UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

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


For the fiscal year                                            Commission File
ended June 30, 2001                                             Number 0-5200

                                  BONTEX, INC.
              Exact name of Registrant as specified in its charter

      VIRGINIA                                                    54-0571303
State of Incorporation                                          IRS Employer No.

ONE BONTEX DRIVE, BUENA VISTA, VIRGINIA                            24416-1500
Address of principal executive offices                              Zip Code

                  Registrant's telephone number (540) 261-2181

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

Securities registered pursuant to Section 12(g) of the Act:
                                                             Title of Class
                                                     $.10 par value common stock

Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months with the
Commission, and (2) has been subject to the filing requirements for at least the
past 90 days: ( x ) Yes ( ) No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K (X)

Aggregated market value of the voting stock held by non-affiliates of the
Registrant: $1.3 million at August 30, 2001

On August 30, 2001, the Registrant had 1,572,824 shares of $.10 par value common
stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

(1)      Portions of the Registrant's Annual Report to Stockholders for fiscal
         year ended June 30, 2001 (the "Annual Report") are incorporated by
         reference into Parts I and II hereof.

(2)      Portions of the Registrant's definitive Proxy Statement for its Annual
         Meeting of Stockholders to be filed with the Securities and Exchange
         Commission pursuant to Regulation 14A under the Securities Act of 1934
         (the "Proxy Statement") are incorporated by reference into Part III
         hereof.




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                                TABLE OF CONTENTS


                                     PART I

ITEM                                                                       PAGE

1.       Business............................................................3
2.       Properties..........................................................9
3.       Legal Proceedings...................................................9
4.       Submission of Matters to a Vote of Security Holders.................10


                                     PART II


5.       Market for the Registrant's Common Equity and Related Stockholder
           Matters...........................................................11
6.       Selected Financial Data.............................................11
7.       Management's Discussion and Analysis of Financial Condition
           and Results of Operations.........................................12
7A.      Quantitative and Qualitative Disclosures About Market Risk..........12
8.       Financial Statements and Supplementary Data.........................12
9.       Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure..............................................12


                                    PART III


10.      Directors and Executive Officers of the Registrant..................12
11.      Executive Compensation..............................................13
12.      Security Ownership of Certain Beneficial Owners and Management......13
13.      Certain Relationships and Related Transactions......................13


                                     PART IV


14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K.....13



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                                     PART I


ITEM 1.           BUSINESS

         On January 2, 1997, the Company completed a plan which changed, among
several items, its name to Bontex, Inc. from Georgia Bonded Fibers, Inc. For
further information, see General Business below.

         The Company's consolidated financial statements and notes to the
consolidated financial statements should be read as an integral part of this
discussion. Except for historical data set forth herein, the following
discussion contains forward-looking statements within the meaning of the Private
Securities Litigation Act of 1995. Forward-looking statements include, without
limitation, statements about financing plans, cash flows, availability of
capital, growth opportunities, benefits from new technologies, financial
condition, capital expenditures, future results of operations or market
conditions and involve certain risks, uncertainties and assumptions. The words
"estimate," "project," "intend," "expect," "believe," and similar expressions
are intended to identify forward-looking statements. These and other
forward-looking statements are found at various places throughout this report,
and you are cautioned not to place undue reliance on these forward-looking
statements. These forward-looking statements should, therefore, be considered in
light of various relevant factors. Actual results may differ materially from
these forward-looking statements. Factors that could cause or contribute to
those differences include, but are not limited to, excessive worldwide footwear
inventories, a shrinking U.S. domestic market for Bontex products, decreased
sales to key customers, increased competition from non-woven materials, the
reduction of prices by competitors, the increase in the relative price of
Bontex's products due to foreign currency devaluations, increased pulp and latex
prices, capital illiquidity, unexpected foreign tax liabilities, the impact of
any unusual items resulting from ongoing evaluations of the Company's business
strategies, decreases in the Company's borrowing base, trading of Bontex common
stock at a level where closing bid prices are too low to remain listed on the
Nasdaq SmallCap Market, increased funding requirements for the Company's pension
plan, inability to recover deferred tax assets, an inability by Bontex to renew
its current credit facilities or obtain alternative financing, a market shift in
demand from higher-quality products to more economical grade products with lower
profit margins, higher energy prices, and increased costs of complying with
environmental laws, and the impact of changes in political, economic or other
factors, legal and regulatory changes or other external factors over which the
Company has no control.

GENERAL BUSINESS

         Bontex, Inc. (all references hereinafter to the "Registrant," "Company"
or "Bontex" refer collectively to Bontex, Inc. and its wholly-owned and
majority-owned subsidiaries unless otherwise indicated by context) was
incorporated in June 1946 under the laws of the State of New Jersey. The Company
originally began as a leather processing operation, and today, Bontex is a
leading worldwide manufacturer and distributor of uncoated and coated
elastomeric wet web impregnated fiberboard products. The Company's products are
generally described by the trademark BONTEX, and are marketed to various
industries, including footwear, headwear, luggage, leathergoods, allied
industries, belt backing, gasketing, furniture, electronic integrated component
packaging, and automotive industries. Bontex is a market leader in many of the
areas in which the Company competes.

         On January 2, 1997, the Company received the final state regulatory
approvals of its proposal, which was adopted by the Company's stockholders at
the Annual Meeting of Stockholders held on November 7, 1996, to change the state
of incorporation of the Company to Virginia and effect Amended and Restated
Articles of Incorporation. As a result of the restructuring, the Company was
reincorporated as a Virginia corporation, with its principal place of business
at One Bontex Drive, Buena Vista, Virginia 24416-1500, and the name of the
Company was changed to "Bontex, Inc." The Company's common stock is traded on
the Nasdaq SmallCap Market under the symbol "BOTX." The restructuring did not
result in any material change in the business, management, assets, liabilities,
or net worth of the Company. For further information, refer to Report on Form
8-K, Reorganization of

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Georgia Bonded Fibers, Inc., dated January 2, 1997, and Proxy Statement for
meeting of Annual Meeting of Stockholders held on November 7, 1996.

         Competitive pricing pressures have had a large negative impact on the
Company's sales and profitability as noted in Management's Discussion and
Analysis incorporated by reference in Part II, Item 7 of this report. Sales have
also been negatively affected by, among other things, the shift in domestic
footwear production primarily to Asia. Nonwoven materials, however, continue to
erode sales of cellulose based products, particularly with athletic footwear.
Bontex is placing greater emphasis on the marketing of nonwoven products, and
working to develop new domestic and export markets for impregnated cellulose
products in an effort to increase sales. Management also recognizes the need to
further diversify it's product line and Bontex has embarked on an aggressive
plan to accomplish this in the near term.

ORGANIZATION

         The Company maintains corporate headquarters, manufacturing,
converting, sales office, and a warehouse facility in Buena Vista, Virginia; a
wholly-owned manufacturing subsidiary, Bontex S.A. in Stembert, Belgium; a
wholly-owned distribution and converting subsidiary, Bontex Italia S.r.l. in
Villafranca, Verona, Italy; a wholly- owned distribution subsidiary, Bontex de
Mexico, S.A. de C.V. in Leon, Mexico; Bontex Vietnam (Representative office);
and a majority owned distribution subsidiary, Bontex Hong Kong Limited in Hong
Kong. See the discussion under "Item 2. Properties" below. The Company utilizes
a wholly-owned foreign sales corporation (FSC) organized and existing under the
laws of the Virgin Islands to facilitate export sales. The U.S. government is
working with the World Trade Organization and European Community regarding the
application of foreign sales corporations, and at a later date, the Company may
have to change its tax strategies for export sales. The situation with our FSC
is not expected to have significant impact on the Company's operations.
Additionally, Bontex maintains a network of liaison offices, Bontex Korea,
Bontex Taiwan, Bontex China, Bontex Indonesia, Bontex Philippines, and Bontex
Australia to service Asian markets.

         The Company currently employs 81 full-time and 2 part-time employees in
Buena Vista, Virginia; 76 full- time and 2 part-time employees in Belgium; 12
full-time and 1 part-time employee in Italy; 3 full-time and 1 part- time
employees in Mexico and 2 full-time employees in Hong Kong. Revenue per employee
was approximately $237,000 and $220,000 in fiscal years 2001 and 2000,
respectively.

         There is no labor union at the United States operations, and management
knows of no union activity at the present time. There are labor unions at the
Company's European operations. Although the Company believes that relations with
its employees are positive, there can be no assurance that the Company will not
experience work stoppages in the future.

PRODUCTS

         BONTEX elastomeric wet web fiberboard materials are primarily used as
an insole material in footwear, as well as visorboard in headwear, dielectric
sealing base in automotive door panels, backing substrate, stiffener and
laminating base in luggage, leathergoods, and allied products. All BONTEX
fiberboard products are designed to be "environmentally-friendly," because
Bontex uses recycled and primary cellulose fibers originally derived from trees,
a renewable resource. Bontex has the American Podiatric Medical Association
(APMA) Seal of Acceptance for BONTEX elastomeric wet web products, BONFOAM,
SUREFOAM, and MAXXON, cushion insole materials. BONFOAM, SUREFOAM, and MAXXON
trademarks are the sole property of the Registrant. The podiatric seal of
acceptance is granted after stringent clinical and laboratory tests have been
carried out on approved products which demonstrate conformity to APMA
guidelines, and assist in foot health and comfort. The APMA Seal of Acceptance
for approved BONTEX products should enhance product acceptance in the
marketplace. Bontex has the SATRA Quality mark and laboratory accreditation at
its Belgium facility.


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         Bontex USA manufactures uncoated and coated BONTEX fiberboard products;
breathable (moisture vapor transmission) cushion foams, that are marketed under
trademarks BON-FOAM, MAXXON and SURE-FOAM, and are sold in a variety of grades
for use as shock absorbing insole material; BONTEX 200 RECYCLED and BONTEX 300
RECYCLED, which are produced from 100 percent recovered paper with a minimum 80
percent "post-consumer waste" for use in footwear, visorboard in headwear, a
backing substrate, stiffener pieces and laminating base; BON-PEL, a hybrid
nonwoven substrate, which is exceptionally strong and flexible; BONTEX 48 MA, an
uncoated visorboard for use in military headwear, which has been approved by
NATICK military laboratory. Bontex USA also combines certain products, such as
foams, fabrics, and vinyls, with BONTEX fiberboard. Additionally, Bontex USA is
the exclusive distributor globally to the footwear industry of an expanded
polyurethane material manufactured by Aero E.A.R. Specialty Composites, under
the trademarks MAXXON LS and CONFOR. MAXXON LS and CONFOR have moisture vapor
transmission characteristics and are used for sock-linings and cushion insoles
in various types of footwear. CONFOR is a trademark of E.A.R. Specialty
Composites. Bontex also markets a range of nonwoven products under the name
Bon-stitch. During 1999 and 2000, Bontex introduced a broad range of footwear
materials, including Bontex 90 Insole Seatboard, economical insole products, and
Bon-Stitch linings and Bon-Stitch next generation nonwoven insoles. Sales of
these new products showed promise, and the Company plans to introduce additional
new products.

         Bontex S.A., Stembert, Belgium, manufactures uncoated BONTEX products.
Bontex Italia, S.r.l. is a distribution company and operates converting
equipment primarily servicing the Italian market.

         The Company's research efforts are directed primarily toward developing
new products and processing techniques, and improving product performance, often
in close association with customers. The Company customizes many composite
products with BONTEX fiberboard, foam and nonwoven products. These products have
increased sales of combination packages, primarily designed to take advantage of
the current increased emphasis on comfort in footwear products.

         Bontex has completed implementation of the International Organization
for Standardization quality assurance system ISO 9001 at both the United States
and Belgium manufacturing facilities. Bontex SA was certified ISO 9001 during
1996, and Bontex USA during 1997. The impact of ISO 9001 on sales is anticipated
to be minimal; however, management regards ISO 9001 qualification as important
to maintaining a competitive edge in quality globally.

COMPETITION

         The industry in which the Company operates is highly competitive.
Participants in the industry compete through quality and price, including the
ability to control costs, risk management, innovation, delivery and customer
service. Presently, it is management's opinion that the Company offers superior
product quality and customer service in major markets globally. Globally, there
is one other primary competitor, but regionally, there are more than twenty five
cellulose insole manufacturers with which Bontex competes. In the United States,
there is one other manufacturer of BONTEX type material. There are, however,
other materials which may be substituted for the same applications. The Company
estimates that during fiscal year 2001, its products were in approximately 45
percent of non-rubber footwear manufactured in the United States. This estimate
is based on Footwear Industries of America (FIA) data as to total sales.

         There are manufacturers who purchase BONTEX type materials for coating,
laminating, and converting into innersoles for footwear, visors for headwear,
and dielectric sealing base in automotive door panels. There is more competition
in these segments, and no comparative market statistics are available.

         In Europe, there are six major manufacturers of material similar to
BONTEX. These competitors are located in Germany, Italy, Finland, Slovenia,
and the former USSR. The Company estimates that it sells approximately 40
percent of the BONTEX type materials sold in the European Union. These estimates
are based on SATRA Common Market statistics as to total sales, and other
generally available industry information.

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         There are a number of manufacturers of elastomeric fiberboard materials
in Asia; however, there are an estimated fourteen competitors operating in the
Peoples Republic of China, which negatively impacts selling prices. There are
duties, currency, employment and environmental regulations that adversely impact
the Company's sales position. For example, many Asian suppliers do not have to
maintain as high environmental and employment regulations as Bontex in USA and
employment in Belgium.

         As there are many customers globally who purchase BONTEX and convert it
into innersoles and other application components, the actual total worldwide
market penetration is difficult to estimate. However, Bontex has a strong market
position globally as supported by Bontex supplying most of the world's leading
branded footwear.

TRADEMARKS

         Bontex utilizes trademarks on nearly all of its products, and believes
having such distinctive trademarks that are readily identifiable is an important
factor in creating and maintaining a market for its goods and services. This
further serves to identify the Company and distinguish its goods from goods of
others. The Company considers its BONTEX trademark and other trademarks to be
among its most valuable assets, and has registered its trademarks in over 70
countries. Bontex continues to vigorously protect its trademarks against
infringement. The Company's operations are not dependent to any significant
extent upon any single or related group of patents, licenses or concessions.

PRODUCTION AND SALES

         Refer to Note 3 of Notes to the Consolidated Financial Statements in
the Company's Annual Report wherein information is provided regarding foreign
and domestic operations and export sales for the last three fiscal years. Such
information is incorporated in Part II, Item 8 of this report by reference.

         Historically, Bontex has had a significant global presence, and one of
its major strategic objectives is to continue to expand this presence. The
Company's sales are diversified with one of the largest customer bases in the
industry we serve, as well as numerous geographic regions. Asia, where an
estimated 70 percent of global shoe production occurs, is the largest market for
Bontex products. The Company offers a wide range of elastomeric products for use
in a variety of applications. However, the majority of the Company's sales are
to the footwear industry. The Company intends to continue its strategy of
developing and broadening non-footwear sales.

         Credit terms offered by the Company to meet competition have been
longer than terms normally available to the Company from its vendors. Some
seasonality exists in that the second half of each fiscal year is usually more
productive and consequently more profitable than the first half. This
seasonality is largely because of customers' buying cycles with scheduled
vacations, shutdowns and holidays, which normally occur during the first half of
each fiscal year. Substantially all export sales are denominated in US dollars,
negotiated letters of credit and sight drafts, and are covered by foreign credit
insurance. During the past three years, no single customer accounted for 10
percent or more of the Company's consolidated net sales.

         Foreign operations, principally in Belgium and Italy, constitute a
significant portion of the Company's business. Production of BONTEX elastromeric
fiberboard products is allocated between the United States and Belgium
manufacturing facilities based on such factors as availability of capacity,
production efficiencies, logistical considerations, and foreign currency
exchange rates. The Company is currently operating at less than full capacity.
During the past three fiscal years, approximately 40 percent of total production
was manufactured in the United States. The backlog of firm orders in the United
States at the end fiscal 2001 was about three weeks production or approximately
$950,000 in sales. The current backlog at Bontex USA is approximately two weeks.
In Europe, the backlog at the end of fiscal year 2000 was about three weeks
production or approximately $1.2 million in sales. The current estimated
backlog at Bontex S.A. is approximately two weeks. The Company expects all the
orders in the backlog will be manufactured and shipped during the next fiscal
year.

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         The Company sells most of its products directly to customers through
its own sales force and commissioned sales representatives throughout the world.
The Company also sells products through distributors and other intermediaries
who may convert and resell these products to others. Bontex USA mainly services
North and South America, as well as certain Asian markets. Over the past three
years, Bontex USA's export sales to markets outside of the United States have
increased from approximately 50 to over 70 percent. This primarily reflects the
decline of the domestic market and continued emphasis on overseas markets.
Bontex USA maintains leased bonded warehouses in Patterson, New Jersey; St.
Louis, Missouri; Leon, Mexico; Cambridge, Ontario, Canada; Montreal, Quebec,
Canada. The Company established Bontex de Mexico, S.A. de C.V., as a marketing
distribution company in Leon, Mexico to directly facilitate sales in Mexico.

         Bontex S.A. markets its products through its own sales force,
distributors and sales representatives in most countries in Europe, Central and
Eastern Europe, Africa, the Middle East, as well as certain Asian markets. The
Company's wholly-owned subsidiary, Bontex Italia S.r.l., services the Italian
market directly and through localized converters and commissioned
representatives.

         Over the past several years, sales of Bontex cellulose insole products,
particularly to the athletic segment, have also declined because of the trend of
increased usage of nonwoven insole materials, an alternative material and
construction to cellulose board lasted construction. Nonwoven insole materials
are used mainly in force last or strobel-stitch applications, whereas Bontex
cellulose products are mainly used in cement or board lasted construction. The
overall volume of nonwoven strobel constructed footwear has leveled off, and
management believes board lasted footwear remains the predominant insole
material and construction worldwide. As part of the Company's sales initiatives,
Bontex has recently introduced a range of new nonwoven insole materials and
linings, marketed under the Bontex trade name, Bon-Stitch, which are sourced
from other manufacturers to further expand the Company's product base.

         The Company maintains six Bontex liaison offices in select Asian
markets, a network of sales representatives in various countries where BONTEX is
marketed, as well as leased bonded warehouses in Korea, Vietnam, Taiwan, and the
Peoples Republic of China. For certain of its foreign markets, the Company uses
individual distributors. One distributor represented approximately 25 percent of
the Company's net consolidated sales. The Company believes that it is well
positioned to replace any of these distributors without materially impacting the
Company's marketing or financial operations. The Bontex liaison office in
Australia continues to perform the coordination of Asian operations covering,
among other countries, Japan, Korea, Taiwan, Hong Kong, Philippines, Indonesia,
New Zealand, Australia, Singapore and Malaysia. The Company has established a
sales subsidiary, Bontex Hong Kong Limited, in Hong Kong, to replace a
distributor for Hong Kong and the PRC New Territories. In Vietnam, the Company
has established a new sales representative office to directly service and
facilitate sales in the Vietnam market.

MATERIALS AND SUPPLIES

         The Company purchases a broad range of raw materials sourced throughout
the world in connection with its manufacturing activities. More than one
supplier is available for all major raw materials. Bontex S.A. appears to have
available and receives adequate quantities of water and steam for processing in
Belgium. However, Bontex S.A. in Belgium is exploring their option to generate
their own steam, and Bontex S.A. may some day build a steam facility. The
manufacturing facility in the United States has an adequate supply of processing
water from wells and river sources.

         The Company attempts to minimize the effects of cyclical changes in raw
material costs through purchase contracts, forward purchasing and the
application of technologies to improve process efficiencies. Principal cost
factors include the cost of raw materials, including pulp and latex, two primary
raw materials for the Company's products. During fiscal 2001, the Company
entered into a number of purchase commitments for certain commodities, including
pulp, latex and natural gas, for future manufacturing requirements in an effort
to manage the effects of market price fluctuations and to secure adequate raw
material supplies. If these purchase

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commitments for pulp and latex had been in effect during all of 2001, the
Company would have had lower raw material prices. However, there is no guarantee
that these purchase commitments will result in lower purchase prices for the
Company. To the extent that these purchase commitments obligate the Company to
purchase pulp or latex at higher than the prevailing market prices, they could
result in higher costs. Please refer to Note 7 of the Notes to the Consolidated
Financial statements in the Company's Annual Report, wherein information is
provided regarding purchase commitments. Management intends to continue to
prudently utilize technology to manufacture high quality products while
attempting to reduce costs in all areas of operations in an effort to maintain
competitive selling prices. There can be no assurance, however, that increased
raw material prices will not continue to have an adverse effect on the Company's
operations or competitive position in the future.

         Bontex USA maintains a limited private fleet of tractors and trailers
for long haul delivery of its products to customers throughout the United States
and Canada and to east coast ports for export shipments, in addition to
back-hauling of certain raw materials to reduce operating costs. The Company
also participates in numerous equipment interchange agreements for containers
with steamship lines to facilitate exports.

REGULATORY AND ENVIRONMENTAL MATTERS

         As with other related manufacturers, the Company is subject to
regulations by various federal, state, foreign and local agencies concerning
compliance with environmental control statutes. These regulations impose
limitations on the use of chemicals in manufacturing processes and discharge of
effluent and emissions into the environment, and establish standards for solid
and hazardous waste disposal, treatment, and storage, as well as require the
Company to obtain and operate in compliance with the conditions of environmental
permits. Except as described below, the Company believes that it is in
substantial compliance with such existing domestic and foreign environmental
statues and regulations. Failure to comply with applicable environmental control
standards could result in interruption or termination of operations or could
require additional expenditures at these facilities.

         In recent years, various agencies have increased their screening and
testing the effects of chemicals or mixtures, including those that occur
naturally. The Company's product formulations, in some instances, may include
compounds that are or will be subject to these tests. The Company continually
devotes significant resources to improve product formulation for, among other
things, comfort, health, cost, quality and other performance features.

         The Company has made and intends to continue to make capital
investments, operating expenditures, and production adjustments in connection
with compliance with environmental laws and regulations. Because the Company is
essentially comprised of two fiberboard plants, Bontex USA and Bontex S.A.,
water quality discharge remains the primary environmental concern. Both plants
are operating new waste water treatment facilities, which, except as described
below, the Company believes to be operating within compliance of applicable
environmental requirements. Also, the actual costs of future environmental
compliance may differ from projected costs due to, among other things, continued
emergence of newer environmental laws and regulations and improving efficiencies
in environmental control or process technology developments.

         Bontex USA received a renewal of its 5-year wastewater discharge permit
on April 2, 2001. The new permit requires the Company to expand its wastewater
treatment facility to increase the capacity of its equalization tank. The
Company started the expansion this Summer and expects to complete it by the end
of the calendar year. Prior to receiving the new permit, the Company had
received a Notice of Violation from the Virginia Department of Environmental
Quality (DEQ). In general, the DEQ stated in the Notice of Violation that it had
reason to believe that the Company's plant in Buena Vista, Virginia, might be
out of compliance with whole effluent toxics limits. In addition, the Company
has received a Notice of Violation from the DEQ alleging that in June 2001 the
Company's plant in Buena Vista, Virginia, discharged wastewater solids in
violation of Virginia law and/or the Company's wastewater discharge permit. The
Company has submitted detailed information to the DEQ relating to the Notices of
Violation. At this stage, it is too early for the Company to make a reasonable
estimate of the potential financial impact, if any, of these Notices of
Violation.

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ITEM 2.           PROPERTIES

         For information about liens and security interests held by banks on the
Company's properties, see Note 4 of Notes to Consolidated Financial Statements
contained in the Company's Annual Report, incorporated in Part II, Item 8 of
this Report by reference.

         The properties of the Company consist primarily of plant and equipment
to manufacture and distribute the Company's products. The Company's corporate
headquarters, manufacturing and converting facility in Buena Vista, Virginia
continues to be modernized, upgraded, and expanded. In Stembert, Belgium, the
subsidiary's plant is one of the most modern and highest capacity in the world
for producing BONTEX type products, and the Company continues to invest in new
equipment to maintain its high capacity and high level of efficiency. Bontex
Italia S.r.l. operates from a modern distribution facility with new converting
equipment. During fiscal 2001, the Company spent approximately $350,000,
$275,000 and $130,000 to refurbish, upgrade and install equipment at Bontex USA,
Bontex S.A., and other subsidiaries, respectively.

         During fiscal 2001, the Company sold the Newark, New Jersey office and
warehouse facility to the New Jersey Institute of Technology for $863,000.
Included in other income is a gain of $803,000 from this sale, as the Company's
net book value was approximately $60,000.

         The total cost of capital expenditures, including the capital
expenditures planned for environmental regulations at both Bontex USA and Bontex
S.A. as discussed in the previous section regarding regulations, is estimated
not to exceed $1.5 million for fiscal year 2002. The Company believes that cash
generated from operations and credit facilities will be sufficient to meet these
capital requirements.

         The Company continues to manage the utilization of its assets in an
effort to meet global growth objectives, marketplace forces, productivity and
technology changes. The Company considers all its properties well maintained,
and adequate for present and future requirements.

ITEM 3.           LEGAL PROCEEDINGS

         During fiscal year 2000, the Ministere Des Finances, the Belgian tax
authority, completed an examination of Bontex S.A.'s, the Company's Belgian
subsidiary, tax returns for 1997, 1998 and 1999 and extended the tax examination
to 1995 and 1996 based on certain items. Bontex S.A. has received notices of
proposed tax adjustments to these tax returns. The proposed tax adjustments
arise from items which are considered disallowed expenses by tax authorities,
including commissions paid to certain distributors and clients, certain travel
expenses and various smaller items, including allowances for doubtful
receivables and certain insurance premiums. The proposed tax adjustments by the
Belgian authorities approximate $820,000. The Company believes, based in part on
written opinion of external counsel, it has meritorious legal defenses to many
of the claims and the Company intends to defend such claims. The Company's best
estimate of the most likely amount payable for the foregoing tax matters is
$239,000, and accordingly, a provision for this amount was accrued at June 30,
2000. Similar deductions relating to the year ended June 30, 2000 and 2001 that
in light of the current information may be disallowed have been treated as
disallowed expenses in the calculation of those year's tax provisions.

         Bontex USA received a renewal of its 5-year wastewater discharge permit
on April 2, 2001. The new permit requires the Company to expand its wastewater
treatment facility to increase the capacity of its equalization tank. The
Company started the expansion this Summer and expects to complete it by the end
of the calendar year. Prior to receiving the new permit, the Company had
received a Notice of Violation from the DEQ. In general, the DEQ stated in the
Notice of Violation that it had reason to believe that the Company's plant in
Buena Vista, Virginia, might be out of compliance with whole effluent toxics
limits. In addition, the Company has received a Notice of Violation from the DEQ
alleging that in June 2001 the Company's plant in Buena Vista, Virginia,
discharged wastewater solids in violation of Virginia law and/or the Company's
wastewater discharge permit. The


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Company has submitted detailed information to the DEQ relating to the Notices of
Violation. At this stage, it is too early for the Company to make a reasonable
estimate of the potential financial impact, if any, of these Notices of
Violation.

         In the normal course of business, the Company is subject to
proceedings, lawsuits and other claims that are subject to many uncertainties,
for which their outcomes are not predictable with assurance. There are no legal
proceedings, lawsuits or other claims pending, other than those described above,
against or involving the Company that, in the opinion of management, will have a
material adverse impact upon the financial condition of the Company.

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

         No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.

EXECUTIVES OF THE REGISTRANT:

         The following list is included as an unnumbered Item in Part I of this
report in lieu of being included in the Proxy Statement.

         The names, ages and positions of the executives of the Company as of
September 26, 2001 are listed below with their business experience with the
Company for the past five years. Executive officers are appointed annually by
the Board of Directors at the annual meeting of stockholders. There is no
agreement or understanding between any executive and any other pursuant to which
the executive was selected. Mr. Jeffrey C. Kostelni and Mr. Charles W. J.
Kostelni are the sons of Mr. James C. Kostelni.

<TABLE>
<CAPTION>

                                                             POSITION AND BUSINESS
NAME AND AGE                                                 EXPERIENCE FOR PAST FIVE YEARS
<S>     <C>    <C>    <C>    <C>    <C>    <C>

James C. Kostelni, 66                                        Chairman of the Board, President, and Chief
                                                             Executive Officer (since 1994), Chief Operating
                                                             Officer (since 1971) of the Company.  Mr. Kostelni
                                                             has a Bachelor of Science Degree in Business
                                                             Administration. Director.

Jeffrey C. Kostelni, 35                                      Senior Vice President (since 1999); Chief Financial
                                                             Officer and Treasurer (since 1994) of the Company;
                                                             General Sales Manager of Bontex S.A., a subsidiary
                                                             of the Company in Belgium (1995-1999).   Mr.
                                                             Kostelni has a Bachelor of Science Degree in
                                                             Accountancy and is a Certified Public Accountant.
                                                             Director.




                                       10


<PAGE>



Charles W. J. Kostelni, 37                                   Senior Vice President (since 1999), General Manager
                                                             (U.S. operations only) (since 1998), Corporate
                                                             Secretary (since 1997), Corporate Controller (since
                                                             1996) of the Company and General Sales Manager of
                                                             Bontex S.A., a subsidiary of the Company in Belgium
                                                             (since 1999).  Prior thereto, Assistant Controller
                                                             (1994-1996) of the Company and Assistant Vice
                                                             President, Union Bank of Switzerland, New York
                                                             (1991-1995).  Mr. Kostelni has a Bachelor of Science
                                                             Degree in Accountancy and is a Certified Public
                                                             Accountant.  Director.

Larry E. Morris, 55                                          Technical Sales Director (since 1998) of the
                                                             Company; prior thereto, Technical Director (1983-
                                                             1998), Sales Director (1993-1998).

Michael  J. Breton, 61                                       Corporate Director of International Operations of the
                                                             Company (since 1993), and General Manager of
                                                             Bontex S.A., a subsidiary of the Company (since
                                                             1987).   Mr. Breton has a Bachelor of Science Degree
                                                             in Paper Technology.

Hadelin Mothet, 57                                           Financial Director and Assistant General Manager
                                                             (since 1985) of Bontex S.A.  Mr. Mothet has a
                                                             Bachelor Degree in Accountancy.  Director.
</TABLE>


                                     PART II

ITEM 5.           MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS

         The information set forth under the caption "Common Stock and Dividend
Data" on page 4 of the Company's Annual Report is incorporated herein by
reference.

         The Company's common stock is listed on the Nasdaq SmallCap Market. In
order to maintain its listing on the Nasdaq SmallCap Market, among other things,
the Company must maintain a minimum market value of the public float of its
common stock of at least $1,000,000. If the closing bid price of the Company's
common stock trades at a level below that necessary to maintain this minimum
market value of its public float for thirty consecutive business days, the
Company's common stock could become subject to delisting from the Nasdaq
SmallCap Market. If delisted, trading in the Company's common stock could be
conducted on the OTC Bulletin Board or in the over-the-counter market in what is
commonly referred to as the "pink sheets." In the event of delisting, holders of
the Company's common stock might find it more difficult to trade their common
stock promptly and at reasonable prices or to obtain accurate quotations as to
its price. It could also adversely affect the Company's ability to raise
additional equity or financing, which in turn could result in a material effect
on the Company's business, financial condition, liquidity and/or results of
operations.

ITEM 6.           SELECTED FINANCIAL DATA

         The five year data for the fiscal years 2001, 2000, 1999, 1998, and
1997 are included in the "Summary of Selected Ten Year Data" on page 4 of the
Company's Annual Report and is incorporated herein by reference.



                                       11

<PAGE>



ITEM 7.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                 RESULTS OF OPERATIONS

         "Management's Discussion and Analysis" on pages 5 through 12 of the
Company's Annual Report is incorporated herein by reference.

ITEM 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Quantitative and qualitative disclosures about market risk in "Market
Risk and Sensitivity" on pages 11 and 12 of the Company's Annual Report to is
incorporated herein by reference.

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following consolidated financial statements of the Registrant and
the independent auditors' report included on pages 13 through 29 of the Annual
Report is incorporated herein by reference.

          1.   Consolidated Statements of Income (Loss) and Comprehensive Income
               (Loss) for the Years Ended June 30, 2001, 2000 and 1999.

          2.   Consolidated Statements of Changes in Stockholders' Equity for
               the Years Ended June 30, 2001, 2000, and 1999.

          3.   Consolidated Balance Sheets as of June 30, 2001 and 2000.

          4.   Consolidated Statements of Cash Flows for the Years Ended June
               30, 2001, 2000, and 1999.

          5.   Notes to Consolidated Financial Statements

          6.   Independent Auditors' Report

ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

         There have been no changes in independent auditors and no disagreements
with independent auditors on any matter of accounting principles or practices,
financial statement disclosure, or auditors' scope or procedure.

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         For information with respect to the executives of the Registrant, see
"Executives of the Registrant" at the end of Part I of this Report. For
information with respect to the Directors of the Registrant, see "Election of
Directors" at pages 4 through 6 of the Proxy Statement, which information is
incorporated herein by reference. The information with respect to compliance
with Section 16(a) of the Exchange Act, which is set forth under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" at page 17 of the
Proxy Statement, is incorporated herein by reference.


                                       12

<PAGE>



ITEM 11.          EXECUTIVE COMPENSATION

         The information set forth under the captions "Executive Compensation,"
"Compensation Committee Report on Executive Compensation" and "Stock
Performance" at pages 9 through 16 of the Proxy Statement is incorporated herein
by reference.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         The information pertaining to stockholders beneficially owning more
than five percent of the Registrant's common stock and the security ownership of
management, which is set forth under the caption "Stockholdings of Certain
Owners and Management" on pages 2 through 4 of the Proxy Statement, is
incorporated herein by reference.

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The information set forth under the caption "Related Party
Transactions" on page 14 of the Proxy Statement is incorporated herein by
reference.

                                     PART IV

ITEM 14.         EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

          (a)  List of documents filed as part of this report:

          1.   Financial Statements: All financial statements of the Registrant
               as set forth under Item 8 of this Report on Form 10-K.

          2.   Financial statement schedules and the location in this Form 10-K
               are as follows:


SCHEDULE
NUMBER                DESCRIPTION                                       PAGE

(a)                   Independent Auditors' Report
                      on Financial Statement Schedule                    18

(d) II                Valuation and Qualifying Accounts for the
                      years ended June 30, 2001, 2000 and 1999           19

               All other schedules are omitted, as the required information is
               inapplicable, or the information is presented in the consolidated
               financial statements or related notes.



                                       13

<PAGE>



          3.   Exhibits to this Form 10-K are as follows:
<TABLE>
<CAPTION>

          EXHIBIT
          NUMBER               DESCRIPTION
<S>     <C>    <C>    <C>    <C>    <C>    <C>

           3   (i)             Amended and Restated Articles of Incorporation of the Company, as amended
                               (incorporated herein by reference to Exhibit No. (iii) of Form 10-Q for the fiscal quarter
                               ended December 31, 1996)

           3   (ii)            Amended and Restated Bylaws of Bontex, Inc. (incorporated herein by reference to
                               Exhibit No. 3(i) of Form 10-Q for quarter ended March 31, 1998)

           10  (i)             *Executive Compensation Agreement dated January 22, 1997, between Bontex, Inc. and
                               James C. Kostelni (incorporated herein by reference to Exhibit 10(i) of Form 10-Q for
                               quarter ended March 31, 1997)

           10  (ii)            *Life Insurance Agreement between Georgia Bonded Fibers Inc. and James C. Kostelni
                               incorporated herein by reference to Exhibit 10.4 of Form 10-Q for quarter ended
                               December 31, 1993)

           10  (iii)           *Bontex S.A. Pension Plan (incorporated herein by reference to Exhibit No. 10(iv) of
                               Form 10-K for the fiscal year ended June 30, 1994)

           10  (iv)            *Georgia Bonded Fibers, Inc. Annual Incentive Plan (incorporated herein by reference
                               to Exhibit No. 10(v) of Form 10-K for the fiscal year ended June 30, 1994)

           10  (v)             *Supplemental Executive Compensation Agreement dated May 26, 1994, between
                               Georgia Bonded Fibers, Inc. and James C. Kostelni (incorporated herein by reference to
                               Exhibit No. of Form 10-K for the fiscal year ended June 30, 1994)

           10  (vi)            Special Consent Order between the Company and the State Water Control Board dated
                               July 22, 1994 (incorporated herein by reference to Exhibit No. 10(vii) of Form 10-K for
                               the fiscal year ended June 30, 1994)

           10  (vii)           Amended Consent Order between the Company and the Commonwealth of Virginia,
                               Department of Environmental Quality dated January 10, 1997. (incorporated herein by
                               reference to Exhibit No. 10(iv) of Form 10-Q for the quarter ended December 31, 1996)

           10  (viii)          Related party Marketing Agreement between Bontex, Inc. and Maxcomm, Inc. dated
                               February 16, 1999

           10  (ix)            *Bontex, Inc. Key Employee Stock Option Plan dated October 29, 1999 (incorporated
                               herein by reference to Exhibit 4(c) of the Form S-8 filed on February 28, 2000).

           10  (x)             *Amendment to Executive Compensation Agreement between Jeffrey C. Kostelni and
                               Bontex, Inc. dated January 27, 2000.

           10  (xi)            *Amendment to Executive Compensation Agreement between Charles W.J. Kostelni
                               and Bontex, Inc. dated January 27, 2000.



                                       14

<PAGE>



           10  (xii)           *Part-Time Employment Agreement, Settlement Agreement, General Release and Non-
                               Disclosure Agreement between Patricia S. Tischio and Bontex, Inc. dated April 30,
                               2000.

           10  (xiii)          **Pulp Supply Agreement No. 1 dated  March 31, 2001.

           10  (xiv)           **Pulp Supply Agreement No. 2 dated  March 31, 2001.

           10  (xv)            **Pulp Supply Agreement No. 3 dated  March 31, 2001.

           10  (xvi)           Second Amendment to Loan and Security Agreement, dated September 12, 2001, by and
                               between Congress Financial Corporation and Bontex, Inc.

           13                  2001 Annual Report to Stockholders (such report, except to the extent incorporated
                               herein by reference, is being furnished for the information of the Commission only and
                               is not to be deemed filed as part of this Report on Form 10-K)

           21                  Subsidiaries of the Company

</TABLE>

         *Management contract or compensatory plan or agreement required to be
filed as an Exhibit to this Form 10-K pursuant to Item 14 (c).

         **Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment and filed separately with the SEC.

          (b)  Reports on Form 8-K: Form 8-K dated July 23, 2001 reporting under
               Item 5 thereof the resignation of Ms. Patricia Tischio.

          (c)  Exhibits - The response to this section of Item 14 is submitted
               as a separate section of this report.

          (d)  Financial statement schedules required by Regulation S-X are
               submitted as a separate section of this report.



                                       15

<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized on this 26th day of
September, 2001.

                                            BONTEX, INC.


                                            by  /s/James C. Kostelni
                                                --------------------------------
                                                Chairman of the Board

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

                                                            Date

/s/James C. Kostelni                                  September 26, 2001
--------------------------------------                ------------------
James C. Kostelni
Chairman of the Board, President and
Chief Executive Officer
Director

/s/Jeffrey C. Kostelni                                September 26, 2001
---------------------------------------               ------------------
Jeffrey C. Kostelni
Treasurer and
Chief Financial Officer
Director

/s/Charles W. J. Kostelni                             September 26, 2001
------------------------------------                  ------------------
Charles W. J. Kostelni
Corporate Controller and
Corporate Secretary
Director

/s/Hadelin Mothet                                     September 26, 2001
-------------------------------------                 ------------------
Hadelin Mothet
Financial Director
Director

/s/William J. Binnie                                  September 26, 2001
-------------------------------------                 ------------------
William J. Binnie
Director

/s/William B. D'Surney                                September 26, 2001
------------------------------------                  ------------------
William B. D'Surney
Director

/s/Frank Mayorshi                                     September 26, 2001
-------------------------------------                 ------------------
Frank Mayorshi
Director


                                       16

<PAGE>



/s/Joseph F. Raffetto                                 September 26, 2001
---------------------------------------               ------------------
Joseph F. Raffetto
Director

/s/Robert J. Weeks                                    September 26, 2001
---------------------------------------               ------------------
Robert J. Weeks
Director



                                       17

<PAGE>





INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of Bontex, Inc.:

Under date of August 22, 2001, except as to Note 4, which is as of September 12,
2001, we reported on the consolidated balance sheets of Bontex, Inc. and
subsidiaries as of June 30, 2001 and 2000, and the related consolidated
statements of income (loss) and comprehensive income (loss), changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended June 30, 2001, as contained in the 2001 annual report to
stockholders. These consolidated financial statements and our report thereon are
incorporated by reference in the accompanying annual report on Form 10-K for the
year 2001. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related consolidated financial
statement schedule as set forth under Item 14(a)2 of the accompanying annual
report on Form 10-K for the year 2001. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.



                                                     KPMG LLP
Roanoke, Virginia
August 22, 2001, except
   as to Note 4, which is as
   of September 12, 2001


<PAGE>



                  SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
                          BONTEX, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>


                                           BALANCE AT      CHARGES TO        CHARGED TO                          BALANCE
                                            BEGINNING       COSTS AND          OTHER                              AT END
            DESCRIPTION                     OF PERIOD       EXPENSES         ACCOUNTS*       DEDUCTIONS**       OF PERIOD
<S>     <C>    <C>    <C>    <C>    <C>    <C>
YEAR ENDED JUNE 30, 2001
Reserves and allowances
deducted from asset accounts:
Allowances for doubtful accounts            $170,000      $ (54,000)        $  (8,000)        $   12,000      $   96,000
YEAR ENDED JUNE 30, 2000
Reserves and allowances
deducted from asset accounts:
Allowances for doubtful accounts           $ 128,000      $   92,000        $ (15,000)        $   35,000       $ 170,000
YEAR ENDED JUNE 30, 1999
Reserves and allowances
deducted from asset accounts:
Allowances for doubtful accounts           $ 268,000      $ (39,000)        $  (7,000)        $   94,000       $ 128,000
</TABLE>

*Foreign currency translation (loss)
**Uncollectible accounts written off, net of recoveries.


<PAGE>


<TABLE>
<CAPTION>


                                  EXHIBIT INDEX
<S>     <C>    <C>    <C>    <C>    <C>    <C>

           3   (i)             Amended and Restated Articles of Incorporation of the Company, as amended
                               (incorporated herein by reference to Exhibit No. (iii) of Form 10-Q for the fiscal quarter
                               ended December 31, 1996)

           3   (ii)            Amended and Restated Bylaws of Bontex, Inc. (incorporated herein by reference to
                               Exhibit No. 3(i) of Form 10-Q for quarter ended March 31, 1998)

           10  (i)             *Executive Compensation Agreement dated January 22, 1997, between Bontex, Inc. and
                               James C. Kostelni (incorporated herein by reference to Exhibit 10(i) of Form 10-Q for
                               quarter ended March 31, 1997)

           10  (ii)            *Life Insurance Agreement between Georgia Bonded Fibers Inc. and James C. Kostelni
                               incorporated herein by reference to Exhibit 10.4 of Form 10-Q for quarter ended
                               December 31, 1993)

           10  (iii)           *Bontex S.A. Pension Plan (incorporated herein by reference to Exhibit No. 10(iv) of
                               Form 10-K for the fiscal year ended June 30, 1994)

           10  (iv)            *Georgia Bonded Fibers, Inc. Annual Incentive Plan (incorporated herein by reference
                               to Exhibit No. 10(v) of Form 10-K for the fiscal year ended June 30, 1994)

           10  (v)             *Supplemental Executive Compensation Agreement dated May 26, 1994, between
                               Georgia Bonded Fibers, Inc. and James C. Kostelni (incorporated herein by reference to
                               Exhibit No. of Form 10-K for the fiscal year ended June 30, 1994)

           10  (vi)            Special Consent Order between the Company and the State Water Control Board dated
                               July 22, 1994 (incorporated herein by reference to Exhibit No. 10(vii) of Form 10-K for
                               the fiscal year ended June 30, 1994)

           10  (vii)           Amended Consent Order between the Company and the Commonwealth of Virginia,
                               Department of Environmental Quality dated January 10, 1997. (incorporated herein by
                               reference to Exhibit No. 10(iv) of Form 10-Q for the quarter ended December 31, 1996)

           10  (viii)          Related party Marketing Agreement between Bontex, Inc. and Maxcomm, Inc. dated
                               February 16, 1999

           10  (ix)            *Bontex, Inc. Key Employee Stock Option Plan dated October 29, 1999 (incorporated
                               herein by reference to Exhibit 4(c) of the Form S-8 filed on February 28, 2000).

           10  (x)             *Amendment to Executive Compensation Agreement between Jeffrey C. Kostelni and
                               Bontex, Inc. dated January 27, 2000.

           10  (xi)            *Amendment to Executive Compensation Agreement between Charles W.J. Kostelni
                               and Bontex, Inc. dated January 27, 2000.

           10  (xii)           *Part-Time Employment Agreement, Settlement Agreement, General Release and Non-
                               Disclosure Agreement between Patricia S. Tischio and Bontex, Inc. dated April 30,
                               2000.

           10  (xiii)          **Pulp Supply Agreement No. 1 dated  March 31, 2001.



<PAGE>


           10  (xiv)           **Pulp Supply Agreement No. 2 dated  March 31, 2001.

           10  (xv)            **Pulp Supply Agreement No. 3 dated  March 31, 2001.

           10  (xvi)           Second Amendment to Loan and Security Agreement, dated September 12, 2001, by and
                               between Congress Financial Corporation and Bontex, Inc.

           13                  2001 Annual Report to Stockholders (such report, except to the extent incorporated
                               herein by reference, is being furnished for the information of the Commission only and
                               is not to be deemed filed as part of this Report on Form 10-K)

           21                  Subsidiaries of the Company

</TABLE>

         *Management contract or compensatory plan or agreement required to be
filed as an Exhibit to this Form 10-K pursuant to Item 14 (c).

         **Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment and filed separately with the SEC.