<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For the fiscal year ended September 30, 2001    Commission File Number 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 Identification No.)
     incorporation or organization)

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

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock,
                                                            par value $.01
                                                            (Title of class)

         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 if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. / /

         State the aggregate market value of the voting stock held by
non-affiliates of the registrant as of December 27, 2001: approximately
$22,152,200

         Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of December 27, 2001: 16,285,338
shares of Common Stock, par value $.01 per share.

                       DOCUMENTS INCORPORATED BY REFERENCE
         The following documents are incorporated by reference into the
indicated Part of this Report:

           Document                                Part of Form 10-K
           --------                                -----------------

Proxy Statement for the 2002
  Annual Meeting of Shareholders                         III


                                       1

<PAGE>
<PAGE>

                                     PART I

Item 1.  Business
------   --------

         This Annual Report on Form 10-K for the year ended September 30,
2001 and the documents incorporated by reference herein contain
forward-looking statements which are inherently subject to risks and
uncertainties. See "--Special Note Regarding Forward Looking Statements."

OVERVIEW

         Zoltek Companies, Inc. (the "Company" or "Zoltek") is an applied
technology and advanced materials company. The Company's primary focus is the
manufacturing and marketing of carbon fibers. The most significant current
application for carbon fibers produced by the Company is for aircraft brake
manufacturers who use the Company's fibers as base materials for the
carbon/carbon brake systems used in most newly designed aircraft (both for
new and replacement brakes). While this market is quite stable and the
Company estimates its growth at 15 to 25% per year, the Company believes a
much more significant market is the commercial use of carbon fibers as
reinforcement for composites. Zoltek believes it is a leader in developing
commercial markets for carbon fibers and carbon fiber reinforced composites
for a diverse range of applications based upon carbon fibers' distinctive
combination of physical and chemical properties, principally corrosion and
fatigue resistance, high-strength, low-weight and stiffness.

         For developing commercial applications that utilize carbon fibers,
Zoltek's business strategy consists of the following elements:

         o    Continue Reducing Production Costs -- Zoltek believes its
proprietary process and equipment design technology enables it to produce
carbon fibers at costs substantially lower than those generally prevailing
in the industry and to supply carbon fibers for applications which are not
economically viable for most higher cost competitors. Zoltek intends to
continue to reduce its total production costs through various means,
including use of its acrylic fiber precursor manufacturing technology.

         o    Maintain Price Leadership -- Currently, Zoltek's ultimate
objective is to sell carbon fibers to high volume users. The Company's
pricing strategy is to market carbon fibers for use as a base reinforcement
material in composites at sustainable price levels resulting in composite
costs per unit of strength which compete favorably with alternative base
construction materials such as steel and aluminum. The Company believes this
would result in significant new product applications for carbon fibers.

         o    Leverage Capacity Leadership -- In order to encourage new
applications development for carbon fibers, the Company believes it is
necessary to maintain significant available capacity. From fiscal 1997
through early fiscal 1999 the Company pursued an aggressive capacity
expansion program and currently has the largest rated capacity for carbon
fibers production in the world. The Company believes that its significant
available capacity will encourage potential high volume users to commit to
incorporating carbon fibers into their products. Zoltek has developed a
standardized continuous carbonization line design in order to optimize
technical process capabilities, reduce equipment cost and shorten lead time
from the decision to add lines to the time when the lines become operational.

         o    Support New Commercial Market and Applications Development --
To accelerate the commercialization of carbon fibers and carbon fiber
composites across a broad range of mass-market applications, the Company has
pursued various initiatives to act as a catalyst in the development of new
low-cost, high volume applications. In fiscal 2000, the Company completed a
series of downstream acquisitions as part of its strategy to accelerate the
introduction and development of carbon fibers and carbon fiber composites.
These acquisitions included: Cape Composites, Inc. ("Cape Composites"), a San
Diego, California-based manufacturer of carbon fiber prepreg (pre-impregnated
with resin) composite materials; and Engineering Technology, Inc. and
Composite Machines Corporation ("CMC") and its parent company Ramal
International (collectively "CMC"),

                                      2

<PAGE>
<PAGE>

which design, manufacture and market filament winding and pultrusion
equipment. In addition, the Company acquired a 45% preferred membership
interest in Hardcore Composites Operations LLC, a Delaware based company
("Hardcore"), which designs and manufactures large composite structures for
the civil infrastructure, construction and marine markets.

         In November 1999, the Company acquired Structural Polymer (Holdings)
Limited, which designs composite structures and manufactures composite
intermediate materials, used in manufacturing marine and wind energy
composite products. SP Systems did not meet its sales and profit forecasts
and, as a result, was unable to support the Company's carbon fiber
commercialization objectives. Therefore, in November 2000, the Company sold
SP Systems to a group consisting of the former Structural Polymer (Holdings)
Limited shareholders and a merchant banking firm. The cash proceeds from the
sale of SP Systems were used to repay bank debt. This transaction improved
the Company's balance sheet and allowed the Company's management resources to
refocus on its carbon fibers strategy. In connection with the sale of SP
Systems, the Company entered into agreements that provide for various
continuing relationships with SP Systems. These agreements include a
long-term carbon fiber supply agreement, an agreement to utilize SP Systems'
formulations for prepreg and formulated products and a license agreement for
the Company to offer SP Systems' proprietary SPRINT composite process
technology.

         In the fourth quarter of fiscal 2001, the Company decided to dispose
of its interests in Hardcore. This decision was due to the fact that Hardcore
was making only limited use of carbon fibers and, as such, was not supportive
of Zoltek's long-term strategy. Further, its financial performance was
disappointing and would have required significant further investment and
management attention.

         Zoltek believes that it has substantially achieved its strategic
goals of lowering its costs, establishing sustainable but competitive selling
prices and increasing its capacity. Its recent downstream acquisitions are
intended to accelerate development of carbon fiber reinforced composite
applications by providing parts producers and original equipment
manufacturers with complete solutions to optimizing the value chain from
carbon fibers to finished components.

         The Company is a Missouri corporation founded in 1975. Until it
entered the carbon fibers business in fiscal 1988, the Company's business
consisted of the sale of various industrial equipment and the provision of
related services. The Company sold its equipment and services business unit
in fiscal 1995. In November 1992, the Company completed its initial public
offering. The Company completed follow-on equity offerings in November 1995
and September 1996.

COMPANY OPERATIONS

         Zoltek's operations consist of three business segments: Carbon
Fibers, Composite Intermediate Materials and Specialty Products.

         The Carbon Fibers Business Segment manufactures and markets carbon
fibers and develops applications for carbon fibers. At plants in Abilene,
Texas, Hungary and St. Charles, Missouri, the Company's rated annual carbon
fibers production capacity of 12.5 million pounds is the largest in the
world. The Carbon Fibers Business Segment also sells oxidized fiber, under
the tradename PYRON, and performs certain downstream processing, such as
chopping and milling. The Company's primary focus is creating integrated
solutions for large potential end users, by working directly with users in
the primary market sectors identified by the Company.

         The Composite Intermediate Materials Business Segment, which is
comprised of Entec and Cape Composites which were acquired by the Company
during fiscal 2000, develops, manufactures and markets reinforcement
materials, prepregs (glass or carbon fiber pre-impregnated with resin),
specialty resins, consumable supplies and manufacturing equipment for the
composite manufacturing industry. In addition, the Composite Intermediates
Materials Business Segment supports the Carbon Fibers Business Segment by
providing composite design and engineering for development of applications
for carbon fiber reinforced composites.

                                      3

<PAGE>
<PAGE>

         The Specialty Products Business Segment, which is comprised of the
Company's Hungarian-based subsidiary, Zoltek Rt., manufactures and markets
acrylic fibers, nylon products and industrial materials. Acrylic fibers
currently represent the Specialty Products Business Segment's primary product
line and are used in producing a variety of end products, including clothing
and carpet. The segment's acrylic fibers are sold in regional markets,
principally to textile mills in Europe and, to a limited extent, Taiwan and
the United States. The Specialty Products Business Segment's other principal
fiber product line consists of nylon-6 fibers and granules. Granular nylon-6
is used as a thermoplastic molding material and combined in certain
applications with glass or carbon fibers. The Specialty Products Business
Segment has targeted Western Europe export markets, the largest of which is
Italy, and also sells significant amounts in Central and Eastern Europe.

         The Company acquired Zoltek Rt. in December 1995 to secure access to
the technology underlying the production of precursor, the acrylic fiber raw
material utilized in the manufacture of carbon fiber. Acrylic fiber precursor
comprises more than 50% of the Company's total carbon fiber product cost.
Currently, there is only one merchant textile-type acrylic fiber
manufacturer, Acordis UK, Ltd. ("Acordis"), which produces such fiber in a
form suitable for precursor use. While this textile-type acrylic fiber is
substantially less costly than internally produced custom-made acrylic fiber
precursor utilized by most of the Company's competitors, Acordis takes
advantage of its sole merchant supplier position to charge a premium price
for its fibers sold as precursor. To provide control of a reliable source of
precursor on favorable terms, the Company undertook a conversion of a portion
of the Specialty Products Business Segment's acrylic fiber capacity to
produce precursor grade material. The Company also established a precursor
technology group to assure continued supply of precursor sources around the
world.

         During 1999, the Company converted the Specialty Products Business
Segment's Mavilon (acrylic) facility to the production of precursor. As a
result, the Company permanently removed from production $25 to $35 million of
potential acrylic fiber annual revenue historically used for textile
applications. During 2000, the Company began to manufacture production
quantities of precursor and the Carbon Fibers Business Unit commenced the
sale of fibers manufactured from this material. The Company expects that in
the future this technology will be transferable to other potential suppliers
to assure sufficient cost-competitive supply of raw material to support the
Company's carbon fiber growth strategy.

         For historical financial information regarding the Company's various
business segments, see Note 10 of the accompanying Notes to Consolidated
Financial Statements.

CARBON FIBERS INDUSTRY OVERVIEW

         Carbon fiber composite materials are suited for a diverse range of
applications based on their distinctive combination of physical and chemical
properties. Carbon fibers are used as reinforcements in composite materials
that combine reinforcement carbon fibers with resins or other matrix
materials to form a substance with high strength, light weight, conductivity
or other exceptional properties not found in either component alone. Carbon
fibers most often are manufactured from acrylic fiber raw material
("precursor"), which is desirable due to the linear orientation of its
molecular structure and high carbon content (approximately 60%). While most
other producers of carbon fibers utilize internally produced custom-made
acrylic raw material, the Company utilizes less costly textile-type acrylic
fiber.

         Beginning in the early 1980s, the Company's predecessor developed a
family of products for use in what then was a new type of carbon/carbon
composite brakes utilized in military and large commercial aircraft. This
business has provided the base for the Company's carbon fiber business.
Currently, Zoltek has long-term supply contracts for this application with
the world's leading manufacturer of aircraft brake systems. The high cost of
qualifying products for aerospace use and the resistance to change by
aircraft manufacturers and airlines are barriers to entry to other potential
suppliers.

                                      4

<PAGE>
<PAGE>

         Until recently, the high cost of carbon fibers precluded all but the
most demanding applications, limiting carbon fibers use primarily to the
aerospace industry. During the past decade, as additional capacity
occasionally outpaced demand from aerospace applications, manufacturers sold
excess production at significantly reduced prices into specialty sporting
goods and industrial applications. As a result, the distinctive
characteristics of carbon fibers and the techniques for fabricating carbon
fiber composites became more broadly understood and some new and diverse
transitional applications developed. In sporting goods (the first significant
commercial application), the strength-to-weight ratio, stiffness, rapid
damping and fatigue resistance characteristics of carbon fibers have made
them a desirable and affordable material for a wide range of products such as
golf club shafts and tennis racquets. The Company has initiated programs to
develop market share in this application. Another application is the
inclusion of carbon fibers in thermoplastic compounds to provide electrically
conductive molded plastics.

         Extensive commercially viable applications are only possible at
carbon fiber prices significantly lower those historically prevailing for
aerospace applications. Commercial applications targeted by the Company, due
to the favorable weight, strength and stiffness properties of carbon fibers,
include wind turbine blades, vehicle drive shafts, compressed natural gas
(CNG) tanks, civil structures, construction components, automotive body and
structural members, cargo shipping containers, mass transit vehicle
components, high strength piping, marine uses and alternative energy systems.
In current industrial uses, carbon fibers' non-structural properties are
often most important. Chemical inertness is useful in corrosive applications
for heat exchanger tubing and pump cavities and in gas turbine blades; high
temperature resistance is useful in specialty metallurgical mold
applications; and combined rigidity and damping are useful in audio equipment
applications.

         The Company believes that the substantial majority of current
worldwide carbon fibers capacity remains dedicated to production of
high-cost, high-priced material for primary aerospace applications. This
market segment differs in important respects from the commercial markets
targeted by Zoltek.

CURRENT AND DEVELOPING APPLICATIONS

         Zoltek is focusing on primary application categories which are
believed to offer potential for substantial market development over coming
years. These application categories are as follows:

         Transportation and Automotive

         At today's lower carbon fiber price points, transportation
companies, such as shipping, rail, pipelines and buses, are now focusing on
the lifecycle cost savings that are possible through the combination of
light weight, strength and durability provided by carbon fibers. In
addition, Zoltek has identified automotive as a distinct sub-category
because of the perceived potential in this market. Auto companies are
looking to composites to reduce the number of parts required to build
different sub-assemblies and components. In applying lean production
techniques, auto companies and their suppliers are concentrating on reducing
the cost of assembly by eliminating the need for assembly. One- or two-part
composite structures can replace complex metal assemblies made up of more
than 100 different parts. Accordingly, major auto companies and their
suppliers are actively exploring the development of a wide variety of carbon
fiber-reinforced parts and assemblies, including steering columns, frames,
and heavy-duty clutches and brakes (see also "--Friction Products").

         Alternative Energy

         Carbon fiber can be utilized in many known applications primarily
because carbon fiber offers a combination of light weight and strength in
the design of complex machinery involving many moving parts. For a variety
of reasons, including strength and stiffness, carbon fiber also is emerging
as an attractive material for other alternative energy applications such as
wind turbines and fuel cells. As the size of wind turbine blades increases
to improve the cost-effectiveness of this power generating source,
particularly in emerging offshore applications, carbon fiber composites
become the only feasible material to achieve the desired structural


                                     5

<PAGE>
<PAGE>

properties. Zoltek intends to work with companies in the European wind
turbine market to promote the conversion to carbon fibers from glass fibers
which are used in current generation technology.

         Due to the superior performance, both in terms of physical
characteristics and chemical/UV resistance, carbon fibers have emerged as a
desirable material for CNG tank reinforcement. Carbon fiber-reinforced CNG
tanks are primarily sold into the bus and other vehicle fleet market, as the
reduction of weight directly translates to increased payload capability. In
addition, the Company believes that governmental pressure to design and
manufacture an automobile with significantly improved fuel efficiency could
cause automotive manufacturers to pursue CNG technologies. Zoltek supplies
carbon fibers to several customers for use in carbon fiber-reinforced CNG
tanks.

         Marine

         There are a multiplicity of potential applications in the marine
environment capitalizing not just on carbon fibers' comparative advantages in
light weight and strength, but also (to cite two properties that are lacking
in fiberglass) on their stiffness and resistance to aqueous corrosion.
Fiberglass, carbon fibers' predecessor, revolutionized boat building. A great
deal of further progress is possible through the additional use of composites
reinforced with carbon fiber or in combination with fiberglass. For instance,
the use of carbon fiber can reduce the weight of hulls, riggings and decks
and other structural components in boats by as much as 30% compared to
fiberglass.

         Infrastructure and Construction

         Carbon fiber can be used as a substitute for steel in reinforcing
concrete in many infrastructure projects, providing greater strength and
stiffness while eliminating the problem of corrosion. This is true both in
new construction projects and in addressing a growing need for maintenance or
repair work. There is growing federal and state interest in alternatives to
conventional steel and concrete construction and repair systems. Carbon
fiber-reinforced composite systems often permit retrofit and repair to be
done without stopping or diverting traffic for extended periods. Applications
include concrete column wrapping, bridge decking, composite re-bar, cables
and tendons.

         Carbon fibers can be used to create earthquake-resistant bridges and
overpasses and can also be used to wrap concrete columns in the construction
of earthquake-resistant buildings. Additionally, carbon fiber has been used
to reinforce wood for residential and commercial construction and home
decorative applications. Carbon fiber may provide a practical means of
obtaining the same strength and stiffness from younger, newly cut timber that
is currently available only in aged timber.

         Friction

         Friction-related products is an application category that cuts
across several other categories, including automotive and industrial and
which capitalizes on a unique property of carbon fibers. While other
materials soften under rising temperatures, carbon/carbon (carbon fibers
fused in a carbon matrix) grows stronger. Zoltek continues to be the world's
largest supplier of carbon fiber to the carbon/carbon aircraft braking
industry. Carbon-carbon is used in aircraft brakes because its utility is
enhanced by heat. Developed originally as a lightweight heat shield for
spacecraft, carbon-carbon has become a key material in advanced braking
systems used in fighter aircraft, military aircraft, newer model commercial
airliners and newer model business aircraft.

         The Company is the exclusive supplier to BF Goodrich Aerospace
("BFG") of carbon fibers for aircraft brakes pursuant to a ten-year agreement
(the "BFG Supply Agreement") entered into in June 1994 and extended in 1999.
The BFG Supply Agreement does not restrict the Company from supplying carbon
fibers to other aircraft brake manufacturers.

                                     6

<PAGE>
<PAGE>

         The technology used in advanced aircraft brakes is now being used as
brakes and clutches in race cars, and is under active study and investigation
for high speed trains, over-the-road trucks, cars and industrial rotating
equipment. Specialty friction product applications are a natural extension of
the existing aircraft brake applications. For instance, following the lead of
aircraft makers, virtually all grand prix racing cars now use carbon-carbon
brakes and clutches because of their superior performance and long life in
high-temperature and high-friction environments. Other friction products
utilizing carbon fibers are emerging as carbon fiber prices are reduced. As
the price of carbon fibers is lowered, the drive for better performance and
weight reduction makes possible their use in a range of automotive
applications. Zoltek continues to pursue a number of initiatives in this
area.

         Industrial

         Zoltek has identified a number of potentially high volume industrial
applications for carbon-fiber reinforced composites. In paper mills, for
instance, there is growing interest in development of fast-rotating composite
drums - capitalizing on carbon fibers' light-weight, stiffness and resistance
to corrosion. Carbon fiber can be used to strengthen and improve many kinds
of rollers and shafts. There is also a growing market for industrial apparel
utilizing oxidized fiber to protect workers in high temperature environments.

         Zoltek's carbon fibers are used in fire-retardant coatings to
prevent or control fire-related disasters in chemical plants, nuclear power
plants, refineries and off-shore drilling platforms. Used as an additive or
reinforcement, carbon fiber heightens the ability of the fire-retardant
coatings to withstand exceptionally high temperatures.

         The Company also has identified potential markets in industrial
tanks and pipes utilizing carbon fiber's high strength, light weight and
corrosion resistance. In addition, the Company is actively involved in
programs to use carbon fiber composites in offshore oil exploration and
drilling due to their combination of light weight, strength, stiffness and
resistance to corrosion. The Company currently supplies carbon fibers which
are used in buoyancy devices for offshore drilling equipment. The Company
also has participated in trials of spoolable pipe capable of extending the
reach of existing offshore oil platforms and interwound composite rods to
tether offshore platforms to the ocean floor at greater depths.

         Conductive Plastics

         Carbon fiber acts to dissipate both static electricity and heat.
Those two properties, combined with light weight, have made it an
increasingly important material in the manufacture of computers, printers,
copiers and other electronic devices. Growth in computers and electronics has
resulted in rising demand for carbon fibers used in conductive plastics to
dissipate static electricity or to act as a shield against electromagnetic
interference ("EMI") in laptop computers, disk drives and similar devices. It
has also been used in making plastic carrying trays for a manufacturing
environment that cannot tolerate contamination. In this application, Zoltek's
carbon fibers help to safeguard the electrical integrity of computer chips
and offer effective shielding from electromagnetic interference.

         Sporting Goods

         Sporting goods represent a stepping stone in the progression of
carbon fiber from an "advanced" material, limited to high-priced
applications, to a price-sensitive, mass-market material. Zoltek anticipates
growth in future demand as graphite golf clubs, skis, racquets and similar
equipment become less expensive, and therefore, less of a novelty item and
more of a staple. Carbon fibers have significantly improved the performance
of many sporting good products. Until recently, graphite clubs and racquets
had been produced from high-priced carbon fibers and sold at very high
prices. Zoltek has begun to generate significant sales in this market as a
result of new ways of spreading its low-cost, high-tow fibers that facilitate
the production of very thin sheets of fabric. The production of very thin
sheets of fabric from carbon fibers enables a number of promising new
applications,

                                     7

<PAGE>
<PAGE>

such as snowboards, in-line skates and skis, in which carbon fibers'
extraordinary stiffness-to-weight and strength-to-weight ratios can be put
to use in improving performance.

CUSTOMERS AND BACKLOG

         As part of its efforts to expand its current range of market
applications, the Carbon Fibers Business Segment engages in various strategic
relationships to study the viability of the use of carbon fibers in new
composite materials and structural enhancement environments. These
relationships are designed to build on existing expertise and industry
knowledge by exploring new potential uses for carbon fibers. Successful
partnerships with commercial customers include the long-term supply
relationship with BFG. The Company intends to consider additional strategic
application development and composite manufacturing partnerships and joint
ventures with other participants in the composite value chain.

         In each of the fiscal years ended September 30, 2001 and 2000, the
Company reported sales of $10.2 million and $9.6 million, respectively, to a
single customer which was the only customer that represented greater than 10%
of the Company's total consolidated revenues.

         As of September 30, 2001 and 2000, the Company had a backlog of orders
believed to be firm aggregating more than $19.0 million and $15.1 million,
respectively (including estimated releases under long-term supply arrangements
during the succeeding 12 months). Purchase orders from the Company's customers
are subject to amendment or cancellation.

INTERNATIONAL

         The Company conducts its operations and sells its products primarily
in the United States and Europe. The Company has, however, shipped carbon
fiber products to customers in Asia. Through the Specialty Products Business
Segment, the Company derives a substantial portion of its revenues from
Europe.

         For additional information regarding the Company's international
operations, see Note 10 of the accompanying Notes to Consolidated Financial
Statements.

SOURCES OF SUPPLY

         The Company currently obtains most of its textile-type acrylic
fibers to supply its carbon fiber operations from Acordis, which is currently
the sole merchant supplier of such raw materials in the world. Acordis is
also the only supplier that currently produces precursor approved for use in
aircraft brake applications such as those supplied under the BFG Supply
Agreement. Pursuant to an agreement with the Company, Acordis has agreed to
supply the Company with up to 18.0 million pounds per year of precursor. This
supply agreement may be terminated by either party on January 1, 2002, or any
anniversary thereof, by providing two years' prior notice.

         The Company believes Acordis is a reliable source of supply at the
Company's current operating levels. However, as part of its growth strategy,
the Company is developing alternative sources of precursor supply, including
Zoltek Rt. In the near term, although not expected, any interruption of
precursor supply from Acordis would have a material adverse effect on the
Company's carbon fibers business.

         The major materials used by the Composite Intermediates Business
Segment and the Specialty Products Business Segment include carbon fiber,
acrylonitrile and other basic commodity products which are widely available
from a variety of sources.

INTELLECTUAL PROPERTY

         The Company believes that it has developed and utilizes valuable
technology and innovations, including various aspects of its manufacturing
process, which are trade secrets in which it has a proprietary interest. The

                                     8

<PAGE>
<PAGE>

Company seeks to protect its proprietary information by, among other things,
requiring key employees to execute non-disclosure agreements. The Company
holds certain patents, but they are not material to its business.

COMPETITION

         The Company's Carbon Fibers Business Segment competes with various
other producers of carbon fibers, acrylic fibers and other textile fiber
products, many of which have substantially greater research and development,
marketing, financial and managerial resources than the Company and represent
significant competition for the Carbon Fibers Business Segment.

         The Company believes that no single manufacturer of carbon fiber
products competes across all of its applications. The Carbon Fibers Business
Segment's direct carbon fiber competitors include Fortafil Fibers, Inc. in
the United States and SGL Carbon in the United States and Europe, inasmuch as
they use the same textile-type precursor as the Company. To varying degrees,
depending on market conditions and supply, the Carbon Fibers Business Segment
also competes with aerospace grade carbon fiber producers, such as Hexcel
Corporation and BP Amoco in the United States and Toray Industries, Inc.,
Toho Rayon and Mitsubishi Rayon Co., Ltd. in Japan. These carbon fibers
producers tend to market higher cost products than the Carbon Fibers Business
Segment's products, with a principal focus on aerospace structural
applications. These manufacturers, while unable to sustain low pricing, tend
to enter into direct competition with the Carbon Fibers Business Segment
primarily when they engage in significant discounting due to protection of
their market share, excess capacity or product surpluses.

         The Company believes that the principal areas of competition for its
Carbon Fibers Business Segment are sustainable price, quality, development of
new applications and ability to reliably meet the customer's volume
requirements and qualifications for particular programs.

         The Composite Intermediates Materials Business Segment competes with
a range of other suppliers in the United States and Europe, including large
competitors such as Hexcel Corporation and many smaller suppliers in markets
with more fragmented participants.

         Competitors of the Specialty Products Business Segment in the
textile fibers market include MonteFibre, Sp.A., A.G. Bayer and Acordis.
However, the historic ties with and geographic proximity to customers in
Eastern and Central Europe provide competitive advantages for the Specialty
Products Business Segment in these markets compared to the larger
manufacturers. Zoltek believes this advantage will decrease over time and,
accordingly, the Specialty Products Business Segment has pursued a strategy
to increase sales to Western European markets and seeking a product mix with
more favorable competitive characteristics, such as advanced materials (e.g.,
carbon fiber precursor).

         The non-textile market for the Specialty Products Business Segment's
products is sufficiently fragmented that no significant single direct
competitor exists. The Specialty Products Business Segment's sales of its
industrial products are heavily concentrated in the Central and Eastern
European markets.

ENVIRONMENTAL

         The operations of the Company's Carbon Fibers Business Segment in
Abilene, Texas and St. Charles, Missouri utilize thermal oxidation of various
by-product streams designed to comply with applicable laws and regulations.
The plants produce air emissions that are regulated and permitted by various
environmental authorities. The plants are required to verify by performance
tests that certain emission rates are not exceeded. Management believes that
the plants are currently operating in compliance with their permits and the
conditions set forth therein. The Company does not believe that compliance by
its Carbon Fibers Business Segment with applicable environmental regulations
will have a material adverse effect upon the Company's future capital
expenditure requirements, results of operations or competitive position.
There can be no assurance, however, as

                                     9

<PAGE>
<PAGE>

to the effect of interpretation of current laws or future changes in federal
or state environmental laws or regulations on the business segment's results
of operations or financial condition.

         The operations of the Specialty Products Business Segment and the
Composite Intermediate Materials Business Segment generate various hazardous
wastes, including gaseous, liquid and solid materials. Zoltek believes the
Specialty Products Business Segment and the Composite Intermediates Materials
Business Segment are in substantial compliance with applicable environmental
and safety regulations applicable to their respective operations. Zoltek
expects that compliance with current environmental regulation will not have a
material adverse effect on the business, results of operations or financial
condition of the Company. There can be no assurance, however, that the
application of future national or local environmental laws, regulations and
enforcement policies will not have a material adverse effect on the business,
results of operations or financial condition of the Company.

EMPLOYEES

         As of September 30, 2001, the Company employed 289 persons in its
U.S. operations and 1,111 in its Hungarian operations. The Company's U.S.
employees are not represented by any collective bargaining organizations. By
law, most employees in Hungary are represented by at least one labor union.
At Zoltek Rt. there are two active unions: Union Viscosa with approximately
710 members and Viscosa 1990 with approximately 400 members (some Zoltek Rt.
employees belong to both unions). The Company believes that relations with
both unions are good. Management meets with union representatives on a
bi-weekly basis. There have not been any problems or major disagreements
with either union in the past five years. The Company believes that overall
its employee relations are good.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

         This Form 10-K, the annual report and certain information provided
periodically in writing and orally by the Company's designated officers and
agents including the annual report contain certain statements which
constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. The terms "Zoltek," "Company," "we," "our"
and "us" refer to Zoltek Companies, Inc. The words "expect," "believe,"
"goal," "plan," "intend," "estimate," and similar expressions and variations
thereof are intended to specifically identify forward-looking statements.
Those statements appear in this Form 10-K, the annual report and the
documents incorporated herein by reference, particularly "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
and include statements regarding the intent, belief or current expectations
of the Company, its directors and officers with respect to, among other
things: (i) our financial prospects; (ii) the successful integration of both
completed and any future acquisitions; (iii) our growth strategy and
operating strategy including the focus on facilitating acceleration of the
introduction and development of mass market applications for carbon fibers;
and (iv) our current and expected future revenue and the impact of any
acquisitions may have on our future performance.

         You are cautioned that any such forward looking statements are not
guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected in the forward
looking statements as a result of various factors. The factors that might
cause such differences include, among others, the following: (i) continued
operating and net losses and negative cash flows; (ii) any material inability
to successfully integrate and profitably operate our acquisitions; (iii) any
material inability to acquire additional sufficient capital and financing at
a reasonable cost to fund our liquidity requirements and long-term growth
strategy or to maintain compliance with our credit facility; (iv)
developments or new initiatives in the carbon fibers market by our
competitors; (v) any failure by the Company to meet analysts' expectations;
(vi) fluctuations in stock price; (vii) inability to successfully manage
rapid growth; and (viii) unexpected cost increases or adverse conditions in
the market for carbon fiber and acrylic fiber.



                                     10

<PAGE>
<PAGE>

         The Company undertakes no obligation to publicly update or revise
forward-looking statements to reflect events or circumstances after the date
of this Form 10-K and annual report or to reflect the occurrence of
unanticipated events.

Item 2.  Properties
------   ----------

         The Company's facilities are listed below and are considered to be
suitable and adequate for its operations. Except as noted below, all the
Company's properties are owned, subject to various mortgage loans.

<TABLE>

<CAPTION>
                                                                                      APPROXIMATE AREA
                     LOCATION                                  USE                    (IN SQUARE FEET)
                     --------                                  ---                    ----------------

      <S>                                      <C>                                      <C>
      St. Louis, Missouri...................   Administrative offices, marketing
                                               and engineering                              40,000

      St. Charles, Missouri(1)..............   Carbon fibers manufacturing                 107,000

      Abilene, Texas........................   Carbon fibers manufacturing
                                               and processing                              428,000

      San Diego, California(2)..............   Carbon fiber prepreg manufacturing           35,000

      Salt Lake City, Utah..................   Filament winding equipment
                                               manufacturing                                65,000

      New Castle, Delaware(2)(3)...........    Composite materials design and
                                               manufacturing                                45,000

      Nyergesujfalu, Hungary................   Carbon fibers, acrylic fiber, nylon
                                               and other manufacturing                   1,600,000
<FN>
----------------
(1)   Properties subject to ground lease.
(2)   Properties subject to lease.
(3)   Held for sale.
</TABLE>

Item 3.  Legal Proceedings
------   -----------------

         The Company is not a party to any legal proceedings other than
ordinary routine litigation incidental to its business which the Company does
not believe will result in any material adverse effect on future consolidated
results of operations or financial condition.

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

         The Company did not submit any matters to a vote of its security
holders during the quarter ended September 30, 2001.

Item 4A. Executive Officers of the Registrant
-------  ------------------------------------

         The name, age and position with respect to each of the executive
officers of the Company are set forth below:

         Zsolt Rumy, age 59, is the founder of the Company and has served as
its Chairman, Chief Executive Officer and President and as a Director since
1975. Prior to founding the Company, Mr. Rumy served as

                                     11

<PAGE>
<PAGE>

Industrial Marketing Manager and Process Engineer for Monsanto Company,
Accounts Manager for General Electric Company and Technical Sales
Representative for W.R. Grace Company. Since 1996, Mr. Rumy has served as a
director of Southwest Bank of St. Louis, with which the Company maintains a
banking relationship. Mr. Rumy received a B.S. degree in Chemical
Engineering from the University of Minnesota in 1966. Mr. Rumy speaks fluent
Hungarian.

         James F. Whalen, age 47, has served as Chief Financial Officer and
Secretary of the Company since April 2001. Prior to joining the Company,
from November 1997 to March 2001, Mr. Whalen served as Vice President and
Chief Financial Officer of Asset Management Outsourcing, Inc. (a
privately-held provider of outsourcing services) and from November 1996 to
November 1997 in a similar capacity for Outsourcing Solutions, Inc. (a
privately-held provider of outsourcing services). From March 1992 to
November 1996, Mr. Whalen served as Vice President of Business Operations
for Dell Computer. Mr. Whalen received B.S. degrees in Accounting and
Finance from the University of Notre Dame and a M.S. in Taxation from the
University of Cincinnati.


                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Shareholder Matters
------   ---------------------------------------------------------------------

         The Company's Common Stock (symbol: "ZOLT") is traded in the Nasdaq
National Market System. The number of beneficial holders of the Company's
stock is approximately 13,500. The Company has never paid dividends.

         Set forth below are the high and low bid quotations as reported by
Nasdaq for the periods indicated. Such prices reflect interdealer prices,
without retail mark-up, mark-down or commission:

<TABLE>

<CAPTION>
                              Fiscal year ended                   Fiscal year ended
                             September 30, 2001                  September 30, 2000
                             ------------------                  ------------------

                           High               Low              High                Low
                           ----               ---              ----                ---
    <S>                 <C>                <C>              <C>                <C>
    First Quarter       $    8.25          $    2.19        $  13.19           $   7.56

    Second Quarter           6.31               2.25           12.25               8.37

    Third Quarter            6.20               4.25            9.87               6.06

    Fourth Quarter           4.48               2.20            9.87               9.00

</TABLE>




                                       12

<PAGE>
<PAGE>

Item 6.  Selected Financial Data
------   -----------------------

<TABLE>

                                                  ZOLTEK COMPANIES, INC.
                                           SELECTED CONSOLIDATED FINANCIAL DATA
                                          (In thousands, except per share data)

<CAPTION>

Statement of Operations Data:                                               Year Ended September 30,
-------------------------------------------------------------------------------------------------------------------------
                                                            2001           2000          1999        1998          1997
                                                          ---------     ---------     ---------    ---------    ---------

<S>                                                       <C>           <C>           <C>          <C>          <C>
Net sales...............................................  $  76,478     $  78,204     $  68,525    $  83,390    $  90,628

Cost of sales...........................................     74,333        64,520        53,375       58,805       64,214

Gross profit............................................      2,145        13,684        15,150       24,585       26,414

Available unused capacity costs.........................      6,803         4,658         3,953            -            -

Selling, general and administrative expenses(1).........     15,870        14,422        14,525       12,958       13,172

Operating income (loss) from continuing operations......    (20,528)       (5,396)       (3,328)      11,627       13,242

Other income (expense) and income taxes.................       (746)        1,392           540          494          820

Net income (loss) from continuing operations............    (21,274)       (4,004)       (2,624)       9,595       12,828

Loss on discontinued operations, net of income taxes....    (10,297)       (4,681)            -            -            -

Net income (loss).......................................  $ (31,571)    $  (8,685)    $  (2,642)   $   9,595    $  12,828

Net income (loss) per share:
  Basic income (loss) per share:
     Continuing operations..............................  $   (1.29)    $   (0.22)    $   (0.16)   $     .59    $     .79
     Discontinued operations............................      (0.62)        (0.25)            -            -            -
                                                          ---------     ---------     ---------    ---------    ---------

     Net income (loss)..................................  $   (1.91)    $   (0.47)    $   (0.16)   $     .59    $     .79
                                                          =========     =========     =========    =========    =========

Weighted average common shares outstanding..............     16,515        18,360        16,209       16,216       16,212

  Diluted income (loss) per share:
     Continuing operations..............................  $   (1.29)    $   (0.22)    $   (0.16)   $     .58    $     .78
     Discontinued operations............................  $   (0.62)    $   (0.25)            -            -            -
                                                          ---------     ---------     ---------    ---------    ---------

     Net income (loss)..................................  $   (1.91)    $   (0.47)    $   (0.16)   $     .58    $     .78
                                                          =========     =========     =========    =========    =========

Weighted average common and common equivalent
 shares outstanding.....................................     16,515        18,360        16,209       16,525       16,547


<CAPTION>

Balance Sheet Data:                                                                September 30,
-------------------------------------------------------------------------------------------------------------------------
                                                             2001         2000          1999         1998          1997
                                                           --------     ---------     ---------    ---------    ---------

<S>                                                       <C>           <C>           <C>          <C>          <C>
Working capital(2)......................................  $  24,391     $  27,041     $  43,946    $  53,058    $  69,556

Total assets............................................    121,492       207,701       136,756      147,209      139,962

Short-term debt.........................................      2,073        47,126           630          817        2,760

Long-term debt, less current maturities.................     22,036         8,697         5,423        5,898        4,295

Shareholders' equity....................................     79,596       122,811       114,634      121,602      115,836

<FN>
------------------
(1)   Includes application and development costs of $3,533, $2,479 and $1,925
      for fiscal years 2001, 2000 and 1999, respectively.
(2)   Working capital at September 30, 2001 and 2000 does not include discontinued
      operations.
</TABLE>



                                                           13

<PAGE>
<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Condition and
------   ---------------------------------------------------------------
         Results of Operations
         ---------------------

OVERVIEW

         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 and its sales strategy is designed
to attract significant new applications for carbon fiber reinforced
composites in automotive, infrastructure, construction, marine and other
industries. The Company believes introduction of carbon fibers to potential
end users has been generally well received and the Company is participating
in a number of ongoing development projects in these application categories.

         As part of its strategy to establish availability of carbon fibers
on a scale sufficient to provide growth of large scale applications, the
Company completed a major carbon fiber production capacity expansion plan in
fiscal 1999. The Company completed construction of seven continuous carbon
fiber lines, each with an annual rated capacity of one million pounds, at its
Abilene, Texas facility (five lines) and Zoltek Rt. facilities (two lines).
In addition, the Company completed construction of a secondary processing
building at its Abilene, Texas facility to perform intermediate and secondary
carbon fiber processing operations, such as chopping, milling and specialty
packaging, and completed construction and partial finish out of an additional
building (288,000 square feet) designed to ultimately house up to 24 more
continuous carbonization lines at its Abilene, Texas facility. During fiscal
2000, the Company also completed construction of an oxidization line at
Zoltek Rt., with an annual rated capacity of two million pounds. The Company
is supplying European markets with oxidized fiber used in friction and
thermal applications from this line.

         As the Company pursues its application and market development
efforts, the Company has found the existing composite materials value chain
relatively slow to change and undertook steps to accelerate the introduction
and development of carbon fiber composites across a broad range of mass
market applications. The Company is continuing to target emerging
applications for low-cost, high-performance carbons in automobile
manufacturing, alternate energy technologies, deep sea oil drilling
applications, filament winding applications, buoyancy and fire resistant
applications.

         The Company acquired a series of downstream businesses during
fiscal 2000, with the objective of accelerating the introduction and
development of carbon fibers and carbon fiber composites in low-cost, high
volume applications. The Company's strategy includes providing 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.

         In October 1999, Zoltek acquired Zoltek Materials Group, Inc. Zoltek
Materials Group, located in San Diego, California, is a manufacturer of
carbon fiber prepreg (pre-impregnated with resin) composite materials.

         In November 1999, the Company acquired substantially all of the
assets of Engineering Technology Corporation ("Entec Composite Machines").
Entec, located in Salt Lake City, Utah, designs and manufactures filament
winding equipment used in the production of composite parts. Also in November
1999, the Company acquired Composite Machines Corporation ("CMC") and Ramal
International, Inc. (parent company of CMC). CMC, located in Salt Lake City,
Utah, designed and manufactured filament winding and pultrusion equipment
used in the production of composite parts. CMC and Ramal have been integrated
into the Entec operation.

         Additionally, in November 1999, the Company acquired Structural
Polymer (Holdings) Ltd. ("SP Systems"), which designs and manufactures
composite materials used in large scale structures such as wind turbine
blades and marine structures. While this acquisition was consistent with the
Company's business strategy, the financial performance of this business was
unsatisfactory. Therefore, in fiscal 2000, the Company formally adopted a
plan to sell this subsidiary. In November 2000, the Company sold SP Systems
and entered into various agreements that provide for various continuing
relationships, including a ten-year carbon fiber supply agreement.

                                       14

<PAGE>
<PAGE>

         In April 2000, the Company acquired a 45% preferred membership
interest in Hardcore Composites Operations LLC ("Hardcore"). Hardcore
designs and manufactures composite structures for the civil infrastructure
market. In the fourth quarter of fiscal 2001, the Company formally adopted a
plan to dispose of its interests in Hardcore. The Company expects that the
disposition of Hardcore will be completed by the end of fiscal 2002.

         The Company's consolidated financial statements for fiscal 2000 and
2001 account for Hardcore and SP Systems as discontinued operations. Unless
otherwise indicated, the following discussion relates to the Company's
continuing operations.

         The Company's carbon fiber manufacturing capacity continues to be
underutilized. Carbon fiber sales have been depressed by excess capacity
across the industry, distressed pricing across most existing markets and
weakening economic conditions globally. Carbon fiber sales for fiscal 2001
were $26.0 million compared to $27.5 million for fiscal 2000. The Company's
strategy for near-term sales increases was to rely primarily on what had been
two fast-growing commercial markets (conductive plastics used in electronic
products and sporting goods). In fiscal 2001, the growth in these two markets
slowed dramatically. In addition, sales of carbon fibers into commercial
markets have been slower to develop than expected due to long lead times in
product development for large-scale applications. For these reasons, the
Company has temporarily idled the plant in Abilene, Texas. The excess
capacity costs related to the carbon fiber business totaled $6.8 million in
2001. In fiscal 2002, these excess capacity costs are forecasted to be
approximately $5.0-$5.5 million.

COMPARISON OF RESULTS FOR FISCAL YEARS ENDED SEPTEMBER 30, 2001 AND 2000

         The Company's sales decreased 2.2% to $76.5 million in fiscal 2001
from $78.2 million in fiscal 2000. Carbon fiber sales decreased 5.4% to $26.0
million in fiscal 2001 from $27.5 million in fiscal 2000. During fiscal 2001,
carbon fiber sales decreased due to excess carbon fiber capacity that
resulted in distressed pricing across most existing markets and by weakening
economic conditions globally. Sales of the composite intermediates business
segment increased 3.0% to $11.3 million in fiscal 2001 from $11.0 million is
fiscal 2000. The increase resulted from higher volume in the prepreg markets.
Sales of acrylic and other products produced at Zoltek Rt. were comparable
year over year ($39.2 million in fiscal 2001 compared to $39.8 million in
fiscal 2000).

         Gross profit decreased 84.3% to $2.1 million in fiscal 2001 from
$13.7 million in fiscal 2000. An inventory value reduction of $8.6 million
recorded in fiscal 2001, to reflect a lower of cost or market adjustment, was
the primary component of the gross profit reduction. The inventory value
reduction was established due to the intensified overcapacity occurring in
the year, which caused distressed pricing across most existing markets for
carbon fibers. Without the inventory reduction, gross profit would have been
$10.7 million, a 21.5% reduction year over year. Gross margin from carbon
fibers decreased to a negative $2.4 million in fiscal 2001 from a positive
$6.7 million in fiscal 2000. The margin percentage on carbon fiber decreased
to (9.2%) of sales in fiscal 2001 from 24.4% in fiscal 2000, primarily due to
the inventory value reduction. Gross profit on carbon fibers before the
inventory adjustment was $6.0 million, or 23.9%, a decrease of $0.7 million,
or 10.4% due primarily to competitive pricing pressures in the market. Gross
profit on composite intermediates was negative $0.8 million in fiscal 2001
compared to a positive $0.2 million in fiscal 2000. These downstream
businesses continue to actively participate in development projects that
generate little margin at current volume levels; however, such projects are
intended to develop new applications for carbon fibers to expand their
commercial use. Gross profit from acrylic and other products sold by Zoltek
Rt., was $5.2 million in fiscal 2001 compared to $6.8 million in fiscal 2000.
Gross margin on acrylic fibers and other products decreased to 13.3% of sales
for fiscal 2001 compared to 17.1% of sales for fiscal 2000 due primarily to
increases in raw material costs that could not be passed on to customers.

         During fiscal years 2001 and 2000, the Company was not operating its
continuous carbonization lines at the Abilene, Texas facility at full
capacity resulting in available unused capacity charges of approximately $6.8
million and $4.7 million, respectively. These costs include depreciation and
other overhead charges. The

                                     15

<PAGE>
<PAGE>

Company believes it is necessary to maintain available capacity to encourage
development of significant new large-scale applications and anticipates
costs associated with the available capacity will continue into fiscal 2002.
The Company does, however, anticipate increases in carbon fiber sales from
both the U.S. and Hungarian locations in fiscal 2002.

         Application and development costs were $3.5 million in fiscal 2001,
compared to $2.5 million in fiscal 2000, representing a $1.0 million
increase. This increase was due to increased costs related to the carbon
fiber operations due to product and market development efforts for product
trials, and for additional sales and product development personnel and
travel. Targeted emerging applications include automobile manufacturing,
alternate energy technologies, deep sea oil drilling, filament winding and
buoyancy.

         Selling, general, and administrative expenses increased $0.4
million, from $11.9 million in fiscal 2000 to $12.3 million in fiscal 2001,
primarily due to salaries and other personnel related costs.

         Interest expense was approximately $2.1 million for fiscal year 2001
compared to $1.3 million in fiscal 2000. The increase in interest expense
resulted from borrowings related to the use of funds for working capital and
capital expenditures. Interest income was $1.0 million for fiscal 2001
compared to $0.6 million in fiscal 2000. Interest income increased due to
higher average balances invested, including notes from sale of business.
During fiscal 2001, capital expenditures totaled $5.3 million.

         During fiscal 2001, the Company reported an income tax benefit of
$0.5 million compared to an income tax benefit of $2.3 million in fiscal
2000. The Company recorded a valuation allowance against the deferred income
tax asset in fiscal 2001 that caused the Company to recognize a lower income
tax benefit in fiscal 2001, even though the Company reported significantly
greater pre-tax losses than in the prior year. The Company recognizes income
taxes in both the United States and Hungary based on the income before income
taxes. Included in the provision for income taxes are gross receipts taxes
charged by the Hungarian local taxing authorities, which were $0.4 million in
fiscal year 2001 and 2000, as well as the statutory income taxes. The
statutory income tax rate for the Zoltek Rt. operation in Hungary is 9%.

         The foregoing resulted in a net loss from continuing operations of
$21.3 million for fiscal 2001 compared to a net loss of $4.0 million for
fiscal 2000. Similarly, the Company reported a net loss from continuing
operations per share of $1.29 and $0.22 on a basic and diluted basis for
fiscal 2001 and fiscal 2000, respectively. The weighted average common shares
outstanding decreased to 16.5 million for fiscal 2001 compared to 18.4
million for fiscal year 2000 due to the repurchase of approximately 2.5
million common shares as partial consideration for the sale of SP Systems in
November 2000.

         In the fourth quarter, the Company formally adopted a plan to
dispose of its 45%-interest in Hardcore. The net loss from discontinued
operations for fiscal 2001 included a $3.4 million loss from the results of
operations of Hardcore, a $5.1 million impairment charge to reduce the
carrying value of Hardcore's net assets to their fair value less estimated
selling costs, and a $1.8 million loss from discontinued operations of SP
Systems. The foregoing resulted in a net loss from discontinued operations of
$10.3 million, or $0.62 per share on a basic and diluted basis, in fiscal
2001, and $4.7 million, or $0.25 per share on a basic and diluted basis, in
fiscal 2000.

         The net loss for fiscal 2001 was $31.6 million, or $1.91 per share
on a basic and diluted basis compared to a net loss of $8.7 million, or $0.47
per share in fiscal 2000.

COMPARISON OF RESULTS FOR FISCAL YEARS ENDED SEPTEMBER 30, 2000 AND 1999

         The Company's sales increased 14.2% to $78.2 million in fiscal 2000
from $68.5 million in fiscal 1999. Carbon fiber sales increased 8.3% to $27.5
million in fiscal 2000 from $25.4 million in fiscal 1999. During fiscal 2000,
the increase in carbon fiber sales volumes was partially offset by distressed
pricing due to significant overcapacity in the industry. The composites
intermediates acquisitions during fiscal 2000 accounted for $11.0 million of
sales. Sales of acrylic and other products produced at Zoltek Rt. decreased
by 7.7% to $39.8 million

                                     16

<PAGE>
<PAGE>

in fiscal 2000 compared to $43.1 million in fiscal 1999. This decrease was
principally due to volume reductions in the Company's production capacity.
The Company converted its Mavilon acrylic fiber plant to carbon fiber
precursor production during the last half of 1999, permanently removing the
capacity from the acrylic textile fiber operation. The Mavilon plant
produced approximately 7,900 metric tons of material in fiscal 1999.

         Gross profit decreased 9.7% to $13.7 million in fiscal 2000 from
$15.2 million in fiscal 1999. Gross profit from carbon fibers decreased to
$6.7 million in fiscal 2000 from $8.0 million in fiscal 1999. The gross
profit percentage on carbon fiber decreased to 24.4% of sales in fiscal 2000
from 31.6% in fiscal 1999 due to selling price decreases and product mix
changes. Gross margin for the composite intermediates acquired in fiscal 2000
was $0.2 million. Gross profit from acrylic and other products sold by Zoltek
Rt., was $6.8 million in fiscal 2000 compared to $7.1 million in fiscal 1999.
Gross margin on acrylic fibers and other products increased to 17.1% of sales
for fiscal 2000 from 16.5% of sales for fiscal 1999 due primarily to higher
sales demand.

         During fiscal years 2000 and 1999, the Company was not operating its
new continuous carbonization lines at full capacity, resulting in available
unused capacity charges of approximately $4.7 million and $4.0 million,
respectively.

         Application and development costs in fiscal 2000 were $2.5 million,
a 28.8% increase versus $1.9 million in fiscal 2000. This increase was due to
product and market development efforts for product trials, additional
sales/product development personnel and travel, primarily in carbon fibers.

          Selling, general and administrative expenses decreased
approximately 5.5%, or $0.7 million, from $12.6 million in fiscal 1999 to
$11.9 million in fiscal 2000. Offsetting the $1.8 million increase caused by
the composite intermediates acquisitions during 2000 was an overall reduction
in personnel and administrative expenses, primarily at Zoltek Rt.

         Interest expense was approximately $1.3 million for fiscal year 2000
compared to $0.5 million in fiscal 1999. The increase in interest expense
resulted from borrowings related to the use of funds for the composite
intermediates acquisitions, working capital and capital expenditures.
Interest income was $0.6 million for fiscal 2000 compared to $1.2 million in
fiscal 1999. The decrease in interest income was due to the use of funds to
finance the acquisitions, working capital and capital expenditures during
fiscal 2000 and 1999. During fiscal 2000, capital expenditures totaled $6.1
million.

         During fiscal 2000, the Company reported an income tax benefit of
$2.3 million compared to an income tax benefit of $0.2 million in fiscal 1999
due to the increased losses from operations before taxes. The Company
recognizes income taxes in both the United States and Hungary based on the
income before income taxes. Included in the provision for income taxes are
gross receipts taxes charged by the Hungarian local taxing authorities, which
were $0.4 and $0.6 million in fiscal year 2000 and 1999, respectively, as
well as the statutory income taxes. The statutory income tax rate for the
Zoltek Rt. operation in Hungary is 9%.

         The foregoing resulted in a net loss from continuing operations of
$4.0 million for fiscal 2000 compared to a net loss of $2.6 million for
fiscal 1999. Similarly, the Company reported net loss from continuing
operations per share of $0.22 and $0.16 on a basic and diluted basis for
fiscal 2000 and fiscal 1999, respectively. The weighted average common shares
outstanding increased to 18.4 million for fiscal 2000 compared to 16.2
million for fiscal year 1999 due to the issuance of approximately 2.5 million
common shares as partial consideration for the purchase of SP Systems.

         The net loss from discontinued operations includes the results
of operations of Hardcore and SP Systems and interest costs related to
borrowings used to finance the SP acquisition. The net loss from
discontinued operations for fiscal year 2000 was $4.7 million, or $0.25 per
share on a basic and diluted basis.

         The net loss for fiscal 2000 was $8.7 million, or $0.47 per share
on a basic and diluted basis compared to a net loss of $2.6 million, or
$0.16 per share in fiscal 1999.

                                    17

<PAGE>
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         During fiscal 2001 and prior years, the Company's primary sources of
liquidity were cash flow from operating activities and available borrowing
capacity under credit facilities, supplemented with the net proceeds from
three equity offerings, and long-term debt financing utilizing the equity in
the Company's real estate properties.

         During much of fiscal 2001 and 2000, the carbon fiber market
experienced excess supply resulting from capacity increases by several other
carbon fiber manufacturers. As a result, the Company experienced substantial
reductions in selling prices and related gross profit across most existing
markets. The Company expects market conditions similar to fiscal 2001 to
continue until the market demand consumes the excess capacity. However, the
Company plans to reduce its carbon fiber inventory, to rationalize its work
force to reflect current and near-term demand and to significantly reduce
operating expenses. Management's objective is to operate the continuing
business on a cash flow neutral basis by the end of fiscal 2002.

         On May 11, 2001, the Company entered into a new two-year credit
facility with Southwest Bank of St. Louis 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. The Company used
the proceeds of the new facility to repay existing borrowing of $9.0 million,
plus accrued interest, and terminated the old credit facility. 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. 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 the 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. In December 2001, the Company received a commitment letter from
Southwest Bank regarding the waiver of certain financial covenants as of
December 31, 2001 and modification of certain financial covenants for fiscal
2002. The Company expects that a definitive amendment to the credit agreement
will be concluded in the second quarter of fiscal 2002.

         On May 18, 2001, the Company's Hungarian subsidiary entered into an
expanded credit facility, to $12.0 million from $6.0 million, with Raiffeisen
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 December 2002
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. Although there is no assurance from the bank, the
Company expects to be able to continue extending the terms on an annual basis
beyond December 2002.

         The Company believes its financial position has been improved as a
result of the recent operating cost reductions and disposal of SP Systems.
The planned disposition of Hardcore also will benefit the Company's future
liquidity position. Management believes that the Company's financial
resources remain adequate to support the execution of its strategic plans.
However, failure to comply with its obligations under its existing 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.

         At September 30, 2001, the Company reported working capital
(excluding discontinued operations) of $24.4 million compared to working
capital of $27.0 million at September 30, 2000. The decrease in working
capital from September 30, 2000 to September 30, 2001 was primarily due to
use of cash and temporary investments of $2.4 million for operations, the
repayment of the current portion of the former credit facility of $9.0
million, partially offset by an increase in accounts payable of $2.8 million
and a reduction in inventory of $5.8 million. Although inventories decreased
from $31.1 million at September 30, 2000 to $25.3 million at September 30,
2001, the decrease was primarily due to recording the $8.6 million reserve
during fiscal 2001 to reduce the carrying value of the inventory to net
realizable value. The reserve was established due to the intensified
overcapacity occurring in the year, which caused distressed pricing across
most existing markets for

                                    18

<PAGE>
<PAGE>

carbon fibers. The Company anticipates that carbon fiber inventories will
decrease further during fiscal 2002, as it will continue to rationalize
production levels and pursue an aggressive sales effort in existing and new
markets. The Company's continuing operations used $6.2 million of cash in
fiscal 2001 compared to using cash of $2.9 million in fiscal 2000. In
fiscal 2002, the Company will seek to fund its continuing operations from
borrowings and managing its working capital.

         Historically, cash used in investing activities has been expended
for equipment additions and to support research and development of carbon
fibers applications and the expansion of the Company's carbon fibers
production capacity. In fiscal 2001, the Company made capital expenditures of
$5.3 million for various projects compared to $6.1 million during the fiscal
year 2000. Of these expenditures in fiscal 2001, approximately $3.3 million
was used for oxidation lines and secondary processing equipment for carbon
fibers and $1.7 million was used at Zoltek Rt. for modernization and
modifications to produce acrylic fiber and other industrial products.
Composite intermediates had capital expenditures of approximately $0.3
million for equipment additions and modifications. These expenditures were
financed principally with cash from the sale of temporary investments and
from borrowings. In fiscal 2002, the Company expects purchases of property,
plant and equipment to be less than $1 million.

         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 and consisted of
$5.5 million of buildings and $22.2 million of machinery and equipment. The
Company began recording depreciation on these assets from the date they were
placed in service. In the third quarter of fiscal 2001, the Company elected
to temporarily idle the continuous carbonization lines at the Abilene
facility. These carbonization lines had a carrying value of $19.8 million at
September 20, 2001. Management intends to return the lines to full production
as market demand for carbon fiber products increases.

         Current maturities of long-term debt at September 30, 2001 include a
$0.5 million payment due on the term loan with Southwest Bank in May 2002
plus approximately $0.6 million related to various mortgage notes.

         As part of the Company's strategic plan for commercializing carbon
fibers and carbon fiber composites, the Company acquired Zoltek Materials
Group and Entec Composite Machines in November 1999 for an aggregate purchase
price of $4.0 million in cash. The Company also assumed certain liabilities
at acquisition and provided working capital and credit facilities for the
acquired companies.

         In November 1999, the Company acquired all of the outstanding stock
of SP Systems for approximately $30.0 million in cash and 2.5 million shares
of the Company's common stock. The Company also borrowed $5.0 million to
refinance certain existing bank debt of SP Systems and fund working capital
requirements. During the fourth quarter of fiscal 2000, the Company formally
adopted a plan to sell SP Systems, which was completed in November 2000.

         The Company entered into a six-year credit facility with a
commercial bank in an original aggregate amount of $71.0 million to finance
the SP Systems acquisition and refinance other indebtedness. The Company
amended and restated the credit agreement on May 31, 2000 to reduce the
amount of borrowings available to $53.0 million and to modify certain
covenants. The facility, as amended, contained financial covenants related to
borrowings, future acquisitions, working capital, net worth, cash flow, and
fixed charge coverage. The Company reduced the borrowings under the credit
facility by $35.4 million in November 2000 from the proceeds of the sale of
SP Systems.

         In April 2000, the Company acquired a 45% membership interest in
Hardcore for $1.4 million cash and guaranteed a note payable of $1.0 million.
The Company also provided additional funding for working capital. In the
fourth quarter of fiscal 2001, the Company formally adopted a plan to dispose
of Hardcore, which it expects to complete in fiscal 2002.

                                    19

<PAGE>
<PAGE>

         At the time of the purchase of its 45% membership interest in
Hardcore, the Company guaranteed Hardcore's post-closing obligations to the
seller. The Company's guarantee relates to obligations of approximately $4.8
million. The obligations were payable as of April 28, 2001; however, these
transactions have not yet been completed pending the outcome of negotiation
with the seller and pending final agreement with respect to the proposed
disposition of Hardcore.

         In February 1999, the Company's Board of Directors authorized a
share repurchase program for up to 1,000,000 shares of the Company's common
stock in the open market over an unspecified period of time as market
conditions allow. The purpose of the repurchase plan was to meet the
Company's obligations under its stock option plans, while minimizing dilution
to shareholders. In connection with the approved repurchase, the Company
purchased 15,000 shares of the Company's common stock in March 1999 and the
Company sold put options for 70,000 shares of the Company's common stock in
February and March 1999 which expired unexercised. The put options allowed
the purchasers to exercise the options and sell the shares back to the
Company. In addition, put options for 160,000 shares of the Company's common
stock were sold in the fourth quarter of fiscal 1999, which expired
unexercised in January 2000. The Company sold additional put options for
50,000 shares in December 1999, which expired in July 2000. The Company
repurchased these put options in March 2000. There were no put options
outstanding at September 30, 2000 and September 30, 2001, respectively. The
Company's credit agreement currently prohibits repurchases of shares and the
Company does not anticipate any repurchases until its financial condition
improves.


Item 7A. 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. However, a one
percent increase in the weighted average interest rate of the Company's debt
for fiscal 2002 compared to fiscal 2001 would result in a $87,000 increase in
interest expense based on debt levels at September 30, 2001 excluding
discontinued operations.

                                    20

<PAGE>
<PAGE>

Item 8.  Financial Statements
------   --------------------


                           ZOLTEK COMPANIES, INC.
                      REPORT OF INDEPENDENT ACCOUNTANTS


TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ZOLTEK COMPANIES, INC.
------------------------------------------------------------------------------

         In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of changes in stockholder's
equity, and of cash flows present fairly, in all material respects, the
financial position of Zoltek Companies, Inc. and its subsidiaries at
September 30, 2001 and 2000, and the results of their operations and their
cash flows for each of the three years in the period ended September 30,
2001 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.




/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
St. Louis, Missouri
December 28, 2001


                                     21
<PAGE>
<PAGE>

<TABLE>
                                                   ZOLTEK COMPANIES, INC.
                                                 CONSOLIDATED BALANCE SHEET
<CAPTION>
ASSETS                                                                                                  September 30,
---------------------------------------------------------------------------------------------------------------------------
                                                                                                     2001            2000
                                                                                                  ---------       ---------
<S>                                                                                               <C>             <C>
Current assets:
     Cash and cash equivalents.................................................................   $     667       $   1,837
     Marketable securities.....................................................................           -           1,327
     Accounts receivable, less allowance for doubtful accounts of $760 and $899, respectively..      13,518          13,104
     Inventories...............................................................................      25,250          31,051
     Other current assets......................................................................         666             758
     Refundable income taxes...................................................................           -           1,556
     Current assets of discontinued operations.................................................       1,307          22,036
                                                                                                  ---------        --------
          Total current assets.................................................................      41,408          71,669
Property and equipment, net....................................................................      79,157          79,489
Intangible assets, net (including goodwill) ...................................................         672             618
Other assets...................................................................................         255           1,090
Long-term assets of discontinued operations....................................................           -          54,835
                                                                                                  ---------       ---------
          Total assets.........................................................................   $ 121,492       $ 207,701
                                                                                                  =========       =========

<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>             <C>
Current liabilities:
     Current maturities of long-term debt......................................................   $   1,073       $  10,751
     Trade accounts payable....................................................................      11,295           8,512
     Accrued expenses and other liabilities....................................................       3,342           3,329
     Short-term debt to be extinguished with discontinued operations...........................       1,000          36,375
     Current liabilities of discontinued operations............................................       2,058          13,615
                                                                                                  ---------       ---------
          Total current liabilities............................................................      18,768          72,582
Other long-term liabilities....................................................................         367             280
Long-term debt, less current maturities........................................................      22,036           8,697
Deferred income taxes..........................................................................           -           1,421
Long-term liabilities of discontinued operations...............................................         725           1,910
                                                                                                  ---------       ---------
          Total liabilities....................................................................      41,896          84,890
                                                                                                  ---------       ---------
Shareholders' equity:
     Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares
        issued and outstanding.................................................................           -               -
     Common stock, $.01 par value, 50,000,000 shares authorized,
        16,285,338 and 18,701,331 shares issued and outstanding, respectively..................         188             187
     Additional paid-in capital................................................................     128,024         127,690
     Retained (deficit) earnings...............................................................      (9,071)         22,500
     Treasury common stock at cost (2,514,993 and 15,000 shares, respectively).................     (19,181)           (118)
     Accumulated other comprehensive loss......................................................     (20,364)        (27,448)
                                                                                                  ---------       ---------
          Total shareholders' equity...........................................................      79,596         122,811
                                                                                                  ---------       ---------
          Total liabilities and shareholders' equity...........................................   $ 121,492       $ 207,701
                                                                                                  =========       =========

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

                                     22


<PAGE>
<PAGE>

<TABLE>
                                               ZOLTEK COMPANIES, INC.
                                       CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Amounts in thousands, except per share data)

<CAPTION>
                                                                                         Year Ended September 30,
---------------------------------------------------------------------------------------------------------------------------
                                                                                   2001            2000              1999
                                                                                ----------       ---------         --------

<S>                                                                             <C>              <C>               <C>
Net sales ..................................................................    $   76,478       $  78,204         $ 68,525
Cost of sales...............................................................        74,333          64,520           53,375
                                                                                ----------       ---------         --------
     Gross profit...........................................................         2,145          13,684           15,150
Available unused capacity costs.............................................         6,803           4,658            3,953
Application and development costs...........................................         3,533           2,479            1,925
Selling, general and administrative expenses................................        12,337          11,943           12,600
                                                                                ----------       ---------         --------
     Operating loss from continuing operations..............................       (20,528)         (5,396)          (3,328)
Other income (expense):
     Interest expense........................................................       (2,136)         (1,314)            (540)
     Interest income.........................................................          974             564            1,163
     Other, net..............................................................          (89)           (163)            (119)
                                                                                ----------       ---------         --------
     Loss from continuing operations before income taxes.....................      (21,779)         (6,309)          (2,824)
Benefit for income taxes.....................................................         (505)         (2,305)            (182)
                                                                                ----------       ---------         --------
     Net loss from continuing operations.....................................      (21,274)         (4,004)          (2,642)
                                                                                ----------       ---------         --------
Discontinued operations:
     Operating loss, net of taxes............................................       (5,175)         (1,981)               -
     Loss on impairment of assets, net of taxes..............................       (5,122)         (2,700)               -
                                                                                ----------       ---------         --------
          Loss on discontinued operations, net of taxes .....................      (10,297)         (4,681)               -
                                                                                ----------       ---------         --------
Net loss.....................................................................   $  (31,571)      $  (8,685)        $ (2,642)
                                                                                ==========       =========         ========
Net loss per share:

     Basic loss per share:
          Continuing operations..............................................   $    (1.29)      $   (0.22)        $  (0.16)
          Discontinued operations............................................        (0.62)          (0.25)               -
                                                                                ----------       ---------         --------
          Total..............................................................   $    (1.91)      $   (0.47)        $  (0.16)
                                                                                ==========       =========         ========
     Diluted loss per share:
          Continuing operations..............................................   $    (1.29)      $   (0.22)        $  (0.16)
          Discontinued operations............................................        (0.62)          (0.25)               -
                                                                                ----------       ---------         --------
          Total..............................................................   $    (1.91)      $   (0.47)        $  (0.16)
                                                                                ==========       =========         ========

Weighted average common shares outstanding...................................       16,515          18,360           16,209
Weighted average common and common equivalent shares outstanding.............       16,515          18,360           16,209


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

                                     23


<PAGE>
<PAGE>

<TABLE>
                                              ZOLTEK COMPANIES, INC.

                             CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                              (Amounts in thousands)
<CAPTION>
                                        Total                  Add'l         Accumulated
                                    Shareholders    Common    Paid-In           Other       Treasury     Retained    Comprehensive
                                       Equity       Stock     Capital       Comprehensive    Stock       Earnings    Income (Loss)
                                                                            Income (Loss)                (Deficit)
----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>       <C>            <C>           <C>          <C>            <C>
Balance, September 30, 1998           $121,602      $ 162     $ 99,954       $ (12,341)    $       -    $ 33,827
Net loss                                (2,642)         -            -               -             -      (2,642)      $ (2,642)
Foreign currency translation
   adjustment                           (3,186)         -            -          (3,186)            -           -         (3,186)
Unrealized losses on securities            (70)         -            -             (70)            -           -            (70)
                                                                                                                       --------

       Comprehensive loss                                                                                              $ (5,898)
                                                                                                                       ========
Treasury shares purchased                 (118)         -            -               -          (118)          -
Sale of put options in company
  shares:
     Put options sold and expired
        without redemption                  67          -           67               -             -           -
      Put options sold and
           unexercised at
           September 30, 1999
           transferred to
           mandatorily redeemable
           common stock                 (1,019)        (2)      (1,017)              -             -           -
                                      --------      -----     --------       ---------     ---------    --------
Balance, September 30, 1999            114,634        160       99,004         (15,597)         (118)     31,185
Net loss                                (8,685)         -            -               -             -      (8,685)      $ (8,685)
Foreign currency translation
   adjustment                          (11,765)         -            -         (11,765)            -           -        (11,765)
Unrealized losses on securities            (86)         -            -             (86)            -           -            (86)
                                                                                                                       --------

       Comprehensive loss                                                                                              $(20,536)
                                                                                                                       ========
Sales of put options on common
   stock:
      Put options sold and
          expired without redemption     1,200          2        1,198               -             -           -
      Put options sold and
          repurchased before
          expiration                        13          -           13               -             -           -
Issuance of common stock for
   purchase SP Systems                  27,500         25       27,475               -             -           -
                                      --------      -----     --------       ---------     ---------    --------
Balance, September 30, 2000            122,811        187      127,690         (27,448)         (118)     22,500
Net loss                               (31,571)         -            -               -             -     (31,571)      $(31,571)
Foreign currency translation
   adjustment                            6,928          -            -           6,928             -           -          6,928
Unrealized losses on securities
   sold                                    156          -            -             156             -           -            156
                                                                                                                       --------

       Comprehensive loss                                                                                              $(24,487)
                                                                                                                       ========
Treasury shares purchased              (19,063)                                              (19,063)
Warrants issued with bank debt              48                      48

Exercise of stock options                  287          1          286
                                      --------      -----     --------       ---------     ---------    --------
Balance, September 30, 2001           $ 79,596      $ 188     $128,024       $ (20,364)    $ (19,181)   $ (9,071)
                                      ========      =====     ========       =========     =========    ========



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

                                     24


<PAGE>
<PAGE>

<TABLE>
                                                   ZOLTEK COMPANIES, INC.
                                            CONSOLIDATED STATEMENT OF CASH FLOWS
                                                   (Amounts in thousands)

<CAPTION>
                                                                                          Year Ended September 30,
---------------------------------------------------------------------------------------------------------------------------
                                                                                   2001            2000             1999
                                                                                ----------       ---------        ---------
<S>                                                                             <C>              <C>              <C>
Cash flows from operating activities:
     Net loss..............................................................     $  (31,571)      $  (8,685)       $  (2,642)
     Adjustments to reconcile net loss to net cash
      used by operating activities:
          Loss from discontinued operations................................         10,297           4,681                -
          Depreciation and amortization....................................          6,604           6,144            5,422
          Unrealized foreign exchange (gain) loss..........................           (250)            (72)              58
          Other, net.......................................................            136              (6)              49
          Changes in assets and liabilities:
              (Increase) decrease in accounts receivable...................            128             (80)           1,093
              (Increase) decrease in other receivables.....................            (87)            (24)           1,882
              (Increase) decrease in inventories...........................          6,055          (3,744)          (5,337)
              (Increase) decrease in prepaid expenses and other assets.....            443            (736)            (669)
              Increase (decrease) in trade accounts payable................          2,317           1,636           (4,181)
              Increase (decrease) in accrued expenses and other liabilities           (769)            301              (90)
              Change in income taxes payable/refundable and deferred taxes             402          (1,762)             260
              Increase (decrease) in other long-term liabilities...........             78            (509)            (186)
                                                                                ----------       ---------        ---------
                  Total adjustments........................................         25,354           5,829           (1,699)
                                                                                ----------       ---------        ---------
     Net cash used by continuing operations................................         (6,217)         (2,856)          (4,341)
     Net cash used by discontinued operations..............................         (2,973)         (1,984)               -
                                                                                ----------       ---------        ---------
Net cash used by operating activities......................................         (9,190)         (4,840)          (4,341)
                                                                                ----------       ---------        ---------
Cash flows from investing activities:
     Payments for purchase of Zoltek Intermediates companies, net of cash..              -          (4,599)               -
     Payments for purchase of property and equipment.......................         (5,339)         (6,135)         (15,744)
     Proceeds from sale of property and equipment..........................            772              33            6,163
     (Increase) decrease in notes receivable...............................          5,066              74           (2,573)
     Sale of marketable securities.........................................          1,483           5,705           11,774
                                                                                ----------       ---------        ---------
   Net cash provided (used) by continuing operations.......................          1,982          (4,922)            (380)
   Net cash provided (used) by discontinued operations.....................         37,823         (35,774)               -
                                                                                ----------       ---------        ---------
Net cash provided (used) by investing activities...........................         39,805         (40,696)            (380)
                                                                                ----------       ---------        ---------
Cash flows from financing activities:
     Purchase of treasury stock............................................              -               -             (118)
     Proceeds from exercise of common stock options........................            287              13              248
     Proceeds from issuance of notes payable...............................         13,162          15,748            1,525
     Repayment of notes payable............................................         (9,853)         (5,817)            (662)
                                                                                ----------       ---------        ---------
   Net cash provided by continuing operations..............................          3,596           9,944              993
   Net cash provided (used) by discontinued operations.....................        (35,375)         33,711                -
                                                                                ----------       ---------        ---------
Net cash provided (used) by financing activities...........................        (31,779)         43,655              993
                                                                                ----------       ---------        ---------
Effect of exchange rate changes on cash....................................             (6)           (532)             (26)
                                                                                ----------       ---------        ---------
Net decrease in cash.......................................................         (1,170)         (2,413)          (3,754)
Cash and cash equivalents at beginning of period...........................          1,837           4,250            8,004
                                                                                ----------       ---------        ---------
Cash and cash equivalents at end of period.................................     $      667       $   1,837        $   4,250
                                                                                ==========       =========        =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Net cash (refunded) paid during the year for:
     Interest..............................................................     $    2,708       $   3,573        $     527
     Income taxes..........................................................           (979)            747             (435)

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

                                     25


<PAGE>
<PAGE>


                           ZOLTEK COMPANIES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
--------------------------------------------------------------------------------

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 Composite Machines"). Zoltek Corporation
("Zoltek") develops, manufactures and markets carbon fibers used in aircraft
brakes and other composite materials. Zoltek Materials Group, Inc.
manufactures "carbon fiber prepreg" (carbon fiber impregnated with resin)
composite materials used in the production of composite products requiring
unidirectional strength and stiffness, such as golf club shafts and other
sporting goods. Entec Composite Machines manufactures and sells filament
winding and pultrusion equipment used in the production of large volume
composite parts. Zoltek Rt. manufactures and markets acrylic and nylon
fibers and yarns for the textile industry, and carbon fiber. Other Zoltek
Rt. products include nylon granules, plastic grids and nets, and
carboxymethyl cellulose. In fiscal 2001 and 2000, the Company owned a 45%
interest in Hardcore Composites Operations, LLC ("Hardcore"), which designs
and manufactures composite structures for the civil infrastructure market
including bridges, bridge decks, marine pilings, fender panels, piers and
stay-in-place form work. From November 1999 to November 2000, the Company
owned Structural Polymer (Holdings) Limited ("SP Systems") which develops,
markets and manufactures prepreg (glass and carbon fiber pre-impregnated
with resin) materials, special bonding and laminating resins, reinforcement
fabrics and consumable materials for composite manufacturing and engineering
of composite structures. These financial statements have been prepared in
accordance with U.S. generally accepted accounting principles. All
significant intercompany transactions and balances have been eliminated upon
consolidation.

FOREIGN CURRENCY TRANSLATION

         The consolidated balance sheet of the Company's current and former
international subsidiaries, SP Systems and Zoltek Rt., were translated from
British Pounds and Hungarian Forints, respectively, 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 for the periods presented. The related translation
adjustments are reported as other comprehensive income (loss) within
shareholders' equity. Gains and losses from foreign currency transactions of
Zoltek Rt. and SP Systems are included in the results of operations.

USE OF ESTIMATES

         The preparation of financial statements in conformity with
generally accepted accounting principles requires that management make
estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimates and assumptions.

REVENUE RECOGNITION

         The Company recognizes sales on the date title to the sold product
transfers to the customer, which generally approximates the shipping date.
During 2001, 2000 and 1999, approximately $10,264,000, $9,626,000 and
$9,615,000, respectively, of sales was earned from one customer.

                                     26


<PAGE>
<PAGE>

1.       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
--------------------------------------------------------------------------------

CONCENTRATION OF CREDIT RISK

         Zoltek's carbon fiber products are primarily sold to customers in
the aerospace and composite industries. Zoltek Rt.'s products are mainly
sold to customers in the textile industry. Zoltek Materials Group products
are mainly sold to the sporting goods industry. Entec Composite Machine's
products are mainly sold in the composite industry. While the markets for
the Company's products are geographically unlimited, most of Zoltek's and
Zoltek Materials Group's business is with customers located in North America
and most of Zoltek Rt.'s sales are to customers in Europe and Asia, while
Entec Composite Machine's sales are worldwide. The Company performs ongoing
credit evaluations and generally requires collateral for significant export
sales to new customers. The Company maintains reserves for potential credit
losses and such losses have been within management's expectations. As of
September 30, 2001, the Company had no significant concentrations of credit
risk.

CASH AND CASH EQUIVALENTS

         All highly liquid investments purchased with a maturity of three
months or less are considered to be cash equivalents. Such investments
amounted to $443,000 and $1,837,000 at September 30, 2001 and 2000,
respectively.

MARKETABLE SECURITIES

         Marketable securities consisted of preferred stock equities
(classified as available-for-sale) that were valued at fair market value.
Unrealized gains and losses were reflected as other comprehensive loss
within shareholders' equity until the marketable securities were sold in
fiscal 2001.

INVENTORIES

         Inventories are valued at the lower of cost, determined on the
first-in, first-out method, or market. Cost includes material, labor and
overhead.

PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost. Cost includes
expenditures necessary to make the property and equipment ready for its
intended use. Expenditures, which improve the asset or extend the useful
life, are capitalized, including interest on funds borrowed to finance the
acquisition or construction of major capital additions. No interest was
capitalized for the years ended September 30, 2001, 2000 and 1999.
Maintenance and repairs are expensed as incurred. When property is retired
or otherwise disposed of, the related cost and accumulated depreciation are
removed from the accounts and any profit or loss on disposition is credited
or charged to income.

         The Company provides for depreciation by charging amounts
sufficient to amortize the cost of properties placed in service over their
estimated useful lives using primarily straight-line methods. The range of
estimated useful lives used in computing depreciation is as follows:

              Buildings and improvements....................10 to 20 years
              Automobiles...................................3 to 5 years
              Machinery and equipment.......................5 to 20 years
              Furniture and fixtures........................7 to 10 years

         The Company primarily uses accelerated depreciation methods for
income tax purposes.

                                     27


<PAGE>
<PAGE>

1.       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
--------------------------------------------------------------------------------

         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.

GOODWILL AND OTHER INTANGIBLES

         Goodwill is the excess of the cost of net assets acquired in
business purchases over the fair value. Goodwill and other intangibles are
amortized on a straight-line basis over a 15-year period. The Company
evaluates goodwill for possible impairment based on estimated future
undiscounted cash flows of the business on an annual basis or whenever
events occur which give rise to questions regarding the recoverability of
the recorded goodwill balance. The Company will adopt Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS
No. 142"), in fiscal 2002. This new standard requires the Company to
discontinue amortization of goodwill and other indefinite lived intangible
assets and annually evaluate whether any of these assets are impaired using
a fair market value approach to the entity or operations where these assets
reside. Based upon a preliminary evaluation, the Company does not believe
there will be an impairment of goodwill upon the adoption of SFAS 142.

FINANCIAL INSTRUMENTS

         The Company does not hold any financial instruments for trading
purposes. The carrying value of cash, marketable securities and accounts
payable approximated their fair value at September 30, 2001 and 2000.
Substantially all of long-term debt bears current market rates of interest.

APPLICATION AND DEVELOPMENT EXPENSES

         Expenditures for research, development and engineering of products
and manufacturing processes are expensed as incurred. Such costs were
approximately $3,533,000, $2,479,000 and $1,925,000 in 2001, 2000 and 1999,
respectively.

INCOME TAXES

         The Company accounts for certain income and expense items
differently for financial reporting and income tax purposes. Deferred tax
assets and liabilities are determined based on the difference between the
financial statement and tax basis of assets and liabilities applying enacted
statutory tax rates in effect for the year in which the differences are
expected to reverse.

STOCK-BASED COMPENSATION

         SFAS No. 123 "Accounting for Stock-Based Compensation," encourages,
but does not require companies to record compensation cost for stock-based
employee compensation plans at fair value. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees." APB No. 25 requires no recognition of
compensation expense for the stock-based compensation arrangements provided
by the Company where the exercise price is equal to the market price at the
date of the grant.

                                     28


<PAGE>
<PAGE>

1.       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
--------------------------------------------------------------------------------

NET INCOME (LOSS) PER SHARE

         Basic net income (loss) per share includes no dilution and is
calculated by dividing net income (loss) by the weighted average number of
common shares outstanding for each period, while diluted net income (loss)
per share reflects the potential dilutive effects of stock options. Because
2001 and 2000 results reflected a net loss, both basic and diluted earnings
per share were calculated based on the same weighted average number of
shares for the year.

RECENT ACCOUNTING PRONOUNCEMENTS

         In August 2001, the Financial Accounting Standards Board issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
("SFAS No. 144"). This statement addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. SFAS No. 144
was adopted early by the Company, effective October 1, 2000. The Company's
planned disposition of Hardcore as discussed in Note 2 has been accounted
for in accordance with SFAS No. 144.

FINANCIAL PRESENTATION CHANGES

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


2.       DISCONTINUED OPERATIONS
--------------------------------------------------------------------------------

         In the fourth quarter of fiscal 2001, the Company formally adopted
a plan to dispose of Hardcore. The Company acquired a 45% interest in
Hardcore in the third quarter of fiscal 2000 for $1.4 million in cash and
guaranteed a note payable of $1.0 million. The Company entered into an
assignment and assumption agreement at the time of the purchase of Hardcore
that require the Company to guarantee Hardcore's post-closing obligations to
the seller. The Company's guarantee relates to obligations of approximately
$4.8 million. The obligations were payable as of April 28, 2001, however,
these transactions have not yet been completed, pending the outcome of
negotiations with the seller and pending final agreement with the proposed
disposition of the Company's interest in Hardcore. The Company also provided
additional funding for working capital. The financial statements of Hardcore
were consolidated with the Company due to the ability to directly control
the operations. Due to losses incurred by Hardcore, majority interest in
consolidated partnerships was $0 at September 30, 2001 compared to $829,000
at September 30, 2000. The original purchase price was allocated to the fair
value of assets acquired, with the excess of the amount paid for the
business over the fair value of the assets recognized as goodwill. The
Company expects that the disposition of Hardcore will be completed by the
end of fiscal 2002.

         The Company recorded an impairment loss on discontinued operations
of $5.1 million in the fourth quarter of fiscal 2001 to reduce the carrying
value of Hardcore's net assets to their estimated fair value less estimated
selling costs.

         In the fourth quarter of fiscal 2000, the Company formally adopted
a plan to sell SP Systems. The Company acquired SP Systems in November 1999
for $30.0 million in cash and 2.5 million shares of the Company's common
stock valued at a price of $11.00 per share, or $27.5 million, for a total
purchase price of approximately $57.5 million. The acquisition resulted in
the recognition of $49.3 million of goodwill. In connection with the
acquisition, the Company borrowed $30.0 million to finance the purchase. In
November 2000, the Company sold SP Systems to a group consisting of the
original shareholders and a merchant banking firm. In connection with the
sale, the Company received $30.0 million in cash, an interest-bearing note
receivable of $5.0 million, the return of 2.5 million shares of the
Company's common stock valued at $7.625 per share ($19.1 million aggregate
value) and was repaid $7.9 million consisting of intercompany loans, accrued
interest and closing expenses. Cash proceeds from the sale and repayment of
the intercompany balances were used to retire $35.4 million of bank debt
($30.0 million initial financing and

                                     29



<PAGE>
<PAGE>

2.       DISCONTINUED OPERATIONS (CONTINUED)
--------------------------------------------------------------------------------

$5.4 million of working capital) and pay interest of $0.8 million. The
Company also entered into a 10-year carbon fiber supply agreement and
certain technology license agreements. The $5.0 million note was paid in
September 2001.

         The Company recorded an impairment loss on discontinued operations of
$2.7 million in the fourth quarter of fiscal 2000 to reduce the carrying
value of SP System's net assets to their estimated fair value less estimated
selling costs.

         The Company has reported the results of operations of Hardcore and
SP Systems as discontinued operations for fiscal 2001 and 2000 in the
consolidated statement of operations. Additionally, assets and liabilities
associated with Hardcore and SP Systems have been reclassified as assets and
liabilities of discontinued operations on the consolidated balance sheet.

         Certain information with respect to the discontinued operations of
Hardcore and SP Systems for the years ended September 30, 2001 and 2000 is
summarized as follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                                2001                     2000
                                                             ----------               ---------
       <S>                                                   <C>                      <C>
       Net sales............................................ $    3,910               $  56,768
       Cost of sales........................................      5,030                  39,858
                                                             ----------               ---------
       Gross profit.........................................     (1,120)                 16,910
       Selling, general and administrative expenses.........      2,194                  12,552
       Goodwill amortization................................        103                   2,748
                                                             ----------               ---------
       Income (loss) from operations........................     (3,417)                  1,610
       Other expenses.......................................     (2,470)                 (3,014)
       Income tax expense...................................       (117)                   (551)
       Minority interest....................................        829                     (26)
                                                             ----------               ---------
       Net loss from operations.............................     (5,175)                 (1,981)
       Loss on impairment of assets.........................     (5,122)                 (2,700)
                                                             ----------               ---------
       Loss on discontinued operations, net of taxes........ $  (10,297)              $  (4,681)
                                                             ==========               =========
</TABLE>

         Certain information with respect to the assets and liabilities of
Hardcore and SP Systems at September 30, 2001 and 2000 is summarized as
follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                                2001                    2000
                                                              ---------              ----------
       <S>                                                    <C>                    <C>
       Cash and cash equivalents............................  $      10              $      921
       Accounts receivable, net.............................        420                  11,895
       Inventories..........................................        811                   8,696
       Property, plant, and equipment, net..................          -                  12,952
       Other assets.........................................         66                     982
       Goodwill, net........................................          -                  41,425
                                                              ---------              ----------
          Assets of discontinued operations.................  $   1,307              $   76,871
                                                              =========              ==========
       Accounts payable.....................................       (953)                 (8,917)
       Accrued expenses and other liabilities...............     (1,105)                 (3,158)
       Income taxes payable.................................          -                  (1,540)
       Current maturities of long-term debt.................     (1,000)                (36,375)
       Deferred income taxes payable........................       (125)                   (443)
       Other liabilities....................................       (600)                 (1,467)
                                                              ---------              ----------
            Liabilities of discontinued operations .........  $  (3,783)             $  (51,900)
                                                              =========              ==========
</TABLE>

                                     30


<PAGE>
<PAGE>



3.       INVENTORIES
--------------------------------------------------------------------------------

Inventories consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
                                                                                          September 30,
                                                                                    2001                2000
                                                                                -------------       -------------
<S>                                                                             <C>                 <C>
         Raw materials.....................................................     $       5,811       $       7,700
         Work-in-process...................................................             2,014               1,516
         Finished goods....................................................            16,666              20,885
         Supplies, spares and other........................................               759                 950
                                                                                -------------       -------------
                                                                                $      25,250       $      31,051
                                                                                =============       =============
</TABLE>

         The Company recorded an $8.6 million inventory valuation reserve
during the year ended September 30, 2001 to reduce the carrying value of the
inventory to a net realizable value. The reserve was established due to the
intensified overcapacity occurring during the year, which caused distressed
pricing across most existing markets for carbon fibers. At September 30,
2001 and 2000, the inventory valuation reserve was $10,905,000 and
$3,340,000, respectively.

4.       PROPERTY AND EQUIPMENT
--------------------------------------------------------------------------------

Property and equipment consists of the following (amounts in thousands):
<TABLE>
<CAPTION>
                                                                                          September 30,
                                                                                    2001                2000
                                                                                -------------       -------------
<S>                                                                             <C>                 <C>
Land.......................................................................     $       1,544       $       1,515
Buildings and improvements.................................................            27,536              21,459
Machinery and equipment....................................................            70,252              45,395
Furniture and fixtures.....................................................             4,735               4,144
Construction in progress...................................................             2,185              28,748
                                                                                -------------       -------------
                                                                                      106,252             101,262
Less:  accumulated depreciation............................................           (27,095)            (21,773)
                                                                                -------------       -------------
                                                                                $      79,157       $      79,489
                                                                                =============       =============
</TABLE>

         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 and consisted of
$ 5.5 million of buildings and $22.2 million of machinery and equipment. The
Company began recording depreciation on these assets from the date they were
placed in service. In the third quarter of fiscal 2001, the Company elected
to temporarily idle the continuous carbonization lines at the Abilene
facility. These carbonization lines have a carrying value of $19.8 million
at September 30, 2001. Management intends to return the lines to full
production as market demand for carbon fiber products increases. During the
years ended September 30, 2001, 2000 and 1999, the Company was not operating
these continuous carbonization lines at full capacity, resulting in
available unused capacity charges of $6,803,000, $4,658,000 and $3,953,000,
respectively. These costs include depreciation and other overhead expenses
associated with unused capacity.

                                     31


<PAGE>
<PAGE>

5.       INCOME TAXES
--------------------------------------------------------------------------------

         The components of the benefit for income taxes for the years ended
September 30, are as follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                               2001                  2000               1999
                                                          --------------        -------------       ------------
<S>                                                       <C>                   <C>                 <C>
From continuing operations:
     Current:
         Federal.....................................     $         622         $      (1,497)      $     (1,792)
         State.......................................                 -                   (59)               (93)
         Non-U.S. local..............................               394                   448                635
                                                          -------------         -------------       ------------
                                                                  1,016                (1,108)            (1,250)
     Deferred:
         Federal.....................................            (1,551)               (1,409)             1,222
         State.......................................               352                   170                 93
         Non-U.S.....................................              (322)                   42               (247)
                                                          -------------         -------------       ------------
                                                                 (1,521)               (1,197)             1,068
                                                          -------------         -------------       ------------
              Total continuing operations............     $        (505)        $      (2,305)      $       (182)
                                                          =============         =============       ============

From discontinued operations:
     Current:
         Non-U.S.....................................     $           -         $       1,292       $          -
     Deferred:
         Federal.....................................               108                  (741)                 -
         State.......................................                 9                     -                  -
                                                          -------------         -------------       ------------
            Total discontinued operations............               117                   551                  -
                                                          -------------         -------------       ------------
     Total ..........................................     $        (388)        $      (1,754)      $       (182)
                                                          =============         =============       ============
</TABLE>

         Deferred income taxes reflect the tax impact of carryforwards and
temporary differences between the amount of assets and liabilities for
financial reporting purposes and such amounts as measured by tax laws and
regulations. Cumulative carryforwards and temporary differences giving rise
to the net deferred income tax liabilities at September 30 are as follows
(amounts in thousands):

<TABLE>
<CAPTION>
                                                                                     2001               2000
                                                                                  -----------        -----------
<S>                                                                               <C>                <C>
     Tax effect of regular net operating losses..............................     $   (11,335)       $    (4,733)
     Valuation allowance on net operating losses.............................           7,229              2,013
     Tax effect of capital loss..............................................            (582)                 -
     Valuation allowance on capital loss.....................................             582                  -
     Depreciation............................................................           4,125              3,706
     Employee related costs..................................................             (97)              (155)
     Inventory reserve.......................................................             (92)               (10)
     Bad debt accrual........................................................             (76)               (33)
     Deferred state income taxes.............................................             (16)               174
     Other...................................................................             (84)               (24)
     Non-U.S. operations deferred tax, net...................................             232                483
                                                                                  -----------        -----------
              Total net deferred tax liabilities (asset).....................     $      (114)       $     1,421
                                                                                  ===========        ===========
</TABLE>

                                     32


<PAGE>
<PAGE>

5.       INCOME TAXES (CONTINUED)
--------------------------------------------------------------------------------

         The benefit for income taxes at September 30 differs from the
amount using the statutory federal income tax rate (34%) as follows (amounts
in thousands):

<TABLE>
<CAPTION>
                                                                          2001             2000            1999
                                                                      ------------    ------------     ------------
<S>                                                                   <C>             <C>              <C>
At statutory rate:
         Income taxes on loss from continuing operations..........    $     (7,405)   $     (2,145)    $       (960)
Increases (decreases):
         Lower effective tax rate on non-U.S. operations..........               4            (361)             254
         Change in valuation allowance on net operating loss......           5,216               -                -
         Change in valuation allowance on capital loss............             582               -                -
         Local taxes, non-U.S.....................................             394             360              569
         State taxes, net of federal benefit......................             352             (38)             (32)
         Refund write-off.........................................             622               -                -
         Other....................................................            (270)           (121)             (13)
                                                                      ------------    ------------     ------------
                                                                      $       (505)   $     (2,305)    $       (182)
                                                                      ============    ============     ============
</TABLE>

         For the years ended September 30, 2001, 2000 and 1999, the
consolidated income (loss) from continuing operations before income taxes by
domestic and foreign sources was $(21,764,000) and $(15,000), $(7,751,000)
and $1,442,000, and $(1,810,000) and $(1,014,000), respectively.
Undistributed earnings of Zoltek Rt. ($10,448,000 and $10,463,000 at
September 30, 2001 and 2000, respectively) are considered to be permanently
reinvested and, accordingly, no provision for income taxes has been
recorded.

6.       FINANCING
--------------------------------------------------------------------------------

SHORT-TERM DEBT AND CREDIT AGREEMENTS

         In November 1999, the Company entered into a six-year credit
facility with a commercial bank in an original aggregate amount of $71.0
million. The Company paid $0.71 million as a nonrefundable fee to the bank
for the arrangement of the credit facility. The Company amended and restated
the credit agreement on May 31, 2000, to among other things, reduce the
amount of borrowings available (from $71.0 million to $53.0 million) and
modify certain financial covenants. The facility, as amended, contained
financial covenants related to borrowings, future acquisitions, working
capital, net worth, cash flow and fixed charge coverage. The Company reduced
the borrowings under the credit facility by $35.4 million on November 6,
2000 from the proceeds of the sale of SP Systems.

         On May 11, 2001, the Company entered into a new two-year credit
facility with Southwest Bank of St. Louis (Southwest Bank) in the amount of
$14.0 million. The new 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 old credit facility.
Borrowings under the new 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 was estimated to be $48,000. In December 2001, the Company
received a commitment letter from Southwest Bank regarding the waiver of
certain financial covenants as of December 31, 2001 and modification of
certain financial covenants for

                                     33


<PAGE>
<PAGE>

6.       FINANCING (CONTINUED)
--------------------------------------------------------------------------------

fiscal 2002. The Company expects that a definitive amendment to the credit
agreement will be concluded in the second quarter of fiscal 2002.

         On May 18, 2001, the Company's Hungarian subsidiary also entered
into an expanded credit facility (to $12.0 million from $6.0 million) with
Raifeissen 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.

         In April 2000, the Company obtained secured financing in the amount
of $1,720,000 with Southwest Bank for the real estate and manufacturing
facility in Salt Lake City, Utah. The note bears interest at 9.0% and
matures in June 2003.

         In 1998, the City of Abilene, Texas provided secured long-term
financing as an incentive to locate facilities in Abilene. The original
financing of $3,099,287 is non-interest bearing and will be repaid from real
estate and personal property tax abatements.

LONG-TERM DEBT

         Long-term debt consists of the following (amounts in thousands):
<TABLE>
<CAPTION>
                                                                                                  September 30,
                                                                                              ---------------------
                                                                                                2001         2000
                                                                                              -------      --------
<S>                                                                                           <C>          <C>
     Note payable with interest at 9%, payable in monthly installments of
         principal and interest of $17,579 to maturity in June 2003.......................... $ 1,778      $  1,700

     Note payable with interest at 9.95%, payable in monthly installments of
         principal and interest of $19,288 to maturity in September 2009.....................   1,272         1,373

     Note payable with interest at 9.5%, payable in monthly installments of
         principal and interest of $27,672 to maturity in December 2009 .....................   1,887         2,030

     Non-interest bearing note payable (discounted at 8%) to the City of Abilene, Texas
          to be repaid from real estate and personal property tax abatements ................   1,762         2,315

     Revolving credit agreement, maturing in 2003, bearing interest at prime
            (prime rate at September 30, 2001 was 6.0%) .....................................   4,678             -

     Term loan, $0.5 million payable in 2002, balance payable in 2003, bearing interest
          at prime (prime rate at September 30, 2001 was 6.0%)...............................   4,000             -

     Revolving credit agreement, maturing in 2005 (average interest rate of 9.31%)...........       -         9,000

     Factoring facility with a Hungarian bank (average interest rate of 5.8%)................   4,443         3,030

     Working capital facility with a Hungarian bank (average interest rate
          of 5.0%)...........................................................................   1,565             -

     Capital investment facility with a Hungarian bank (average interest
         rate of 5.0%).......................................................................   1,724             -
                                                                                              -------      --------
                                                                                               23,109        19,448
            Less:  amounts payable within one year...........................................  (1,073)      (10,751)
                                                                                              -------      --------

     Long-term obligations from continuing operations........................................ $22,036      $  8,697
                                                                                              =======      ========


                                     34


<PAGE>
<PAGE>

<CAPTION>
6.       FINANCING (CONTINUED)
--------------------------------------------------------------------------------

<S>                                                                                           <C>          <C>
     Obligations from discontinued operations:
     Non-interest bearing purchase money note to be repaid on or
             before April 28, 2001 (see note 2)..............................................   1,000         1,000
     Borrowings against revolving credit agreement and term loan
            (average interest rate of 9.2%) .................................................       -        35,375
                                                                                              -------      --------

       Total Debt............................................................................ $24,109      $ 55,823
                                                                                              =======      ========
</TABLE>

         Following is a schedule of required principal payments of long-term
debt, net of discontinued operations (amounts in thousands):

<TABLE>
<CAPTION>
                               Year ending
                              September 30,                                     Total
                              -------------                                     -----

                                 <S>                                           <C>
                                 2002......................................    $  1,073
                                 2003......................................      16,305
                                 2004......................................         451
                                 2005......................................         484
                                 2006......................................       2,270
                                 Thereafter................................       2,526
                                                                               --------
                                                                               $ 23,109
                                                                               ========
</TABLE>


7.       COMMITMENTS AND CONTINGENCIES
--------------------------------------------------------------------------------

LEASES

         Land at the carbon fibers manufacturing facility in Missouri is
leased under an operating lease that expires in December 2065, with a renewal
option for 24 years expiring in December 2089. The lease requires annual
rental payments of $57,991 through October 2010. Rental expense related to
this lease was $57,991 for the years ended September 30, 2001, 2000 and
1999.

         The Company entered into a sale/leaseback arrangement with
Southwest Bank for a nitrogen plant located at the Abilene facility, in
January 1999. The Company received $5,000,000 in cash for the nitrogen plant
and did not recognize a gain or loss. The term of the lease is seven years
and may be extended on a month-to-month basis thereafter. At expiration of
the lease, the Company may repurchase the plant for market value. The lease
is accounted for as an operating lease and requires minimum annual rental
payments of $962,000 per year. Rental expense related to this lease was
$962,000 and $784,000 for the years ended September 30, 2001 and 2000,
respectively.

LEGAL

         The Company is a party to various claims and legal proceedings
arising out of the normal course of its business. In the opinion of
management, the ultimate outcome of these claims and lawsuits will not have
a material adverse effect upon the financial condition or results of
operations of the Company and its subsidiaries taken as a whole.

                                     35


<PAGE>
<PAGE>

7.       COMMITMENTS AND CONTINGENCIES (CONTINUED)
--------------------------------------------------------------------------------

SOURCES OF SUPPLY

         The Company currently obtains substantially all of its textile-type
acrylic fibers to supply its carbon fiber operations from a single supplier,
which is currently the sole merchant supplier of such raw materials in the
world. This supplier is also the only supplier that currently produces
precursor approved for use in aircraft brake applications.

         The Company believes this supplier is a reliable source of supply
at the Company's current operating levels. In the near term, although not
expected, any interruption of precursor supply from this supplier would have
a material adverse effect on the Company's carbon fiber business.

8.       PROFIT SHARING PLAN
--------------------------------------------------------------------------------

         The Company maintains a 401(k) Profit Sharing Plan for the benefit
of employees who have completed six months of service and attained 21 years
of age. Contributions of $220,000 were made by the Company for the year
ended September 30, 1999 with no contributions made in subsequent years.

9.       STOCK OPTIONS
--------------------------------------------------------------------------------

         In 1992, the Company adopted a Long-term Incentive Plan that
authorizes the Compensation Committee of the Board of Directors (the
"Committee") to grant key employees and officers of the Company incentive or
nonqualified stock options, stock appreciation rights, performance shares,
restricted shares and performance units. The Committee determines the prices
and terms at which awards may be granted along with the duration of the
restriction periods and performance targets. Currently, 1,500,000 shares of
common stock may be issued pursuant to awards under the plan. Outstanding
stock options expire 10 years from the date of grant or upon termination of
employment. Options granted in 1998 and prior vest 100% five years from date
of grant. Options granted in 1999, 2000 and 2001 primarily vest 100% three
years from date of grant. All options were issued at an option price equal
to the market price on the date of grant.

         In 1992, the Company adopted a Directors Stock Option Plan under
which options to purchase 7,500 shares of common stock at the then fair
market value are currently issued to each non-employee director annually. In
addition, newly elected non-employee directors receive options to purchase
7,500 shares of common stock, at the then fair market value. The options
expire from 2002 through 2010, respectively.

         The pro forma information required by SFAS 123 regarding net income
and earnings per share has been presented below as if the Company had
accounted for its stock option plans under the fair value method. The fair
value of each option grant is estimated on the date of the grant using the
Black-Scholes option pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
         Assumptions:                                                       2001            2000
         -----------                                                      -------         -------

<S>                                                                       <C>             <C>
         Expected life of options.................................        6 years         6 years
         Risk-free interest rate..................................          7.15%           7.50%
         Volatility of stock......................................            79%            114%
         Expected dividend yield..................................             --              --
</TABLE>

                                     36


<PAGE>
<PAGE>

9.       STOCK OPTIONS (CONTINUED)
--------------------------------------------------------------------------------

         The fair value of the options granted during 2001 and 2000 was
$379,000 and $824,000, respectively. Had the fair value of the options been
amortized to expense over the options' vesting periods, the pro forma impact
on earnings of the stock-based compensation for the options would have been
as follows (amounts in thousands, except for earnings per share information):

<TABLE>
<CAPTION>
                                                                          2001          2000
                                                                       ---------      ---------

<S>                                                                    <C>            <C>
         Net loss:
             As reported..........................................     $ (31,571)     $  (8,685)
             Pro forma............................................       (32,027)        (9,142)

         Diluted loss per share:
             As reported..........................................     $   (1.91)     $   (0.47)
             Pro forma............................................         (1.94)         (0.50)
</TABLE>

         Presented below is a summary of stock option plans activity for the
years shown:

<TABLE>
<CAPTION>
                                                   Wtd. Avg.       Options           Wtd. Avg.
                                                    Options     Exercise Price      Exercisable   Exercise Price
                                                   ---------    --------------      -----------   --------------

<S>                                                <C>            <C>                 <C>            <C>
         Balance, September 30, 1998                 722,500      $   14.13           154,500        $  21.31
             Granted.............................    215,500           8.91
             Exercised...........................         --             --
             Cancelled...........................   (145,000)         10.78
                                                   ---------
         Balance, September 30, 1999                 793,000      $   13.32           199,500        $  18.41
             Granted.............................    237,500           8.58
             Exercised...........................         --             --
             Cancelled...........................    (58,000)          7.74
                                                   ---------
         Balance, September 30, 2000                 972,500      $   12.50           672,500        $  13.71
             Granted.............................    287,500           4.58
             Exercised...........................    (84,000)          3.42
             Cancelled...........................   (120,000)         16.27
                                                   ---------
         Balance, September 30, 2001               1,056,000      $   10.75           531,000        $  10.81
                                                   =========
</TABLE>

         The following table summarizes information for options currently
outstanding and exercisable at September 30, 2001:

<TABLE>
<CAPTION>
                                                    Options Outstanding                    Options Exercisable
                                             ----------------------------------       ----------------------------
            Range of                           Wtd. Avg.           Wtd. Avg.                           Wtd. Avg.
             Prices            Number        Remaining Life      Exercise Price        Number       Exercise Price
        --------------       ---------       --------------      --------------       -------       --------------
        <S>                  <C>                <C>                <C>                <C>             <C>
        $    1.33-2.33          12,000          2 years            $    1.83           12,000         $   1.83
             3.25-5.25         323,500          8 years                 4.38          118,500             4.23
             6.25-6.88         205,500          4 years                 6.42          205,500             6.42
             7.69-9.25         272,500          9 years                 8.51           45,000             8.44
           10.00-39.00         242,500          7 years                25.88          150,000            23.44
                             ---------                                                -------
        $   1.33-39.00       1,056,000          7 years            $   10.75          531,000         $  10.81
                             =========                                                =======
</TABLE>

                                     37


<PAGE>
<PAGE>

10.  BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
--------------------------------------------------------------------------------

         The SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" requires disclosure of segment information on a basis
consistent with the basis used internally for evaluating segment performance
and deciding how to allocate resources to segments. The Company's strategic
business units are based on product lines and have been grouped into three
reportable segments: Carbon Fibers, Composite Intermediates and Specialty
Products. The Carbon Fibers segment is the primary strategic segment and is
focused on the manufacturing of low-cost carbon fibers, facilitating
development of product and process applications to increase the demand for
carbon fibers and aggressively marketing carbon fibers. The Carbon Fibers
segment is located geographically in the United States and Hungary. The
Composite Intermediates segment manufactures carbon fiber composite products
and filament winding equipment used in the composites industry and is
located in the United States. The Specialty Products segment manufactures
and markets acrylic and nylon products and fibers primarily to the textile
industry and is located in Hungary. With the exception of the Carbon Fibers
segment, none of the segment's sales is substantially dependent on one
customer nor a small group of customers. Carbon Fibers has one customer
which represented 13%, 12%, and 14% of the total sales of the Company in
fiscal 2001, 2000 and 1999, respectively.

         Management evaluates the performance of its operating segments on
the basis of operating income (loss) contribution to the Company. The
following table presents financial information on the Company's continuing
operating segments as of and for the fiscal years ended September 30, 2001,
2000 and 1999 (amounts in thousands):

<TABLE>
<CAPTION>
                                                         Fiscal Year Ended September 30, 2001
                                                         ------------------------------------
                                                                                       Corporate
                                                       Composite      Specialty      Headquarters
                                      Carbon Fibers  Intermediates    Products     and Eliminations     Total
                                      -------------  -------------    ---------    ----------------    --------

<S>                                     <C>            <C>             <C>              <C>            <C>
Net sales - external................    $ 25,960       $ 11,309        $ 39,209         $     -        $ 76,478
Net sales - intersegment............       1,216              -               -          (1,216)              -
                                        --------       --------        --------         -------        --------
   Total net sales..................      27,176         11,309          39,209          (1,216)         76,478
Gross profit (loss).................      (2,395)          (840)          5,210             170           2,145
Available unused capacity expenses..       6,803              -               -               -           6,803
Operating income (loss).............     (13,420)        (3,603)            418          (3,923)        (20,528)
Depreciation and amortization
  expense...........................       4,690            831           1,001              82           6,604
Capital expenditures................       3,328            323           1,688               -           5,339
Total assets, net of discontinued
  operations........................      88,442         10,474          22,129            (860)        120,185

<CAPTION>
                                                         Fiscal Year Ended September 30, 2000
                                                         ------------------------------------
                                                                                       Corporate
                                                       Composite      Specialty      Headquarters
                                      Carbon Fibers  Intermediates    Products     and Eliminations     Total
                                      -------------  -------------    ---------    ----------------    --------

<S>                                     <C>            <C>             <C>              <C>            <C>
Net sales - external................    $ 27,523       $ 10,988        $ 39,784         $     -        $ 78,204
Net sales - intersegment............         288              -               -            (288)              -
                                        --------       --------        --------         -------        --------
   Total net sales..................      27,811         10,988          39,784            (288)         78,204
Gross profit (loss).................       6,728            174           6,784              (2)         13,684
Available unused capacity expenses..       4,658              -               -               -           4,658
Operating income (loss).............      (1,928)        (1,672)            987          (2,783)         (5,396)
Depreciation and amortization
  expense...........................       4,259            717           1,072              96           6,144
Capital expenditures................       2,840            547           2,748               -           6,135
Total assets, net of discontinued
  operations........................      89,615         13,842          23,873           3,500         130,830

                                     38


<PAGE>
<PAGE>

<CAPTION>
10.  BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)
--------------------------------------------------------------------------------

                                                         Fiscal Year Ended September 30, 1999
                                                         ------------------------------------
                                                                                       Corporate
                                                       Composite      Specialty      Headquarters
                                      Carbon Fibers  Intermediates    Products     and Eliminations     Total
                                      -------------  -------------    ---------    ----------------    --------

<S>                                     <C>            <C>             <C>              <C>            <C>
Net sales...........................    $ 25,404       $      -        $ 43,121         $     -        $ 68,525
Gross profit........................       8,023              -           7,127               -          15,150
Available unused capacity expenses..       3,953              -               -               -           3,953
Operating income (loss).............       1,093              -          (1,564)         (2,857)         (3,328)
Depreciation and amortization
  expense...........................       4,240              -           1,066             116           5,422
Capital expenditures................      13,330              -           2,414               -          15,744
Total assets........................      85,796              -          35,935          15,025         136,756
</TABLE>

         Sales and long-lived assets, by geographic area, consist of the
following as of and for the three years ended September 30, 2001, 2000 and
1999 (amounts in thousands):

<TABLE>
<CAPTION>

                                        2001                            2000                        1999
                             --------------------------      --------------------------   ---------------------------
                                                Net                             Net                           Net
                                             Long Lived                      Long Lived                    Long Lived
                             Net Sales (a)   Assets (b)      Net Sales (a)   Assets (b)   Net Sales (a)    Assets (b)
                             -------------   ----------      -------------   ----------   -------------    ----------
<S>                            <C>            <C>              <C>            <C>           <C>             <C>
      United States            $ 27,715       $  54,685        $ 30,935       $ 60,756      $ 21,347        $ 55,400

      Western Europe
           Italy                  6,362                           7,544              -         5,804               -
           France                 3,606                           4,163              -         3,856
           Other                  4,095                           4,063                        6,633
                                                                                     -                             -
      Eastern Europe
           Hungary               15,224          25,144          15,818         19,351        16,508          22,022
           Poland                 4,087                           4,464              -         4,186               -
           Other                  9,936                           7,300              -         4,730               -
      Other Areas                 5,453               -           3,917              -         5,461               -
                               --------        --------        --------       --------      --------        --------
           Total               $ 76,478        $ 79,829        $ 78,204       $ 80,107      $ 68,525        $ 77,422
                               ========        ========        ========       ========      ========        ========

<FN>
      (a) Revenues are attributed to countries based on the location of the customer.
      (b) Property, plant and equipment net of accumulated depreciation and goodwill
          and intangibles, net of discontinued operations, based on country location of assets.
</TABLE>

11.  ACQUISITIONS
--------------------------------------------------------------------------------

         During the first quarter of fiscal 2000, the Company acquired
downstream businesses, Zoltek Materials Group and Entec Composite Machines,
for an aggregate purchase price of $4.0 million in cash. The Company also
assumed certain liabilities at acquisition and provided working capital and
credit facilities for the acquired companies.

         In the third quarter of fiscal 2000, the Company acquired a 45%
preferred membership interest in Hardcore for $1.4 million in cash and
guaranteed a note payable of $1.0 million. The Company also provided
additional funding for working capital. During the fourth quarter 2001, the
Company formally adopted a plan to sell its interest in Hardcore (see note 2).

                                     39


<PAGE>

11.  ACQUISITIONS (CONTINUED)
--------------------------------------------------------------------------------

         In the first quarter of fiscal 1999, the Company acquired SP
Systems. The aggregate purchase price paid by the Company in connection with
the acquisition was approximately $30.0 million in cash and 2.5 million
shares of Zoltek common stock having a market value of $27.5 million on the
date of acquisition. During the fourth quarter of fiscal 2000, the Company
formally adopted a plan to sell SP Systems (see note 2), which was completed
in November 2000.

         These acquisitions were accounted under the purchase method of
accounting and are included in the Company's consolidated financial
statements from the date of acquisition. The purchase prices were allocated
to the fair value of the assets acquired. The excess of the amount paid for
the companies over the fair value of the assets acquired was recognized as
goodwill and had been amortized over 15 years.

         Set forth below is aggregate selected purchase price data of the
acquired companies at the dates of acquisition (amounts in thousands).

<TABLE>
<CAPTION>
                                                                       SP Systems       Hardcore      Other        Total
                                                                       ----------       --------      -----        -----

<S>                                                                     <C>             <C>          <C>          <C>
Fair value of assets and liabilities acquired:
    Current assets..............................................        $ 18,342        $   321      $ 2,310      $ 20,973
    Long-term assets..........................................             9,093          2,967         6067        18,127
    Goodwill and intangibles.................................             49,337          1,598          680        51,615
    Liabilities......................................................    (18,854)        (2,623)      (6,081)      (27,558)
                                                                        --------        -------      -------      --------
          Net purchase price.....................................       $ 57,918        $ 2,263      $ 2,976      $ 63,157
                                                                        ========        =======      =======      ========

</TABLE>

                                     40


<PAGE>
<PAGE>

<TABLE>
12.       SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
------------------------------------------------------------------------------------------------------------

<CAPTION>
(Amounts in thousands, except per share data)

Fiscal year 2001                                    1st Quarter    2nd Quarter    3rd Quarter    4th Quarter
------------------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>            <C>            <C>
Net sales..........................................   $ 21,831       $ 20,334       $ 17,156       $ 17,157
Gross profit.......................................      2,707         (5,109)         2,193          2,354
Loss from continuing operations....................     (2,317)       (11,816)        (3,583)        (3,558)
Loss from discontinued operations..................     (1,980)          (718)          (654)        (6,945)
Net loss...........................................   $ (4,297)      $(12,534)      $ (4,237)      $(10,503)

Net loss per share:
Basic and diluted net loss per share
  Continuing operations............................   $  (0.13)      $  (0.73)      $  (0.22)      $  (0.21)
  Discontinued operations..........................      (0.11)         (0.04)         (0.04)         (0.43)
                                                      --------       --------       --------       --------
         Total.....................................   $  (0.24)      $  (0.77)      $  (0.26)      $  (0.64)
                                                      ========       ========       ========       ========

<CAPTION>
Fiscal year 2000                                    1st Quarter    2nd Quarter    3rd Quarter    4th Quarter
------------------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>            <C>            <C>
Net sales..........................................   $ 17,465       $ 19,738       $ 19,595       $ 21,406
Gross profit.......................................      3,724          4,381          2,977          2,602
Loss from continuing operations....................       (744)          (672)          (846)        (1,742)
Loss from discontinued operations..................       (454)          (437)          (523)        (3,267)
Net loss...........................................   $ (1,198)      $ (1,109)      $ (1,369)      $ (5,009)

Net loss per share:
Basic and diluted net loss per share
  Continuing operations............................   $  (0.04)      $  (0.03)      $  (0.05)      $  (0.10)
  Discontinued operations..........................      (0.03)         (0.03)         (0.02)         (0.17)
                                                      --------       --------       --------       --------
         Total.....................................   $  (0.07)      $  (0.06)      $  (0.07)      $  (0.27)
                                                      ========       ========       ========       ========
</TABLE>




Item 9.   Changes in and Disagreements with Accountants on Accounting and
------    ---------------------------------------------------------------
          Financial Disclosure
          --------------------

          Not Applicable.



                                     41

<PAGE>
<PAGE>

                                  PART III

Item 10.  Directors and Executive Officers of the Registrant
-------   --------------------------------------------------

         The information set forth under the caption "Election of Directors"
in the registrant's Proxy Statement for its 2002 Annual Meeting of
Shareholders is incorporated herein by this reference. See also Item 4A of
Part I of this report.

Item 11.  Executive Compensation
-------   ----------------------

         The information set forth under the captions "Directors' Fees" and
"Compensation of Executive Officers" in the registrant's Proxy Statement for
its 2002 Annual Meeting of Shareholders is incorporated herein by this
reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
-------   --------------------------------------------------------------

         The information set forth under the captions "Voting Securities and
Principal Holders Thereof" and "Security Ownership By Management" in the
registrant's Proxy Statement for its 2002 Annual Meeting of Shareholders is
incorporated herein by this reference.

Item 13.  Certain Relationships and Related Transactions
-------   ----------------------------------------------

         The information set forth under the caption "Certain Transactions"
in the registrant's Proxy Statement for its 2002 Annual Meeting of
Shareholders is incorporated herein by this reference.


                                   PART IV

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K
-------   --------------------------------------------------------------

         (a)      (1)      Financial statements: The following financial
statements are included in Item 8 of this report:

                  Report of Independent Accountants

                  Consolidated Balance Sheet as of September 30, 2001
                  and 2000

                  Consolidated Statement of Operations for the years ended
                  September 30, 2001, 2000 and 1999

                  Consolidated Statement of Changes in Shareholders' Equity
                  for the years ended September 30, 2001, 2000 and 1999

                  Consolidated Statement of Cash Flows for the years ended
                  September 30, 2001, 2000 and 1999

                  Notes to Consolidated Financial Statements


                                     42

<PAGE>
<PAGE>

                  (2)      The following financial statement schedule and
independent accountant's report thereon are included in Part IV of this
report:

                                                                        Page
                                                                        ----

         Report of Independent Public Accountants on
         Financial Statement Schedule                                     47

         12-09 Valuation and Qualifying Accounts and Reserves             48

                           Schedules other than those listed above have been
omitted because they are either not required or not applicable, or because
the information is presented in the consolidated financial statements or the
notes thereto.

                  (3)      The following exhibits are filed herewith or
incorporated by reference herein, as indicated:


         3.1      Restated Articles of Incorporation of the Registrant,
                  filed as Exhibit 3.1 to Registrant's Registration
                  Statement on Form S-1 (Reg. No. 33-51142) is incorporated
                  herein by this reference

         3.2      Restated By-Laws of the Registrant, as currently in
                  effect, filed as Exhibit 3.2 to Registrant's Registration
                  Statement on Form S-1 (Reg. No. 33-51142) is incorporated
                  herein by this reference

         4.1      Form of certificate for Common Stock, filed as Exhibit 4.1
                  to Registrant's Registration Statement on Form S-1 (Reg.
                  No. 33-51142) is incorporated herein by this reference

         4.2      Form of Warrant, dated May 11, 2001, issued to Southwest
                  Bank of St. Louis with respect to 12,500 shares of
                  Registrant's Common Stock is filed herewith

         10.1     Loan Agreement, dated December 29, 1989, by and between
                  Zoltek Corporation and Southwest Bank of St. Louis, as
                  amended by letter, dated August 13, 1992, filed as Exhibit
                  10.7 to Registrant's Registration Statement on Form S-1
                  (Reg. No. 33-51142) is incorporated herein by this
                  reference

         10.2     Zoltek Companies, Inc. Long Term Incentive Plan, filed as
                  Appendix B to Registrant's definitive proxy statement for
                  the 1997 Annual Meeting of Shareholders is incorporated
                  herein by this reference

         10.3     Zoltek Companies, Inc. Amended and Restated Directors
                  Stock Option Plan, filed as Exhibit 10.1 to Registrant's
                  Quarterly Report on Form 10-Q dated August 13, 1999, is
                  incorporated herein by this reference

         10.4     Promissory Note, dated September 29, 1994, by and between
                  Zoltek Properties, Inc. and Metlife Capital Corporation,
                  filed as Exhibit 10.8 to Registrant's Annual Report on
                  Form 10-K for the fiscal year ended September 30, 1994, is
                  incorporated herein by this reference

                                     43

<PAGE>
<PAGE>


         10.5     Precursor Agreement, dated as of July 1, 1994, by and
                  between Zoltek Corporation and Courtaulds Fibres Limited,
                  filed as Exhibit 10.9 to Registrant's Annual Report on
                  Form 10-K for the fiscal year ended September 30, 1994, is
                  incorporated herein by this reference. (An application for
                  confidential treatment has been made for a portion of
                  Exhibit 10.5.)

         10.6     Materials Supply Agreement, dated as of June 15, 1994, by
                  and between Zoltek Companies, Inc. and The B.F. Goodrich
                  Company, filed as Exhibit 10.10 to Registrant's Annual
                  Report on Form 10-K for the fiscal year ended September
                  30, 1994, is incorporated herein by this reference. (An
                  application for confidential treatment has been made for a
                  portion of Exhibit 10.6.)

         10.7     Loan Agreement, dated November 14, 1994, by and between
                  Zoltek Properties, Inc. and The Reliable Life Insurance
                  Company, filed as Exhibit 10.11 to the Registrant's
                  Quarterly Report on Form 10-Q for the quarter ended March
                  31, 1995, is incorporated herein by this reference

         10.8     Promissory Note, dated November 14, 1994, by and between
                  Zoltek Corporation and Southwest Bank of St. Louis, filed
                  as Exhibit 10.2 to the Registrant's Quarterly Report on
                  Form 10-Q for the quarter ended March 31, 1995, is
                  incorporated herein by this reference

         10.9     Stock Purchase Agreement, dated November 19, 1999, by and
                  among Zoltek Companies, Inc. and each of the holders of
                  the outstanding share capital of Structural Polymer
                  (Holdings) Limited, filed as Exhibit 2.1 to Registrant's
                  Current Report on Form 8-K dated November 19, 1999 is
                  incorporated herein by this reference

         10.10    Credit Agreement, dated as of November 19, 1999, by and
                  among Zoltek Companies, Inc., Zoltek Corporation, Zoltek
                  Intermediates Corporation, Zoltek Properties, Inc., Cape
                  Composites Incorporated, Engineering Technology
                  Corporation and Mercantile Bank National Association,
                  filed as Exhibit 2.3 to Registrant's Current Report on
                  Form 8-K dated November 19, 1999 is incorporated herein by
                  this reference

         10.11    Amended and Restated Credit Agreement dated as of November
                  19, 1999 and amended and restated as of May 31, 2000,
                  among Zoltek Companies, Inc., Zoltek Corporation, Zoltek
                  Intermediates Corporation, Zoltek Properties, Inc., Cape
                  Composites, Inc., Engineering Technology Corporation and
                  Firstar Bank Missouri, N.A., filed as Exhibit 10 to the
                  Registrant's Quarterly Report on Form 10-Q dated for the
                  quarter ended June 30, 2000 is incorporated herein by this
                  reference

         10.12    Stock Purchase Agreement, dated as of November 6, 2000, by
                  and among Structural Polymer Group Limited, Zoltek
                  Companies, Inc. and certain Shareholders of Zoltek
                  Companies, Inc., filed as Exhibit 2.1 to Registrant's
                  Current Report on Form 8-K dated November 6, 2000 is
                  incorporated herein by this reference

         10.13    Credit Agreement, dated May 11, 2001, between Southwest
                  Bank of St. Louis and Zoltek Companies, Inc., Zoltek
                  Corporation, Cape Composites, Inc., Engineering Technology
                  Corporation, Zoltek Properties, Inc., and Hardcore
                  Composites Operations, LLC, filed as Exhibit 10.1 to
                  Registrant's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 2001 is incorporated herein by reference

                                     44

<PAGE>
<PAGE>

         21       Subsidiaries of the Registrant filed as Exhibit 21 to
                  Registrant's Annual Report on Form 10-K for the fiscal
                  year ended September 30, 2000 is incorporated herein by
                  this reference

         23       Consent of PricewaterhouseCoopers LLP is filed herewith





                                     45

<PAGE>
<PAGE>

                                 SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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)


                                    By  /s/ Zsolt Rumy
                                        -------------------------------------
                                        Zsolt Rumy, Chairman of the Board,
                                        President and Chief Executive Officer
Date: December 28, 2001

         Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                                 Title                                         Date
---------                                 -----                                         ----

<S>                                       <C>                                           <C>
/s/ Zsolt Rumy                            Chairman, Chief Executive Officer             December 28, 2001
------------------------------------      and Director
Zsolt Rumy


/s/ James F. Whalen                       Chief Financial Officer                       December 28, 2001
------------------------------------      and Corporate Secretary
James F. Whalen


/s/ Linn Bealke                           Director                                      December 28, 2001
------------------------------------
Linn Bealke


/s/ James W. Betts                        Director                                      December 28, 2001
------------------------------------
James W. Betts


/s/ Charles A. Dill                       Director                                      December 28, 2001
------------------------------------
Charles A. Dill


/s/ John L. Kardos                        Director                                      December 28, 2001
------------------------------------
John L. Kardos


/s/ John F. McDonnell                     Director                                      December 28, 2001
------------------------------------
John F. McDonnell
</TABLE>


                                     46

<PAGE>
<PAGE>

                    REPORT OF INDEPENDENT ACCOUNTANTS ON
                        FINANCIAL STATEMENT SCHEDULE





To the Board of Directors
of Zoltek Companies, Inc.


Our audits of the consolidated financial statements referred to in our
report dated December 28, 2001 appearing in the 2001 Annual Report to
Shareholders of Zoltek Companies, Inc. (which report and consolidated
financial statements are included in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated
financial statements.




/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
St. Louis, Missouri
December 28, 2001



                                     47

<PAGE>
<PAGE>

<TABLE>
                                              FOR THE YEAR ENDED SEPTEMBER 30, 2001

                                    Rule 12-09 Valuation and Qualifying Accounts and Reserves

                                                     (Amounts in thousands)
<CAPTION>
          Column A                  Column B                         Column C                         Column D         Column E
          --------                  --------           ------------------------------------           --------         --------
                                                                     Additions
                                                       ------------------------------------
                                   Balance at          Charged to              Charged to                             Balance at
                                    beginning          costs and             other accounts          Deductions           end
                                    of period           expenses                describe              describe         of period
                                    ---------           --------                --------              --------         ---------
<S>                                 <C>                <C>                    <C>                    <C>               <C>
RESERVE FOR DOUBTFUL ACCOUNTS       $   899            $     836              $       --             $     975(1)      $     760
                                    =======            =========              ==========             =========         =========

RESERVE FOR INVENTORY VALUATION     $ 3,340            $   8,644              $       --             $   1,079(2)      $  10,905
                                    =======            =========              ==========             =========         =========


<CAPTION>
                                                ---------------------------------


                                              FOR THE YEAR ENDED SEPTEMBER 30, 2000

                                    Rule 12-09 Valuation and Qualifying Accounts and Reserves

                                                     (Amounts in thousands)

          Column A                  Column B                         Column C                         Column D         Column E
          --------                  --------           ------------------------------------           --------         --------
                                                                     Additions
                                                       ------------------------------------
                                   Balance at          Charged to              Charged to                             Balance at
                                    beginning          costs and             other accounts          Deductions           end
                                    of period           expenses                describe              describe         of period
                                    ---------           --------                --------              --------         ---------
<S>                                 <C>                <C>                    <C>                    <C>               <C>
RESERVE FOR DOUBTFUL ACCOUNTS       $   774            $      81              $      190(3)          $     146(1)      $     899
                                    =======            =========              ==========             =========         =========

RESERVE FOR INVENTORY VALUATION     $ 2,191            $   1,609              $       --             $     460(2)      $   3,340
                                    =======            =========              ==========             =========         =========


<CAPTION>
                                                ---------------------------------


                                              FOR THE YEAR ENDED SEPTEMBER 30, 1999

                                    Rule 12-09 Valuation and Qualifying Accounts and Reserves

                                                     (Amounts in thousands)

          Column A                  Column B                         Column C                         Column D         Column E
          --------                  --------           ------------------------------------           --------         --------
                                                                     Additions
                                                       ------------------------------------
                                   Balance at          Charged to              Charged to                             Balance at
                                    beginning          costs and             other accounts          Deductions           end
                                    of period           expenses                describe              describe         of period
                                    ---------           --------                --------              --------         ---------
<S>                                 <C>                <C>                    <C>                    <C>               <C>
RESERVE FOR DOUBTFUL ACCOUNTS       $   314            $     577              $       --             $     117(1)      $     774
                                    =======            =========              ==========             =========         =========

RESERVE FOR INVENTORY VALUATION     $ 3,122            $      40              $       --             $     971(2)      $   2,191
                                    =======            =========              ==========             =========         =========

<FN>
-----------------
(1) Write-off of uncollectible receivable, net of recovery.
(2) Write-down of specific inventory items.
(3) Acquisition of subsidiaries.
</TABLE>


                                     48

<PAGE>
<PAGE>

                                 EXHIBIT INDEX
                                 -------------

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

         3.1      Restated Articles of Incorporation of the Registrant*

         3.2      Restated By-Laws of the Registrant, as currently in effect*

         4.1      Form of certificate for Common Stock*

         4.2      Form of Warrant, dated May 11, 2001, issued to Southwest
                  Bank of St. Louis with respect to 12,500 shares of
                  Registrant's Common Stock

         10.1     Loan Agreement, dated December 29, 1989, by and between
                  Zoltek Corporation and Southwest Bank of St. Louis, as
                  amended by letter, dated August 13, 1992*

         10.2     Zoltek Companies, Inc. Long Term Incentive Plan*

         10.3     Zoltek Companies, Inc. Amended and Restated Directors Stock
                  Option Plan filed as Exhibit 10.1 to Registrant's Quarterly
                  Report on Form 10-Q dated August 13, 1999*

         10.4     Promissory Note, dated September 29, 1994, by and between
                  Zoltek Properties, Inc. and Metlife Capital Corporation*

         10.5     Precursor Agreement, dated as of July 1, 1994, by and
                  between Zoltek Corporation and Courtaulds Fibres Limited.*
                  (An application for confidential treatment has been made for
                  a portion of Exhibit 10.5.)

         10.6     Materials Supply Agreement, dated as of June 15, 1994, by
                  and between Zoltek Companies, Inc. and The B.F. Goodrich
                  Company.* (An application for confidential treatment has
                  been made for a portion of Exhibit 10.6.)

         10.7     Loan Agreement, dated November 14, 1994, by and between
                  Zoltek Properties, Inc. and The Reliable Life Insurance
                  Company*

         10.8     Promissory Note, dated November 14, 1994, by and between
                  Zoltek Corporation and Southwest Bank of St. Louis*

         10.9     Stock Purchase Agreement, dated November 19, 1999, by and
                  among Zoltek Companies, Inc. and each of the holders of the
                  outstanding share capital of Structural Polymer (Holdings)
                  Limited *


<FN>
------------------
* Incorporated herein by reference



                                      49

<PAGE>
<PAGE>

                                 EXHIBIT INDEX
                                 -------------

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

         10.10    Credit Agreement, dated as of November 19, 1999, by and
                  among Zoltek Companies, Inc., Zoltek Corporation, Zoltek
                  Intermediates Corporation, Zoltek Properties, Inc., Cape
                  Composites Incorporated, Engineering Technology Corporation
                  and Mercantile Bank National Association*

         10.11    Amended and Restated Credit Agreement dated as of November
                  19, 1999 and amended and restated as of May 31, 2000, among
                  Zoltek Companies, Inc., Zoltek Corporation, Zoltek
                  Intermediates Corporation, Zoltek Properties, Inc., Cape
                  Composites, Inc., Engineering Technology Corporation and
                  Firstar Bank Missouri, N.A.*

         10.12    Stock Purchase Agreement, dated as of November 6, 2000, by
                  and among Structural Polymer Group Limited, Zoltek
                  Companies, Inc. and certain Shareholders of Zoltek
                  Companies, Inc.*

         10.13    Credit Agreement, dated as of May 11, 2001, between
                  Southwest Bank of St. Louis and Zoltek Companies, Inc.,
                  Zoltek Corporation, Cape Composites, Inc., Engineering
                  Technology Corporation, Zoltek Properties, Inc., and
                  Hardcore Composites Operations, LLC*

         21       Subsidiaries of the Registrant*

         23       Consent of PricewaterhouseCoopers LLP




<FN>
------------------
* Incorporated herein by reference



                                      50