of this report, however, the possibility does exist and Management is
unable to reasonably estimate the potential financial impact of a criminal
filing or a negotiated settlement as of the date of this report.


--------------------------------------------------------------------------------
Results of Operations for the Three Month Periods Ending September 30, 2003 and
September 30, 2002
--------------------------------------------------------------------------------

Summary of Results:

Management believes that earnings before interest, taxes, depreciation
amortization and gains on the sales of product lines ("EBITDA as Adjusted") is
an important measure of the Company's operating performance. For the three
months ended September 30, 2003 EBITDA as Adjusted was $645,200 compared to
$693,000 for the prior year, a decrease of $47,800 or 7%. The decrease in 2003
is discussed in detail below, but was primarily attributable to increased
operating expenses partially offset by increased gross profit in 2003.

While Management believes that EBITDA as Adjusted is a useful measure of the
Company's financial performance, it should not be construed as an alternative to
income from operations, net income or cash flows from operating activities as
determined in accordance with accounting principles generally accepted in the
United States of America. Furthermore, the Company's calculation of EBITDA as
Adjusted, which is detailed in the following table, may be different from the
calculation used by other companies, thereby limiting comparability:

                                                   Three Months Ended Sept. 30,
                                                    --------------------------
                                                      2003             2002
                                                    ---------        ---------
Net income                                          $ 325,300        $ 574,800
Add back:  Provision for income taxes                  16,800           12,700
           Interest expense                           164,200           94,400
           Depreciation and amortization              138,900          108,800
Subtract:  Gain on sales of product lines                --            (97,700)
                                                    ---------        ---------
EBITDA as Adjusted                                  $ 645,200        $ 693,000
                                                    =========        =========

                                       11

<PAGE>
<TABLE>
<CAPTION>


Revenues:

SPOP's net sales for the three months ended September 30, 2003 were $12,168,900
compared to $9,718,200 for 2002, an increase of $2,450,700 or 25%. The increase
in net sales was primarily volume-related and was driven by increases in the
Spectrum Naturals(R) and Spectrum Ingredients product lines, as detailed in the
following table:

                                                     Three Months Ended September 30,
                                                 ----------------------------------------
                                                     2003            2002       % Change
                                                 -----------     -----------    ---------
<S>                                              <C>             <C>                 <C>
Spectrum Naturals(R)Culinary Products            $ 5,796,500     $ 4,607,900        +26%
Spectrum Essentials(R)Nutritional Supplements      2,761,100       2,640,100         +5%
Spectrum Ingredients/Private Label Products        3,492,300       2,348,600        +49%
Disposed/Discontinued Product Lines                  119,000         121,600         -2%
                                                 -----------     -----------     -------
  Total Net Sales                                $12,168,900     $ 9,718,200        +25%
                                                 ===========     ===========     =======

Within the Spectrum Naturals(R) culinary products, sales were significantly
higher than prior year in consumer packaged oils (+42%), institutional and food
service oils (+34%) olive oils (+22%) and mayonnaise (+28%). The Company's
culinary oils continued to benefit from increased consumer awareness of the
dangers of hydrogenated oils with regards to obesity and cardiovascular disease.

Spectrum Essentials(R) nutritional supplement sales increased 5% versus the
prior year, primarily as a result of increased demand for organic flaxseed sold
as a dry supplement and refined coconut oil sold as a health and beauty aid.
Liquid supplement sales, which represented approximately 60% of the Spectrum
Essentials(R) sales during the third quarter, were flat versus the prior year.
However, the prior year sales were an all-time quarterly record for liquid
supplements.

The Spectrum Ingredients sales increased 49% versus the prior year on the
strength of increased customer demand for non-hydrogenated culinary oils. During
the third quarter there was additional media coverage of commitments by several
Fortune 500 companies to eliminate or sharply reduce hydrogenated oils from
their products.

Cost of Goods Sold:

The Company's cost of goods sold increased sharply as a percent of net sales for
the three-month period ended September 30, 2003 to 74.5% compared to 71.7% for
the same period in 2002. The increase was due primarily to the $53,000
write-down incurred for the bottling line equipment that was not relocated to
Interpac, increased raw material costs in the Company's flax oil, olive oil and
mayonnaise product lines, and an unfavorable sales mix.

Gross Profit:

Gross profit for 2003 was $3,099,800 versus $2,746,100 for 2002, an increase of
$353,700 or 13%. Gross profit as a percentage of net sales (gross margin) was
25.5% for 2003 versus 28.3% for 2002, primarily as a result of the bottling line
relocation and the increased raw material costs in the Company's flax oil, olive
oil and mayonnaise product lines.


Sales and Marketing Expenses:

The Company's sales and marketing expenses for 2003 were $1,634,200 or 13.4% of
net sales, versus $1,437,400 or 14.8% of net sales for 2002. The increase in
spending of $196,800 in 2003 was primarily attributable to increased broker
commissions during 2003 of $90,800, increased compensation and benefits of
$55,000, increased trade show expenses of $32,700 and increased market research
of $27,900, partially offset by reduced levels of advertising of $64,800 as a
result of improvements currently being made to the Company's advertising message
and its overall consistency.

General and Administrative Expenses:

The Company's general and administrative expenses for 2003 were $959,300 or 7.9%
of net sales, versus $735,100 or 7.6% of net sales for 2002. The increase in
spending of $224,200 was primarily attributable to increased compensation and
benefits of $117,400, increased rent of $33,900 associated with the move to the
Company's new headquarters facility, and increased legal fees of $35,300
primarily associated with the industrial accident and an S-8 filing with the
SEC.

                                       12
</TABLE>

<PAGE>


Gain on Sales of Product Lines:

Since both product line sales comprised all of the remaining assets of OI and
OFPI, the remaining net goodwill associated with the reverse acquisition of both
companies in October 1999 was written-off as a result of the sales. Accordingly,
the Company recorded a net gain from the sales of product lines during the nine
months ended September 30, 2002 of $97,700 which consisted primarily of the
collection of the first installment of the escrowed funds from the sale of OI
for $125,000 collected on September 3, 2002.

Interest Expense:

The Company's interest expense for 2003 was $164,200 versus $94,400 for 2002.
The increase of $69,800 or 74% was primarily attributable to the early
termination fee of $62,400 paid to the Company's former primary lender (see Note
4 to the financial statements).

Provision for Income Taxes:

During the three months ended September 30, 2003 the Company recorded a
provision for state income taxes of $16,800 versus $12,700 for 2002. The Company
has federal net operating loss carryovers sufficient to offset all federal
income taxes due on its estimated taxable income for 2003. However, the State of
California has imposed a two-year moratorium on the use of net operating loss
carryovers, as a result of a budget crisis, effective January 1, 2002.
Consequently, the Company paid $176,000 in estimated state income taxes due for
2002 during the first quarter of 2003 and will owe state income taxes for 2003
estimated at approximately 9% of its taxable income. The Company estimates that
its taxable income for the third quarter of 2003 was approximately $180,000.

Due to continued uncertainty regarding the Company's realization of its deferred
tax assets, the Company maintained a 100% reserve at September 30, 2003 against
the net deferred tax assets. In light of the Company's operating results, this
reserve will continue to be evaluated during 2003 to determine whether it should
be fully or partially reversed at some future point.

--------------------------------------------------------------------------------
Results of Operations for the Nine-Month Periods Ending September 30, 2003 and
September 30, 2002
--------------------------------------------------------------------------------

Summary of Results:

Management believes that earnings before interest, taxes, depreciation
amortization and gains on the sale of product lines ("EBITDA as Adjusted") is an
important measure of the Company's operating performance. For the nine months
ended September 30, 2003 EBITDA as Adjusted was $2,025,500 compared to
$1,438,500 for the prior year, an increase of $587,000 or 41%. The improved
performance in 2003 is discussed in detail below, but was primarily attributable
to increased sales and gross profit, partially offset by increased operating
expenses.

While Management believes that EBITDA as Adjusted is a useful measure of the
Company's financial performance, it should not be construed as an alternative to
income from operations, net income or cash flows from operating activities as
determined in accordance with accounting principles generally accepted in the
United States of America. Furthermore, the Company's calculation of EBITDA as
Adjusted which is detailed in the following table, may be different from the
calculation used by other companies, thereby limiting comparability:

                                                   Nine Months Ended Sept. 30,
                                                   ---------------------------
                                                      2003            2002
                                                   -----------     -----------
Net income                                         $ 1,276,900     $   855,000
Add back:  Provision for income taxes                   81,200          12,700
           Interest expense                            317,200         391,000
           Depreciation and amortization               350,200         319,600
Subtract:  Gain on sales of product lines                 --          (139,800)
                                                   -----------     -----------
EBITDA as Adjusted                                 $ 2,025,500     $ 1,438,500
                                                   ===========     ===========

                                       13

<PAGE>
<TABLE>
<CAPTION>


Revenues:

SPOP's net sales for the nine months ended September 30, 2003 were $33,858,000
compared to $31,075,200 for 2002, an increase of $2,782,800 or 9%. The increase
was attributable to strong sales growth in all three of the Company's primary
product categories, partially offset by the lost sales associated with the
disposed product lines. Comparable net sales (after eliminating the sales of
disposed or discontinued product lines from both periods) increased by 20%, as
detailed in the following table:

                                                        Nine Months Ended September 30,
                                                   -----------------------------------------
                                                       2003             2002        % Change
                                                   ------------     ------------    --------
<S>                                                <C>              <C>                <C>
Spectrum Naturals(R)Culinary Products              $ 15,453,600     $ 12,771,200      +21%
Spectrum Essentials(R)Nutritional Supplements         7,737,700        7,089,800       +9%
Spectrum Ingredients(R)/Private Label Products       10,458,000        8,113,900      +29%
                                                   ------------     ------------     -----
Comparable Net Sales                                 33,649,300       27,974,900      +20%
Disposed/Discontinued Product Lines                     208,700        3,100,300      -93%
                                                   ------------     ------------     -----
  Total Net Sales                                  $ 33,858,000     $ 31,075,200       +9%
                                                   ============     ============     =====


Within the Spectrum Naturals(R) culinary products, sales were significantly
higher in consumer packaged oils (+45%), institutional and food service oils
(+26%), consumer and institutional sizes of mayonnaise (+17%) and olive oils
(+10%). All of the Spectrum Naturals(R) products contain no hydrogenated oils
and continue to benefit from increased consumer awareness of the dangers of
hydrogenated oils with regards to obesity and cardiovascular disease.

Spectrum Essentials(R) nutritional supplement sales increased 9% versus the
prior year as a result of continued strong demand for flax oil and other
nutritionally rich sources of Omega 3 and 6 essential fatty acids. The Spectrum
Essentials(R) product line continues to benefit from increased consumer
awareness of the importance of Omega 3 and 6 EFAs to brain and other organ
functions.

The Spectrum Ingredients sales increase of 29% versus the prior year was
primarily attributable to increased demand by other food manufacturers for
non-hydrogenated culinary oils for use in their products.

Cost of Goods Sold:

The Company's cost of goods sold decreased as a percent of net sales for the
nine-month period ended September 30, 2003 to 73.0% compared to 74.2% for the
same period in 2002. The decrease was primarily due to the direct effects of the
industrial accident during the prior year of $254,100. Partially offsetting the
impact of the industrial accident was the $53,000 write-down incurred for the
bottling line equipment that was not relocated to Interpac and higher raw
material costs during 2003 in the Company's flax oil, olive oil and mayonnaise
product lines.

Gross Profit:

Gross profit as a percent of net sales (gross margin) was 27.0% for 2003 versus
25.8% for the prior year. The increase was primarily due to the effects of the
industrial accident on the prior year, partially offset by the bottling line
write-down and increased raw material costs during 2003.

Sales and Marketing Expenses:

The Company's sales and marketing expenses for the nine months ended September
30, 2003 were $4,699,000 or 13.9% of net sales, versus $4,601,400 or 14.8% of
net sales for 2002. The increase in spending of $97,600 was primarily
attributable to increased compensation and benefits of $146,200 and increased
broker commissions of $372,500, partially offset by the elimination of $408,600
of expenses associated with the OI business disposed of on April 25, 2002.

General and Administrative Expenses:

The Company's general and administrative expenses for the nine months ended
September 30, 2003 were $2,774,500 or 8.2% of net sales, versus $2,317,000 or
7.5% of net sales for 2002. The increase in spending of $457,500 was primarily
attributable to increased compensation and benefits of $243,500, increased rent
of $106,900 associated with the move to the Company's new headquarters in
December 2002, increased board fees for non-executive Directors in 2003 of
$66,700 and increased legal expenses of $49,700 primarily attributable to the
industrial accident and an S-8 filing with the SEC.

                                       14
</TABLE>

<PAGE>

Gain on Sales of Product Lines:

Since both product line sales comprised all of the remaining assets of OI and
OFPI, the remaining net goodwill associated with the reverse acquisition of both
companies in October 1999 was written-off as a result of the sales. Accordingly,
the Company recorded a net gain from the sales of product lines during the nine
months ended September 30, 2002 of $139,800, which consisted primarily of the
collection of the final escrowed funds from the sale of OFPI of $173,200 (see
Note 6 to the financial statements).

Interest Expense:

The Company's interest expense for the nine months ended September 30, 2003 was
$317,200 versus $391,000 for 2002. The reduction of $73,800 or 19% was primarily
attributable to lower borrowing levels under the line of credit as a result of
the sale of the OI product lines on April 25, 2002. Also contributing to the
reduced interest expense was the early retirement of the private placement notes
on December 31, 2002 and the reduction in the interest rate paid to the
Company's second largest creditor from 12% per annum to 9% per annum effective
November 1, 2002. These favorable items were partially offset by the early
termination fee of $62,400 paid to the Company's former primary creditor on July
11, 2003.

Provision for Income Taxes:

During the nine months ended September 30, 2003 the Company recorded a provision
for state income taxes of $81,200 versus $12,700 for 2002. The Company has
federal net operating loss carryovers sufficient to offset all federal income
taxes due on its estimated taxable income for 2003. However, the State of
California has imposed a two-year moratorium on the use of net operating loss
carryovers, as a result of a budget crisis, effective January 1, 2002.
Consequently, the Company paid $176,000 in estimated state income taxes due for
2002 during the first quarter of 2003 and will incur state income tax expense
for 2003 estimated at approximately 9% of its taxable income. The Company
estimates that its taxable income for the first nine months of 2003 was
approximately $900,000.

Due to continued uncertainty regarding the Company's realization of its deferred
tax assets, the Company maintained a 100% reserve at September 30, 2003 against
the net deferred tax assets. In light of the Company's operating results, this
reserve will continue to be evaluated during 2003 to determine whether it should
be fully or partially reversed at some future point.

Seasonality:

Historically, the Company has experienced little seasonal fluctuation in
revenues. With regards to product purchasing, the Company will seasonally
contract for certain raw materials for the entire year at harvest time or at
planting time. These purchases take place annually from early spring to
mid-summer and are effected to reduce the risk of price swings due to demand
fluctuations. These annual purchases can create overages and shortages in
inventory.

Liquidity and Capital Resources:

As disclosed in Note 4 to the financial statements, the Company entered into a
new Credit Facility with Comerica Bank-California ("Comerica") that expires on
June 30, 2005 unless renewed earlier. The new Credit Facility includes a
revolving line of credit up to a maximum of $7,000,000, a term loan for
$1,250,000 and a capital expenditure term loan of $1,000,000. The new Credit
Facility is secured by substantially all assets of the Company and enables the
Company to borrow below prime, using a LIBOR rate option.

The new Credit Facility with Comerica substantially enhanced the Company's
available borrowing capacity during July 2003 as a result of refinancing the
existing term debt and more liberal definitions of eligible inventory to secure
the borrowing base under the revolving line of credit.

The Company could not operate its business without the Credit Facility with
Comerica or one similar to it. The Credit Facility calls for continued
satisfaction of various financial covenants for 2003 and beyond related to
profitability levels, debt service coverage, and the ratio of total liabilities
to tangible net worth. As of September 30, 2003 the Company was in technical
default under one of the three financial covenants called for under the Credit
Agreement. That covenant was the ratio of total liabilities to tangible net
worth, which measured 3.06 to one at September 30, 2003 versus a covenant that
it not exceed 2.75 to one. The ratio was in excess of the covenant as a result
of higher than expected levels of trade accounts payable and borrowings under
the line of credit in order to finance the above-normal inventory levels.
Inventories are above normal as a result of higher levels of safety stock
maintained while the new bottling location comes up to full speed, higher levels
of flaxseed inventory as a result of a short crop which necessitated buying and
taking seed in advance of production requirements, and higher levels of raw
materials as a result of the longer lead times required for the importation of
food products as a result of the Bioterrorism Act of 2003. Comerica has granted
the Company a waiver of its rights as a result of this covenant violation.

                                       15

<PAGE>

During 2003 the Company used $1,692,900 in cash from operating activities,
compared to generating $1,223,800 in cash in 2002. The increase in cash used was
primarily due to increased inventory levels as the Company rebuilt its safety
stock of flax oil products in the wake of the flaxseed shortage during late 2002
and higher levels of trade accounts receivable due to increased sales. Flaxseed
inventories were sharply higher as a result of higher costs and the requirement
to pay for seed in advance prior to shipment due to intense competition.
Partially offsetting the increased inventories were higher levels of accounts
payable associated with the same issues.

Cash used in investing activities was $1,427,200 in 2003 compared to cash
provided of 2,533,000 in 2002. The cash was invested by the Company in machinery
and equipment (primarily for a new rotary labeler, new conveying equipment and
six used expeller presses) and the purchase of the intellectual property (see
Note 5 to the financial statements). The cash provided during the prior year was
primarily attributable to the sale of the OI product lines and related
inventories in April 2002.

Cash provided by financing activities was $3,202,300 in 2003 compared to cash
used of $3,757,000 in 2002. The funds provided by financing activities during
2003 primarily reflected the proceeds from the new term debt with Comerica and
increased borrowing under the revolving line of credit to finance the equipment
and intellectual property purchases and the cash used for operating activities.
The cash used in financing activities during 2002 was primarily attributable to
payments against outstanding borrowings under the Company's line of credit with
the cash proceeds from the sale of the OI product lines and related inventories
in April 2002.

Management believes that future cash flows from operations and available
borrowing capacity under the revolving line of credit should provide adequate
funds to meet the Company's estimated cash requirements for the foreseeable
future. Available borrowing capacity under the revolving line of credit was
$1,515,200 and $2,872,200 at September 30, 2003 and 2002, respectively. The
reduction in available borrowing capacity versus 2002 is primarily attributable
to higher borrowings in 2003 to finance the increased levels of inventory.

The Company relocated to a new leased headquarters facility in December 2002
which represented a significant upgrade to the Company's office facilities. The
new office is rented under a five year fixed operating lease. Rental payments
for the year ended December 31, 2003 are expected to be $185,600.

Effective June 2, 2003 the Company relocated its third-party warehousing and
distribution facility from Rancho Cucamongo, California to a new facility in
Woodland, California operated by Interpac Technologies, Inc. ("Interpac").
Additionally, the Company outsourced its bottling operation effective July 14,
2003 to another Interpac facility in Petaluma, California. As a result, there
were thirteen positions eliminated from the Company's bottling and warehousing
operation at its Copeland Street, Petaluma facility during July. The Company
continues to own its bottling equipment, which has been moved and reassembled in
a more efficient configuration at the Interpac Petaluma facility.

The Company does not utilize off-balance sheet financing arrangements. There
were no transactions with special purpose entities that give the Company access
to assets or additional financing or carry debt that is secured by the Company.
There was one significant transaction with a related party during the nine
months ended September 30, 2003. The Company paid consulting fees of $74,300,
plus expenses incurred, to Running Stream Food and Beverage, Inc. ("RSFB"). RSFB
provides private label consulting and management services to the Company and is
owned and operated by John R. Battendieri, a non-executive Director of the
Company. In the opinion of Management, the consulting fees paid to RSFB were
fair, reasonable and consistent with terms the Company could have obtained from
an unaffiliated third party.

Mr. Thomas Simone is one of the Company's non-executive Directors and also sits
on the Board of Directors of United Natural Foods, Inc ("UNFI"). UNFI is the
Company's largest customer, representing approximately 50% of the Company's net
sales for the nine months ended September 30, 2003.

The Company's operating results could vary from period to period as a result of
a number of factors. These factors include, but are not limited to, the
purchasing patterns of significant customers, the timing of new product
introductions by the Company and its competitors, the amount of slotting fees,
new product development and advertising expenses incurred by the Company,
variations in sales by distribution channel, fluctuations in market prices and
availability of raw materials, competitive pricing policies and situations that
the Company cannot foresee. These factors could cause the Company's performance
to differ from investor expectations, resulting in volatility in the price of
the common stock.

                                       16
<PAGE>
<TABLE>
<CAPTION>

New Applicable Accounting Pronouncements:

In July 2002 the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard No. 146 ("SFAS 146"), "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS 146 requires that a liability
for expenses associated with an exit or disposal activity be recognized when the
liability is incurred. SFAS 146 also establishes that fair value is the
objective for initial measurement of the liability. Severance pay under SFAS
146, in many cases, would be recognized over time rather than up front. The
provisions of SFAS 146 are effective for exit or disposal activities that are
initiated after December 31, 2002. The Company's relocation and outsourcing of
its bottling operation to the Interpac Petaluma facility became effective on
July 14, 2003. Exit and disposal costs associated with the bottling operation
relocation and outsourcing of $53,000 were recognized during the third quarter
in accordance with SFAS 146.

In November 2002 the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others", which is effective for financial statements issued
after December 15, 2002. Under FIN 45, a guarantor is required to measure and
recognize the fair value of certain guarantees at inception. Additionally, a
guarantor must provide new disclosures regarding the nature of any guarantees,
potential amount of future guarantee payments, the current carrying amount of
the guarantee liability, and the nature of any recourse provisions or assets
held as collateral. The initial recognition and measurement provisions under FIN
45 are effective for guarantees issued or modified on or after January 1, 2003
for the Company. The disclosure requirements are effective as of December 31,
2002 for the Company. There have been no new guaranties entered into during 2003
and therefore no valuation necessary under FIN 45. However, the Company is the
continuing guarantor for a portion of a line of credit for The Olive Press, LLC,
an unrelated third party, in the amount of $25,000.

In December 2002 the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", which provides alternative methods of
transition for a voluntary change to the fair value method of accounting for
stock-based employee compensation as prescribed in SFAS 123, "Accounting for
Stock-Based Compensation". Additionally, SFAS 148 requires more prominent and
more frequent disclosures in financial statements about the effects of
stock-based compensation. The provisions of SFAS 148 are effective for fiscal
years ending after December 15, 2002 with early application permitted in certain
circumstances. Management has evaluated the benefits of changing to the fair
value method of accounting for stock-based compensation and has elected to
continue to use the intrinsic value method. Accordingly, the adoption of SFAS
148 did not have a material impact on the Company's financial condition or
results of operations. The additional interim disclosures required under SFAS
148 are included in Note 8 to the financial statements.

In January 2003 the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" an interpretation of Accounting Research Bulletin
No. 51, "Consolidated Financial Statements". Interpretation 46 establishes
accounting guidance for consolidation of variable interest entities that
function to support the activities of the primary beneficiary. Interpretation 46
applies to any business enterprise, both public and private, that has a
controlling interest, contractual relationship or other business relationship
with a variable interest entity. The Company has no investment in or contractual
or other business relationship with a variable interest entity. However, if the
Company were to enter into any such arrangement with a variable interest entity
in the future, its consolidated financial position or results of operations may
be adversely impacted.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------------------------------------------------------------------

The Company does not hold market risk sensitive trading instruments, nor does it
use financial instruments for trading purposes. All sales, operating items and
balance sheet data are denominated in U.S. dollars; therefore, the Company has
no foreign currency exchange rate risk.

Throughout the course of its fiscal year, the Company utilizes a variable
interest rate line of credit at various borrowing levels. For the nine months
ended September 30, 2003 the average outstanding balance under the line of
credit was approximately $4,504,400 with a weighted average effective interest
rate of 4.8% per annum. For the nine months ended September 30, 2002 the average
outstanding balance under the line of credit was approximately $3,614,100 with a
weighted average effective interest rate of 6.6% per annum. The increased
average borrowing levels in 2003 reflect the funds necessary to finance the
increased inventory levels and increased level of operations in general. The
reduction in the weighted average effective interest rate reflects the lower
interest rates available under the new banking relationship with Comerica.

                                       17

<PAGE>

Certain other debt items are also sensitive to changes in interest rates. The
following table summarizes principal cash flows and related weighted average
interest rates by expected maturity date for long-term debt, excluding capital
leases ($ thousands):

                                              Expected Principal Payments
                                              (Periods Ended December 31)
                  Outstanding    -----------------------------------------------------
                 Sept.30, 2003   2003     2004      2005      2006      2007     2008+
                 -------------   ----     ----      ----      ----      ----     -----
Long Term Debt:
<S>                <C>         <C>      <C>       <C>       <C>       <C>      <C>
Fixed Rate         $    588.7  $  69.6  $  275.2  $  228.2  $   15.6     --       --
  Avg. Int. Rate          9.3%     9.3%      9.3%      9.2%      9.0%    --       --
Variable Rate      $  1,432.7  $  62.5  $  280.7  $  311.3  $  311.3  $  311.3 $  155.6
  Avg. Int. Rate          4.3%   var.      var.      var.      var.      var.     var.
Imputed Rate       $    300.5     --        --        --        --        --   $  300.5
  Avg. Int. Rate          6.5%    --        --        --        --        --        6.5%


As discussed in Note 3 to the financial statements, the Company entered into a
new Loan and Security Agreement with Comerica Bank-California effective July 11,
2003. As a result, all of the Company's variable rate long-term debt outstanding
was retired on July 11 and replaced with new variable rate long-term debt
provided by Comerica. The Company's fixed rate and imputed rate long-term debt
outstanding were not affected by the change to Comerica.

In the ordinary course of its business the Company enters into commitments to
purchase raw materials over a period of time, generally six months to one year,
at contracted prices. At September 30, 2003 these future commitments were not at
prices in excess of current market, nor in quantities in excess of normal
requirements. The Company does not utilize derivative contracts either to hedge
existing risks or for speculative purposes.


Item 4.  DISCLOSURE CONTROLS AND PROCEDURES
-------------------------------------------

The Company's Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of both the design and the operation of its disclosure
controls and procedures and have found them to be adequate. The Company has
formed a Disclosure Review Committee (the "DRC") which consists of various
senior managers from each functional area of the Company. The DRC considers the
materiality of new information and reports to the Company's Chief Financial
Officer.

There were no material changes in the Company's internal control system during
the nine months ended September 30, 2003. Management is not aware of any
significant deficiencies in the design or operation of internal controls.


PART II - OTHER INFORMATION
---------------------------

Item 1.  Legal Proceedings

In October 2000 the Company was notified by counsel for GFA Brands, Inc. ("GFA")
that nutritional claims pertaining to Spectrum Naturals(R) Organic Margarine
were infringing upon two patents issued in the United States that pertain to
particular fat compositions suitable for human consumption. The patent holder
exclusively licensed each of these patents to GFA. Management believes that the
margarine does not infringe upon either patent, and further, that the patents
are unenforceable. Management engaged legal counsel that specialize in this area
and received an opinion letter in February 2001 confirming that, in the opinion
of counsel, the manufacture or sale of Spectrum Naturals(R) Organic Margarine
does not infringe upon the GFA patents, either literally or under the doctrine
of equivalents.

The Company filed a complaint against GFA for declaratory judgment of
non-infringement and invalidity of the two patents on August 28, 2001 in the
U.S. District Court for Northern California. The Complaint requests a
declaratory judgment that the margarine does not infringe either patent, a
declaratory judgment that both patents are invalid, that GFA be enjoined from
threatening or asserting any action for infringement of either patent, and
attorney's fees.

GFA subsequently filed a motion to transfer venue to the U.S. District Court for
New Jersey (the "court"). The Company filed an opposition to that motion;
however, the motion to transfer venue was granted in January 2002.

A Settlement hearing between GFA, its counsel, the Company and its counsel took
place on July 31, 2003. There was discussion amongst the parties regarding a
potential resolution of the case without resorting to a trial. As of the date of
this report, further negotiations were necessary with GFA before a potential
settlement could be reached.

                                       18
</TABLE>

<PAGE>


Markman briefs, in which each side presents its arguments on how the patent
claims should be construed, were submitted by both GFA and Spectrum in July
2003. In most patent infringement cases, the court's determination of how the
patent claims should be interpreted is the central issue. A Markman hearing was
held by the court on October 16, 2003. The court is expected to issue a ruling
on the Markman hearing soon, however, there had been no ruling issued as of the
date of this report.

Management believes the Company has meritorious defenses and that a loss is not
probable on the patent infringement complaint at this time. Accordingly, no
provision for loss has been recorded at September 30, 2003.


Item 2.  Changes in Securities and Use of Proceeds
--------------------------------------------------

During the three months ended September 30, 2003 the Company issued 279,224
shares of its common stock for the exercise of 301,950 common stock purchase
warrants issued under the private placement notes that were retired on December
31, 2002. Of the total warrants exercised, 258,100 were exercised in cash with
total proceeds to the Company of $70,700 and the remaining 43,850 warrants were
exercised via the cash-less exercise feature under which the net equity in the
warrants are exchanged into common stock of the Company. The Company applied the
proceeds received of $70,700 against its outstanding borrowings under the line
of credit.

The Company has not in the past nor does it intend to pay cash dividends on its
common stock in the foreseeable future. The Company intends to retain earnings,
if any, for use in the operation and expansion of its business.


Item 3.  Defaults Upon Senior Securities
----------------------------------------

As disclosed in Note 4 to the financial statements, the Company entered into a
new Credit Facility with Comerica Bank-California on July 11, 2003. As of
September 30, 2003 the company was in technical default under one of the three
financial covenants called for under the Credit Agreement. That covenant was the
ratio of total liabilities to tangible net worth, which measured 3.06 to one at
September 30, 2003 versus a covenant that it not exceed 2.75 to one. The ratio
was in excess of the covenant as a result of higher than expected levels of
trade accounts payable and borrowings under the line of credit in order to
finance the above-normal inventory levels. Inventories were above normal as a
result of higher levels of finished goods maintained while the new bottling
location comes up to full speed, higher levels of flaxseed inventory as a result
of a short crop which necessitated buying and taking seed in advance of
production requirements, and higher levels of raw materials as a result of the
longer lead times required for the importation of food products as a result of
the Bioterrorism Act of 2003.

As a result of the technical default Comerica has certain rights under the
Credit Agreement, including the right to raise the interest rates levied on the
Company's indebtedness to Comerica by 3%. Comerica has granted the Company a
waiver of its rights as a result of this covenant violation.


Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

None.


Item 5.  Other Information
--------------------------

None.

                                       20

<PAGE>


Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

(a) Exhibits:       Description

     10.44          Loan and Security Agreement dated June 12, 2003 effective as
                    of July 11, 2003 by and between Spectrum Organic Products,
                    Inc. and Comerica Bank-California.

     10.45          LIBOR Addendum to Loan and Security Agreement dated June 12,
                    2003 effective as of July 11, 2003 by and between Spectrum
                    Organic Products, Inc. and Comerica Bank-California.

     10.46          Variable Rate-Installment Note dated June 12, 2003 effective
                    as of July 11, 2003 by and between Spectrum Organic
                    Products, Inc. and Comerica Bank-California

     10.47          Variable Rate-Single Payment Note dated June 12, 2003
                    effective as of July 11, 2003 by and between Spectrum
                    Organic Products, Inc. and Comerica Bank-California

     10.48          Subordination Agreement dated June 12, 2003 effective as of
                    July 11, 2003 by and between Debora Bainbridge Phillips
                    Trust, Spectrum Organic Products, Inc. and Comerica
                    Bank-California

     10.49          Subordination Agreement dated June 12, 2003 effective as of
                    July 11, 2003 by and between Steven Reedy, Spectrum Organic
                    Products, Inc. and Comerica Bank-California

     31.01          Certification of Chief Executive Officer pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002.

     31.02          Certification of Chief Financial Officer pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002.

     32.01          Certification of Chief Executive Officer pursuant to Section
                    906 of the Sarbanes-Oxley Act of 2002.

     32.02          Certification of Chief Financial Officer pursuant to Section
                    906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K during the quarter ended September 30, 2003:

None.

                                       21

<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Date: November 3, 2003                      SPECTRUM ORGANIC PRODUCTS, INC.

                                            By:  /s/  Robert B. Fowles
                                               --------------------------------
                                                      Robert B. Fowles
                                                      Duly Authorized Officer &
                                                      Chief Financial Officer

                                       22