SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                            FORM 10-Q

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


          For quarterly period ended February 28, 2003
                   Commission File No. 0-5940


                    TEMTEX  INDUSTRIES, INC.
      -----------------------------------------------------
     (Exact name of registrant as specified in its charter)


          Delaware                        75-1321869
-------------------------------    --------------------
(State or other jurisdiction of         (I.R.S. Employer
 incorporation or organization)        Identification No.)


1190 W. Oleander Avenue, Perris, California          92571
-------------------------------------------       ---------
(Address of principal executive offices)          (Zip Code)


                          909  657-7311
       ---------------------------------------------------
       (Registrant's telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirement for the past 90 days.

                                   Yes   X    No
                                       -----    -----

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).

                                   Yes        No  X
                                       -----    -----


The  Registrant had 3,444,641 shares of common stock,  par  value
$.20 per share, outstanding as of April 17, 2003.

<PAGE>


                 PART I.  FINANCIAL INFORMATION

                  ITEM 1: FINANCIAL STATEMENTS

            TEMTEX INDUSTRIES, INC. AND SUBSIDIARIES

         Condensed Consolidated Statements of Operations


<TABLE>
<CAPTION>

                                            Three Months Ended              Six Months Ended
                                                February 28,                  February 28,
                                        ---------------------------   ---------------------------
                                            2003           2002           2003          2002
                                        ------------   ------------   ------------   ------------
                                                               (Unaudited)
                                               (In thousands except share and per share data)

                                     <c>            <c>            <c>            <c>
Net sales                               $      5,588   $      5,432   $     11,797   $     11,109
Cost of goods sold                             5,041          5,155         10,423         10,142
                                        ------------   ------------   ------------   ------------
                                                 547            277          1,374            967

Cost and expenses:
  Selling, general and administrative          1,358          1,419          2,777          2,811
  Interest                                       157            126            301            271
  Other expense, net                             204             13            339             41
                                        ------------   ------------   ------------   ------------
                                               1,719          1,558          3,417          3,123
                                        ------------   ------------   ------------   ------------

    NET LOSS                            $     (1,172)  $     (1,281)  $     (2,043)  $     (2,156)
                                        ============   ============   ============   ============

Basic and diluted loss per
  common share:                               $ (.34)        $ (.37)        $ (.59)        $ (.63)
                                              ======         ======         ======         ======

Basic and diluted weighted average
  common shares outstanding                3,444,641      3,444,641      3,444,641      3,444,641
                                        ============   ============   ============   ============

</TABLE>


See notes to condensed consolidated financial statements.



                               -2-

<PAGE>


            TEMTEX INDUSTRIES, INC. AND SUBSIDIARIES

              Condensed Consolidated Balance Sheets


<TABLE>
<CAPTION>

                                                                 February 28,      August 31,
                                                                     2003             2002
                                                                 ------------     ------------
                                                                  (Unaudited)

                                                                 (in thousands except share
                                                                    and per share data)

                                                              <c>              <c>
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                      $         26     $        918
  Accounts receivable, less allowance for doubtful accounts
     of $296 at February 28, 2003 and $236 at August 31, 2002           2,929            2,386
  Inventories, net                                                      1,986            2,146
  Prepaid expenses and other assets                                       315              139
                                                                 ------------     ------------

          TOTAL CURRENT ASSETS                                          5,256            5,589

OTHER ASSETS                                                               86               97

PROPERTY, PLANT AND EQUIPMENT
  Buildings and improvements                                            2,599            2,615
  Machinery, equipment, furniture and fixtures                         18,950           18,890
  Leasehold improvements                                                1,363            1,318
                                                                 ------------     ------------
                                                                       22,912           22,823
  Less allowances for depreciation and amortization                    20,184           19,947
                                                                 ------------     ------------
                                                                        2,728            2,876

TOTAL ASSETS                                                     $      8,070     $      8,562
                                                                 ============     ============

</TABLE>

                               -3-

<PAGE>


            TEMTEX INDUSTRIES, INC. AND SUBSIDIARIES

              Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                 February 28,      August 31,
                                                                     2003             2002
                                                                 ------------     ------------
                                                                  (Unaudited)

                                                                 (in thousands except share
                                                                    and per share data)

                                                              <c>              <c>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
  Notes payable                                                  $      1,940     $      1,974
  Accounts payable                                                      3,723            2,296
  Accrued expenses                                                        806            1,233
  Income taxes payable                                                     20               20
  Current maturities of indebtedness to related parties                    25               20
  Current maturities of long-term obligations                              49               49
                                                                 ------------     ------------

     TOTAL CURRENT LIABILITIES                                          6,563            5,592

INDEBTEDNESS TO RELATED PARTIES,
  less current maturities                                               3,123            2,834

LONG-TERM OBLIGATIONS,
  less current maturities                                                 698              445

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
  Preferred stock - $1 par value; 1,000,000
    shares authorized, none issued                                         --               --
  Common stock - $.20 par value; 10,000,000 shares authorized,
    5,286,125 shares issued                                               720              720
  Additional capital                                                    9,339            9,301
  Accumulated deficit                                                 (11,934)          (9,891)
                                                                 ------------     ------------
                                                                       (1,875)             130
Less:
    Treasury stock:
      At cost - 153,696 shares                                            439              439
      At no cost - 1,687,788 shares                                        --               --
                                                                 ------------     ------------
            TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                       (2,314)            (309)
                                                                 ------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)             $      8,070     $      8,562
                                                                 ============     ============

</TABLE>


                               -4-

<PAGE>


            TEMTEX INDUSTRIES, INC. AND SUBSIDIARIES

         Condensed Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>


                                                                                Six Months Ended
                                                                                   February 28,
                                                                           ---------------------------

                                                                               2003           2002
                                                                           ------------   ------------
                                                                           (Unaudited)
                                                                           (in thousands except share
                                                                                and per share data)

                                                                        <c>            <c>
OPERATING ACTIVITIES
  Net loss                                                                 $     (2,043)  $     (2,156)
  Adjustments to reconcile net loss to net cash provided by
      (used in) operating activities:
    Depreciation and amortization                                                   352            463
    Provision for doubtful accounts                                                  60             22
    Changes in operating assets and liabilities
      Accounts receivable                                                          (603)           422
      Inventories                                                                   160          2,373
      Prepaid expenses and other assets                                            (165)           (20)
      Accounts payable and accrued expenses                                       1,000           (132)
      Income taxes payable/recoverable                                               --              5
                                                                           ------------   ------------
          NET CASH PROVIDED BY (USED IN)
             OPERATING ACTIVITIES                                                (1,239)           977

INVESTING ACTIVITIES
  Purchases of property, plant and equipment                                       (200)           (61)
                                                                           ------------   ------------
          NET CASH USED IN INVESTING ACTIVITIES                                    (200)           (61)

FINANCING ACTIVITIES
  Proceeds from revolving line of credit and long-term obligations                  572             --
  Principal payments on revolving line of credit, long-term obligations
      and indebtedness to related parties                                           (63)          (908)
  Issuance of warrants                                                               38             --
                                                                           ------------   ------------
          NET CASH PROVIDED BY (USED IN)
             FINANCING ACTIVITIES                                                   547           (908)
                                                                           ------------   ------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   (892)             8
Cash and cash equivalents at beginning of period                                    918            169
                                                                           ------------   ------------

          CASH AND CASH EQUIVALENTS AT END OF PERIOD                       $         26   $        177
                                                                           ============   ============

</TABLE>


See notes to condensed consolidated financial statements.

                               -5-

<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A-SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:  The accompanying unaudited condensed
consolidated financial statements include the accounts of Temtex
Industries, Inc. (the "Company") and its wholly owned
subsidiaries.  All significant intercompany accounts and
transactions have been eliminated.

The condensed financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions for Form
10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not
include all of the information and notes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three
and six month periods ended February 28, 2003 are not necessarily
indicative of the results that may be expected for the year
ending August 31, 2003.  The financial statements should be read
in conjunction with the audited financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for
the year ended August 31, 2002.

Certain prior year amounts have been reclassified to conform with
the current year's presentation.

The accompanying unaudited consolidated financial statements have
been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business.  The Company's consolidated financial
statements for the year ended August 31, 2002 as filed in the
Company's Annual Report on Form 10-K were subject to a going
concern qualification and indicated that the Company incurred
significant losses from continuing operations during the previous
two years ended August 31, 2002. The Company has continued to
experience losses from continuing operations for the first two
quarters of fiscal year 2003.  In addition, Frost Capital Group,
the lender under the Company's revolving credit facility, has
continued to reduce the Company's credit availability,
notwithstanding the fact that the borrowing base under the credit
agreement would permit additional borrowings, thereby further
restricting the amount of cash the Company can borrow to finance
operations and exacerbating its liquidity problems. Considering
borrowing limitations under the Company's existing credit
agreement, the Company was only able to borrow an additional
$164,000 under its credit agreement at February 28, 2003.
Further, the $2,110,000 that the Company received as result of
its July 2002 and January 2003 debt offerings has not provided
the Company with sufficient capital to satisfy its near term cash
requirements.  In fact, the current cash on hand and expected
short term revenues from operations raise substantial doubt about
the Company's ability to fund current operations. These factors,
among others, also raise substantial doubt that the Company will
be able to continue as a going concern.

Management recognizes that the Company's continuation as a going
concern will depend upon its ability to increase its cash flow to
allow the Company to satisfy its obligations on a timely basis or
upon its ability to obtain additional outside financing.  The
generation of sufficient cash flow is dependent on the Company's
immediate ability to increase revenue and reduce costs.  The
Company does not anticipate that it will be able to effect such
improvements in cash flow in the near future.  Consequently, if
the Company is unable to obtain additional financing as needed,
which the Company currently considers doubtful, the Company may
be required to cease operations altogether or to pursue other
alternatives, such as filing for bankruptcy protection under
Chapter 11 of the United States Bankruptcy Code.


                               -6-

<PAGE>


NOTE B--INCOME TAXES

For the periods ended February 28, 2003 and 2002, no state and
federal income tax benefit has been recorded as the Company has
recorded a valuation allowance to fully reserve the net operating
loss carryforwards since the realization of these assets is
uncertain.

The Company has federal net operating loss carryforwards of
approximately $15,000,000, which begin to expire in the year
2021.

NOTE C--LOSS PER COMMON SHARE

Basic loss per common share is based upon the weighted average
number of shares of common stock outstanding during the year.
Diluted loss per share is based upon the weighted average number
of shares of common stock and common stock equivalents
outstanding during the year unless the effect of the common stock
equivalents would be antidilutive. Common stock equivalents
include options granted to key employees and outside directors,
as well as warrants issued in connection with the subordinated
convertible notes.  The number of common stock equivalents was
based on the number of shares issuable on the exercise of options
reduced by the number of shares that are assumed to have been
purchased at the average price of the common stock during the
year with the proceeds from the exercise of the options.

All options and warrants outstanding were not included in the
calculation of losses per share as they were not dilutive.

NOTE D--INVENTORIES

Inventories are summarized below (in thousands):

                              February 28,    August 31,
                                  2003           2002
                              ------------   ------------

Finished goods                $        659   $        740
Work in process                        165            332
Raw materials and supplies           1,794          1,704
                              ------------   ------------
                              $      2,618   $      2,776
                              ------------   ------------
Excess and obsolete reserves          (632)          (630)
                              ------------   ------------
Total Inventories, Net        $      1,986   $      2,146
                              ============   ============


NOTE E--NOTES PAYABLE AND LONG-TERM DEBT

In September 2000, the Company entered into a three-year credit
agreement with Frost Capital Group whereby the Company may borrow
a maximum of $4,000,000 under a revolving credit facility.
Initially, the amount available under this facility was subject
to limitations based on specified percentages of the Company's
eligible outstanding receivables and inventories.  The
outstanding principal bears interest at an annual rate of 1.25%
above the specified bank's prime commercial interest rate.  On
July 19, 2002, the Company entered into an amendment to the
revolving facility which, among other things, (1) permitted the
issuance of $1.5 million in long term obligations, represented by
a $750,000 Secured Term Note and Initial Convertible Notes in an
aggregate amount of $750,000 (as described below), (2)
subordinated the bank's lien on the Company's inventory so as to
permit the pledge of that inventory to the holder of the Secured
Term Note, and  (3) eliminated inventory as part of the borrowing
base. Interest is payable monthly and is added to the outstanding
loan balance.


                               -7-

<PAGE>


The revolving credit facility does not require the maintenance of
any financial ratios but does contain both affirmative and
negative covenants. As of the date of this filing, the Company is
in compliance with all of the loan covenants, with the exception
of provisions requiring the timely filing of an officer's
certificate and the timely delivery of the Company's financial
statements for the month of February 2003.  In the past, Frost
Capital Group has waived any defaults related to the timely
filing of the officer's certificate.  The Company subsequently
delivered the February monthly financial statements and is now
seeking a waiver from the bank to cure this default.  In the
event the Company is unable to obtain such a waiver, the bank may
elect to accelerate all of the indebtedness evidenced by the
credit facility and exercise its other rights and remedies
relating thereto.  In addition, in the event of such
acceleration, the holders of the Company's Convertible
Subordinated Notes and other senior debt will be entitled to
accelerate the indebtedness by the applicable agreements.  The
credit  facility is secured by all assets of the Company and its
subsidiary, Temco Fireplace Products, subject to a first priority
security interest in inventory and a second priority security
interest in equipment held by Mr. James E. Upfield, as described
below.   At February 28, 2003 there was approximately $1,940,000
outstanding under the credit facility, leaving $164,000
available.

On July 19, 2002, James E. Upfield loaned the Company $750,000
pursuant to a Secured Term Note due July 19, 2005. This Secured
Term Note bears interest at the rate of 6% per annum (9% after a
default) which is payable monthly commencing September 1, 2002.
The outstanding principal balance of the Secured Term Note is due
on July 19, 2005, or earlier upon an event of default.  The
Secured Term Note issued to Mr. Upfield is secured by a first
priority security interest in the Company's inventory and a
second priority security interest in equipment (with the superior
lien on equipment remaining pledged under the credit facility
with Frost Capital Group).

Effective July 19, 2002, a group of four private investors (the
"Initial Investors") led by William Y. Tauscher, the Company's
current Chairman, loaned the Company an aggregate of $750,000 in
exchange for the Company's subordinated convertible notes due
July 19, 2007 (the "Initial Convertible Notes"). The Initial
Convertible Notes were issued pursuant to a Note Purchase
Agreement dated July 19, 2002 (the "Note Purchase Agreement") and
several related agreements of the same date (the "Related
Agreements).

Effective January 23, 2003, a total of six investors, including
Mr. James E. Upfield, a director, Mr. Richard Anderson, the
Company's President and Chief Executive Officer, Mr. John
Gurrola, Chief Financial Officer and Secretary, Mr. John Fahey,
Vice President of Marketing, Mr. Robert Creer, Vice President of
Manufacturing, and Mr. Terry Giles, a private investor
(collectively, the "New Investors"), loaned the Company an
aggregate of $610,000 in  exchange for additional subordinated
convertible notes (the "Additional Convertible Notes") which were
issued pursuant to, and on the  same terms and conditions
contained in, the Note Purchase Agreement and the Related
Agreements.  Also, effective January 23, 2003, the Company
entered into an amendment to the revolving credit facility which,
in effect, permitted the issuance of the Additional Convertible
Notes.  Collectively, the Initial Convertible Notes and the
Additional Convertible Notes are referred to as the "Convertible
Notes."

Taking into effect the issuance of the Additional Convertible
Notes, the outstanding principal under the Convertible Notes is
$1,360,000, and is due on July 19, 2007, or earlier upon an event
of default. The original principal amount bears interest at the
rate of 6% per annum (9% after a default). Interest under the
Initial  Convertible Notes is payable monthly, and such payments
commenced on September 1, 2002, while interest under the
Additional  Convertible Notes is payable monthly, and such
payments commenced on March 1, 2003.  Further, to the extent the
Company engages in certain transactions resulting in the sale of
the business prior to the maturity date, the holders of the
Convertible Notes maintain the right, at their election, to
accelerate the payment of the debt to the effective date of such
transaction.  Commencing July 19, 2003, the Convertible Notes are
convertible, at the option of the holders thereof, into shares of
the Company's common stock at an initial conversion price of
$0.60


                               -8-

<PAGE>


per share.  As a result, the aggregate outstanding principal
amount of the Convertible Notes would collectively convert into
2,266,667 shares or, approximately 39.7% of the shares
outstanding on February 28, 2003, assuming only the conversion of
the Convertible Notes. The Convertible Notes are convertible
prior to July 19, 2003, upon an event of default at the election
of the holders.  Lastly, to the extent the holders of the
Convertible Notes do not voluntarily elect to receive the
prepayment of the notes in connection with certain sale events,
the Convertible Notes will automatically convert upon the
occurrence of such event at the then existing conversion price.
The Convertible Notes are unsecured obligations and are fully
subordinated to certain indebtedness owed by the Company to Frost
Capital Group under the revolving credit facility and to the
Secured Term Note payable to James Upfield.  In connection with
the sale of the Convertible Notes, the Company issued to the
Initial Investors and the New Investors common stock purchase
warrants exercisable for an aggregate of 453,333 shares of common
stock.  The warrants may be exercised at any time until July 19,
2007, at a per share exercise price of $0.60. The warrants were
allocated a value of $85,100 at issuance. Such amount reduced the
face amount of the Convertible Notes and will be accreted to
interest expense over the life of the notes.


NOTE F--COMMITMENTS AND CONTINGENCIES

The Company has certain litigation pending against it. One or
more of these cases may individually or in the aggregate result
in a material loss to the Company.

During 2002, the Company entered into an agreement with William
Tauscher (now the Chairman of the Company) to provide consulting
services. As a result of such agreement, the Company  recorded
$142,406 in expenses for the 2002 fiscal year, $78,228  of which
remains outstanding and is included in accounts payable as of
February 28, 2003.


NOTE G--FOREIGN OPERATIONS

At February 28, 2003 assets of approximately $1,038,000 were
located at the Company's manufacturing facility in Mexico.

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

The following discussion and analysis should be read in
conjunction with the financial statements and notes thereto
included as Part 1, Item 1 of this report.  This document
contains "forward-looking statements" made under the "safe
harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on the
beliefs of our management as well as assumptions made by, and
information currently available, to our management.

These statements include, without limitation, the following:

  *  statements regarding our ability to obtain additional
     outside financing;

  *  statements regarding the effectiveness of any of
     management's strategic objectives or initiatives or the
     implication thereof on our shareholders, creditors or other
     constituencies; and


                               -9-

<PAGE>

  *  other statements which speak to projections of future
     conditions or our anticipated performance, including
     statements which contain the words "anticipate," "believe,"
     "expect" and words or phrases of similar import, as they
     relate to us or our management.

You  should  be  aware that these forward-looking statements  are
subject   to   certain  risks,  uncertainties   and   assumptions
including, without limitation:

  *  the, albeit qualified, assumption currently held by management
     that they may be able to locate additional financing sources
     or improve the Company's cash flow position, or any
     inference that such results are possible, may be unfounded;
     and

  *  our ability to overcome numerous other significant risks and
     difficulties including, but not limited to, those factors
     set forth in previously filed reports with the U. S.
     Securities and Exchange Commission.

Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to have been correct.
Should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those
described herein. Except as required by federal securities laws,
we undertake no obligation to publicly update or revise any
written or oral forward-looking statements, whether as a result
of new information, future events, changed circumstances or any
other reason after the date of this report. All subsequent
written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by the applicable cautionary statements.

We are a producer of metal fireplace products used in the
residential and commercial building and the remodeling markets.
As of the date of this report, we manufacture our fireplace
products at our plants in Manchester, Tennessee and through
Temcomex, S.A. de C.V. and distribute them through Temco
Fireplace Products, Inc., (both of which are our wholly owned
subsidiaries). Our fireplace products are sold nationwide to a
network of contractors, distributors and retailers.

Net Sales
---------

Net sales of fireplace products increased $156,000, approximately
3%, in the second quarter of fiscal 2003 compared to the second
quarter of fiscal 2002. The increase in sales was mainly due to
an overall increase in the quantity of fireplaces delivered in
the second quarter of 2003. While unit shipments increased by 7%,
the average sales price per unit decreased for the 2003 periods,
reflecting a shift in product mix to lower priced units. Between
the comparative six-month periods, net sales increased $688,000,
approximately 6%, in fiscal 2003, again mainly due to the
increase in quantities delivered. Total units shipped increased
approximately 9% between the comparative six months.

Gross Profit
------------

Gross profit increased from $277,000 to $547,000, or
approximately 97% from the second quarter of fiscal 2002 to the
second quarter of fiscal 2003.  The increase in gross profit was
the result of the increase in sales between periods and improved
margin percentages, attributable to price increases implemented
in January 2003.


                              -10-

<PAGE>


Selling, General and Administrative Expenses
--------------------------------------------

Selling, general and administrative expenses decreased $61,000 or
approximately 4% from the second quarter of 2002. Between the
comparative six-month periods, selling, general and
administrative expenses decreased $34,000 or 1%.  In both cases,
the 2003 expense levels benefit from certain accrual adjustments.

Interest Expense
----------------

Interest expense increased in both the three-month and six-month
comparative periods, due to the increased level of average
indebtedness. The Company issued new debt in July 2002 and
January 2003 (Secured Term Notes  and Convertible Notes), causing
the increase in interest expense.

Other Expense
-------------

Other expense in fiscal 2003 includes restructuring costs of
$338,000, representing costs incurred related to the
manufacturing consolidation and centralization initiatives that
are under way.  Such costs include travel, physical moving of
equipment, and employee severance and stay-pay agreements.

Income Taxes
------------

The Company has not recorded a benefit for income taxes on its
operating losses in either of the comparison quarters.  The
Company, before considering the valuation allowance, has net
deferred tax assets resulting primarily from net operating
losses.  Therefore, the Company has chosen to establish a
valuation allowance to reserve the entire amount until such time
that reassessment indicates that it is more likely than not that
the benefits will be realized primarily through future taxable
income.

Accounts Payable
----------------

Accounts payable increased from $2,296,000 at August 31, 2002 to
$3,723,000 at February 28, 2003, representing an increase of
$1,427,000 or 62% since the end of fiscal year 2002. This
significant increase in accounts payable is primarily a result of
the Company's continued deferral of payments to its trade
creditors. Certain of the Company's trade creditors have now
instituted cash only terms for the Company's purchases.   This
deferral of trade payments is the principal reason  the Company
has been able to continue its operations despite its current cash
flow problems.   The Company does not anticipate that it will be
in a position to continue to defer payments in this manner.

Liquidity and Capital Resources
-------------------------------

Net cash used in operating activities was $1,239,000 for the
first six months of 2003 compared to net cash provided of
$977,000 for the first six months of 2002.  The change in cash
flow from operations in the first six  months of fiscal 2003 was
primarily due to the reduced level of inventory reductions
achieved in 2003. A significant increase in accounts payable (as
discussed above) provided significant cash during 2003. Capital
expenditures for the first six months of 2003 were $200,000
compared to $61,000 in 2002. The majority of expenditures were
for tooling, replacement items and major repairs/additions to
manufacturing equipment, including improvements to the Mexicali
facility as part of our manufacturing consolidation plan.

Working capital was $(1,307,000) at February 28, 2003 compared to
$(3,000) at August 31, 2002.  The change in working capital is
primarily due to the continued drain on cash to fund operating
losses, and a $1,427,000 increase in accounts payable since
August 31, 2002. Any future financing must be sufficient not only
to fund future operations but also to apply towards the repayment
of these aging payables.


                              -11-

<PAGE>


REVOLVING CREDIT FACILITY:  In September 2000, the Company
entered into a three-year credit agreement with Frost Capital
Group whereby the Company may borrow a maximum of $4,000,000
under a revolving credit facility.  Initially, the amount
available under this facility was subject to limitations based on
specified percentages of the Company's eligible outstanding
receivables and inventories.  The outstanding principal bears
interest at an annual rate of 1.25% above the specified bank's
prime commercial interest rate.  On July 19, 2002, the Company
entered into an amendment to the revolving credit facility which,
among other things, (1) permitted the issuance of $1.5 million in
long term obligations, represented by a $750,000 Secured Term
Note and Initial Convertible Notes in an aggregate amount of
$750,000 (as described below), (2) subordinated the bank's lien
on the Company's inventory so as to permit the pledge of that
inventory to the holder of the Secured Term Note, and  (3)
eliminated inventory as part of the borrowing base. Interest is
payable monthly and is added to the outstanding loan balance.
The revolving credit facility does not require the maintenance of
any financial ratios but does contain both affirmative and
negative covenants.  As of the date of this filing, the Company
is  in compliance with all of the loan covenants, with the
exception of provisions requiring the timely filing of an
officer's certificate and the timely delivery of the Company's
financial statements for the month of February 2003.  In the
past, Frost Capital Group has waived any defaults related to the
timely filing of the officer's certificate.  The Company
subsequently delivered the February monthly financial statements
and is now seeking a waiver from the bank to cure this default.
In the event the Company is unable to obtain such a waiver, the
bank may elect to accelerate all of the indebtedness evidenced by
the credit facility and exercise its other rights and remedies
relating thereto.  In addition, in the event of such
acceleration, the holders of the Company's Convertible
Subordinated Notes and other senior debt will be entitled to
accelerate the indebtedness by the applicable agreements.   The
credit facility is secured by all assets of the Company and its
subsidiary, Temco Fireplace Products, subject to a first priority
security interest in inventory and a second priority security
interest in equipment held by Mr. James E. Upfield, as described
below.   At February 28, 2003 there was approximately $1,940,000
outstanding under the credit facility, leaving $164,000
available.

RECENT FINANCING ACTIVITIES:  On July 19, 2002, James E. Upfield
loaned the Company $750,000 pursuant to a Secured Term Note due
July 19, 2005. This Secured Term Note bears interest at the rate
of 6% per annum (9% after a default) which is payable monthly
commencing September 1, 2002.  The outstanding principal balance
of the Secured Term Note is due on July 19, 2005 or earlier upon
an event of default.  The Secured Term Note issued to Mr. Upfield
is secured by a first priority security interest in the Company's
inventory and a second priority security interest in equipment
(with the superior lien on equipment remaining pledged under the
credit facility with Frost Capital Group).

Effective July 19, 2002, a group of four private investors (the
"Initial Investors") led by William Y. Tauscher, the Company's
current Chairman, loaned the Company an aggregate of $750,000 in
exchange for the Company's subordinated convertible notes due
July 19, 2007 (the "Initial Convertible Notes"). The Initial
Convertible Notes were issued pursuant to a Note Purchase
Agreement dated July 19, 2002 (the "Note Purchase Agreement") and
several related agreements of the same date (the "Related
Agreements).

Recognizing that cash flow from operations would not provide the
Company with adequate capital to meet its near term operating
requirements, the Company's management pursued additional
financing in January of 2003. As a result, effective January 23,
2003, a total of six investors, including Mr. James E. Upfield, a

                              -12-

<PAGE>

director, Mr. Richard Anderson, President and Chief Executive
Officer, Mr. John Gurrola, Chief Financial Officer and
Secretary, Mr. John Fahey, Vice President of Marketing, Mr.
Robert Creer, Vice President of Manufacturing, and Mr. Terry
Giles, a private investor (collectively, the "New Investors"),
loaned the Company an aggregate of $610,000 in exchange for
additional subordinated convertible notes (the "Additional
Convertible Notes") which were issued pursuant to, and on the
same terms and conditions contained in, the Note Purchase
Agreement and the Related Agreements.  Also effective January 23,
2003, the Company entered into an amendment to the revolving
credit facility which, in effect, permitted the issuance of the
Additional Convertible Notes.  Collectively, the Initial
Convertible Notes and the Additional Convertible Notes are
referred to as the "Convertible Notes."

Taking into effect the issuance of the Additional Convertible
Notes, the outstanding principal under the Convertible Notes is
$1,360,000, and is due on July 19, 2007, or earlier upon an event
of default. The original principal amount bears interest at the
rate of 6% per annum (9% after a default). Interest under the
Initial Convertible Notes is payable monthly, and such payments
commenced on September 1, 2002, while interest under the
Additional  Convertible Notes is payable monthly, and such
payments commenced on March 1, 2003.  Further, to the extent the
Company engages in certain transactions resulting in the sale of
the business prior to the maturity date, the holders of the
Convertible Notes maintain the right, at their election, to
accelerate the payment of the debt to the effective date of such
transaction.  Commencing July 19, 2003, the Convertible Notes are
convertible, at the option of the holders thereof, into shares of
the Company's common stock at an initial conversion price of
$0.60 per share.  As a result, the aggregate outstanding
principal amount of the Convertible Notes would collectively
convert into 2,266,667 shares or, approximately 39.7% of the
shares outstanding on February 28, 2003, assuming only the
conversion of the Convertible Notes. The Convertible Notes are
convertible prior to July 19, 2003, upon an event of default at
the election of the holders.  Lastly, to the extent the holders
of the Convertible Notes do not voluntarily elect to receive the
prepayment of the notes in connection with certain sale events,
the Convertible Notes will automatically convert upon the
occurrence of such event at the then existing conversion price.
The Convertible Notes are unsecured obligations and are fully
subordinated to certain indebtedness owed by the Company to Frost
Capital Group under the revolving credit facility and to the
Secured Term Note payable to James Upfield. In connection with
the sale of the Convertible Notes, the Company issued to the
Initial Investors and the New Investors common stock purchase
warrants exercisable for an aggregate of 453,333 shares of common
stock.  The warrants may be exercised at any time until July 19,
2007, at a per share exercise price of $0.60. The warrants were
allocated a value of $85,100 at issuance. Such amount reduced the
face amount of the Convertible Notes and will be accreted to
interest expense over the life of the notes.

Although these recent financing transactions provided us with
$2,110,000 in additional working capital, our management
recognizes that under current conditions our revenues from
operations will not be adequate to satisfy our near term funding
requirements.  As a result, our management is considering a
number of options, including the drastic measures detailed in
"Management Strategies" set forth below.

GOING CONCERN ISSUES: The accompanying consolidated financial
statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.  The following
factors, among others, raise substantial doubt that the Company
will be able to continue as a going concern.

  *  The Company's consolidated financial statements for the year
     ended August 31, 2002 as filed in the Company's Annual
     Report on Form 10-K, were subject to a going concern
     qualification and indicated that the Company incurred
     significant losses from continuing operations during the
     previous two years ended August 31, 2002.  The Company has
     continued to experience losses from continuing operations
     for the first two quarters of fiscal year 2003.

                              -13-

<PAGE>

  *  We are managing our cash on a day-to-day basis.

  *  Frost Capital Group, the lender on our revolving credit
     facility, has continued to reduce our credit availability,
     notwithstanding that the borrowing base under the credit
     agreement would permit additional borrowings, thereby
     further restricting the amount of cash we can borrow to
     finance our operations and exacerbating our liquidity
     problems.  Considering borrowing limitations under the
     Company's existing credit agreement, the Company was only
     able to borrow an additional $164,000 under its credit
     agreement at February 28, 2003.

  *  The $2,110,000 that the Company received as result of its
     July 2002 and January 2003 debt offerings has not provided
     the Company with sufficient capital to satisfy its immediate
     cash requirements.

  *  Our continued deferral of trade payables has resulted in an
     increase in accounts payable of $1,427,000 from August 31,
     2002.  This deferral of trade payments is the principal
     reason  the Company has been able to continue its operations
     despite its current cash flow problems.   We do not
     anticipate that we will be in a position to continue to
     defer payments in this manner.

  *  We have experienced unanticipated expenses relating to our
     plans to relocate equipment and manufacturing operations
     from our Manchester, Tennessee location to our Mexicali,
     Mexico facility that have further depleted our available
     cash on hand.

  *  Management expresses substantial doubt that current cash on
     hand and expected short term revenues from operations will
     be sufficient to fund current operations.

MANAGEMENT STRATEGIES:  In an effort to decrease costs and to
achieve profitability, our management initiated certain
consolidation measures that were designed to streamline
operations, reduce costs, and improve efficiencies. These
consolidation measures included the relocation of our corporate
headquarters to Perris, California, as well as the relocation of
a significant amount of equipment and manufacturing operations
from our Manchester, Tennessee location to our plant in Mexicali,
Mexico.  While we expected  the move to our lower cost Mexican
facility to result in cost savings, unanticipated expenses
incurred in transferring production have more than offset these
cost savings to date. These expenses resulted primarily from
unexpected product delays and increased dependence on existing
inventories needed to satisfy customer demand.

Unless we are immediately successful in dramatically improving
our operating performance and increasing our cash flow, which we
consider doubtful, we will require additional financing in order
to continue as a going concern.  We believe that it will be
particularly difficult under the current circumstances to obtain
such additional financing.  Consequently, our management is
considering all available options, including aggressively
pursuing various financing transactions, attempting to effect
further deferrals and discounts of existing payables, effecting
further cost reductions, and pursuing a potential reorganization
pursuant to Chapter 11 of the United States Bankruptcy Code.  To
date, management's efforts to implement a strategy that would
avoid filing for Chapter 11 bankruptcy protection have not been
successful, and, despite the continued efforts of management to
avoid seeking bankruptcy protection, it is doubtful that we will
be able to continue without filing for such bankruptcy protection.


                              -14-

<PAGE>


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

We do not engage in market risk sensitive instruments and do not
purchase hedging instruments or "other than trading" instruments
that are likely to expose us to market risk, whether interest
rate, foreign currency exchange, commodity price or equity price
risk.  We have not purchased options or entered into swaps or
forward or futures contracts.  Our primary market risk exposure
is that of interest rate risk on borrowings that we may have
under some future credit facility.

ITEM 4: CONTROLS AND PROCEDURES
------------------------------

Within ninety days prior to the filing date of this Form 10-Q, we
carried out an evaluation under the supervision and with the
participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as
defined in Rule 13a-14 of the Securities Exchange Act of 1934.
Based upon that evaluation, the Chief Executive Officer and the
Chief Financial Officer concluded that our disclosure controls
and procedures are effective in timely alerting them to material
information relating to our company (including our consolidated
subsidiaries) required to be included in this Quarterly Report on
Form 10-Q. There have been no significant changes in our internal
controls or in other factors that could significantly affect
internal controls subsequent to the date we carried out our
evaluation.

                   PART II.  OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS
------------------------

Plan Administrative Agent, o/b/o of Kevco, Inc. vs Temco
Fireplace Products, Inc.  On February 5, 2003, the trustee on
behalf of Kevco, Inc. instituted a an action in the U.S.
Bankruptcy Court for the Northern District of Texas, Fort Worth
Division against Temco Fireplace Products, Inc. for the recovery
of what the trustee characterizes as preferential transfers under
11 U.S.C. 547 and 550 in the amount of $219,902.45, and other
claimed damages.

Rutherford Marketing Services vs Temco Fireplace Products, Inc.
On February 6, 2003, Sam Rutherford, individually and d/b/a Sam
Rutherford Marketing Services filed suit against Temco Fireplace
Products, Inc. in the Chancery Court of Davidson, Tennessee
demanding past due payment in the amount of $97,575.33, and other
claimed damages.

Continental Machinery Movers, Inc. vs Temco Fireplace Products,
Inc. On February 24, 2003, Continental Machinery Movers, Inc.
filed suit against Temco Fireplace Products, Inc. in the Chancery
Court for Davidson County, Tennessee demanding past due payment
in the amount of $139,099.00, and other claimed damages.

Averitt Express, Inc. vs Temco Fireplace Products, Inc. On
February 24, 2003, Averitt Express, Inc. filed suit against Temco
Fireplace Products, Inc. in the Chancery Court of Putnam County,
Tennessee demanding past due payment in the amount of $64,090.16,
and other claimed damages.

ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------------

Subsequent Events -- Subordinated Convertible Notes Issued
January 27, 2003.

Effective July 19, 2002, a group of four private investors led by
William Y. Tauscher, our current Chairman, loaned us an aggregate
of $750,000 in exchange for our subordinated convertible notes
due July 19, 2007 (the "Initial Convertible Notes"). The Initial
Convertible Notes were issued pursuant to a Note Purchase
Agreement dated July 19, 2002 (the "Note Purchase Agreement") and
several related agreements of the same date (the "Related
Agreements).


                              -15-

<PAGE>


Effective January 23, 2003, a total of six investors, including
Mr. James E. Upfield, a director, Mr. Richard Anderson, President
and Chief Executive Officer, Mr. John Gurrola, Chief Financial
Officer and Secretary, Mr. John Fahey, Vice President of
Marketing, Mr. Robert Creer, Vice President of Manufacturing, and
Mr. Terry Giles, a private investor (collectively, the "New
Investors"), loaned us an aggregate of $610,000 in exchange for
additional subordinated convertible notes (the "Additional
Convertible Notes") which were issued pursuant to, and on the
same terms and conditions contained in, the Note Purchase
Agreement and the Related Agreements.  Also effective January 23,
2003, the Company entered into an amendment to the revolving
credit facility which, in effect, permitted the issuance of the
Additional Convertible Notes.  Collectively, we refer to the
Initial Convertible Notes and the Additional Convertible Notes as
the "Convertible Notes."  The Convertible Notes were issued
pursuant to the registration exemption available under Section
4(2) of the Securities Act of 1933, as amended.

Taking into effect the issuance of the Additional Convertible
Notes, the outstanding principal under the Convertible Notes is
$1,360,000, and is due on July 19, 2007, or earlier upon an event
of default. The original principal amount bears interest at the
rate of 6% per annum (9% after a default). Interest under the
Initial Convertible Notes is payable monthly, and such payments
commenced on September 1, 2002, while interest under the
Additional Convertible Notes is payable monthly, and such payments
commenced on March 1, 2003.  Further, to the extent we engage in
certain transactions resulting in the sale of the business prior
to the maturity date, the holders of the Convertible Notes
maintain the right, at their election, to accelerate the payment
of the debt to the effective date of such transaction.
Commencing July 19, 2003, the Convertible Notes are convertible,
at the option of the holders thereof, into shares of our common
stock at an initial conversion price of $0.60 per share.  As a
result, the aggregate outstanding principal amount of the
Convertible Notes would collectively convert into 2,266,667
shares or, approximately 39.7% of the shares outstanding on
February 28, 2003, assuming only the conversion of the
Convertible Notes. The Convertible Notes are convertible prior to
July 19, 2003, upon an event of default at the election of the
holders.  Lastly, to the extent the holders of the Convertible
Notes do not voluntarily elect to receive the prepayment of the
notes in connection with certain sale events, the Convertible
Notes will automatically convert upon the occurrence of such
event at the then existing conversion price.  The Convertible
Notes are unsecured obligations and are fully subordinated to
certain indebtedness owed by us to Frost Capital Group under our
revolving credit facility and to our secured term note payable to
James Upfield.  In connection with the sale of the Convertible
Notes, the Company issued to the Initial Investors and the New
Investors common stock purchase warrants exercisable for an
aggregate of 453,333 shares of common stock.  The warrants may be
exercised at any time until July 19, 2007, at a per share
exercise price of $0.60.  The warrants were allocated a value of
$85,100 at issuance.  Such amount reduced the face amount of the
Convertible Notes and will be accreted to interest expense over
the life of the notes.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES
---------------------------------------

As of the date of this filing, the Company has not complied with
certain of the loan covenants under its revolving credit facility
with Frost Capital Group which required (a) the timely filing of
an officer's certificate and (b) the timely delivery of the
Company's financial statements for the month of February 2003.
In the past, Frost Capital Group has waived any defaults related
to the timely filing of the officer's certificate.  The Company
subsequently delivered the February monthly financial statements
and is now seeking a waiver from the bank to cure this default.
In the event the Company is unable to obtain such a waiver, the
bank may elect to accelerate all of the indebtedness evidenced by
the credit facility and exercise its other rights and remedies
relating thereto.  In addition, in the event of such
acceleration, the holders of the Company's Convertible Notes and
other senior debt will be entitled to accelerate the indebtedness
by the applicable agreements.  The credit  facility is secured by
all assets of the Company and its subsidiary, Temco Fireplace
Products, subject to a first priority security interest in
inventory and a second priority security interest in equipment
held by Mr. James E. Upfield.


ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------------

None

ITEM 5: OTHER INFORMATION
------------------------

None


                              -16-

<PAGE>


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

     (a). Exhibits
          --------

          Exhibit
             No.         Description
          ---------      ------------------------------------------------

             99.1        Section 906 Certification.
















                              -17-

<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.

                              TEMTEX INDUSTRIES, INC.



DATE:     April 21, 2003      BY: /s/  RICHARD N. ANDERSON
                                 ------------------------------
                                   Richard N. Anderson
                                   President, CEO



DATE:     April 21, 2003      BY: /s/  JOHN F. GURROLA
                                 ------------------------------
                                   John F. Gurrola
                                   Chief Financial Officer and
                                      Secretary








                              -18-

<PAGE>


                         CERTIFICATIONS

I, Richard Anderson, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of
         Temtex Industries, Inc.:

     2.  Based on my knowledge, this quarterly report does not
         contain any untrue statement of a material fact or omit
         to state a material fact necessary to make the
         statements made, in light of the circumstances under
         which such statements were made, not misleading with
         respect to the period covered by this quarterly report;

     3.  Based on my knowledge, the financial statements, and
         other financial information included in this quarterly
         report, fairly present in all material respects the
         financial condition, results of operations and cash
         flows of the registrant as of, and for, the periods
         presented in this quarterly report;

     4.  The registrant's other certifying officers and I are
         responsible for establishing and maintaining disclosure
         controls and procedures (as defined in Exchange Act
         Rules 13a-14 and 15d-14) for the registrant and we
         have:

           a.)  designed such disclosure controls and
                procedures to ensure that material information
                relating to the registrant, including its
                consolidated subsidiaries, is made known to us
                by others within those entities, particularly
                during the period in which this quarterly report
                is being prepared;

          b.)  evaluated the effectiveness of the registrant's
               disclosure controls and procedures as of a date
               within 90 days prior to the filing date of this
               quarterly report (the "Evaluation Date"); and

          c.)  presented in  this quarterly report our
               conclusions  about the effectiveness of  the
               disclosure controls and procedures based on our
               evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have
         disclosed, based on our most recent evaluation, to the
         registrant's auditors and the audit committee of
         registrant's board of directors (or  persons performing
         the equivalent function):

          a.)  all significant deficiencies in the design or
               operation of internal controls  which could
               adversely affect the registrant's ability to
               record, process, summarize and report financial
               data and have identified for the registrant's
               auditors any material weaknesses in internal
               controls; and

          b.)  any fraud, whether or not material, that involves
               management or other employees who have a
               significant role in the registrant's internal
               controls; and

     6.  The registrant's other certifying officers and I have
         indicated in this quarterly report whether or not there
         were significant changes in internal controls or in
         other factors that could significantly affect internal
         controls subsequent to the date of our most recent
         evaluation, including any corrective actions with
         regard to significant deficiencies and material
         weaknesses.

Date: April 21, 2003          /s/  RICHARD N. ANDERSON
                         -------------------------------------
                         Richard N. Anderson
                         President and Chief Executive Officer



                              -19-

<PAGE>


                         CERTIFICATIONS

I, John Gurrola, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of
         Temtex Industries, Inc.:

     2.  Based on my knowledge, this quarterly report does not
         contain any untrue statement of a material fact or omit
         to state a material fact necessary to make the
         statements made, in light of the circumstances under
         which such statements were made, not misleading with
         respect to the period covered by this quarterly report;

     3.  Based on my knowledge, the financial statements, and
         other financial information included in this quarterly
         report, fairly present in all material respects the
         financial condition, results of operations and cash
         flows of the registrant as of, and for, the periods
         presented in this quarterly report;

     4.  The registrant's other certifying officers and I are
         responsible for establishing and maintaining disclosure
         controls and procedures (as defined in Exchange Act
         Rules 13a-14 and 15d-14) for the registrant and we
         have:

          a.)  designed such disclosure controls and  procedures
               to ensure that material information relating to
               the registrant, including its consolidated
               subsidiaries, is made known to us by others within
               those entities, particularly during the period in
               which this quarterly report is being prepared;

          b.)  evaluated the effectiveness of the registrant's
               disclosure controls and procedures as of a date
               within 90 days prior to the filing date of this
               quarterly report (the "Evaluation Date"); and

          c.)  presented in  this quarterly report our
               conclusions  about the effectiveness of  the
               disclosure controls and procedures based on our
               evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have
         disclosed, based on our most recent evaluation, to the
         registrant's auditors and the audit committee of
         registrant's board of directors (or  persons performing
         the equivalent function):

          a.)  all significant deficiencies in the design or
               operation of internal controls  which could
               adversely affect the registrant's ability to
               record, process, summarize and report financial
               data and have identified for the registrant's
               auditors any material weaknesses in internal
               controls; and

          b.)  any fraud, whether or not material, that involves
               management or other employees who have a
               significant role in the registrant's internal
               controls; and

     6.  The registrant's other certifying officers and I have
         indicated in this quarterly report whether or not there
         were significant changes in internal controls or in
         other factors that could significantly affect internal
         controls subsequent to the date of our most recent
         evaluation, including any corrective actions with
         regard to significant deficiencies and material
         weaknesses.

Date: April 21, 2003          /s/  JOHN F. GURROLA
                              ------------------------------
                              John F. Gurrola
                              Chief Financial Officer and
                                 Secretary



                              -20-