<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, DC 20549





                                  FORM 10-Q



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







For the quarter ended March 31, 2003              Commission File No. 0-20600
                      --------------                                  -------



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

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

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

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

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

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes      No  x
    ---     ---

Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date: As of May 14,
2003, 16,297,338 shares of Common Stock, $.01 par value, were outstanding.




<PAGE>
<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
                                                   ZOLTEK COMPANIES, INC.

                                                 CONSOLIDATED BALANCE SHEET
                                                 --------------------------
                                 (Amounts in thousands, except share and per share amounts)
                                                         (Unaudited)

<CAPTION>
                                                                                                 MARCH 31,     SEPTEMBER 30,
ASSETS                                                                                             2003            2002
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>              <C>
Current assets:
     Cash and cash equivalents.................................................................$      378       $      685
     Accounts receivable, less allowance for doubtful accounts of $826 and
       $742, respectively......................................................................    11,539           11,749
     Inventories...............................................................................    27,296           27,081
     Other current assets......................................................................     1,409            1,424
                                                                                               ----------       ----------
          Total current assets.................................................................    40,622           40,939
Property and equipment, net....................................................................    78,369           78,415
Other assets...................................................................................     3,102            2,068
                                                                                               ----------       ----------
          Total assets.........................................................................$  122,093       $  121,422
                                                                                               ==========       ==========

<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>              <C>
Current liabilities:
     Short-term notes payable..................................................................$    1,167       $        -
     Current maturities of long-term debt......................................................    25,959           14,014
     Trade accounts payable....................................................................    12,610           12,535
     Accrued expenses and other liabilities....................................................     3,311            4,518
                                                                                               ----------       ----------
          Total current liabilities............................................................    43,047           31,067
Other long-term liabilities....................................................................       732              752
Long-term debt, less current maturities........................................................     6,858           13,699
                                                                                               ----------       ----------
          Total liabilities....................................................................    50,637           45,518
                                                                                               ----------       ----------

Shareholders' equity:
     Preferred stock, $.01 par value, 1,000,000 shares authorized,
       no shares issued or outstanding.........................................................         -                -
     Common stock, $.01 par value, 50,000,000 shares authorized,
       16,297,338 shares issued and outstanding................................................       163              163
     Additional paid-in capital................................................................   109,269          108,897
     Retained deficit..........................................................................   (24,356)         (16,903)
     Accumulated other comprehensive loss......................................................   (13,620)         (16,253)
                                                                                               ----------       ----------
          Total shareholders' equity...........................................................    71,456           75,904
                                                                                               ----------       ----------
          Total liabilities and shareholders' equity ..........................................$  122,093       $  121,422
                                                                                               ==========       ==========




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


                                     2

<PAGE>
<PAGE>

<TABLE>
                                                       ZOLTEK COMPANIES, INC.

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


<CAPTION>
                                                                        THREE MONTHS ENDED MARCH 31,   SIX MONTHS ENDED MARCH 31,
                                                                        ----------------------------   --------------------------
                                                                              2003        2002              2003        2002
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>          <C>               <C>          <C>
Net sales................................................................$    15,944  $    17,448       $    32,903  $    34,005
Cost of sales............................................................     14,810       14,989            29,712       29,594
                                                                         -----------  -----------       -----------  -----------
     Gross profit........................................................      1,134        2,459             3,191        4,411
Available unused capacity costs..........................................      1,431        1,462             2,757        3,216
Application and development costs........................................        910          964             1,780        1,994
Selling, general and administrative expenses.............................      2,528        2,634             5,217        5,028
                                                                         -----------  -----------       -----------  -----------
     Operating loss from continuing operations...........................     (3,735)      (2,601)           (6,563)      (5,827)
Other income (expense):
     Interest expense....................................................       (455)        (355)             (933)        (774)
     Interest income.....................................................         14            7                34           14
     Other, net..........................................................        (15)          49               (34)           9
                                                                         -----------  -----------       -----------  -----------
         Loss from continuing operations before income taxes.............     (4,191)      (2,900)           (7,496)      (6,578)
Income tax expense (benefit).............................................         91           27               (43)          72
                                                                         -----------  -----------       -----------  -----------
     Net loss from continuing operations.................................     (4,282)      (2,927)           (7,453)      (6,650)
Discontinued operations:
     Operating loss, net of taxes........................................          -         (382)                -       (1,030)
     Gain on disposal of discontinued operations.........................          -        1,319                 -        1,319
                                                                         -----------  -----------       -----------  -----------
         Net gain on discontinued operations, net of taxes...............          -          937                 -          289
                                                                         -----------  -----------       -----------  -----------
Net loss.................................................................$    (4,282) $    (1,990)      $    (7,453) $    (6,361)
                                                                         ===========  ===========       ===========  ===========

Net loss per share:
     Basic and diluted loss per share:
         Continuing operations..........................................$      (0.26) $     (0.18)      $     (0.46) $     (0.41)
         Discontinued operations........................................           -         0.06                 -         0.02
                                                                        ------------  -----------       -----------  -----------
              Total.....................................................$      (0.26) $     (0.12)      $     (0.46) $     (0.39)
                                                                        ============  ===========       ===========  ===========
Weighted average common and common equivalent shares outstanding.........     16,297       16,285            16,297       16,285





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


                                     3

<PAGE>
<PAGE>

<TABLE>
                                                    ZOLTEK COMPANIES, INC.

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


<CAPTION>
                                                                                                SIX MONTHS ENDED MARCH 31,
                                                                                                --------------------------
                                                                                                  2003             2002
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>              <C>
Cash flows from operating activities:
      Net loss................................................................................$    (7,453)     $    (6,361)
      Adjustments to reconcile net loss to net cash
        provided (used) by operating activities:
           Gain from discontinued operations.................................................           -             (289)
           Depreciation and amortization......................................................      3,133            3,159
           Unrealized foreign exchange (gain) loss............................................        (60)             (65)
           Other, net.........................................................................        (25)             (11)
           Changes in assets and liabilities:
                 Decrease in accounts receivable..............................................      1,017              959
                 Decrease in inventories......................................................        890              211
                 (Increase) decrease in prepaid expenses and other assets.....................         33             (574)
                 Increase (decrease) in trade accounts payable................................       (722)              87
                 Increase (decrease) in accrued expenses and other liabilities................       (161)             337
                 Increase (decrease) in other long-term liabilities...........................       (574)             376
                                                                                              -----------      -----------
                      Total adjustments.......................................................      3,531            4,190
                                                                                              -----------      -----------
      Net cash used by continuing operations..................................................     (3,922)          (2,171)
      Net cash used by discontinued operations................................................          -             (262)
                                                                                              -----------      -----------
Net cash used by operating activities.........................................................     (3,922)          (2,433)
                                                                                              -----------      -----------

Cash flows from investing activities:
      Payments for purchase of property and equipment.........................................       (716)          (1,119)
      Proceeds from sale of property and equipment............................................        104
                                                                                              -----------      -----------
Net cash used by investing activities.........................................................       (612)          (1,073)
                                                                                              -----------      -----------

Cash flows from financing activities:
      Proceeds from issuance of notes payable.................................................     12,187            4,234
      Repayment of notes payable..............................................................     (7,968)            (300)
                                                                                              -----------      -----------
Net cash provided by financing activities.....................................................      4,219            3,934
                                                                                              -----------      -----------
Effect of exchange rate changes on cash.......................................................         10               (1)
                                                                                              -----------      -----------
Net increase (decrease) in cash...............................................................       (307)             427
Cash and cash equivalents at beginning of period..............................................        685              667
                                                                                              -----------      -----------
Cash and cash equivalents at end of period....................................................$       378      $     1,094
                                                                                              ===========      ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Net cash paid during the period for:
      Interest................................................................................$       910      $       758
      Income taxes............................................................................$         -      $         -





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

                                     4

<PAGE>
<PAGE>

                           ZOLTEK COMPANIES, INC.

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


1.   UNAUDITED FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments of a normal and recurring
nature necessary for a fair presentation of the financial position and
results of operations as of the dates and for the periods presented. These
financial statements should be read in conjunction with the Company's 2002
Annual Report to Shareholders, which includes consolidated financial
statements and notes thereto for the fiscal year ended September 30, 2002.
Certain reclassifications have been made to conform prior year's data to the
current presentation. The results for the periods ended March 31, 2003 are
not necessarily indicative of the results which may be expected for the
fiscal year ending September 30, 2003.

2.   PRINCIPLES OF CONSOLIDATION

Zoltek Companies, Inc. (the "Company") is a holding company, which operates
through wholly owned subsidiaries, Zoltek Corporation, Zoltek Properties
Inc., Zoltek Rt., Zoltek Materials Group, Inc., and Engineering Technology
Corporation ("Entec Composites Machines"). From April 2000 to March 2002,
the Company owned a 45% interest in Hardcore Composites Operations, LLC
("Hardcore Composites").

The consolidated balance sheets of the Company's international subsidiary,
Zoltek Rt., were translated from Hungarian Forints to U.S. Dollars at the
exchange rate in effect at the applicable balance sheet date, while their
consolidated statements of operations were translated using the average
exchange rates in effect during the periods presented. Adjustments resulting
from the translation of financial statements are reflected as other
comprehensive income (loss) within shareholders' equity. Gains and losses
from foreign currency transactions of Zoltek Rt. are included in the results
of operations. These financial statements have been prepared in accordance
with U.S. generally accepted accounting principles and on a consistent basis
with the consolidated financial statements as of and for the fiscal year
ended September 30, 2002. All significant inter-company transactions and
balances have been eliminated upon consolidation.

3.   DISCONTINUED OPERATIONS

In the fourth quarter of fiscal 2001, the Company formally adopted a plan to
dispose of its 45% interest in Hardcore Composites, which designs and
manufactures composite structures for the civil infrastructure market. The
Company acquired its interest in Hardcore Composites in the third quarter of
fiscal 2000. From the date of acquisition until disposition, the financial
statements of Hardcore Composites were consolidated with the Company due to
the ability to directly control the operations. On March 1, 2002, the
Company completed the sale of its interest in Hardcore Composites to the 55%
majority owner. (For further discussion see Note 2 of the Notes to the
Consolidated Financial Statements included in the Company's 2002 Annual
Report.)

The Company has reported the results of operations of Hardcore as
discontinued operations for fiscal 2002 in the consolidated statement of
operations. Certain information with respect to the discontinued operations
of Hardcore Composites for the three- and six-month periods ended March 31,
2002 is summarized as follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS          SIX MONTHS
                                                                                    ENDED MARCH 31,      ENDED MARCH 31,
                                                                                         2002                 2002
                                                                                    ---------------      ---------------
         <S>                                                                           <C>                 <C>
         Net sales..................................................................   $      90           $     408
         Cost of sales..............................................................         265                 886
                                                                                       ---------           ---------
         Gross loss.................................................................        (175)               (478)
         Selling, general and administrative expenses...............................         200                 534
                                                                                       ---------           ---------
         Loss from operations.......................................................        (375)             (1,013)
         Other expenses.............................................................          (7)                (17)
                                                                                       ---------           ---------
         Net loss from operations...................................................        (382)             (1,030)
         Gain on disposal of discontinued operations................................       1,319               1,319
                                                                                       ---------           ---------
         Net gain on discontinued operations, net of taxes..........................   $     937           $     289
                                                                                       =========           =========
</TABLE>





                                     5

<PAGE>
<PAGE>
4.   COMPREHENSIVE LOSS

Comprehensive loss for the three- and six-month periods ended March 31, 2003
and 2002 was as follows (amounts in thousands):
<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED MARCH 31,
                                                                                      ----------------------------
                                                                                        2003                2002
                                                                                     -----------         -----------
          <S>                                                                        <C>                  <C>
          Net loss.................................................................  $    (4,282)         $  (1,990)
          Foreign currency translation adjustment..................................           83               (542)
                                                                                     -----------          ---------
          Comprehensive loss.......................................................  $    (4,200)         $  (2,532)
                                                                                     ===========          =========
<CAPTION>
                                                                                       SIX MONTHS ENDED MARCH 31,
                                                                                       --------------------------
                                                                                        2003                2002
                                                                                     -----------         -----------
          <S>                                                                        <C>                  <C>
          Net loss.................................................................  $    (7,453)         $  (6,361)
          Foreign currency translation adjustment..................................        2,633                232
                                                                                     -----------          ---------
          Comprehensive loss.......................................................  $    (4,820)         $  (6,129)
                                                                                     ===========          =========
</TABLE>
5.   DEBT

The Company's financing of its U.S. operations is separate from that of its
Hungarian operations. Availability of credit is based on the collateral
value at each operation. However, the covenants of the U.S. term loan and
revolving line of credit from Southwest Bank apply to the Company on a
consolidated basis.

In May 2001, the Company entered into a two-year credit facility with
Southwest Bank of St. Louis (Southwest Bank) in the amount of $14.0 million.
The credit facility is structured as a term loan in the amount of $4.0
million and a revolving credit loan in the amount of $10.0 million. In
conjunction therewith, the Company repaid borrowings of $9.0 million plus
accrued interest and terminated the previous credit facility. Borrowings
under this revolving credit facility are based on a formula of eligible
accounts receivable and eligible inventory of the Company and its U.S. based
subsidiaries. The outstanding loans under the credit facility bear interest
at the prime interest rate. The loan agreement contains financial covenants
related to borrowings, working capital, debt coverage, current ratio,
inventory turn ratio and capital expenditures. The Company issued warrants
to Southwest Bank to purchase 12,500 shares of common stock of the Company
at an exercise price of $5.00 per share, exercisable at any time during a
five-year period from the date of the loan. The fair value of the warrants,
at the time of the grant, was estimated to be $48,000.

In December 2001, the Company amended its credit agreement with Southwest
Bank to waive the debt coverage ratio covenant for the first two quarters of
fiscal 2002, and modify the current ratio, the inventory turn ratio and the
debt coverage ratio covenants for quarters subsequent to the second quarter
of fiscal 2002. In June 2002, the Company amended the credit agreement with
Southwest Bank to waive the debt coverage ratio and the inventory turn ratio
covenants for the remainder of fiscal 2002, modify the current ratio
covenant for the third and fourth quarters of fiscal 2002, and lower the
maximum advance on inventory covenant for quarters subsequent to the third
quarter of fiscal 2002. In consideration for these concessions by Southwest
Bank, the Company paid fees of $50,000. The interest rate was adjusted to
the prime rate plus 1.0% per annum. As a result of these waivers and
modifications, at September 30, 2002, the Company was in compliance with all
financial covenants requirements included in the credit agreement as
amended.

The Company executed an amended credit facility agreement, dated as of
February 13, 2003, with Southwest Bank of St. Louis. The amended credit
facility agreement is structured as a term loan in the amount of $3.5
million (due February 13, 2005) and a revolving credit loan in the amount of
$5.0 million (due January 31, 2004). Borrowings under the new facility are
based on a formula of eligible accounts receivable and inventory of the
Company's U.S. based subsidiaries. The outstanding loans under the agreement
bear interest at the prime interest rate plus 2% per annum. The loan
agreement contains financial covenants related to borrowings, working
capital, debt coverage, current ratio and capital expenditures. The amended
credit agreement waived the debt coverage ratio for the first quarter of
fiscal 2003. Total and available borrowings under the revolving credit
agreement were $2.0 million and $3.0 million at March 31, 2003,
respectively.

The Company also entered into a debenture purchase agreement, dated as of
February 13, 2003, under which the Company agreed to issue and sell to 14
individuals, including directors Messrs. Bealke, Dill, McDonnell and Rumy,
subordinated convertible debentures in the aggregate principal amount of
$8.1 million. The subordinated convertible debentures mature in five years,
bear interest at 7% per annum and are convertible into an aggregate of
2,314,286 shares of common stock of the Company at a conversion price of
$3.50 per share. The Company also agreed to issue to the individual
investors five-year warrants to purchase an aggregate of 405,000 shares

                                     6

<PAGE>
<PAGE>
of common stock of the Company at an exercise price of $5.00 per share. The
fair value of the warrants, at the time of the grant, was estimated to be
$376,650. Proceeds from the issuance of these convertible debentures were
used to repay existing borrowings as well as for working capital.

In May 2001, the Company's Hungarian subsidiary entered into a credit
facility with Raiffeissen Bank Rt. The facility consists of a $6.0 million
bank guarantee and factoring facility, a $4.0 million capital investment
facility and a $2.0 million working capital facility. All of the Raiffeissen
debt is due on November 30, 2003, therefore, $10.46 million of this debt was
classified to current debt on the balance sheet as of March 31, 2003. In
March 2003, the Hungarian subsidiary entered into a credit agreement with
K&H/Exim Bank Rt. for $2.2 million. The facility consists of a bank
guarantee, factoring and mortgages and expires September 30, 2004. Total
borrowings of Zoltek Rt. was $13.3 million at March 31, 2003. Borrowings
against the Raiffeissen and K&H credit facilities cannot be used in Zoltek's
U.S. operations.

The Company was not in compliance with the debt coverage covenant under its
amended credit agreement with Southwest Bank as of March 31, 2003.
Additionally, as a result of re-classification of the Hungarian debt to
current obligation, the working capital and current ratio covenants also
became non-compliant. The Company is seeking to obtain a waiver of the
covenants from Southwest Bank and an extension of the Raiffeissen debt. The
Company believes this will be accomplished in the near future after
additional information is provided to the banks, however, there can be no
assurance that such waiver and extension will be obtained on terms favorable
to the Company or at all. As a result of these covenant non-compliances, $3.1
million of the Southwest Bank debt has been classified as current at March
31, 2003.

Additionally, the subordinated convertible debentures contain certain cross-
default provisions related to the Company's other debt agreements.
Accordingly, the covenant non-compliances under the Southwest Bank debt at
March 31, 2003 result in the possibility of a default event being declared
by the subordinated convertible debenture holders which would result in that
debt being immediately due and payable. As a result, the Company has
classified the $8.1 million of debentures as current at March 31, 2003. The
Company believes, for the foreseeable future, it is unlikely the holders of
the subordinated convertible debentures would call the debt in the event
covenant waivers cannot be obtained from Southwest Bank.

6.  STOCK OPTION PLAN

At March 31, 2003, the Company had stock-based employee compensation plans.
The Company accounts for those plans under the recognition and measurement
principles of Accounting Principles Board Opinion No. 25 ("APB 25"),
Accounting for Stock Issued to Employees, and its related interpretations.
No stock-based employee compensation costs are reflected in net loss, as all
options granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The following
table illustrates the effect on net loss and loss per share if the Company
had applied the fair value recognition provisions of Statement of Financial
Accounting Standards No. 123 ("FAS 123"), Accounting for Stock Based
Compensation, to stock-based employee compensation (in thousands, except per
share):
<TABLE>
<CAPTION>
                                                                                          SIX MONTHS ENDED MARCH 31,
                                                                                          --------------------------
                                                                                            2003              2002
                                                                                        -----------       -----------
         <S>                                                                            <C>               <C>
         Reported net loss..............................................................$    (7,453)      $    (6,361)
         Total stock-based employee compensation expense determined under
           fair value based method for all awards, net of tax effects...................       (186)             (358)
                                                                                        -----------       -----------
         Pro forma net loss.............................................................$    (7,639)      $    (6,719)
                                                                                        ===========       ===========
         Reported diluted loss per share................................................$     (0.46)      $     (0.39)
                                                                                        ===========       ===========
         Pro forma diluted loss per share...............................................$     (0.47)      $     (0.41)
                                                                                        ===========       ===========
</TABLE>
7.   SEGMENT INFORMATION

The Company's strategic business units are based on product lines and have
been grouped into two reportable segments: Carbon Fibers and Specialty
Products. The Company's former Composite Intermediates segment was combined
with the Carbon Fibers segment in the third quarter of fiscal 2002 to
reflect that its products and services are now strategically focused on the
Company's strategy of commercializing the use of carbon fibers as
reinforcement in advanced composite materials, including providing composite
design and engineering services for development of applications for carbon
fiber reinforced composites.

The Carbon Fibers segment manufactures carbon fibers used as reinforcement
material in aircraft brakes, low-cost carbon fibers for reinforcement of
composites, oxidized acrylic fibers for heat/fire barrier applications,
resin coated carbon fibers and composite manufacturing equipment. It also
facilitates development of product and process applications to increase the
demand for carbon fibers as the Company seeks to aggressively market carbon
fibers for commercial applications. The Carbon Fiber segment is located
geographically in the United States and Hungary.

                                     7

<PAGE>
<PAGE>

The Specialty Products segment manufactures and markets acrylic fibers and
nylon fibers to the textile industry and nylon compounds and industrial
materials in European markets. The Specialty Products segment is located in
Hungary. The following table presents financial information on the Company's
operating segments as of March 31, 2003 and September 30, 2002 and for the
three- and six- month periods ended March 31, 2003 and 2002 (in thousands):

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED MARCH 31, 2003
                                                                                 ---------------------------------
                                                                                            (Unaudited)
                                                                                                     Corporate
                                                                                                   Headquarters
                                                                    Carbon          Specialty           and
                                                                    Fibers           Products      Eliminations          Total
                                                                -------------     -------------    -------------     -------------
<S>                                                             <C>               <C>              <C>               <C>
Net sales.....................................................  $     6,621       $     9,323      $         -       $    15,944
Available unused capacity expenses............................        1,431                 -                -             1,431
Operating loss................................................       (2,029)             (812)            (894)           (3,735)
Depreciation and amortization expense.........................        1,264               238               60             1,562
Capital expenditures..........................................          291                68               12               371

<CAPTION>
                                                                                 THREE MONTHS ENDED MARCH 31, 2002
                                                                                 ---------------------------------
                                                                                            (Unaudited)
                                                                                                     Corporate
                                                                                                   Headquarters
                                                                    Carbon          Specialty           and
                                                                    Fibers           Products      Eliminations          Total
                                                                -------------     -------------    -------------     -------------
<S>                                                             <C>               <C>              <C>               <C>
Net sales.....................................................  $     7,997       $     9,451      $         -       $    17,448
Available unused capacity expenses............................        1,462                 -                -             1,462
Operating loss................................................         (932)             (702)            (967)           (2,601)
Depreciation and amortization expense.........................        1,295               194               80             1,569
Capital expenditures..........................................          259               179               15               453

<CAPTION>
                                                                                  SIX MONTHS ENDED MARCH 31, 2003
                                                                                  -------------------------------
                                                                                            (Unaudited)
                                                                                                     Corporate
                                                                                                   Headquarters
                                                                    Carbon          Specialty           and
                                                                    Fibers           Products      Eliminations          Total
                                                                -------------     -------------    -------------     -------------
<S>                                                             <C>               <C>              <C>               <C>
Net sales.....................................................  $    13,785       $    19,118      $         -       $    32,903
Available unused capacity expenses............................        2,757                 -                -             2,757
Operating loss................................................       (3,667)           (1,335)          (1,561)           (6,563)
Depreciation and amortization expense.........................        2,538               466              129             3,133
Capital expenditures..........................................          554               150               12               716

<CAPTION>
                                                                                  SIX MONTHS ENDED MARCH 31, 2002
                                                                                  -------------------------------
                                                                                            (Unaudited)
                                                                                                     Corporate
                                                                                                   Headquarters
                                                                    Carbon          Specialty           and
                                                                    Fibers           Products      Eliminations          Total
                                                                -------------     -------------    -------------     -------------
<S>                                                             <C>               <C>              <C>               <C>
Net sales.....................................................  $    15,772       $    18,233      $         -       $    34,005
Available unused capacity expenses............................        3,216                 -                -             3,216
Operating loss................................................       (3,629)             (351)          (1,847)           (5,827)
Depreciation and amortization expense.........................        2,612               385              162             3,159
Capital expenditures..........................................          661               434               24             1,119



                                     8

<PAGE>
<PAGE>
<CAPTION>
                                                                                           TOTAL ASSETS
                                                                                           ------------
                                                                                            (Unaudited)
                                                                                                      Corporate
                                                                                                    Headquarters
                                                                    Carbon          Specialty           and
                                                                    Fibers           Products       Eliminations           Total
                                                                -------------     --------------   ------------------   -----------
<S>                                                             <C>               <C>              <C>                  <C>
March 31, 2003................................................  $    99,329       $    27,295      $    (4,531)         $  122,093
September 30, 2002............................................       99,511            25,024           (3,113)            121,422
</TABLE>

<TABLE>
GEOGRAPHIC INFORMATION (UNAUDITED) / (AMOUNTS IN THOUSANDS)
-----------------------------------------------------------

<CAPTION>
                                                                               REVENUES (1)
                                                                               ------------               LONG-LIVED ASSETS (2)
                                                                             SIX MONTHS ENDED             ---------------------
                                                                                 MARCH 31,               MARCH 31,  SEPTEMBER 30,
                                                                            2003          2002             2003         2002
                                                                         -----------  -----------       ----------- -------------
<S>                                                                      <C>          <C>               <C>          <C>
United States............................................................$     9,499  $    11,881       $    47,831  $    50,366
Hungary..................................................................     23,404       22,124            30,538       28,660
                                                                         -----------  -----------       -----------  -----------
Total....................................................................$    32,903  $    34,005       $    78,369  $    79,026
                                                                         ===========  ===========       ===========  ===========

<FN>
------------------------
(1)  Revenues are attributed to the entity recognizing the sale in the
     interim statements, as it is not practical to accumulate every
     customer's country of domicile on an interim basis.
(2)  Property and equipment and intangibles, net of accumulated depreciation
     and amortization, are based on country location of assets.
</TABLE>

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

GENERAL
-------

The Company's mission is to commercialize the use of carbon fibers as
reinforcement in advanced composite materials. The Company believes it is
the lowest cost producer of carbon fibers. Its marketing strategy is
designed to attract significant new applications for carbon fiber reinforced
composites in automotive, infrastructure, wind energy, oil and gas
production and other industries. The Company also manufactures and markets
oxidized acrylic fibers for fire and heat resistant applications. The
Company believes its strategy of introducing the low-cost carbon fibers into
high potential end users has been well received. The Company is
participating in selected ongoing significant development projects in these
application categories. The Company expects that certain of these emerging
applications will be introduced in the relatively near future.

As the Company pursues its strategic markets, it is the leader in the supply
of carbon fibers to the aircraft brake industry. The Company also
participates in traditional carbon fiber markets, such as sporting goods and
conductive thermoplastic manufacturing. The Company also sells acrylic and
nylon fibers into the textile markets and manufactures other specialty
products to generate sales and profits to partially fund the development of
the major carbon fibers applications.

The Company introduced its carbon fibers strategic plan in 1995 to develop a
low cost raw material source, low cost process and processing equipment and
build significant capacity while encouraging growth of significant new
applications. While the Company succeeded in developing its infrastructure,
the large volume applications have been much slower to develop than
initially anticipated. Although the Company has not achieved the
profitability it expected by this time, the Company believes that feedback
from the marketplace provides evidence that the strategy is valid. In order
to facilitate the strategic development of the targeted applications to
support the Company's strategy, management believes it is necessary to
provide direct input into the composites value chain by supplying composite
engineering and design technology, composite processing technology and the
ability to create integrated product solutions utilizing composite
materials. The Company acquired several businesses to facilitate its
objective. These acquisitions included Zoltek Materials Group and Entec
Composite Machines.

Carbon fiber sales in current markets have been depressed by excess capacity
across the industry, distressed pricing across most existing markets and
weakening economic conditions globally. The Company's strategy for near-term
sales increases was to rely primarily on what had been two growing
commercial markets (conductive plastics used in electronic products and
sporting goods). In fiscal 2001, these two markets softened and eventually
declined dramatically. As a consequence of the delays in market development,
the Company's carbon fiber manufacturing capacity continues to be
underutilized. For these reasons, the Company has temporarily idled a
significant part of the plant in Abilene, Texas. The excess capacity costs
related to the carbon fiber business totaled $2.8

                                     9

<PAGE>
<PAGE>

million for the six months ended March 31, 2003 compared to $3.2 million for
the six months ended March 31, 2002. Although the current financial results
do not justify maintaining the current manufacturing capacity and
facilities, the Company believes that the progress in new application and
market development justifies the maintenance of this idle capacity.

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

THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED MARCH 31, 2002
-------------------------------------------------------------------------------

The Company's sales decreased $1.5 million, or 8.6%, to $15.9 million in the
second quarter of fiscal 2003 from $17.4 million in the second quarter of
fiscal 2002. Carbon fiber sales decreased 17.2% ($1.4 million) to $6.6
million in the second quarter of fiscal 2003 from $8.0 million in the second
quarter of fiscal 2002. Carbon fiber sales decreased due to depressed demand
from aircraft brake customers, reflecting the worldwide decline in the
airline industry. Sales of acrylic and other products produced at Zoltek Rt.
decreased by $0.1 million (1.4%) to $9.3 million in the second quarter of
fiscal 2003 compared to $9.4 million in the second quarter of fiscal 2002.
Overall, demand in the textile markets remains depressed due to continued
weakened economic conditions globally and particularly, in the primary
European markets in which Zoltek Rt. competes. The Company expects these
depressed conditions impacting the carbon fiber and acrylic markets to
continue throughout the remainder of fiscal 2003.

Gross profit decreased $1.3 million to $1.1 million (7.1% of sales) in the
second quarter of fiscal 2003 from $2.4 million (14.1%) in the second
quarter of fiscal 2002. Gross profit on carbon fibers decreased by $1.1
million to $0.8 million (12.2% of sales) in the second quarter of fiscal
2003 compared to $1.9 million (23.3% of sales) in the second quarter of
fiscal 2002, due primarily to decreased selling margins and curtailed
operations. The carbon fibers business has been impacted from industry-wide
excess capacity that resulted in distressed pricing across most existing
markets. Gross profit on specialty products decreased to $0.3 million (3.5%
of sales) in the second quarter of fiscal 2003 from $0.6 million (6.3% of
sales) in the second quarter of fiscal 2002 primarily due to weak demand for
acrylic products.

The Company continued to incur costs related to the underutilized productive
capacity for carbon fibers at the Abilene, Texas facility. These costs
included depreciation and other overhead associated with the unused
capacity. These costs, which were separately identified on the income
statement, were approximately $1.4 million during the second quarter of
fiscal 2003 and $1.5 million in the second quarter of fiscal 2002. The
Company believes it is necessary to maintain available capacity to encourage
and facilitate the development of significant new large-scale applications.

Application and market development project direct costs were $0.9 million in
the second quarter of fiscal 2003 and $1.0 million in the second quarter of
fiscal 2002. These costs included product and market development efforts,
product trials and sales and product development personnel and related
travel. Targeted emerging applications include automobile manufacturing,
fire/heat barrier, alternate energy technologies and deep sea oil drilling.

Selling, general and administrative expenses decreased $0.1 million to $2.5
million in the second quarter of fiscal 2003 from $2.6 million in the second
quarter of fiscal 2002 primarily due to cost cutting measures.

Interest expense increased $0.1 million to $0.5 million for the second
quarter of fiscal 2003 from $0.4 million in the second quarter of fiscal
year 2002, as a result of increased interest payable under the Company's
amended credit facility and the issuance of convertible subordinated
debentures in February 2003.

The foregoing resulted in a net loss from continuing operations of $4.3
million for the second quarter of fiscal 2003 compared to a net loss from
continuing operations of $2.9 million for the second quarter of fiscal 2002.
Similarly, the Company reported a net loss from continuing operations per
share of $0.26 and $0.18 on a basic and diluted basis for the second quarter
of fiscal 2003 and fiscal 2002, respectively. The weighted average common
shares outstanding were 16.3 million for both the second quarter of fiscal
2003 and the second quarter of fiscal 2002.

In the second quarter of fiscal 2002, the Company disposed of its 45%
interest in Hardcore Composites. The $0.9 million net gain from discontinued
operations for the second quarter of fiscal 2002 included a $0.4 million
loss from the results of operations and a $1.3 million gain on disposal, or
$0.06 per share on a basic and diluted basis.

The net loss for the second quarter of fiscal 2003 was $4.3 million, or
$0.26 per share on a basic and diluted basis, compared to a net loss of $2.0
million, or $0.12 per share in the second quarter of fiscal 2002.



                                     10

<PAGE>
<PAGE>
SIX MONTHS ENDED MARCH 31, 2003 COMPARED TO SIX MONTHS ENDED MARCH 31, 2002
---------------------------------------------------------------------------

The Company's sales decreased 3.2% ($1.1 million) to $32.9 million in fiscal
2003 from $34.0 million in fiscal year 2002. Carbon fiber sales decreased
12.6% ($2.0 million) to $13.8 million in fiscal 2003 from $15.8 million in
fiscal 2002. Carbon fiber sales decreased due to depressed demand from
aircraft brake customers, reflecting the worldwide decline in the airline
industry. Sales of the Specialty Products business segment increased by 4.9%
($0.9 million) to $19.1 million in fiscal 2003 compared to $18.2 million in
fiscal 2002. Overall, demand in the textile markets remains depressed due to
continued weakened economic conditions globally and particularly, in the
primary European markets in which Zoltek Rt. competes. The Company expects
these depressed conditions impacting the carbon fiber and acrylic markets to
continue throughout the remainder of fiscal 2003.

Gross profit decreased to $3.2 million (9.7% of sales) in fiscal 2003 from
$4.4 million (13.0% of sales) in the corresponding period of fiscal 2002.
Gross profit from carbon fibers decreased $0.6 million (23.3%) in fiscal
2003 to $2.2 million (15.8% of sales) from $2.8 million (18.0% of sales) for
fiscal 2002. Gross margin on carbon fibers decreased primarily due to a
decrease in selling margins. The carbon fibers business has been impacted
from industry-wide excess capacity that resulted in distressed pricing
across most existing markets. Gross profit on specialty products decreased
38.7%, or $0.6 million, from $1.6 million in fiscal 2002 to $1.0 million in
fiscal 2003. Gross margin on specialty products decreased to 5.3% of sales
for fiscal 2003 compared to 9.0% of sales for fiscal 2002 due primarily to
price decreases and product mix.

The Company continued to incur costs related to the underutilized productive
capacity for carbon fibers at the Abilene, Texas facilities. These costs
included depreciation and other overhead associated with the unused
capacity. These costs, which were separately identified on the income
statement, were approximately $2.8 million during the first six months of
fiscal 2003 and $3.2 million in the first six months of fiscal 2002. The
Company believes it is necessary to maintain available capacity to encourage
development of significant new large-scale applications.

Application and development direct costs were $1.8 million in the first six
months of fiscal 2003 and $2.0 million in the corresponding period of fiscal
2002. These costs included product and market development efforts, product
trials and sales and product development personnel and related travel.
Targeted emerging applications include automobile manufacturing, fire/heat
barrier, alternate energy technologies and deep sea oil drilling.

Selling, general and administrative expenses were $5.2 million in the first
six months of fiscal 2003 compared to $5.0 million in first six months of
fiscal 2002. The increase in expense was primarily due to the adverse effect
of the exchange rate of the Hungarian currency.

Interest expense was approximately $0.9 million for fiscal 2003 compared to
$0.8 million in the corresponding period of fiscal year 2002. The increase
in interest expense resulted from increased borrowings under the Company's
credit facility in the first quarter and increased interest rate related to
the Company's amended credit facility and the issuance of convertible
subordinated debentures in February 2003.

The foregoing resulted in a net loss from continuing operations of $7.5
million for the first six months of fiscal 2003 compared to a net loss of
$6.6 million for the corresponding period of fiscal 2002. Similarly, the
Company reported net loss from continuing operations per share of $0.46 and
$0.41 on a basic and diluted basis for the first six months of fiscal 2003
and fiscal 2002, respectively. The weighted average common shares
outstanding were 16.3 million for both the first six months of fiscal 2003
and fiscal 2002.

The net gain from discontinued operations for the first six months of fiscal
2002 included a $1.0 million loss from the results of operations and a $1.3
million gain from the disposal of Hardcore Composites. The foregoing
resulted in a net gain from discontinued operations of $0.3 million in the
first six months of fiscal 2002, or $0.02 per share on a basic and diluted
basis.

The net loss for the first half of fiscal 2003 was $7.5 million, or $0.46
per share on a basic and diluted basis, compared to a net loss of $6.4
million, or $0.39 per share in the year-to-date period of fiscal 2002.

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

The Company's primary sources of liquidity historically have been cash flow
from operating activities and borrowings under credit facilities,
supplemented with the net proceeds from three previous equity offerings, and
long-term debt financing utilizing the equity in the Company's real estate
properties. The Company's financing of its U.S. operations is separate from
that of its Hungarian operations. Availability of credit is based on the
collateral value at each operation. However, the covenants of the U.S. term
loan and revolving line of credit from Southwest Bank apply to the Company
on a consolidated basis.

The Company executed an amended credit facility agreement, dated as of
February 13, 2003, with Southwest Bank of St. Louis. The amended credit
facility agreement is structured as a term loan in the amount of $3.5
million (due February 13, 2005) and a revolving credit loan in the amount of
$5.0 million (due January 31, 2004). Borrowings under the new facility are
secured by the Company's

                                     11

<PAGE>
<PAGE>
U.S. non-real estate assets and certain U.S. real estate assets and are
based on a formula of eligible accounts receivable and inventory of the
Company's U.S. based subsidiaries. The outstanding loans under the agreement
bear interest at the prime interest rate plus 2% per annum (6.25% at March
31, 2003).

The loan agreement contains financial covenants related to the total
consolidated borrowings, working capital, debt coverage, current ratio and
capital expenditures. The Company was not in compliance with the debt
coverage covenant under its amended credit agreement with Southwest Bank as
of March 31, 2003. Additionally, as a result of re-classification of the
Hungarian debt to current obligation, the working capital and current ratio
covenants also became non-compliant. The Company is seeking to obtain a
waiver of the covenants from Southwest Bank. In addition, the Company is
seeking to obtain alternate financing, minimizing the reliance of bank debt,
however, no assurances can be made that the Company will be successful in
this effort. Total and available borrowings under the credit agreement were
$2.0 million and $3.0 million at March 31, 2003, respectively. If current
weaknesses in carbon fibers and acrylic markets do not improve, the Company
likely will be unable to comply with these financial covenants for the
remainder of fiscal 2003. There can be no assurance that the Company will
obtain covenant waivers or alternative financing on favorable terms or at
all.

The Company also entered into a debenture purchase agreement, dated as of
February 13, 2003, under which the Company issued and sold to 14
individuals, including directors Messrs. Bealke, Dill, McDonnell and Rumy,
subordinated convertible debentures in the aggregate principal amount of
$8.1 million. The subordinated convertible debentures mature in five years,
bear interest at 7% per annum and are convertible into an aggregate of
2,314,286 shares of common stock of the Company at a conversion price of
$3.50 per share. The Company also issued to the investors five-year warrants
to purchase an aggregate of 405,000 shares of common stock of the Company at
an exercise price of $5.00 per share. The fair value of the warrants, at the
time of the grant, was estimated to be $376,650. Proceeds from the issuance
of these convertible debentures were used to repay existing borrowings as
well as for working capital.

Additionally, the subordinated convertible debentures contain certain cross
default provisions related to the Company's other debt agreements.
Accordingly, the covenant non-compliances under the Southwest Bank debt at
March 31, 2003 result in the possibility of a default event being declared
by the subordinated convertible debenture holders which would result in that
debt being immediately due and payable. As a result, the Company has
classified the $8.1 million of debentures as current at March 31, 2003. The
Company believes, for the foreseeable future, it is unlikely the holders of
the subordinated convertible debentures would call the debt in the event
covenant waivers cannot be obtained from Southwest Bank.

In May 2001, the Company's Hungarian subsidiary entered into an increased
credit facility, to $12.0 million from $6.0 million, with Raiffeissen Bank
Rt. The facility consists of a $6.0 million bank guarantee and factoring
facility and a $2.0 working capital facility, both expiring in November 2003
and a $4.0 million capital investment facility that expires in 2006. The
factoring facility and the working capital facility are one-year agreements
renewable each year. Since the due date is less than one year, these loans
are classified as current on the March 31, 2003 balance sheet. In March
2003, the Hungarian subsidiary entered into a credit agreement with K&H/Exim
Bank Rt. for $2.2 million. The facility consists of bank guarantee,
factoring and mortgages and expires September 30, 2004. Zoltek Rt.'s total
borrowings were $13.3 million at March 31, 2003. Borrowings against the
Raiffeissen and K&H credit facility cannot be used in Zoltek's U. S.
operations.

Notes payable consists of promissory notes issued by the Company's Hungarian
subsidiary to settle a supplier payable for advance purchases of raw
material prior to published price increases with scheduled payment due dates
through July 2003.

Inventories consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
                                                                                          MARCH 31,     SEPTEMBER 30,
                                                                                             2003            2002
                                                                                          ----------    -------------
         <S>                                                                              <C>             <C>
         Raw materials....................................................................$   4,500       $   4,893
         Work-in-process..................................................................    1,326           1,913
         Finished goods...................................................................   20,393          18,897
         Supplies, spares and other.......................................................    1,077           1,378
                                                                                          ---------       ---------
                                                                                          $  27,296       $  27,081
                                                                                          =========       =========
</TABLE>

The Company has taken aggressive steps to sell carbon fiber inventories to
improve its cash flow. The Company has decreased the actual inventory by
$0.9 million but this decrease was offset by the significant increase in the
value of the Hungarian currency against the U.S. Dollar.

                                     12

<PAGE>
<PAGE>
The Company believes its financial position has been improved as a result of
operating cost reductions, including the rationalization of its work force
and the reduction of operating expenses and the recent amendment to its bank
credit facility and convertible debenture financing. Management believes
that the Company's financial resources remain adequate to support the
execution of its strategic plans. However, failure to obtain a waiver of its
loan covenants compliance as of March 31, 2003,extension of the Hungarian
loans, comply with its obligations under its amended credit facilities,
manage costs and increase carbon fiber sales on a timely basis would have a
material adverse effect on the Company's results of operations and financial
condition. Management will seek to fund its continuing operations from
continued sale of the excess inventory, bank borrowings and to continue to
closely manage the Company's working capital.

In fiscal 2001, the Company placed $27.7 million of assets in service that
were previously classified as construction in progress. These assets are
primarily located at the Abilene, Texas facility. In the third quarter of
fiscal 2001, the Company elected to temporarily idle a significant part of
the Abilene operations. Management believes it may be necessary to return
this facility to full operations within the next year given identified
future market demand for carbon fiber products. In light of the expected
resumption of manufacturing at this time, the Company does not believe that
any impairment exists based on an analysis of expected future net cash flow
generated from this facility over the expected remaining useful life.
However, if the forecasted levels of demand do not materialize, the Company
would likely be required to recognize an impairment charge with respect to
the carrying value of its manufacturing assets.

Historically, cash used in investing activities has been expended for
equipment additions and the expansion of the Company's carbon fibers
production capacity. In the first six months of fiscal 2003, the Company
made capital expenditures of $0.7 million for various projects compared to
$1.1 million during the corresponding period of fiscal 2002. The Company
expects capital expenditures to total less than $1.0 million in the
remaining of fiscal 2003 unless near-term demand increases significantly.

Since the beginning of fiscal 1994, the Company has obtained long-term
financing utilizing its equity in its real estate properties. These loans
are non-recourse mortgages on the Company's headquarters, the St. Charles
manufacturing facility and the Salt Lake City facility. Based on the
interest rates and the nature of the loans, the Company plans to repay these
loans in accordance with their stated long-term amortization schedules.

A summary of significant contractual obligations is shown below. See Note 5
to the Condensed Financial Statements for discussion of the Company's debt
agreements.

<TABLE>
<CAPTION>
                                                                                  Less than                    3-5       More than
                                                                       Total       1 year      1-3 years      years       5 years
                                                                       -----      ---------    ---------    ---------    ---------
         <S>                                                         <C>          <C>          <C>          <C>          <C>
         Notes payable...............................................$  1,167     $  1,167
         Long-term debt, including current maturities................  32,817       25,959     $   1,519    $   4,469    $     870
                                                                     --------     --------     ---------    ---------    ---------
              Total debt.............................................  33,984       27,126         1,519        4,469          870
         Operating leases............................................   3,329        1,537         1,526          116          150
                                                                     --------     --------     ---------    ---------    ---------
              Total debt and operating leases........................$ 37,313     $ 28,663     $   3,045    $   4,585    $   1,020
                                                                     ========     ========     =========    =========    =========
</TABLE>

In fiscal 2002, as a part of the sale of the Company's interest in Hardcore
Composites, Hardcore Composites and the Company also settled the $1,000,000
note and certain other obligations payable to the former owner, with the
Company making a $475,000 payment and Hardcore Composites contributing an
additional amount. This note comprised part of the purchase price of the
acquisition in the third quarter of fiscal 2000 and was guaranteed by the
Company. However, the Company continues to guaranty Hardcore Composite's
lease obligations of approximately $30,000 per month to the former owner.
The obligation relates to a lease of the Hardcore Composites manufacturing
facility, which expires March 31, 2008. In fiscal 2002, the Company reversed
the $525,000 remaining accrual for the note payable to the former owner, as
its obligation has been satisfied.

CRITICAL ACCOUNTING POLICIES
----------------------------

Outlined below are accounting policies that Zoltek believes are key to a
full understanding of the Company's operations and financial results. All of
the Company's accounting policies are in compliance with U. S. generally
accepted accounting principles (GAAP).

Revenue recognition

The Company recognizes sales on the date title to the sold product transfers
to the customer, which generally approximates the shipping date.
Historically, the Company has experienced very low levels of product returns
due to damaged goods or products that do not meet customer specifications.
Additionally, the Company generally does not offer any volume or other
incentives to encourage sales.

                                     13

<PAGE>
<PAGE>
Inventories

The Company evaluates its ending inventories for estimated excess quantities
and obsolescence. This evaluation includes analyses of sales levels by
product and projections of future demand within specific time horizons.
Inventories in excess of future demand, if any, are reserved. Remaining
inventory balances are adjusted to approximate the lower of cost on a
first-in, first-out basis or market value. Cost includes material, labor and
overhead. If future demand or market conditions are less favorable than the
Company's projections, additional inventory write-downs may be required and
would be reflected in cost of sales on the Company's statement of operations
in the period in which the revision is made.

In recent years, carbon fiber sales have been depressed by excess capacity
across the industry, distressed pricing across most existing markets and
weakening economic conditions globally. These factors combined with the high
level of inventories maintained by the Company, have resulted in the Company
reducing the cost of certain carbon fiber inventories to their lower
estimated market values. If these industry conditions do not improve in a
reasonable period of time, or further deteriorate, it is possible that the
market value of certain of the Company's carbon fiber inventories may
further decrease resulting in additional charges to cost of sales.

Application and development expenses

The Company is actively pursuing the development of a number of applications
for the use of its carbon fiber and related products. The Company is
currently party to several developmental agreements with various prospective
users of these products for the purpose of accelerating the development of
various carbon fiber applications. Additionally, the Company is executing
several internal developmental strategies to further the use of carbon fiber
and consumer and industrial products made from carbon fiber. As a result,
the Company incurs certain costs for research, development and engineering
of products and manufacturing processes. These costs are expensed as
incurred and totaled approximately $1.8 million and $2.0 million in the
first six months of fiscal 2003 and 2002, respectively. Application and
development expenses are presented as an operating item on the Company's
consolidated statement of operations. Given the Company's position and
strategy within the carbon fiber industry, it is expected that similar or
greater levels of application and development expenses could be incurred in
future periods.

Unused capacity costs

The Company is currently not operating its continuous carbonization lines
located at the Abilene, Texas facility at full capacity. As a result, the
Company has elected to categorize certain costs related to these idle assets
as unused capacity costs. Such costs totaled $2.8 million and $3.2 million
for the six months ended March 31, 2003 and 2002, respectively, and include
depreciation and other overhead expenses associated with unused capacity.
The unused capacity costs are presented as an operating item on the
Company's consolidated statement of operations. As discussed above,
management currently intends to return certain unused portions of the
Abilene, Texas facility to service in fiscal 2003. However, until the
facility is operating at certain production levels, these unused capacity
costs will continue to be incurred.

Valuation of long-lived assets

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If
the sum of the expected future undiscounted cash flows is less than the
carrying amount of the asset, a loss is recognized for the difference
between the fair value and the carrying value of the asset. In determining
expected future undiscounted cash flows attributable to a long-lived asset
or a group of long-lived assets, the Company must make certain judgments and
estimations including the expected market conditions and demand for products
produced by the assets, expected product pricing assumptions, and
assumptions related to the expected costs to operate the assets. These
judgments and assumptions are particularly challenging as they relate to the
Company's long-lived assets due to the developmental stage and current
market conditions of the carbon fiber industry. It is possible that actual
future cash flows related to the Company's long-lived assets may materially
differ from the Company's determination of expected future undiscounted cash
flows. Additionally, if the Company's expected future undiscounted cash
flows were less than the carrying amount of the asset being analyzed, it
would be necessary for the Company to make significant judgments regarding
the fair value of the asset due to the specialized nature of much of the
Company's carbon fiber production equipment in order to determine the amount
of the impairment charge.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to changes in interest rates primarily as a result of
borrowing activities under its credit facility. The nature and amount of the
Company's debt may vary as a result of future business requirements, market
conditions and other factors. The extent of the Company's interest rate risk
is not quantifiable or predictable because of the variability of future
interest rates and business financing requirements, but the Company does not
believe such risk is material. At March 31, 2003, the Company did not have
any interest rate swap agreements outstanding. However, a one percent
increase in the weighted average interest rate of the Company's debt would
result in a $0.3 million increase in interest expense based on the debt
levels at March 31, 2003.

                                     14

<PAGE>
<PAGE>

The Company views as long-term its investment in Zoltek Rt., which has a
functional currency other than the U.S. dollar. As a result, the Company
does not hedge this net investment. In terms of foreign currency translation
risk, the Company is exposed to Zoltek Rt.'s functional currency, which is
the Hungarian Forint. The Company's net foreign currency investment in
Zoltek Rt. translated into U.S. dollars using period-end exchange rates was
$18.1 million and $15.1 million at March 31, 2003 and 2002, respectively.
The potential loss in value of the Company's net foreign currency investment
in Zoltek Rt. resulting from a hypothetical 10% adverse change in quoted
foreign currency exchange rate of the Hungarian Forint at March 31, 2003 and
2002 amounted to $2.8 million and $2.5 million, respectively. In addition,
Zoltek Rt. routinely sells its products to customers located primarily
throughout Europe in sales transactions that are denominated in foreign
currencies other than the Hungarian Forint. As a result, Zoltek Rt. is
exposed to foreign currency risks related to these transactions. The Company
does not currently employ a foreign currency hedging strategy related to the
sales of Zoltek Rt. and does not believe these risks will have a material
adverse impact on the Company's results of operations or financial position.

                                    * * *

The forward-looking statements contained in this report are inherently
subject to risks and uncertainties. The Company's actual results could
differ materially from those in the forward-looking statements. Potential
risks and uncertainties consist of a number of factors, including the
Company's ability to return to operating on a profitable basis, obtain a
waiver of its debt coverage covenants as of March 31, 2003, and otherwise
comply with its obligations under its credit agreements, refinance those
agreements at their maturity dates, manage its excess carbon fiber
production capacity and inventory levels, continue investing in application
and market development, manufacture low-cost carbon fibers and profitably
market them at decreasing price points and penetrate existing, identified
and emerging markets, as well as other matters discussed herein.

ITEM 4.   CONTROLS AND PROCEDURES

Based on his evaluation as of March 31, 2003, Zsolt Rumy, the Company's
Chief Executive Officer and Chief Financial Officer has concluded that the
Company's disclosure controls and procedures (as defined in Rule 13a-14(c)
and 15d-14(c) under the Securities Exchange Act of 1934, as amended) are
effective. There have been no significant changes in internal controls or in
other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.




                                     15

<PAGE>
<PAGE>

                           ZOLTEK COMPANIES, INC.

PART II. OTHER INFORMATION

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

         The registrant's annual meeting of shareholders was held March 10,
2003. At such meeting, the shareholders voted to adjourn the annual meeting
until March 31, 2003, to allow additional time for the solicitation of
proxies. The annual meeting was reconvened on March 31, 2003, and at such
reconvened meeting the shareholders considered and voted upon the following:

                  1.        John L. Kardos and Linn H. Bealke were
                            reelected as directors of the registrant,
                            with the results of the voting as
                            follows:

<TABLE>
<CAPTION>
                                                       Votes For         Votes Withheld       Abstain
                                                       ---------         --------------       -------
                            <S>                        <C>                    <C>            <C>
                            John L. Kardos             8,551,674              6,041          1,142,197
                            Linn H. Bealke             8,551,574              6,141          1,142,197
</TABLE>

                           The terms of the following directors of the
                           registrant continued after the meeting: James W.
                           Betts, John F. McDonnell and Zsolt Rumy.

                  2.       The shareholders voted to adopt and approve the
                           Zoltek Companies, Inc. 2003 Long-Term Equity
                           Incentive Plan, with the results of the voting as
                           follows:

<TABLE>
<CAPTION>
                                                       Votes For         Votes Withheld       Abstain
                                                       ---------         --------------       -------
                                                       <S>                  <C>               <C>
                                                       8,051,708            1,586,361         61,843
</TABLE>

         Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      Exhibits:

                           Exhibit 99.1 - Certification of Zsolt Rumy
                           pursuant to 18 U. S. C. Section 1350, as adopted
                           pursuant to Section 906 of the Sarbanes-Oxley Act
                           of 2002.

                  (b)      Reports on Form 8-K:

                           The registrant filed the following Current
                           Reports on Form 8-K during the period ended March
                           31, 2003:

                           1.      The registrant filed a Current Report on
                                   Form 8-K on February 20, 2003, reporting
                                   under Item 5 that on February 18, 2003
                                   the registrant completed an amendment to
                                   its existing credit facility and the sale
                                   of subordinated convertible debentures in
                                   a principal amount of $8 million to a
                                   group of 14 investors.

                           2.      The registrant filed a Current Report on
                                   Form 8-K on March 14, 2003, furnishing
                                   under Item 9 certain slide presentation
                                   materials utilized at the registrant's
                                   annual meeting of shareholders held March
                                   10, 2003.




                                     16

<PAGE>
<PAGE>

                                  SIGNATURE
                                  ---------

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

                                                    Zoltek Companies, Inc.
                                                        (Registrant)

Date:  May 15, 2003                         By:       /s/ ZSOLT RUMY
       ------------                            --------------------------------
                                                        Zsolt Rumy
                                                   Chief Executive Officer
                                                   Chief Financial Officer









                                     17

<PAGE>
<PAGE>

I, Zsolt Rumy, certify that:

         (1)      I have reviewed this quarterly report on Form 10-Q of
                  Zoltek Companies, 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 in order 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)      I am responsible for establishing and maintaining
                  disclosure controls and procedures (as defined in Exchange
                  Act Rules 13a-14 and 15d-14) for the registrant and 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 for which this quarterly report is being
                           prepared;

                  (b)      evaluated the effectiveness of the registrant's
                           disclosure controls 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 my conclusions
                           about the effectiveness of the disclosure
                           controls and procedures based on my evaluation as
                           of the Effective Date;

         (5)      I have disclosed, based on our most recent evaluation, to
                  the registrant's auditors and the audit committee of the
                  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)      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.


May 15, 2003                                 /s/ Zsolt Rumy
                                             ----------------------------------
                                             Zsolt Rumy
                                             Chief Executive Officer
                                             Chief Financial Officer












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