FORM 10Q - Second Quarter 2009

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NkbGtSun6fhlYGNq5k4QGlyDgsFXdbWQu9kGuKMOBtun/A5EftO6wLIukbnX06kw WcajD8f8Mo0lZPWMJSwRRQ== 0000842295-09-000055.txt : 20090810 0000842295-09-000055.hdr.sgml : 20090810 20090810145008 ACCESSION NUMBER: 0000842295-09-000055 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090810 DATE AS OF CHANGE: 20090810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOR MINERALS INTERNATIONAL INC CENTRAL INDEX KEY: 0000842295 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 742081929 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17321 FILM NUMBER: 09999261 BUSINESS ADDRESS: STREET 1: 722 BURLESON CITY: CORPUS CHRISTI STATE: TX ZIP: 78402 BUSINESS PHONE: 3618825175 MAIL ADDRESS: STREET 1: 722 BURLESON CITY: CORPUS CHRISTI STATE: TX ZIP: 78402 FORMER COMPANY: FORMER CONFORMED NAME: HITOX CORPORATION OF AMERICA DATE OF NAME CHANGE: 19920703 10-Q 1 x10q2009q2.htm FORM 10Q - SECOND QUARTER 2009 FORM 10Q - Second Quarter 2009

United States Securities and Exchange Commission Washington, D. C. 20549 ____________________________ FORM 10-Q ____________________________
(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2009 OR
[__]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________
Commission file number 0-17321 TOR MINERALS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization)		74-2081929 (I.R.S. Employer Identification No.)
722 Burleson Street, Corpus Christi, Texas 78402 (Address of principal executive offices)
(361) 883-5591 (Issuer’s telephone number) ____________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 R			No *
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer *	Accelerated filer *	Non-accelerated filer *		Smaller reporting company R
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes *			No R
Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.
Class Common Stock, $0.25 par value			Shares Outstanding as of August 10, 2009 9,453,492

Table of Contents
			Page No.
Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Statements of Operations -- Three and six months ended June 30, 2009 and 2008	3
		Condensed Consolidated Statements of Comprehensive Income (Loss) -- Three and six months ended June 30, 2009 and 2008	4
		Condensed Consolidated Balance Sheets -- June 30, 2009 and December 31, 2008	5
		Condensed Consolidated Statements of Cash Flows -- Six months ended June 30, 2009 and 2008	6

	Notes to the Condensed Consolidated Financial Statements		7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		21

Item 4.	Controls and Procedures		34

Part II - Other Information

Item 1.	Legal Proceedings		35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		35

Item 3.	Defaults Upon Senior Securities		35

Item 5.	Other Information		36

Item 6.	Exhibits		36

Signatures			36

Forward Looking Information

Certain portions of this report contain forward-looking statements about the business, financial condition and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation, changes in demand for the Company’s products, changes in competition, economic conditions, fluctuations in market price for TiO₂ pigments, changes in foreign currency exchange rates, increases in the price of energy and raw materials, such as ilmenite, interest rate fluctuations, changes in the capital markets, changes in tax and other laws and governmental rules and regulations applicable to the Company’s business, and other risks indicated in the Company’s filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, and, in many cases, the Company cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The Company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws. When used in this report, the words “believes,” “estimates,” “plans,” “expects,” “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements.

TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts)
		Three Months Ended June 30,				Six Months Ended June 30,
		2009		2008		2009		2008
NET SALES	$	5,654	$	6,916	$	11,357	$	13,662
Cost of sales		4,789		5,912		9,678		11,998
GROSS MARGIN		865		1,004		1,679		1,664
Technical services and research and development		40		61		92		127
Selling, general and administrative expenses		725		1,154		1,736		2,229
Gain on disposal of assets		-		-		-		(2)
OPERATING INCOME (LOSS)		100		(211)		(149)		(690)
OTHER INCOME (EXPENSE):
Interest income		-		-		2		1
Interest expense		(136)		(131)		(248)		(275)
Gain (loss) on foreign currency exchange rate		(12)		(2)		42		(1)
Other, net		2		9		4		10
LOSS BEFORE INCOME TAX		(46)		(335)		(349)		(955)
Income tax expense (benefit)		(38)		3		(72)		(28)
NET LOSS	$	(8)	$	(338)	$	(277)	$	(927)
Less: Preferred Stock Dividends		15		15		30		30
Loss Available to Common Shareholders	$	(23)	$	(353)	$	(307)	$	(957)

Loss per common share:
Basic	$	(0.00)	$	(0.04)	$	(0.03)	$	(0.12)
Diluted	$	(0.00)	$	(0.04)	$	(0.03)	$	(0.12)
Weighted average common shares outstanding:
Basic		9,453		7,878		9,453		7,875
Diluted		9,453		7,878		9,453		7,875

See accompanying notes.

TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (In thousands)
		Three Months Ended June 30,				Six Months Ended June 30,
		2009		2008		2009		2008
NET LOSS	$	(8)	$	(338)	$	(277)	$	(927)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax
Net gain on derivative instruments designated and qualifying as cash flow hedges, net of tax:
Net gain reclassified to income		-		-		-		1
Currency translation adjustment, net of tax:
Net foreign currency translation adjustment gain (loss)		681		(301)		(200)		805
Other comprehensive income (loss), net of tax		681		(301)		(200)		806
COMPREHENSIVE INCOME (LOSS)	$	673	$	(639)	$	(477)	$	(121)

See accompanying notes.

TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except per share amounts)
		June 30,		December 31,
		2009		2008
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	204	$	191
Restricted cash		475		-
Trade accounts receivable, net		3,296		2,310
Inventories, net		10,572		11,839
Other current assets		969		444
TOTAL CURRENT ASSETS		15,516		14,784
PROPERTY, PLANT AND EQUIPMENT, net		19,114		19,515
OTHER ASSETS		39		38
Total Assets	$	34,669	$	34,337

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,443	$	2,268
Accrued expenses		1,269		1,611
Notes payable under lines of credit		3,262		2,156
Export credit refinancing facility		1,451		1,458
Current deferred tax liability		60		56
Current maturities - capital leases		90		86
Current maturities of long-term debt – financial institutions		1,366		1,590
Total current liabilities		8,941		9,225
LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES
Capital leases		95		141
Long-term debt – financial institutions		1,599		1,876
Long-term debt – convertible debentures, net		1,062		-
Deferred tax liability		492		580
Total liabilities		12,189		11,822
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Series A 6% convertible preferred stock $.01 par value: authorized, 5,000 shares; 200 shares issued and outstanding at 6/30/09 and 12/31/08		2		2
Common stock $.25 par value: authorized, 20,000 shares; 9,453 shares issued and outstanding at 6/30/09 and at 12/31/08, respectively		2,363		2,363
Additional paid-in capital		24,998		24,525
Accumulated deficit		(7,918)		(7,611)
Accumulated other comprehensive income:
Cumulative translation adjustment		3,035		3,236
Total shareholders' equity		22,480		22,515
Total Liabilities and Shareholders' Equity	$	34,669	$	34,337
See accompanying notes.

TOR Minerals International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
		Six Months Ended June 30,
		2009		2008
*CASH FLOWS FROM OPERATING ACTIVITIES:*
Net loss	$	(277)	$	(927)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		862		987
Stock-based compensation expense		50		90
Warrant interest expense		9		-
Gain on sale/disposal of property, plant and equipment		-		(2)
Deferred income taxes		(75)		(31)
Provision for bad debt		(3)		1
Changes in working capital:
Receivables		(761)		(1,415)
Inventories		1,191		1,523
Other current assets		(527)		(332)
Accounts payable and accrued expenses		(1,139)		1,041
Net cash provided by (used in) operating activities		(670)		935
*CASH FLOWS FROM INVESTING ACTIVITIES:*
Additions to property, plant and equipment		(578)		(1,699)
Proceeds from sales of property, plant and equipment		-		3
Net cash used in investing activities		(578)		(1,696)
*CASH FLOWS FROM FINANCING ACTIVITIES:*
Net proceeds / (payments) from lines of credit		1,098		(72)
Net proceeds from export credit refinancing facility		15		365
Net payments on capital leases		(43)		(17)
Proceeds from long-term bank debt		-		1,973
Payments on long-term bank debt		(496)		(1,628)
Proceeds from convertible debentures		1,475		-
Increase in restricted cash		(475)		-
Proceeds from the issuance of common stock through exercise of common stock options		-		12
Preferred stock dividends paid		(30)		(30)
Net cash provided by financing activities		1,544		603
Effect of exchange rate fluctuations on cash and cash equivalents		(283)		(9)
Net change in cash and cash equivalents		13		(167)
Cash and cash equivalents at beginning of period		191		376
Cash and cash equivalents at end of period	$	204	$	209

Supplemental cash flow disclosures:
Interest paid	$	236	$	275
Taxes paid	$	8	$	5
See accompanying notes.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 1.

Going Concern

The consolidated financial statements included in this report have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As discussed in Note 3, the Company has significant borrowings which require, among other things, compliance with certain financial covenants, specifically a Consolidated Fixed Charge Ratio and a Consolidated Funded Debt to EBITDA Ratio, on a quarterly basis. As a result of the operating losses incurred throughout 2008 and the first quarter of 2009, the Company was not in compliance with these ratio covenants under our US Credit Agreement (the “Credit Agreement”) with Bank of America, N.A. (the “Bank”) as of December 31, 2008 and March 31, 2009.

As reported in the Company’s Form 8-K filed with the Securities and Exchange Commission on May 6, 2009 the Company amended the Credit Agreement with the Bank. Under the terms of the amendment, subject to the Company’s compliance with the terms and conditions contained in the amendment, including revised financial covenants, the Bank agreed not to exercise any of its rights or remedies relating to the existing events of default under the Credit Agreement. The Bank also agreed to extend the maturity date on our Line of Credit (the “Line”) from April 1, 2009 to October 1, 2009. In addition, the amendment modified the maturity date for our real estate term loan (the “Loan”) from November 30, 2010 to October 1, 2009 and our term loan (the “Term Loan”) from May 1, 2012 to October 1, 2009. The Credit Agreement is secured by all of the Company’s assets in the US. The interest rate on the Line, the Loan and the Term Loan was increased from prime plus two percent to prime plus two and one-half percent, which was 5.75% at June 30, 2009. As a result, all of the Company’s debt owed to the Bank matures on October 1, 2009.

As reported in the Company’s Form 8-K filed with the Securities and Exchange Commission on May 6, 2009, the Company’s Board of Directors has authorized, subject to shareholder approval, the issuance of up to $4 million of its six-percent (6%) convertible subordinated debentures with detachable warrants (the “Debentures”) for the purpose of refinancing its debt to the Bank and general corporate purposes. Under the current authorization, the Company received, on May 4, 2009, $1 million from the sale of Debentures due May 4, 2016, from three of the Company’s directors.

In addition to the above referenced Debentures, in June 2009 the Company received subscription agreements from five additional accredited investors, one of which is a director and another of which is a greater than 5% shareholder, for 19 Units for an aggregate purchase price of $475,000. These subscription agreements have been accepted by the Company subject to shareholder approval at the Company’s annual meeting on August 21, 2009. The proceeds are held in restricted cash and will be used to reduce the Company’s debt to the Bank after receiving shareholder approval.

Under the terms of the Credit Agreement, the Company has agreed to use all proceeds in excess of $1 million that it receives after May 1, 2009 from the issuance of any of its capital stock, from capital contributions in respect to its capital stock, from the issuance of debentures or the incurrence of permitted subordinated indebtedness (as defined in the Credit Agreement) to prepay the loans and other obligations under the Credit Agreement.

The Company is diligently working to establish a corporate lending relationship with a new financial institution for the Company’s US operations prior to October 1, 2009, the revised maturity date under the Credit Agreement, to refinance outstanding debt with the Bank prior to its revised maturity. However, there can be no assurance that the Company will be able to successfully refinance the debt or sell any material part of the Debentures. If the Company is unable to refinance the debt due to the Bank prior to its revised maturity or if the Company defaults under the terms of the Credit Agreements prior to its revised maturity and the Bank were to accelerate the maturity of such indebtedness, the Company does not have sufficient liquidity to pay off the indebtedness owed to the Bank, and the Bank would be entitled to exercise all of its rights and remedies as a secured lender under the Credit Agreement which could force the Company into bankruptcy or liquidation.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

In addition, the Company’s two subsidiaries, TOR Minerals Malaysia, Sdn. Bhd. (“TMM”) and TOR Processing and Trade, BV (“TPT”) have short-term credit facilities and term loans at banks in Malaysia and the Netherlands, respectively. At June 30, 2009, TMM’s utilization under the credit facilities and term loans with HSBC Bank Malaysia, Bhd. (“HSBC”) and RHB Bank, Bhd. (“RHB”) totaled $2,000,000 and TPT’s utilization under the credit facility and term loans with Rabobank totaled $2,939,000. The credit facilities with HSBC, RHB and Rabobank are subject to demand provisions and are subject to certain subjective acceleration covenants based on the judgment of the banks. While the banks have made no indication that they will demand payment of the debt in Malaysia or in the Netherlands, in light of the Company’s liquidity difficulties, there can be no assurances that this debt will not be called for payment prior to the stated maturity date.

Since early 2007, the Company has actively pursued new production methods and new product development. As a result, the Company introduced new products to the market in 2008 and completed a new powder treatment facility in Malaysia in May 2008. In addition, the Company has invested in a new powder treatment facility at the US operation which was commissioned in April 2009. With the new process equipment, the Company will replace natural gas with electricity as the primary energy source at the US operation. The Company believes that the changes in the manufacturing process in the US and Malaysia, as well as the potential acceptance of its new products in the market, will improve cash flows. However, the introduction of new products and the sales volume of existing product lines may be negatively impacted by the decline in the global economy. To offset the possible decline in sales revenue associated with the economy, the Company has implemented numerous cost cutting measures at each of the three operations, including, but not limited to, reductions in staff, salaries, travel and other discretionary expenses.

The events described above raise substantial doubt about the Company’s ability to continue as a going concern. Our ability to continue to operate as a going concern is dependent on our ability to successfully establish a corporate lending relationship with a new financial institution for the US operation, and/or raise sufficient new capital and improve our operating cash flows to a sufficient level.

Note 2.

Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim condensed consolidated financial statements include the consolidated accounts of TOR Minerals International, Inc. and its wholly-owned subsidiaries with all significant intercompany transactions eliminated. In our opinion, all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the consolidated financial position, results of operations and cash flows for the interim periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2008, in our Annual Report on Form 10-K filed with the SEC on March 31, 2009. Operating results for the three and six month periods ended June 30, 2009, are not necessarily indicative of the results for the year ending December 31, 2009.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Income Taxes

We record income taxes under SFAS No. 109, “Accounting for Income Taxes”, using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Income taxes consisted of a foreign deferred tax benefit of approximately $40,000 and state income tax expense of $2,000 for the three month period ended June 30, 2009, compared to state income tax expense of $3,000 for the corresponding three month period in 2008. For the six-month periods ended June 30, 2009 and 2008, we recorded a foreign deferred tax benefit of approximately $75,000 and $33,000, respectively, and state income tax expense of $3,000 and $5,000, respectively. Taxes are based on an estimated annualized consolidated effective rate of 20.6%

In accordance with the requirements of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 (“FIN 48”), we evaluate all tax years still subject to potential audit under the applicable state, federal and foreign income tax laws. We are subject to taxation in the United States, Malaysia and The Netherlands. Our federal income tax returns in the United States are subject to examination for the tax years ended December 31, 2005 through December 31, 2008. Our state returns, which are filed in Texas, Ohio and Michigan, are subject to examination for the tax years ended December 31, 2004 through December 31, 2008. Our tax returns in various non-US jurisdictions are subject to examination for various tax years ended December 31, 2003 through December 31, 2008.

As of January 1, 2009, we did not have any unrecognized tax benefits and there was no change during the six-month period ended June 30, 2009.

Subsequent Events

We evaluated all activity of TOR through August 10, 2009, the issue date of the Consolidated financial statements, and concluded that no subsequent events have occurred that would require recognition in the Consolidated financial statements or disclosure in the notes to the Consolidated financial statements.

Recently Adopted and Recently Issued Accounting Standards

On January 1, 2009, we adopted FASB Statement No. 157, Fair Value Measurement (“SFAS 157”), as it relates to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on at least an annual basis. SFAS 157 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions. The adoption of SFAS 157, as it relates to nonfinancial assets and nonfinancial liabilities, had no impact on the consolidated financial statements. The provisions of SFAS 157 will be applied at such time a fair value measurement of a nonfinancial asset or nonfinancial liability is required, which may result in a fair value that is materially different than would have been calculated prior to the adoption of SFAS 157.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

On January 1, 2009, we adopted FASB Statement No. 141 (Revised 2007) Business Combinations (“SFAS 141(R)”) and Statement No. 160 Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”). The new standards represent the completion of the FASB’s first major joint project with the International Accounting Standards Board (IASB) and are intended to improve, simplify and converge internationally the accounting for business combinations and the reporting of noncontrolling interests (formerly minority interests) in consolidated financial statements. The effect of adoption will generally be prospectively applied to transactions completed after the end of our 2008 fiscal year, although the new presentation and disclosure requirements for pre-existing noncontrolling interests will be retrospectively applied to all prior-period financial information presented. The impact of SFAS 141(R) and SFAS 160 on our consolidated financial statements is dependent upon acquisitions entered into by the Company after January 1, 2009.

On January 1, 2009, we adopted FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”), an amendment of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 161 requires entities to provide greater transparency in derivative disclosures by requiring qualitative disclosure about objectives and strategies for using derivatives and quantitative disclosures about fair value amounts of gains and losses on derivative instruments. Other than the required disclosures (see Note 11), the adoption of SFAS 161 had no impact on the consolidated financial statements.

In April 2009, the FASB issued FASB Staff Position FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP FAS 107-1 and APB 28-1”). FSP FAS 107-1 and APB 28-1 enhance consistency in financial reporting by increasing the frequency of fair value disclosures. This FSP relates to fair value disclosures for any financial instruments that are not currently reflected in a company’s balance sheet at fair value. Prior to the effective date of this FSP, fair values for these assets and liabilities were only disclosed once a year. This FSP will now require these disclosures to be made on a quarterly basis. FSP FAS 107-1 and APB 28-1 became effective for us on June 30, 2009 and we have included the additional disclosure information required within Note 5, Fair Value Measurements, of the notes to the consolidated financial statements.

In May 2009, the FASB issued Statement No. 165, Subsequent Events (“SFAS 165”), to be effective for interim or annual financial periods ending after June 15, 2009. SFAS 165 does not materially change the existing guidance but introduces the concept of financial statements being available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, that is, whether the date represents the date the financial statements were issued or were “available to be issued”. This disclosure is intended to alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. SFAS 165 became effective for us on June 30, 2009 and the adoption did not have an impact on our consolidated financial statements.

In June 2009, the FASB issued Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“SFAS 168”), which amends SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS 168 will become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date, SFAS 168 will supersede all then existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in SFAS 168 will become non-authoritative. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We are currently assessing the impact SFAS 168 will have on our consolidated financial statements and disclosures.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 3.

Long-Term Debt

A summary of long-term debt follows:

		(Unaudited)
(In thousands)		June 30,		December 31,
		2009		2008
Term note payable to a U.S. bank, with an interest rate of 5.75% at June 30, 2009, due October 1, 2009, secured by real estate and leasehold improvements of our US operation.	$	502	$	576
Term note payable to a U.S. bank, with an interest rate of 5.75% at June 30, 2009, due October 1, 2009, secured by property, plant and equipment, inventory and accounts receivable of our US operation.		292		342
Term note payable to a U.S. equipment financing company, with an interest rate of 5.24% at June 30, 2009, due April 1, 2013, secured by Caterpillar front-end loader.		95		106
Fixed rate term Euro note payable to a Netherlands bank, with an interest rate of 5.5% at June 30, 2009, due June 1, 2009, secured by TPT's assets.		-		94
Fixed rate term Euro note payable to a Netherlands bank, with an interest rate of 7.8% at June 30, 2009, due July 1, 2029, secured by TPT's land and office building purchased July 2004. (391 Euro)		549		560
Fixed rate term Euro note payable to a Netherlands bank, with an interest rate of 4.7% at June 30, 2009, due January 31, 2030, secured by TPT's land and building purchased January 2005. (388 Euro)		545		556
Fixed rate term Euro note payable to a Netherlands bank, with an interest rate of 6.1% at June 30, 2009, due July 31, 2015, secured by TPT's assets. (308 Euro)		433		465
U.S. Dollar term note payable to a Malaysian bank, with an interest rate of 2.0% at June 30, 2009, due June 30, 2010, secured by TMM's property, plant and equipment.		358		525
U.S. Dollar term note payable to a Malaysian bank, with an interest rate of 2.13% at June 30, 2009, due April 1, 2010, secured by TMM's property, plant and equipment.		191		242
Total		2,965		3,466
Less current maturities		1,366		1,590
Total long-term debt and notes payable	$	1,599	$	1,876

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

US Bank Credit Facility, Term Loans and Convertible Debentures

Bank of America Credit Facility and Term Loans

On April 30, 2009, we amended the Credit Agreement with the Bank. Under the terms of the amendment, subject to our compliance with the terms and conditions contained in the amendment, including revised financial covenants, the Bank agreed not to exercise any of its rights or remedies relating to the existing events of default under the Credit Agreement. The Bank also agreed to extend the maturity date on the Line from April 1, 2009 to October 1, 2009. In addition, the amendment modified the maturity date for the Loan from November 30, 2010 to October 1, 2009 and the Term Loan from May 1, 2012 to October 1, 2009. As a result, all of our debt owed to the Bank matures on October 1, 2009, provided, if we default on obligations contained in the amendment, the Bank will have the rights and remedies available to it under the Credit Agreement and applicable law. The interest rate on the Line, the Loan and the Term Loan was increased from prime plus two percent to prime plus two and one-half percent, which was 5.75% at June 30, 2009. Under the terms of the amendment, the financial covenants are replaced with the following:

Covenants to be based on the results of the Corpus Christi operation
Current Ratio – Maintain a ratio of current assets to current liabilities of at least 1.0 to 1.0 as of the quarter ending June 30, 2009 (1.2 to 1.0 at June 30, 2009)
Fixed Charge Coverage Ratio – Maintain a fixed charge coverage ratio of at least 0.85 to 1.0 for the quarter ending June 30, 2009 (0.85 to 1.0 at June 30, 2009)

We also agreed that we will use all proceeds in excess of $1 million that we receive after May 1, 2009 from the issuance of any of our capital stock, from capital contributions in respect to our capital stock, from the issuance of debentures or the incurrence of permitted subordinated indebtedness (as defined in the Credit Agreement) to prepay the loans and other obligations under the Credit Agreement.

At June 30, 2009, the outstanding balance on the Line was $1,850,000 and we had $524,000 available on that date based on eligible accounts receivable and inventory borrowing limitations. The Line is secured by the accounts receivable and inventory of the US Operation and all outstanding credit on the Line will be due on October 1, 2009.

Six-percent Convertible Subordinated Debentures

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Netherlands Bank Credit Facility, Mortgage and Term Loan

On March 20, 2007, our subsidiary, TPT, entered into a short-term credit facility (the “Credit Facility”) with Rabobank which increased TPT’s line of credit from Euro 650,000 to Euro 1,100,000. The Credit Facility, which has a variable interest rate of Bank prime plus 2.8% (currently at 7.65%), will mature on December 31, 2009 and is secured by TPT’s accounts receivable and inventory. At June 30, 2009, TPT had utilized Euro 1,006,000 ($1,412,000) of its short-term credit facility.

The loan agreements covering both TPT’s credit facility and term loans include subjective acceleration clauses that allow Rabobank to accelerate payment if, in the judgment of the bank, there are adverse changes in our business. We believe that such subjective acceleration clauses are customary in the Netherlands for such borrowings. However, if demand is made by Rabobank, we may be unable to refinance the demanded indebtedness, in which case the lenders could foreclose on the assets of TPT.

Malaysian Bank Credit Facility and Term Loan

On November 3, 2008, the Company’s subsidiary, TMM, amended its banking facility with HSBC Bank Malaysia Berhad (“HSBC”) to extend the maturity date from October 1, 2008 to October 31, 2009. In addition, the HSBC facility includes the following in Malaysian Ringgits (“RM”): (1) a banker’s acceptance (“BA”) of RM 500,000; (2) an export line (“ECR”) of RM 5,000,000; and (3) a foreign exchange contract limit of RM 5,000,000 ($142,000, $1,424,000 and $1,424,000, respectively).

TMM renewed its banking facility with RHB Bank Berhad (“RHB”) on October 30, 2008, for the purpose of extending the maturity date of the current facilities from October 31, 2008, to October 31, 2009. The RHB facility, which TMM is still negotiating, includes the following: (1) an overdraft line of credit up to RM 1,000,000; (2) an ECR of RM 9,300,000; and (3) a foreign exchange contract limit of RM 25,000,000 ($284,000, $2,648,000 and $7,120,000, respectively).

The banking facilities with both HSBC and RHB bear an interest rate on the overdraft facilities at 1.25% over bank prime and the ECR facilities bear interest at 1.0% above the funding rate stipulated by the Export-Import Bank of Malaysia Berhad. The ECR, a government supported financing arrangement specifically for exporters, is used by TMM for short-term financing of up to 180 days against customers’ and inter-company shipments. At June 30, 2009, the interest rate was 3.5% and the outstanding balance on their ECR and BA facilities was RM 5,094,000 ($1,451,000).

The borrowings under both the HSBC and the RHB short term credit facilities are subject to certain subjective acceleration covenants based on the judgment of the banks and a demand provision that provide that the banks may demand repayment at any time. We believe such a demand provision is customary in Malaysia for such facilities. The loan agreements are secured by TMM’s property, plant and equipment. However, if demand is made by HSBC or RHB, we may be unable to refinance the demanded indebtedness, in which case, the lenders could foreclose on the assets of TMM. The credit facilities prohibit TMM from paying dividends and the HSBC facility further prohibits loans to related parties without the prior consent of HSBC.

Note 4.

Series A Convertible Preferred Stock Dividend

On June 7, 2009, the Company declared a dividend, in the amount of $15,000, or $0.075 per share, for the quarterly period ended June 30, 2009, payable on July 1, 2009, to the holders of record of the Series A Convertible Preferred Stock as of the close of business on June 7, 2009.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 5.

Fair Value Measurements

The following table presents the Company’s financial assets and financial liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of fair value hierarchy as of June 30, 2009. The Company did not hold any non-financial assets and/or non-financial liabilities subject to fair value measurements at June 30, 2009.

	June 30, 2009
(In thousands)	Balance at June 30, 2009		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset for foreign currency derivative financial instruments (including forward contracts)	$	23	$	-	$	23	$	-

Our foreign currency derivative financial instruments mitigate foreign exchange risks and include forward contracts.

The fair value of the Company’s debt is based on estimates using standard pricing models that take into account the present value of future cash flows as of the balance sheet date. The computation of the fair value of these instruments is generally performed by the Company. The carrying amounts and estimated fair values of the Company’s long-term debt, including current maturities, are summarized below:

		June 30, 2009				December 31, 2008
(In thousands)		Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current portion	$	2,965	$	2,833	$	3,466	$	3,143
Long-term debt – convertible debentures		1,475		1,475		-		-
	$	4,440	$	4,308	$	3,466	$	3,143

The carrying amounts reported in the balance sheet for cash and cash equivalents, restricted cash, trade receivables, payables and accrued liabilities, accrued income taxes and short-term borrowings approximate fair value due to the short term nature of these instruments, Accordingly, these items have been excluded from the above table.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 6.

Capital Lease

On June 27, 2005, TPT entered into a financial lease agreement with De Lage Landen Financial Services, BV for equipment related to the production of ALUPREM. The cost of the equipment under the capital lease is included in the balance sheets as property, plant and equipment and was $381,181. Accumulated amortization of the leased equipment at June 30, 2009 was approximately Euro 115,000 ($161,000). Amortization of assets under capital leases is included in depreciation expense. The capital lease is in the amount of Euro 377,351 including interest of Euro 62,113 (implicit interest rate 6.3%) and Euro 238 in executory costs. The lease term is 72 months with equal monthly installments of Euro 5,241 ($7,355). The net present value of the lease at June 30, 2009 was Euro 113,000 ($159,000).

On October 30, 2007, the Company entered into a financial lease agreement with Dell Financial Services for two computer servers. The cost of the equipment under the capital lease, in the amount of $12,420, is included in the balance sheets as property, plant and equipment. Accumulated amortization of the leased equipment at June 30, 2009 was approximately $7,000. The capital lease is in the amount of $13,217 including interest of $800 (implicit interest rate 4.1%). The lease term is 36 months with equal monthly installments of $367. The net present value of the lease at June 30, 2009 was $6,000.

On March 13, 2008, the Company entered into a financial lease agreement with Toyota Financial Services for a forklift. The cost of the equipment under the capital lease, in the amount of $26,527, is included in the balance sheets as property, plant and equipment. Accumulated amortization of the leased equipment at June 30, 2009 was approximately $5,000. The capital lease is in the amount of $31,164 including interest of $4,637 (implicit interest rate 6.53%). The lease term is 60 months with equal monthly installments of $519. The net present value of the lease at June 30, 2009 was $20,000.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 7.

Calculation of Basic and Diluted Loss per Share

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

(in thousands, except per share amounts)		Three Months Ended June 30,				Six Months Ended June 30,
		2009		2008		2009		2008
Numerator:
Net Loss	$	(8)	$	(338)	$	(277)	$	(927)
Preferred Stock Dividends		(15)		(15)		(30)		(30)
Numerator for diluted loss per share - loss available to common shareholders after assumed conversions	$	(23)	$	(353)	$	(307)	$	(957)

Denominator:
Denominator for basic loss per share - weighted-average shares		9,453		7,878		9,453		7,875
Effect of dilutive securities:
Employee stock options		-		-		-		-
Detachable warrants		-		-		-		-
Convertible Preferred Shares		-		-		-		-
Dilutive potential common shares		-		-		-		-
Denominator for diluted loss per share - weighted-average shares and assumed conversions		9,453		7,878		9,453		7,875

*Basic loss per common share*	$	(0.00)	$	(0.04)	$	(0.03)	$	(0.12)

*Diluted loss per common share*	$	(0.00)	$	(0.04)	$	(0.03)	$	(0.12)

Excluded from the computation of diluted earnings per share were a total of 168,000 common shares related to the 200,000 convertible preferred shares at June 30, 2009 and 2008. The convertible preferred shares were not included in the computation of diluted earnings per share as the effect would be antidilutive.

For the three and six month periods ended June 30, 2009 and 2008, all employee stock options (758,600 and 756,100, respectively) were excluded from the computation of diluted earnings per share because the effect would be antidilutive.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 8.

Segment Information

The Company and its subsidiaries operate in the business of pigment manufacturing and related products in three geographic segments. All United States manufacturing is done at the facility located in Corpus Christi, Texas. Foreign manufacturing is done by the Company’s wholly-owned subsidiaries, TMM, located in Malaysia and TPT, located in the Netherlands. A summary of the Company’s manufacturing operations by geographic area is presented below:

(In thousands)		United States (Corpus Christi)		Europe (TPT)		Asia (TMM)		Inter-Company Eliminations		Consolidated
As of and for the three months ended:
*June 30, 2009*
Net Sales:
Customer sales	$	3,861	$	1,225	$	568	$	-	$	5,654
Intercompany sales		-		554		1,075		(1,629)		-
Total Net Sales	$	3,861	$	1,779	$	1,643	$	(1,629)	$	5,654

Location profit (loss)	$	52	$	(155)	$	28	$	67	$	(8)

*June 30, 2008*
Net Sales:
Customer sales	$	3,998	$	2,134	$	784	$	-	$	6,916
Intercompany sales		69		329		1,151		(1,549)		-
Total Net Sales	$	4,067	$	2,463	$	1,935	$	(1,549)	$	6,916

Location profit (loss)	$	(577)	$	199	$	47	$	(7)	$	(338)
As of and for the six months ended:
*June 30, 2009*
Net Sales:
Customer sales	$	7,805	$	2,617	$	935	$	-	$	11,357
Intercompany sales		-		1,342		1,424		(2,766)		-
Total Net Sales	$	7,805	$	3,959	$	2,359	$	(2,766)	$	11,357

Location profit (loss)	$	(142)	$	(179)	$	(87)	$	131	$	(277)

Location assets	$	12,657	$	8,051	$	13,961	$	-	$	34,669

*June 30, 2008*
Net Sales:
Customer sales	$	7,998	$	4,069	$	1,595	$	-	$	13,662
Intercompany sales		69		354		1,983		(2,406)		-
Total Net Sales	$	8,067	$	4,423	$	3,578	$	(2,406)	$	13,662

Location profit (loss)	$	(835)	$	199	$	(243)	$	(48)	$	(927)

Location assets	$	12,066	$	12,876	$	15,773	$	-	$	40,716

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Product sales of inventory between Corpus Christi, TPT and TMM are based on inter-company pricing, which includes an inter-company profit margin. In the geographic information, the location profit (loss) from all locations is reflective of these inter-company prices, as is inventory at the Corpus Christi location prior to elimination adjustments. Such presentation is consistent with the internal reporting reviewed by the Company’s chief operating decision maker. The elimination entries include an adjustment to the cost of sales resulting from the adjustment to ending inventory to eliminate inter-company profit, and the reversal of a similar adjustment from a prior period. To the extent there are net increases/declines period over period in Corpus Christi inventories that include an inter-company component, the net effect of these adjustments can decrease/increase location profit.

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

Note 9.

Stock Options and Equity Compensation Plan

For the three month periods ended June, 2009 and 2008, the Company recorded an expense of $24,000 and $56,000, respectively, in stock-based employee compensation expense and for the six-month periods ended June 30, 2009 and 2008, $50,000 and $90,000, respectively. This compensation expense is included in the selling, general and administrative expenses in the accompanying consolidated statements of operations.

The Company granted 20,000 and 15,000 options during the six- month periods ended June 30, 2009 and 2008.

As of June 30, 2009, there was $170,000 of option compensation expense related to non-vested awards which is expected to be recognized over a weighted average period of 2.44 years.

As all options issued under the Plan are Incentive Stock Options, the Company does not normally receive significant excess tax benefits relating to the compensation expense recognized on vested options.

Note 10.

Inventories

The following table reflects the Company’s inventory at June 30, 2009 and December 31, 2008.

(In thousands)		June 30,		December 31,
		2009		2008
Raw materials	$	5,218	$	5,208
Work in progress		1,320		1,327
Finished goods		3,424		4,828
Supplies		719		700
Total Inventories		10,681		12,063
Inventory reserve		(109)		(224)
Net Inventories	$	10,572	$	11,839

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Note 11.

Derivatives and Other Financial Instruments

The Company has exposure to certain risks relating to its ongoing business operations, including financial, market, political and economic risks. The following discussion provides information regarding our exposure to the risks of changing energy prices and foreign currency exchange rates. The Company has not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future. The natural gas and foreign exchange contracts are used to mitigate uncertainty and volatility, and to cover underlying exposures.

Natural Gas Contracts

We manage the risk of changes in natural gas supply prices at our Corpus Christi operation using derivative financial instruments. Natural gas market prices are volatile and we effectively fix prices for a portion of our natural gas production requirements through the use of swaps. A swap is a contract between us and a third party to exchange cash based on a designated natural gas price. Swap contracts require payment to or from us for the amount, if any, that the monthly published gas prices from the source specified in the contract differ from the prices of the New York Mercantile Exchange (NYMEX) natural gas futures during a specified period. There are no initial cash requirements related to the swap. The contracts are traded in months forward and settlement dates are scheduled to coincide with gas purchases during that future period. We report the fair value of the derivatives on our balance sheet and changes in fair value are recognized in cost of sales in the period of the change.

On November 18, 2008, the Company entered into a natural gas contract with Bank of America, N.A. for 40,000 MM/Btu’s of natural gas which settled on March 1, 2009. For the six month period ended June 30, 2009, we recorded a net expense of approximately $27,000 as a component of our cost of sales.

TOR Minerals International, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Foreign Currency Forward Contracts

We manage the risk of changes in foreign currency exchange rates, primarily at our Malaysian operation, through the use of foreign currency contracts. Foreign exchange contracts are used to protect the Company from the risk that the eventual cash flows resulting from transactions in foreign currencies, including sales and purchases transacted in a currency other than the functional currency, will be adversely affected by changes in exchange rates. We report the fair value of the derivatives on our balance sheet and changes in the fair value are recognized in earnings in the period of the change.

The following table summarizes the gross fair market value of all derivative instruments, which are not designated as hedging instruments under SFAS No. 133, and their location in our Condensed Consolidated Balance Sheet:

(In thousands)
Asset Derivatives
			June 30,		December 31,
Derivative Instrument	Location		2009		2008
Foreign Currency Exchange Contracts	Other Current Assets	$	23	$	-
		$	23	$	-
Liability Derivatives
			June 30,		December 31,
Derivative Instrument	Location		2009		2008
Natural Gas Swap Contract	Accrued Expenses	$	-	$	26
Foreign Currency Exchange Contracts	Accrued Expenses		-		1
		$	-	$	27

The following table summarizes the impact of the Company’s derivatives on the condensed consolidated financial statements of operations for the three and six-month periods ended June 30, 2009 and 2008:

(In thousands)			Amount of Gain (Loss) Recognized in Operations
	Location of Gain (Loss) on Derivative Instrument		Three Months Ended June 30,				Six Months Ended June 30,
Derivative Instrument	Location of Gain (Loss) on Derivative Instrument		2009		2008		2009		2008
Natural Gas Swap Contract	Cost of Sales	$	-	$	-	$	(27)	$	-
Foreign Currency Exchange Contracts	Other Income (Expense)		23		(26)		9		(34)
		$	23	$	(26)	$	(18)	$	(34)

Note 12.

Subsequent Events

On July 15, 2009, the Company tentatively accepted, subject to shareholder approval, a subscription agreement for one (1) Unit of its Debentures, in the amount of $25,000, from the spouse of Thomas Pauken, a Director of the Company.

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Company Overview

We are a global specialty chemical company engaged in the business of manufacturing and marketing mineral products for use as pigments, pigment extenders and flame retardants used in the manufacture of paints, industrial coatings, plastics, catalysts and solid surface applications. We have operations in the US, Asia and Europe.

Our US Operation, located in Corpus Christi, Texas, manufactures HITOX, BARTEX, HALTEX and TIOPREM. The facility is also the Global Headquarters for the Company. The Asian Operation, located in Ipoh, Malaysia, manufactures SR and HITOX and our European Operation, located in Hattem, Netherlands, manufactures Alumina based products.

Operating expenses in the foreign locations are primarily in local currencies. Accordingly, we have exposure to fluctuation in foreign currency exchange rates. These fluctuations impact the translation of sales, earnings, assets and liabilities from local currency to the US Dollar.

Our business is closely correlated with the construction industry and its demand for materials that use pigments, such as paints and plastics. This has generally led to higher sales in our second and third quarters due to increases in construction and maintenance during warmer weather. Also, pigment consumption is closely correlated with general economic conditions. When the economy is in an expansionary state, there is typically an increase in pigment consumption while a slow down typically results in decreased pigment consumption. When the construction industry or the economy is in a period of decline, TOR's sales and profit are likely to be adversely affected.

2009 Outlook

Due to the downturn in the global economy, we have experienced a decrease in HITOX sales of approximately 35% and a decrease in BARTEX sales of approximately 30% during the first six months of 2009 and anticipate this trend to continue through 2009. However, we have experienced an increase in our specialty grade ALUPREM sales during the first six months of 2009 over the corresponding period in 2008 of approximately 15% which is primarily related to the purchasing pattern of one of our US customers. We anticipate the sales of our specialty grade ALUPREM to continue strong throughout 2009. While the decline in the economy has impacted the introduction of our new TIOPREM and OPTILOAD product lines, we anticipate that we will be able to sell these products in plastics, top coat paint and paper applications which were not previously available to us with our traditional HITOX and HALTEX products.

Our new production technologies, installed at our Malaysian operation in May 2008 and at our US operation in March 2009, have replaced fuel oil and natural gas with electricity as our primary source of energy, thereby reducing our overall energy costs. In addition, we have seen a decrease in the cost of freight between Malaysia and the US during the first quarter of 2009. As a result, we were able to secure the delivery of our first shipment of SR, which arrived at our US operation in April 2009, at approximately 25% less than we paid for freight in 2008. Based on our current forecast, this shipment of SR should provide sufficient raw materials to meet most of our US production requirements for 2009.

However, as a result of our projected decrease in worldwide sales of HITOX, our Malaysian operation will be required to decrease their SR production from the 2008 production level of four months to only two months in 2009. As a result, we expect to incur additional costs related to idle facility expense in 2009 at our Malaysian operation of approximately $250,000 or 25% as compared to 2008.

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

At our US operation, we are scaling back our production requirements and reducing costs in 2009. Based on our forecast, we anticipate a reduction in direct and indirect production costs of approximately 30% and a reduction in our SG&A expense of approximately 25%. This is being accomplished through various cost cutting measures, including a reduction in salaries of approximately 20%, elimination of overtime, a reduction in staff and a delay in filling vacant positions. In addition, we are reducing and/or eliminating discretionary spending. Similar cost savings measures have also been implemented at our operations in Malaysia and the Netherlands. However, a portion of the savings may not be immediately recognized due to various laws and regulations relating to termination benefits in these countries. There is no assurance that cost reductions will offset our expected revenue decline in 2009, in which case we would continue to experience a loss from our operations.

Looking to the future

Our strategy focuses on pursuing niche markets for paints, plastics, papers and catalysts applications with high value-added products that produce attractive profit margins and have high barriers to entry by competitors. Our focus is on products that will provide a solid value proposition with our customers and therefore sell at a higher average price and produce more attractive gross margins for TOR. In addition, the high value-added nature of these products allows us to create close partnerships with our customers and develop long-term relationships with recurring and predictable revenue streams.

As we look at our HITOX business going forward, we expect our traditional HITOX business to remain tied to the strength of the US and global economy. Our key growth strategy is to introduce newly developed colored pigments that will expand our addressable market and increase our sales potential. We are applying technologies developed in our Netherlands operation to create new high performance fillers and pigments. Unlike our traditional HITOX products, our new products have high performance characteristics, much broader end market applications and provide for value-added premium pricing.

We introduced four new colored pigments that are heat stable and branded these new products under the name TIOPREM in 2008. In addition, we introduced our new HALTEX line, OPTILOAD, in late 2008. While the decline in the economy has impacted the introduction of these new products, we anticipate that we will be able to sell these products in plastics, top coat paint and paper applications, which were not previously available to us with our traditional HITOX and HALTEX products. However, we believe that these products have the potential to greatly expand our addressable market and we hope that they will be contributing to our results in the second half of 2009.

Actual results could differ materially from those indicated by these forward looking statements because of various risks and uncertainties. See the information under the caption “Forward Looking Information” appearing below the Table of Contents of this report.

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following are our results for the three and six month periods ended June 30, 2009 and 2008.

		(Unaudited)
(In thousands, except per share amounts)		Three Months Ended June 30,				Six Months Ended June 30,
		2009		2008		2009		2008
NET SALES	$	5,654	$	6,916	$	11,357	$	13,662
Cost of sales		4,789		5,912		9,678		11,998
GROSS MARGIN		865		1,004		1,679		1,664
Technical services and research and development		40		61		92		127
Selling, general and administrative expenses		725		1,154		1,736		2,229
Gain on disposal of assets		-		-		-		(2)
OPERATING INCOME (LOSS)		100		(211)		(149)		(690)
OTHER INCOME (EXPENSE):
Interest income		-		-		2		1
Interest expense		(136)		(131)		(248)		(275)
Gain (loss) on foreign currency exchange rate		(12)		(2)		42		(1)
Other, net		2		9		4		10
LOSS BEFORE INCOME TAX		(46)		(335)		(349)		(955)
Income tax expense (benefit)		(38)		3		(72)		(28)
NET LOSS	$	(8)	$	(338)	$	(277)	$	(927)

Loss per diluted common share:	$	(0.00)	$	(0.04)	$	(0.03)	$	(0.12)

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Results of Operations

Net Sales: Consolidated net sales for the quarter ended June 30, 2009 decreased approximately $1,262,000 or 18% compared to the second quarter 2008 primarily due to decreases in HITOX, ALUPREM and BARTEX sales. For the six month period ended June 30, 2009, consolidated net sales decreased approximately $2,305,000 or 17% primarily due to decreases in both HITOX and BARTEX sales which were partially offset by an increase in ALUPREM and HALTEX sales.

Following is a summary of our consolidated products sales for the three and six month periods ended June 30, 2009 and 2008 (in thousands). All inter-company sales have been eliminated.

		(Unaudited)
	Three Months Ended June 30,									Six Months Ended June 30,
Product		2009			2008			Variance			2009			2008			Variance
HITOX	$	2,840	50%	$	3,501	51%	$	(661)	-19%	$	4,783	42%	$	7,306	54%	$	(2,523)	-35%
ALUPREM		1,781	32%		2,208	32%		(427)	-19%		4,525	40%		3,929	29%		596	15%
BARTEX		618	11%		814	12%		(196)	-24%		1,203	11%		1,724	13%		(521)	-30%
HALTEX		333	6%		284	4%		49	17%		649	6%		564	4%		85	15%
TIOPREM		3	<1%		26	<1%		(23)	-88%		3	<1%		26	<1%		(23)	-88%
OTHER		79	1%		83	1%		(4)	-5%		194	1%		113	<1%		81	72%
Total	$	5,654	100%	$	6,916	100%	$	(1,262)	-18%	$	11,357	100%	$	13,662	100%	$	(2,305)	-17%

HITOX sales declined 19% in the second quarter 2009 as compared to the same period in 2008. This follows a decline of 49% in the first quarter 2009 as compared to the same period in 2008. HITOX sales increased in the second quarter 2009 at all of the Company’s three operations compared to the first quarter 2009. For the first six months of 2009, sales of HITOX declined by 35% versus the same period a year ago primarily as a result of the weak North American market and the impact of the global economy. While the economy continues to impact our current year’s sales, many customers have depleted their inventory held at the end of 2008 and are now starting to order replacement inventory.

ALUPREM sales were 19% lower in the second quarter 2009 than the second quarter 2008, primarily due to a decline in sales in Europe of approximately 42% which was partially offset by an increase in US sales primarily due to a change in the order pattern of a significant US customer. For the first six months of 2009, ALUPREM sales increased 15% primarily due to a change in the ordering pattern of a significant US customer.

BARTEX sales declined approximately 24% during the second quarter 2009 as compared to the same period in 2008. For the first six months of 2009, BARTEX sales decreased 30% compared to the same period of 2008. The decrease in BARTEX sales is primarily as a result of the downturn in the US economy.

HALTEX sales increased 17% during the second quarter 2009 and 15% for the first six months of 2009, in each case as compared to the same periods in 2008. Because our HALTEX product line is not as closely tied to the construction industry, the product sales have not had as great an impact from the economic slowdown as our other products. In addition, sales of our new HALTEX line, OPTILOAD, is gaining acceptance in the marketplace.

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Corpus Christi Operation

Our Corpus Christi operation manufactures and sells HITOX, BARTEX and HALTEX to third party customers. In addition, we purchase ALUPREM and HITOX from our subsidiaries, TPT and TMM, for distribution in the Americas. Following is a summary of net sales for our Corpus Christi operation for the three and six month periods ended June 30, 2009 and 2008 (in thousands), as well as a summary of the material changes. All inter-company sales have been eliminated.

		(Unaudited)
	Three Months Ended June 30,									Six Months Ended June 30,
Product		2009			2008			Variance			2009			2008			Variance
HITOX	$	2,100	54%	$	2,432	61%	$	(332)	-14%	$	3,598	46%	$	5,195	65%	$	(1,597)	-31%
ALUPREM		732	19%		391	10%		341	87%		2,198	28%		414	5%		1,784	431%
BARTEX		618	16%		814	20%		(196)	-24%		1,203	16%		1,724	22%		(521)	-30%
HALTEX		333	9%		284	7%		49	17%		649	8%		564	7%		85	15%
TIOPREM		3	<1%		-	0%		3			3	<1%		-	0%		3
OTHER		75	2%		77	2%		(2)	-3%		155	2%		101	1%		54	53%
Total	$	3,861	100%	$	3,998	100%	$	(137)	-3%	$	7,806	100%	$	7,998	100%	$	(192)	-2%

HITOX – Sales during the second quarter increased 8% and 63% in Canada and South America, respectively, as compared to the same period in 2008; however, US sales trailed the second quarter last year by 20% resulting in a net decrease for the quarter of 14%. Year to date, HITOX sales decreased in the US market, as well as in the balance of North America, Central and South America. The decrease is primarily related to the global decline in the construction industry.
ALUPREM – Increase in US sales of ALUPREM primarily due to a change in the order pattern of a significant customer.
BARTEX – Decrease in US sales of BARTEX primarily related to a decrease in demand from existing customers as they deplete their existing inventory as a result of the US economy.
HALTEX – Increase in US sales of HALTEX primarily related to an increase in customer demand and the growing acceptance of our new product, OPTILOAD, in the marketplace.

Netherlands Operation

Our subsidiary in the Netherlands, TPT, manufactures and sells ALUPREM to third party customers, as well as to our Corpus Christi operation for distribution to our US customers. In addition, TPT purchases HITOX from TMM for distribution in Europe. Our increased sales efforts in Europe have resulted in an increase in our customer base, as well as our sales volume. The following table represents TPT’s ALUPREM and HITOX sales (in thousands) for the three and six month periods ended June 30, 2009 and 2008 to third party customers. All inter-company sales have been eliminated.

		(Unaudited)
	Three Months Ended June 30,									Six Months Ended June 30,
Product		2009			2008			Variance			2009			2008			Variance
ALUPREM	$	1,049	86%	$	1,817	85%	$	(768)	-42%	$	2,327	89%	$	3,515	86%	$	(1,188)	-34%
HITOX		176	14%		291	14%		(115)	-40%		290	11%		528	13%		(238)	-45%
TIOPREM		-	0%		26	1%		(26)	-100%		-	0%		26	1%		(26)	-100%
Total	$	1,225	100%	$	2,134	100%	$	(909)	-43%	$	2,617	100%	$	4,069	100%	$	(1,452)	-36%

ALUPREM – Decrease in European sales of ALUPREM primarily related to a decrease in volume and the effects of the foreign currency exchange rate as the Euro weakens against the USD.
HITOX – Decrease in European sales of HITOX primarily related to impact of the global economy on the construction industry, as well as the effects of the foreign exchange rate.

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Malaysian Operation

Our subsidiary in Malaysia, TMM, manufactures and sells HITOX and SR to third party customers, as well as to our Corpus Christi operation and TPT. The following table represents TMM’s sales (in thousands) for the three and six month periods ended June 30, 2009 and 2008 to third party customers. All inter-company sales have been eliminated.

		(Unaudited)
	Three Months Ended June 30,									Six Months Ended June 30,
Product		2009			2008			Variance			2009			2008			Variance
HITOX	$	564	99%	$	778	99%	$	(214)	-28%	$	895	96%	$	1,583	99%	$	(688)	-43%
OTHER		4	1%		6	1%		(2)	-33%		39	4%		12	1%		27	225%
Total	$	568	100%	$	784	100%	$	(216)	-28%	$	934	100%	$	1,595	100%	$	(661)	-41%

HITOX – Decrease in Asian sales primarily related to a decrease in volume related to impact of the global economy on the construction industry. However, compared to the first quarter 2009, second quarter HITOX sales in the Asian market increased 70%.

Other Consolidated Results

Gross Margin: For the three month period ended June 30, 2009, gross margin increased approximately .08% percent, from 14.5% in 2008 to 15.3% in 2009. For the six month periods ended June 30, 2009 and 2008, gross margin increased approximately 2.6%, from 12.2% to 14.8%. The primary factors affecting our gross margin include the mix of products sold during the three and six month periods compared to the same periods in 2008, as well as a reduction in the cost of energy and raw materials. Also contributing to the year to date increase in the gross margin were cost reduction measures implemented during the first quarter 2009, primarily at the US operation, which reduced indirect costs approximately 19% primarily related to a reduction in labor and equipment repairs which were reduced approximately 20% and 31%, respectively, as compared to the same six month period 2008.

Technical Services and Selling, General, Administrative and Expenses (“SG&A”): Total SG&A expenses decreased approximately 37% and 22% during the three and six month periods ended June 30, 2009, respectively, as compared to the comparable periods in 2008, primarily due to a reduction in staff, travel and other discretionary expenses. At the US operation, SG&A decreased approximately 55% and 37%, respectively, compared to the same three and six month periods in 2008 as a result of the Company’s cost cutting initiative implemented during the first quarter 2009. Similar measures have also been implemented at the European and Asian operations.

Interest Expense: Net interest expense increased approximately $5,000 and decreased approximately $27,000 as compared to the same three and six month periods in 2008, respectively. The year to date reduction in interest expense is primarily related to the decrease in long-term debt.

Income Taxes: Income taxes consisted of a foreign deferred tax benefit of approximately $40,000 and state income tax expense of $2,000 for the three month period ended June 30, 2009, compared to state income tax expense of $3,000 for the same three month period in 2008. For the six-month periods ended June 30, 2009 and 2008, we recorded a foreign deferred tax benefit of approximately $75,000 and $33,000, respectively, and state income tax expense of $3,000 and $5,000, respectively. Taxes are based on an estimated annualized consolidated effective rate of 20.6%

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Liquidity, Capital Resources and Other Financial Information

Liquidity

Going Concern

As reported in the Company’s Form 8-K filed with the Securities and Exchange Commission on May 6, 2009 the Company amended and restated the Credit Agreement with the Bank. Under the terms of the amendment, subject to the Company’s compliance with the terms and conditions contained in the amendment, including revised financial covenants, the Bank agreed not to exercise any of its rights or remedies relating to the existing events of default under the Credit Agreement. The Bank also agreed to extend the maturity date on our Line of Credit (the “Line”) from April 1, 2009 to October 1, 2009. In addition, the amendment modified the maturity date for our real estate term loan (the “Loan”) from November 30, 2010 to October 1, 2009 and our term loan (the “Term Loan”) from May 1, 2012 to October 1, 2009. The Credit Agreement is secured by all of the Company’s assets in the US. The interest rate on the Line, the Loan and the Term Loan was increased from prime plus two percent to prime plus two and one-half percent, which was 5.75% at June 30, 2009. As a result, all of the Company’s debt owed to the Bank matures on October 1, 2009.

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Long-term Debt

Following is a schedule of our long-term debt.

		(Unaudited)
(In thousands)		June 30,		December 31,
		2009		2008
Term note payable to a U.S. bank, with an interest rate of 5.75% at June 30, 2009, due October 1, 2009, secured by real estate and leasehold improvements of our US operation.	$	502	$	576
Term note payable to a U.S. bank, with an interest rate of 5.75% at June 30, 2009, due October 1, 2009, secured by property, plant and equipment, inventory and accounts receivable of our US operation.		292		342
Term note payable to a U.S. equipment financing company, with an interest rate of 5.24% at June 30, 2009, due April 1, 2013, secured by Caterpillar front-end loader.		95		106
Fixed rate term Euro note payable to a Netherlands bank, with an interest rate of 5.5% at June 30, 2009, due June 1, 2009, secured by TPT's assets.		-		94
Fixed rate term Euro note payable to a Netherlands bank, with an interest rate of 7.8% at June 30, 2009, due July 1, 2029, secured by TPT's land and office building purchased July 2004. (391 Euro)		549		560
Fixed rate term Euro note payable to a Netherlands bank, with an interest rate of 4.7% at June 30, 2009, due January 31, 2030, secured by TPT's land and building purchased January 2005. (388 Euro)		545		556
Fixed rate term Euro note payable to a Netherlands bank, with an interest rate of 6.1% at June 30, 2009, due July 31, 2015, secured by TPT's assets. (308 Euro)		433		465
U.S. Dollar term note payable to a Malaysian bank, with an interest rate of 2.0% at June 30, 2009, due June 30, 2010, secured by TMM's property, plant and equipment.		358		525
U.S. Dollar term note payable to a Malaysian bank, with an interest rate of 2.13% at June 30, 2009, due April 1, 2010, secured by TMM's property, plant and equipment.		191		242
Total		2,965		3,466
Less current maturities		1,366		1,590
Total long-term debt and notes payable	$	1,599	$	1,876

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

US Operations

Bank of America Credit Facility and Term Loans

Covenants to be based on the results of the Corpus Christi operation
Current Ratio – Maintain a ratio of current assets to current liabilities of at least 1.0 to 1.0 as of the quarter ending June 30, 2009 (1.2 at June 30, 2009)
Fixed Charge Coverage Ratio – Maintain a fixed charge coverage ratio of at least 0.85 to 1.0 for the quarter ending June 30, 2009 (0.85 at June 30, 2009)

Six-percent Convertible Subordinated Debentures

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Netherlands Operation

Malaysian Operation

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Cash and Cash Equivalents

As noted on the following table, cash and cash equivalents increased $13,000 from December 31, 2008 to June 30, 2009 as compared to a decrease of $167,000 from December 31, 2007 to June 30, 2008.

		(Unaudited)
		Six Months Ended June 30,
(In thousands)		2009		2008
Net cash provided by (used in)
Operating activities	$	(670)	$	935
Investing activities		(578)		(1,696)
Financing activities		1,544		603
Effect of exchange rate fluctuations		(283)		(9)
Net change in cash and cash equivalents	$	13	$	(167)

Operating Activities

We used $670,000 in operating activities during the first six months of 2009. Following are the major changes in working capital affecting cash provided by operating activities for the six month period ended June 30, 2009:

Accounts Receivable: Accounts receivable increased $761,000 as compared to an increase of $1,415,000 for the same period in 2008. The increase in accounts receivable is primarily due to stronger sales in the second quarter 2009 as compared to the fourth quarter 2008. Accounts receivable increased $676,000 at the Corpus Christi operation and $158,000 at TMM, offset by a decrease at TPT of $73,000.
Inventories: Inventories decreased $1,191,000 as compared to a decrease of $1,523,000 for the same period in 2008. Inventories at the Corpus Christi operation decreased $1,272,000 primarily related to a decrease in both finished goods and raw materials and TPT’s decreased $144,000 primarily due to a decrease in finished goods. TMM’s inventories increased approximately $225,000 primarily due to an increase in raw materials which was partially offset by a decrease in finished goods.
Other Current Assets: Other current assets increased $527,000 as compared to an increase of $332,000 for the same period in 2008. At the Corpus Christi operation, prepaid expenses increased $188,000 primarily due to insurance; at TPT $50,000 related to prepaid insurance and pension expense; and at TMM $289,000 related to prepaid freight related to a shipment of SR to the Corpus Christi operation.
Accounts Payable and Accrued Expenses: Trade accounts payable and accrued expenses decreased $1,139,000 as compared to an increase of $1,041,000 for the same period in 2008. Accounts payable and accrued expenses at the Corpus Christi operation decreased $327,000 and at TMM decreased $982,000. TPT’s accounts payable and accrued expenses increased approximately $170,000 primarily relating to raw materials.

Investing Activities

We used cash of $578,000 in investing activities during the first six months of 2009 primarily for the purchase of fixed assets as compared to $1,696,000 during the same period in 2008. Net investments for each of our three locations are as follows:

Corpus Christi Operation: We invested approximately $529,000 for equipment related to new process technologies to convert a majority of our production from natural gas to electricity, as compared to $299,000 for the same period in 2008 for capital maintenance.
Netherlands Operation: We invested approximately $43,000 at TPT for new equipment, as compared to $31,000 for the same period in 2008.
Malaysian Operation: We invested approximately $6,000 at TMM for new equipment, as compared to $1,366,000 for the same period in 2008 for equipment related to new process technologies to convert the energy supply for the production of HITOX from fuel oil to electricity.

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Financing Activities

We received $1,544,000 from financing activities during the six month period ended June 30, 2009 as compared to $603,000 for the same period 2008. Significant factors relating to financing activities include the following:

Lines of Credit: Our borrowings on the domestic line of credit increased $1,100,000 primarily for the purpose of financing our new processing equipment and working capital, as compared to a decrease of $125,000 for the same period in 2008 which was primarily to related a decrease in inventory levels. Borrowings at TPT decreased approximately $2,000 primarily for the purpose of financing working capital as compared to an increase of $53,000 for the same period in 2008.
Export Credit Refinancing Facility (ECR): TMM’s borrowings on the ECR increased $15,000 primarily for the purpose of financing working capital as compared to an increase of $365,000 for the same period in 2008.
Capital Leases: Capital leases decreased approximately $43,000 related to lease payments at both the Corpus Christi operation and at TPT. During the same period in 2008, capital leases decreased approximately $17,000 as a result of the acquisition of equipment at the Corpus Christi operation which provided approximately $26,000 offset by a reduction in capital leases, primarily at TPT, of approximately $43,000.
Long-term Debt – Financial Institutions: Long-term debt decreased approximately $496,000 compared to an increase of approximately $345,000 during the same period in 2008. At the Corpus Christi operation, long-term debt decreased $134,000; at TPT $157,000 and at TMM $205,000.
6% Convertible Subordinated Debentures: We received subscription agreements for 59 Units ($1,475,000) of our six percent convertible subordinated debentures with warrants during the second quarter 2009. The proceeds from the first 40 Units ($1 million) were used to reduce inter-company debt between the US operation and TMM related to the purchase of inventory. We have tentatively accepted the subscriptions for an additional 19 Units ($475,000) subject to shareholder approval. The proceeds from these 19 Units are held in restricted cash and will be used to reduce our debt to Bank of America after receiving shareholder approval in August 2009.
Proceeds from Issuance of Common Stock: For the six month period ended June 30, 2009, we did not receive proceeds from the issuance of common stock. This compares to $12,000 received from the exercise of employee stock options for the same period in 2008.
Preferred Stock Dividends: We paid dividends of $30,000 on our Series A convertible preferred stock for both of the six month periods ended June 30, 2009 and 2008.

TOR Minerals International, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition and Results of Operation

Off-Balance Sheet Arrangements and Contractual Obligations

No material changes have been made to the “Off-Balance Sheet Arrangements and Contractual Obligations” noted in the Company’s 2008 Annual Report on Form 10-K except as noted above.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company's Chief Executive Officer and Acting Chief Financial Officer, management of the Company has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Acting Chief Financial Officer concluded that, as of the date of the evaluation, the Company's disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

During the period covered by this report, there were no significant changes in the Company's internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Part II - Other Information

Item 1.

Legal Proceedings

In late July 2008, we learned that our former chief financial officer, Steven H. Parker, filed a complaint with the Occupational Safety and Health Administration, U.S. Department of Labor. Parker’s complaint was filed on or about July 21, 2008, and alleges that TOR violated the whistleblower provisions of the Sarbanes-Oxley Act of 2002 by terminating Parker’s employment in response to Parker’s reporting to our CEO and a board member of the negative accounting treatment of a potential transaction. In addition, Parker has claimed that he was terminated for refusing to perform an illegal act in violation of Texas law. Parker subsequently notified the Department of Labor that he intended to bring an action against the Company in the United States District Court for the Southern District of Texas. Because of Parker’s election to proceed in the United States District Court, the Department of Labor has dismissed Parker’s complaint. Relief sought by Parker includes back pay, reinstatement or front pay in lieu of reinstatement and reasonable attorney’s fees and costs. We intend to vigorously defend such legal action.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

As discussed in the our Form 8-K filed with the Securities and Exchange Commission on May 6, 2009, we entered into subscription agreements on May 4, 2009, pursuant to which we sold Units (the “Units”) to certain related parties, each Unit consisting of an aggregate principal amount of $25,000 of its six-percent (6%) Convertible Subordinated Debentures due May 4, 2016, which is incorporated herein by reference. Debentures comprising a Unit are convertible into 47,170 shares of our common stock, subject to adjustments for certain events, at an initial conversion price of $0.53 per share. In addition, we also issued to each subscriber of a Unit Warrants to purchase 47,170 shares of common stock. The Warrants may be exercised in whole or in part at any time or from time to time only after we obtain shareholder approval for the issuance of shares upon exercise of the Warrants and on or before the seven year anniversary of the date hereof, unless otherwise extended. If such shareholder approval is not obtained, the Warrants shall remain non-exercisable. The initial exercise price of the Warrants is $0.53.

In addition to the above referenced Debentures, in June 2009 we received subscription agreements from five additional accredited investors for 19 Units for an aggregate purchase price of $475,000. Thomas Pauken, our director and a 2% shareholder, purchased one (1) Unit; and Mark Graber, an 11.7% shareholder, purchased 16 Units. We have accepted these subscription agreements subject to shareholder approval at our annual meeting on August 21, 2009. The proceeds are held in restricted cash and will be used to reduce our debt to the Bank after receiving shareholder approval.

No underwriters were involved in the foregoing offers and sales of securities. These offers and sales were made in reliance upon an exemption from the registration provisions of the Securities Act of 1933, as amended (the “Securities Act”), set forth in Section 4(2) under the Securities Act. The offers and sales were made only to :accredited investors” as such term is defined in Regulation D under the Securities Act with whom we had previous relationships and we did not partake in any general solicitation or advertisement. All of the foregoing securities sold in the private placement are deemed restricted securities for purposes of the Security Act.

Item 3.

Defaults Upon Senior Securities

At December 31, 2008 and March 31, 2009, we were not in compliance with certain financial covenants in the Credit Agreement. We received notification from the Bank on March 5, 2009 of the Bank’s decision to terminate the Credit Agreement and require us to pay off all outstanding indebtedness owed to the Bank by April 1, 2009. On April 30, 2009, we amended the Credit Agreement with the Bank. Under the terms of the amendment, subject to our compliance with the terms and conditions contained in the amendment, including revised financial covenants, the Bank agreed not to exercise any of its rights or remedies relating to the existing events of default under the Credit Agreement and to extend the maturity date from April 1, 2009 to October 1, 2009. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity” for a discussion of the amendment of the Credit Agreement.

Part II - Other Information

Item 5.

Other Information

Amended By-Laws

Stockholder’s Meetings. On April 6, 2009, the Board of Directors amended Section 1 of Article I of TOR’s By-Laws to change the date of the annual stockholder’s meeting. The By-Laws previously provided than an annual meeting of stockholders shall be held on a day in May of each year. The amendment provides for the annual meeting of the stockholders may be held on any date and at any time set by the Board of Directors.

Item 6.

Exhibits

(a)	Exhibits
	Exhibit 10.1	By-Laws, Amended April 6, 2009
	Exhibit 31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	Exhibit 31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	Exhibit 32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	Exhibit 32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Signatures:

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

	TOR Minerals International, Inc.
	____________
	(Registrant)

Date:	August 10, 2009	OLAF KARASCH Olaf Karasch President and CEO

Date:	August 10, 2009	BARBARA RUSSELL Barbara Russell Acting CFO

EX-10 2 exhibit10.htm EXHIBIT 10 - BY-LAWS Exhibit 10.1 - By-Laws

TOR MINERALS INTERNATIONAL, INC.

BY-LAWS

______________________________________

ARTICLE I

STOCKHOLDERS

SECTION 1. (Amended 04/06/09) The annual meetings of the stockholders of the Corporation shall be held in such city in the United States, and at such time and at such place in such city as the Board of Directors, from time to time, shall establish provided that at least ten days notice shall be given to the stockholders of the time and place so fixed by the Board of Directors each year, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting.

SECTION 2. Special meetings of the stockholders may be called upon the call of the Board of Directors or of the Executive Committee or of the Chairman or President (and shall be called by the Chairman or President at the request in writing of stockholders owning 10% of the outstanding shares of the Corporation entitled to vote at the meeting), at such time and at such place within or without the State of Delaware, as may be fixed by the Board of Directors or by the Executive Committee or by the Chairman or President (or by the stockholders owning 10% of the outstanding shares of the Corporation entitled to vote), as the case may be, and as may be stated in the notice setting forth such call.

If the Chairman or President, shall not, within five days after the receipt of such request from stockholders owning 10% of the outstanding shares of the Corporation entitled to vote; notify such holders of such stock in writing that such request will be complied with, or if notice of such meeting shall not be given within twenty-five days after the receipt of such request, such holders of outstanding stock of the Corporation entitled to vote shall have the power to call and convene such meeting of the stockholders. The record date for the determination of the holders of the outstanding stock entitled to vote at any such meeting called by such holders of such stock, as hereinabove provided, shall be the close of business on the thirtieth day next preceding the date on which such meeting shall be called to be held, unless such thirtieth day shall fall on a Saturday, Sunday or legal holiday, in which event such record date shall be the close of business on the next preceding business day which is not a Saturday.

SECTION 3. Notice of the time and place for every meeting of stockholders shall be delivered personally or mailed at least ten days previous thereto to each stockholder of record entitled to vote, who shall have furnished a written address to the Secretary of the Corporation for the purpose. Such further notice shall be given as may be required by law. Meetings may be held without notice, if all stockholders entitled to vote are present, or if notice is waived by those not present. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy; and if any stockholder shall, in person or by attorney thereunto authorized, in writing or by telegraph or cable, waive notice of any meeting, whether before or after such meeting be held, notice thereof need not be given him.

SECTION 4. The holders of record of a majority of the shares of the capital stock of the Corporation, issued and outstanding and entitled to vote, present in person or by proxy, shall except as otherwise provided by law, constitute a quorum at all meetings of the stockholders. If there be no such quorum, the holders of a majority of such shares so present or represented may adjourn the meeting from time to time until a quorum shall have been obtained and no notice of the adjourned meeting need be given except as required by law. At any adjourned meeting at which a quorum shall be represented, any business may be transacted which might have been transacted if the meeting had been held on the date originally fixed.

SECTION 5. Meetings of the stockholders shall be presided over by the Chairman or in his absence, the President, or, in his absence, a Chairman chosen at the meeting. The Secretary of the Corporation, or an Assistant Secretary, or, a person chosen at the meeting shall act as Secretary of the meeting.

SECTION 6. Each stockholder entitled to vote at any meeting shall have one vote in person or by proxy for each share of stock held by him which has voting power upon the matter in question at the time; but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.

SECTION 7. At all elections of directors by the stockholders the voting shall be by ballot, and a majority of the votes cast thereat shall elect. The vote upon any question before any meeting of stockholders, other than the election of directors, shall, in the discretion of the presiding officer at any such meeting, be either by ballot or viva voce. At all meetings of stockholders, all questions (except matters of procedure which shall be determined by the Chairman of the meeting), the manner of deciding which is not specifically regulated by statute, or by the Certificate of Incorporation, or by these By-Laws, shall be determined by the vote of a majority of the stockholders entitled to vote at the meeting present in person or by proxy.

SECTION 8. The presiding officer at each meeting of stockholders shall appoint an inspector or inspectors of election to conduct all votes by ballot unless such appointment shall be unanimously waived by those stockholders present or represented by proxy at the meeting and entitled to vote. In case any person appointed as an inspector shall fail to appear or to act, a substitute inspector shall be appointed by the presiding officer. Inspectors of election need not be stockholders of the Corporation and may be officers or employees of the Corporation, except that no director or candidate for the office of director shall be appointed as an inspector. Inspectors of election shall first take and subscribe to an oath or affirmation faithfully to execute the duties of inspector of such meeting with strict impartiality and according to the best of their respective abilities, and shall take charge of the polls and after the balloting shall make a certificate of the result of the vote taken.

SECTION 9. The officer who has charge of the stock ledger shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, said list of stockholders, or to vote in person or by proxy at any meeting of stockholders.

ARTICLE II

DIRECTORS

SECTION 1. (Amended 5/10/01) The number of directors which shall constitute the whole Board of Directors of the Corporation shall be fixed from time to time by resolution of the Board of Directors but shall not be less than five (5) nor more than nine (9), who shall serve and hold office until their respective successors are duly elected and qualified or until the annual meeting of the stockholders next ensuing or resignation or removal, whichever shall be first. A majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of the majority of the directors present at a meeting at which a quorum is present, shall be the act of the Board of Directors. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum shall have been obtained.

SECTION 2. In case of vacancies on the Board of Directors, other than upon removal in the manner authorized in Section 7 of this Article II of the By-Laws, a majority of the Directors then in office may elect Directors to fill such vacancies until the next annual meeting of stockholders or until their respective successors shall have been duly elected and shall have qualified, whichever shall first occur. In case of any increase in the number of Directors, the additional Directors may be elected by the Board of Directors to hold office until the next annual meeting of the stockholders and until their successors are elected and qualified.

SECTION 3. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board, or as may be specified in the call of any meeting. Regular meetings of the Board of Directors shall be held at such times as may from time to time be fixed by resolution of the Board, and special meetings may be held at any time upon the call of the Executive Committee Chairman or President, or a majority of directors, by oral, telegraphic, electronic or written notice, duly served on or sent or mailed to each Director not less than one day before such meeting. A meeting of the Board may be held without notice immediately after the annual meeting of stockholders at the same place at which such meeting was held. Notice need not be given of regular meetings of the Board held at times fixed by resolution of the Board. Meetings, whether regular or special, may be held at any time without notice if all the Directors are present or if those not present waive notice of the meeting in writing.

SECTION 4. (Amended 6/14/94) The Board of Directors may, in its discretion, by resolution passed by a majority of the whole Board designate an Executive Committee to consist of such Directors as the Board may from time to time determine, which Committee shall have, and may exercise when the Board is not in session, the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it; but the Executive Committee shall not have the power to fill vacancies in the Board or to change the membership of or to fill vacancies in the said Committee, or to make or amend By-Laws of the Corporation. The Board shall have the power at any time to change the membership of said Committee, to fill vacancies in it, or to dissolve it. The Executive Committee may make rules for the conduct of its business. A majority of the members of the said Committee shall constitute a quorum.

SECTION 5. The Board of Directors may, in its discretion, appoint other committees which shall have and may exercise such powers as shall be respectively conferred or authorized by the resolutions appointing them. A majority of any such committee, composed of more than two members, may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. The Board of Directors shall have power at any time to change the members of such committee, to fill vacancies therein, and to dissolve the same.

SECTION 6. Each Director shall be paid such compensation, if any, and such sum for expenses of attendance, if any, as shall be fixed by the Board of Directors for his services as a director or as a member of a committee or both.

SECTION 7. Notwithstanding anything to the contrary contained in the By-Laws of the Corporation, any one or more or all of the Directors may be removed either with or without cause at any time by the affirmative vote of a majority of issued and outstanding shares of stock of the Corporation at any special meeting which may be called by the Chairman or President at the request of the holder or holders of 10% of the outstanding shares entitled to vote for the election of Directors, at such time at such place within or without the State of Delaware as may be fixed in the notice of said meeting and thereupon the term of each Director or Directors who shall have been so removed shall forthwith terminate and there shall be a vacancy or vacancies in the Board of Directors, which vacancy or vacancies shall be filled by the election of a new Director or Directors at the same special meeting, which new Director or Directors shall serve until his successor or their successors shall be elected and shall qualify.

SECTION 8. Notwithstanding anything to the contrary contained in the By-Laws of the Corporation, a Director may also be removed from office at any time during his or her term with or without cause by written demand therefor by the holder or holders of more than 50% of the outstanding stock entitled to vote for the election of Directors filed with or sent to the Secretary of the Corporation, or in his or her absence any other officer of the Corporation.

ARTICLE III (Amended 3/3/93)

INDEMNIFICATION

SECTION 1. Indemnification of Directors and Officers.

(a) Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permissible under Delaware law, as the same exists or may hereafter exist in the future (but, in the case of any future change, only to the extent that such change permits the Corporation to provide broader indemnification rights than the law permitted prior to such change), each person who was or is made a party or is threatened to be made a party or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether formal or informal, whether of a civil, criminal, administrative or investigative nature (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation, whether the basis of such proceeding is an alleged action or inaction in an official capacity or in any other capacity, from and against all costs, charges, liabilities and losses (including, without limitation, judgments, fines, ERISA excise taxes, or penalties and amounts paid or to be paid in settlement) suffered and expenses (including, without limitation, attorneys' fees and expenses) reasonably incurred by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors and administrators. The Corporation shall be required to indemnify a director or officer in connection with a proceeding initiated by such person only if such proceeding was authorized by the Board of Directors of the Corporation.

(b) Prepayment of Expenses. The Corporation shall pay expenses actually incurred by a director or officer in connection with any proceeding in advance of its final disposition; provided, however, that if Delaware law then requires, the payment of such expenses incurred by a director or officer in advance of the final disposition of a proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Article or otherwise.

(c) Claims. If a claim under paragraph (a) of this Section 1 is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. Neither the failure of the Corporation (including its Board, independent legal counsel, or its stockholders) to have made a determination that indemnification of the claimant is permissible in the circumstances because the claimant has met the applicable standard of conduct, if any, nor an actual determination by the Corporation (including its Board, independent legal counsel, or its shareholders) that the claimant has not met the standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the standard of conduct. In any such action, the Corporation shall have the burden of proving that the director or officer was not entitled to the requested indemnification or payment of expenses under applicable law.

SECTION 2. Indemnification of Employees and Agents. The Corporation may, in the discretion of the Board of Directors of the Corporation, provide indemnification to employees and agents of the Corporation to the fullest extent permissible under Delaware law.

SECTION 3. Expenses as a Witness. To the extent that any director, officer, employee or agent of the Corporation is by reason of such position, or position with another entity at the request of the Corporation, a witness in any action, suit or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

SECTION 4. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or of another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under Delaware law.

SECTION 5. Indemnity Agreements. The Corporation may enter into agreements with any director, officer, employee or agent of the Corporation providing for indemnification to the fullest extent permissible under Delaware law.

SECTION 6. Separability. Each and every paragraph, sentence, term and provision of this Article III is separate and distinct, so that if any paragraph, sentence, term or provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or unenforceability of any other paragraph, sentence, term or provision hereof. To the extent required, any paragraph, sentence, term or provision of this Article III may be modified by a court of competent jurisdiction to preserve its validity and to provide the claimant with, subject to the limitations set forth in this Article III and any agreement between the Corporation and claimant, the broadest possible indemnification permitted under applicable law.

SECTION 7. Contract Right. Each of the rights conferred on directors and officers of the Corporation by Sections 1 and 3 of this Article and on employees or agents of the Corporation by Section 3 of this Article shall be a contract right and any repeal or amendment of the provisions of this Article shall not adversely affect any right hereunder of any person existing at the time of such repeal or amendment with respect to any act or omission occurring prior to the time of such repeal or amendment, and, further, such repeal or amendment shall not apply to any proceeding, irrespective of when the proceeding is initiated, arising from the service of such person prior to such repeal or amendment.

SECTION 8. Nonexclusivity. The rights conferred on any person by Article III shall not be exclusive of any other rights that any person may have or hereafter acquire under any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

SECTION 9. Other Indemnification. The Corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person has collected as indemnification from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

SECTION 10. Indemnification For Proceedings Arising From Service Prior to Adoption of this Article III. The provisions of this Article III shall apply, subject to the limitations set forth in this Article III, to any proceeding, irrespective of when the proceeding is initiated, arising from the service of any person both prior to and from and after the adoption of this Article III; provided, however, if for any reason the provisions of this Article III shall not be valid or enforceable or applicable to any proceeding, irrespective of when the proceeding is initiated, arising from the service of any person prior to the adoption of this Article III, then the repeal of provisions of Article III of the Bylaws of the Corporation in effect prior to the adoption of this Article III shall not adversely affect any right or protection thereunder of any person in respect of any act or omission occurring prior to the time of such repeal, and in such circumstance, the provisions of the former Article III shall be contract rights that shall apply to any proceeding, irrespective of when the proceeding is initiated, arising from the service of such person prior to such repeal.

ARTICLE IV

OFFICERS

SECTION 1. The Board of Directors, as soon as may be practicable after the election thereof held in each year, shall choose a Chairman, a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors or the Executive Committee may from time to time appoint such additional Vice Presidents, such Assistant Secretaries, Assistant Treasurers and such other officers as it may deem proper and may fill vacancies in any offices. The offices of Secretary and Treasurer may be held by the same person, and a Vice President of the Corporation may also be either the Secretary or the Treasurer. The Chairman and the President shall be chosen from the Directors. The Chairman shall be the Chief Executive Officer of the Corporation unless otherwise designated by the Board of Directors.

SECTION 2. The term of office of all officers shall be one year, or until their respective successors are chosen, but any officer may be removed from office with or without cause at any time by the affirmative vote of a majority of the members of the Board then in office.

SECTION 3. The officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be converted by the Board of Directors or by the Executive Committee. The Treasurer and the Assistant Treasurers may be required to give bond for the faithful discharge of their duties in such form and with such surety or sureties as the Board of Directors may from time to time prescribe.

ARTICLE V

CERTIFICATES OF STOCK

SECTION 1. The interest of each stockholder of the Corporation shall be evidenced by certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The shares in the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his duly authorized attorney, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require.

SECTION 2. The certificates of stock shall be signed by two of the Chairman, the President, a Vice President, the Secretary, the Treasurer, an Assistant Secretary, or an Assistant Treasurer, and registered in such manner, if any, as the Board of Directors or the Executive Committee may by resolution prescribe. Where any such certificate is signed by a transfer agent or transfer clerk and by a registrar, the signatures of any such Chairman, President, Vice President, Secretary, Treasurer, Assistant Secretary or Assistant Treasurer may be facsimiles, engraved or printed.

Any person claiming a certificate of stock of this corporation to be lost, destroyed or mutilated, shall make an affidavit or affirmation to that effect and shall, if the Board of Directors so requires, give the Corporation a bond of indemnity in form and with one or more sureties satisfactory to the Board of Directors in at least double the value of the Stock represented by such certificate; whereupon, in the discretion of the Board of Directors, a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost, destroyed or mutilated. The Board of Directors may, upon such conditions as the Board shall specify, authorize the issuance of a new certificate of the same tenor and for the same number of shares as the one alleged to be lost, destroyed or mutilated, without the necessity of further action by the Board of Directors in each particular case, upon the filing with the Corporation of an affidavit or affirmation and by the giving of a bond of indemnity to the Corporation for an amount and in such form as shall be satisfactory to officers of the Corporation designated by the Board of Directors from time to time.

SECTION 3. In order to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action.

In the event no record date is so fixed:

(1)	The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
(2)	The record date for determining stockholders for any other purpose shall be at close of business on the day on which the Board of Directors adopts the resolution relating thereto.
(3)	A determination of stockholders of record entitled to a notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

ARTICLE VI

CHECKS, NOTES, ETC.

All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, agent or agents as shall be thereunto authorized from time to time by the Chairman, President, any Vice President, the Secretary, the Treasurer, or any Assistant Secretary or Assistant Treasurer.

ARTICLE VII

OFFICES, BOOKS, RECORDS, ETC.

The Corporation and the stockholders and the Directors may have offices and the books, records, documents and papers of the Corporation, except as may otherwise be required by the laws of the State of Delaware, may be kept within or without the State of Delaware at such place or places as may be determined from time to time by the Board of Directors or the Executive Committee.

ARTICLE VIII

AMENDMENTS

The By-Laws of the Corporation may be amended, added to, rescinded, or repealed at any meeting of the Board of Directors or of the stockholders provided notice of the proposed change is given in the notice of the meeting. No change of the time or place for the annual meeting of the stockholders for the election of Directors shall be made except in accordance with the laws of the State of Delaware in such case made or provided.

ARTICLE IX

PROVISIONS FOR NATIONAL EMERGENCIES

During the periods of emergency resulting from an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of its Board of Directors or its stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, the following provisions shall apply, notwithstanding any different provision elsewhere contained in these By-Laws or in the Articles of Incorporation:

(1)	Whenever during such emergency and as a result thereof a quorum of the Board of Directors or a standing committee thereof cannot readily be convened for action, a meeting of such board or committee thereof may be called by any officer or director by a notice of the time and place given only to such of the directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publications or radio. The director or directors in attendance at the meeting shall constitute a quorum, provided, however, that the officers or other persons present designated on a list approved by the Board of Directors before the emergency, all in such order of priority and subject to such conditions and for such period of time as may be provided in the resolution approving such list, or in the absence of such a resolution, the officers of the Corporation who are present, in order of rank, and within the same rank in order of seniority, shall to the extent required to provide a quorum be deemed directors for such meeting.
(2)	The Board of Directors, either before or during any such emergency, may provide, and from time to time modify, lines of succession in the event that during such emergency any or all officers or agents of the Corporation shall for any reason be rendered incapable of discharging their duties.
(3)	The Board of Directors, either before or during any such emergency, may, effective in the emergency, change the head office or designate several alternative head offices or regional offices, or authorize the officers to do so.
(4)	No officer, director or employee acting in accordance with this article shall be liable except for willful misconduct.
(5)	To the extent not inconsistent with this article, all other articles of these By-Laws shall remain in effect during any emergency described in this article and upon its termination the provisions of this article covering the duration of such emergency shall cease to be operative.

EX-31 3 ceo31-1.htm EXHIBIT 31 - CEO CERTIFICATION Exhibit 31 Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Olaf Karasch, President and Chief Executive Officer of TOR Minerals International, Inc. (the "Registrant"), certify that:

I have reviewed this report on Form 10-Q of TOR Minerals International, Inc.;
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;
The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:
1. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
2. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
3. evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
4. disclosed in this quarterly report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
1. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
2. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

/s/ Olaf Karasch
Olaf Karasch
President and Chief Executive Officer
(Principal Executive Officer)
August 10, 2009

EX-31 4 cfo31-2.htm EXHIBIT 31 - CFO CERTIFICATION Exhibit 31 Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, Barbara Russell, Acting Chief Financial Officer of TOR Minerals International, Inc. (the "Registrant"), certify that:

I have reviewed this report on Form 10-Q of TOR Minerals International, Inc.;
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;
The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:
1. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
2. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
3. evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
4. disclosed in this quarterly report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
1. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
2. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

/s/ BARBARA RUSSELL
Barbara Russell
Acting Chief Financial Officer
(Principal Financial Officer)
August 10, 2009

EX-32 5 ceo32-1.htm EXHIBIT 32 - CEO CERTIFICATION Exhibit 32 Exhibit 32.1

Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of TOR Minerals, Inc. ("Registrant") for the quarter ended June 30, 2009 (the "Report") as filed with the Securities and Exchange Commission, the undersigned Chief Executive Officer of the Registrant hereby certifies, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ OLAF KARASCH
Olaf Karasch
President and Chief Executive Officer
(Principal Executive Officer)
August 10, 2009

EX-32 6 cfo32-2.htm EXHIBIT 32 - CFO CERTIFICATION Exhibit 32 Exhibit 32.2

Certification of Acting Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of TOR Minerals, Inc. ("Registrant") for the quarter ended June 30, 2009 (the "Report") as filed with the Securities and Exchange Commission, the undersigned Acting Chief Financial Officer of the Registrant hereby certifies, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant

/s/ BARBARA RUSSELL
Barbara Russell
Acting Chief Financial Officer
(Principal Financial Officer)
August 10, 2009

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