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

| o | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|-----------------------------------------------------------------------------------------------------|

----

| Delaware                                               |   | 13-3115216                                |
|--------------------------------------------------------|--------|-------------------------------------------|
| (State      of incorporation)                          |   | (IRS      Employer Identification Number) |
|                                                   |   |                                      |
| 701      Koehler Avenue, Suite 7, Ronkonkoma, New York |   | 11779                                     |
| (Address      of principal executive offices)          |   | (Zip      Code)                           |
|                                                   |   |                                      |

|   |  Large      accelerated filer o                                                             | Accelerated      filer                         o |
|--------|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Non-Accelerated      filer   o (Do not check if a smaller      reporting company) | Smaller      reporting company x                                                                                                                |

| Class                                        |   | Outstanding      at September 5, 2008 |
|----------------------------------------------|--------|---------------------------------------|
| Common      Stock, $0.01 par value per share |   | 5,420,701                             |

----

| PART I - FINANCIAL INFORMATION: |                                                                                                                 |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------|
|                            |                                                                                                                 |
| Item 1.                         | Financial Statements (unaudited):                                                                                    | Page |
|                            |                                                                                                                 |   |
|                            | Introduction                                                                                                         |        3 |
|                            |                                                                                                                 |   |
|                            | Condensed Consolidated Balance Sheets July 31, 2008 and January      31, 2008                                        |        4 |
|                            |                                                                                                                 |   |
|                            | Condensed      Consolidated Statements of Income for the Three and Six Months Ended      July      31, 2008 and 2007 |        5 |
|                            |                                                                                                                 |   |
|                            | Condensed      Consolidated Statement of Stockholders' Equity –Six Months Ended      July      31, 2008        |        6 |
|                            |                                                                                                                 |   |
|                            | Condensed Consolidated Statements of Cash Flows –Six Months      Ended July 31, 2008 and 2007                  |        7 |
|                            |                                                                                                                 |   |
|                            | Notes to Condensed Consolidated Financial      Statements                                                            |        8 |
|                            |                                                                                                                 |   |
| Item 2.                         | Management's Discussion and Analysis of Financial Condition and      Results of Operations                           | 15 |
|                            |                                                                                                                 |   |
| Item 3.                         | Quantitative and Qualitative Disclosures About Market      Risk                                                      | 20 |
|                            |                                                                                                                 |   |
| Item 4.                         | Controls and Procedures                                                                                              | 20 |
|                            |                                                                                                                 |   |
| PART II - OTHER INFORMATION:    |                                                                                                                 |
|                            |                                                                                                                 |
| Item 6.                         | Exhibits and Reports on Form 8-K                                                                                     | 23 |
|                            |                                                                                                                 |   |
| Signature Page                  | 24                                                                                                                   |

----

| PART I - | FINANCIAL      INFORMATION |
|----------|----------------------------|

| Item1. | Financial      Statements: |
|--------|----------------------------|

r

|   | · | Our      ability to obtain fabrics and components from suppliers and manufacturers      at competitive prices or prices that vary from quarter to      quarter; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Risks      associated with our international manufacturing and start up sales      operations; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | Potential      fluctuations in foreign currency exchangerates; |
|--------|--------|----------------------------------------------------------------|

|   | · | Our      ability to respond to rapid technological  change; |
|--------|--------|-------------------------------------------------------------|

|   | · | Our      ability to identify and complete acquisitions or future      expansion; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | Our      ability to manage our growth; |
|--------|--------|----------------------------------------|

|   | · | Our      ability to recruit and retain skilled employees, including our senior      management; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | Our      ability to accurately estimate customerdemand; |
|--------|--------|---------------------------------------------------------|

|   | · | Competition      from other companies, including some with greater    resources; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | Risks      associated with sales to foreignbuyers; |
|--------|--------|----------------------------------------------------|

|   | · | Restrictions      on our financial and operating flexibility as a result of covenants in our      credit facilitates; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Our      ability to obtain additional funding to expand or operate our business as      planned; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | The      impact of a decline in federal funding for preparations for terrorist      incidents; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | The      impact of potential product liabilityclaims; |
|--------|--------|-------------------------------------------------------|

|   | · | Liabilities      under environmental laws andregulations; |
|--------|--------|-----------------------------------------------------------|

|   | · | Fluctuations      in the price of our common stock; |
|--------|--------|-----------------------------------------------------|

|   | · | Variations      in our quarterly results ofoperations; |
|--------|--------|--------------------------------------------------------|

|   | · | The      cost of compliance with the Sarbanes-Oxley Act of 2002 and rules and      regulations relating to corporate governance and public      disclosure; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      significant influence of our directors and executive officer on our      company and on matters subject to a vote of our    stockholders; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      limited liquidity of our commonstock; |
|--------|--------|------------------------------------------------|

|   | · | The      other factors referenced in this 10-Q, including, without limitation, in      the sections entitled “Management’s Discussion and Analysis of Financial      Condition and Results of Operations,” and “Business.” |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                     |

----

N

| ASSETS                                                                                                                                     |   | July      31, 2008 |        |   | January      31, 2008 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|--------|-----------------------|--------|
|                                                                                                                                       |   | (Unaudited)        |        |   |                  |   |
|                                                                                                                                       |   |               |        |   |                  |   |
| Current      assets:                                                                                                                       |   |               |        |   |                  |   |
| Cash                                                                                                                                       |   | $                  | 4,265,352   |   |                  | $      | 3,427,672 |   |
| Accounts      receivable, net of allowance for doubtful accounts of $71,000                                                                |   |               |        |   |                  |   |   |   |
|      at      July 31, 2008 and $45,000 at January 31, 2008                                                        |   |               | 17,280,328  |   |                  |   | 14,927,666 |   |
| Inventories,      net of reserves of $607,000 at July 31, 2008 and at     January      31, 2008              |   |               | 48,396,286  |   |                  |   | 48,116,173 |   |
| Deferred      income taxes                                                                                                                 |   |               | 1,997,712   |   |                  |   | 1,969,713 |   |
| Other      current assets                                                                                                                  |   |               | 2,642,699   |   |                  |   | 1,828,210 |   |
|      Total      current assets                                                                                    |   |               | 74,582,377  |   |                  |   | 70,269,434 |   |
| Property      and equipment, net of accumulated depreciation of                                                                            |   |               | 14,446,482  |   |                  |   | 13,324,648 |   |
|      $8,414,000 at July      31, 2008 and $7,055,000 at January 31, 2008                                          |   |               |        |   |                  |   |   |   |
| Goodwill                                                                                                                                   |   |               | 10,969,284  |   |                  |   | 871,297 |   |
| Other      assets                                                                                                                          |   |               | 1,129,677   |   |                  |   | 157,474 |   |
|                                                                                                                                       |   | $                  | 101,127,820 |   |                  | $      | 84,622,853 |   |
|                                                                                                                                       |   |               |        |   |                  |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                  |   |               |        |   |                  |   |   |   |
| Current      liabilities:                                                                                                                  |   |               |        |   |                  |   |   |   |
| Accounts      payable                                                                                                                      |   | $                  | 4,602,117   |   |                  | $      | 3,312,696 |   |
| Accrued      expenses and other current liabilities                                                                                        |   |               | 2,889,900   |   |                  |   | 1,684,161 |   |
|      Total      current liabilities                                                                               |   |               | 7,492,017   |   |                  |   | 4,996,857 |   |
| Construction      loan                                                                                                                     |   |               | 1,801,924   |   |                  |   | 1,882,085 |   |
| Borrowings      under revolving credit facility                                                                                            |   |               | 20,311,466  |   |                  |   | 8,871,000 |   |
| Other      non current liabilities                                                                                                         |   |               | 299,902     |   |                  |   | ----- |   |
|                                                                                                                                       |   |               |        |   |                  |   |   |   |
| Commitments      and contingencies                                                                                                         |   |               |        |   |                  |   |   |   |
|                                                                                                                                       |   |               |        |   |                  |   |   |   |
| Stockholders'      equity:                                                                                                                 |   |               |        |   |                  |   |   |   |
| Preferred      stock, $.01 par; authorized 1,500,000 shares                                                                                |   |               |        |   |                  |   |   |   |
|      (none      issued)                                                                                           |   |               |        |   |                  |   |   |   |
| Common      stock $.01 par; authorized 10,000,000 shares;                                                                                  |   |               |        |   |                  |   |   |   |
|      issued      and outstanding 5,523,288 shares at July 31, 2008 and                                            |   |               |        |   |                  |   |   |   |
|      January      31, 2008                                                                                        |   |               | 55,233      |   |                  |   | 55,233 |   |
| Less      treasury stock, at cost, 102,587 shares at July 31, 2008 and 0 shares      at     January      31, 2008 |   |               | (1,201,005  | )      |                  |   | ----- |   |
| Additional      paid-in capital                                                                                                            |   |               | 49,370,317  |   |                  |   | 49,211,961 |   |
| Other      comprehensive income (loss)                                                                                                     |   |               | 838,520     |   |                  |   | (36,073 | ) |
| Retained      earnings (1)                                                                                                                 |   |               | 22,159,446  |   |                  |   | 19,641,790 |   |
|      Stockholders'      equity                                                                                    |   |               | 71,222,511  |   |                  |   | 68,872,911 |   |
|                                                                                                                                       |   | $                  | 101,127,820 |   |                  | $      | 84,622,853 |   |

----

S

|                                                                                                                  |   | THREE      MONTHS ENDED |       |   | SIX      MONTHS ENDED |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------------|------------|--------|-----------------------|--------|
|                                                                                                                  |   | July      31,           |       |   | July      31,         |   |
|                                                                                                                  |   | 2008                    |       |   | 2007                  |   |   | 2008 |   |   | 2007 |   |
| Net      sales                                                                                                        |   | $                       | 27,565,036 |   |                  | $      | 21,731,685 |   |   | $ | 54,845,193 |   |   | $ | 47,328,423 |   |
| Cost      of goods sold                                                                                               |   |                    | 19,404,170 |   |                  |   | 16,538,171 |   |   |   | 40,005,729 |   |   |   | 36,844,951 |   |
| Gross      profit                                                                                                     |   |                    | 8,160,866  |   |                  |   | 5,193,514 |   |   |   | 14,839,464 |   |   |   | 10,483,472 |   |
| Operating      expenses                                                                                               |   |                    | 5,967,128  |   |                  |   | 4,278,432 |   |   |   | 11,197,612 |   |   |   | 8,573,579 |   |
| Operating      profit                 |   |                    | 2,193,738  |   |                  |   | 915,082 |   |   |   | 3,641,852 |   |   |   | 1,909,893 |   |
| Interest      and other income, net                                                                                   |   |                    | 55,816     |   |                  |   | 82,078 |   |   |   | 85,890 |   |   |   | 125,138 |   |
| Interest      expense                                                                                                 |   |                    | (253,976   | )      |                  |   | (57,518 | ) |   |   | (353,496 | ) |   |   | (111,126 | ) |
| Income      before income taxes                                                                                       |   |                    | 1,995,578  |   |                  |   | 939,642 |   |   |   | 3,374,246 |   |   |   | 1,923,905 |   |
| Provision      for income taxes                                                                                       |   |                    | 371,061    |   |                  |   | 172,592 |   |   |   | 856,590 |   |   |   | 561,007 |   |
| Net      income                                                                                                       |   | $                       | 1,624,517  |   |                  | $      | 767,050 |   |   | $ | 2,517,656 |   |   | $ | 1,362,898 |   |
| Net      income per common share:                                                                                     |   |                    |       |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                 |   | $                       | 0.30       |   |                  | $      | 0.14 |   |   | $ | 0.46 |   |   | $ | 0.25 |   |
| Diluted                                                                                                               |   | $                       | 0.30       |   |                  | $      | 0.14 |   |   | $ | 0.46 |   |   | $ | 0.25 |   |
| Weighted      average common shares outstanding:                                                                      |   |                    |       |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                 |   |                    | 5,421,520  |   |                  |   | 5,522,604 |   |   |   | 5,454,209 |   |   |   | 5,522,214 |   |
| Diluted                                                                                                               |   |                    | 5,459,191  |   |                  |   | 5,543,407 |   |   |   | 5,490,690 |   |   |   | 5,540,906 |   |

----

E

|                                                       |   |     Common      StockShares  Amount |      |   |    AdditionalPaid-inCapital |   |   |   Treasury Stock  |   |    |    RetainedEarnings |   |   |    OtherComprehensiveIncome (Loss) |    |   |      Total |   |
|------------------------------------------------------------|--------|--------------------------------------------------------------|-----------|--------|--------------------------------------------|--------|--------|----------------------------------|--------|---------|------------------------------------|--------|--------|---------------------------------------------------|---------|--------|-------------------------------------|--------|
|                                                       |   |                                                         |      |   |                                       |   |   |                             |   |    | Shares                             |   |   | Amount                                            |    |   |                                |   |   |   |   |   |   |   |
| Balance      February 1, 2008                              |   |                                                         | 5,523,288 |   |                                       | $      | 55,233 |                             |   | $       | 49,211,961                         |   |   |                                              | -----   |   |                                |   | ----- |   |   | $ | 19,641,790 |   |   | $ | (36,073 | ) |   | $ | 68,872,911 |   |
| Net      Income                                            |   |                                                         | -----     |   |                                       |   | -----  |                             |   |    | -----                              |   |   |                                              | -----   |   |                                |   | ----- |   |   |   | 2,517,656 |   |   |   | ----- |   |   |   | 2,517,656 |   |
| Stock      Repurchase Program                              |   |                                                         | -----     |   |                                       |   | -----  |                             |   |    | -----                              |   |   |                                              | 102,587 |   |                                | $      | (1,201,005 | ) |   |   | ----- |   |   |   | ----- |   |   |   | (1,201,005 | ) |
| Other      Comprehensive Income                            |   |                                                         | -----     |   |                                       |   | -----  |                             |   |    | -----                              |   |   |                                              | -----   |   |                                |   | ----- |   |   |   | ----- |   |   |   | 874,593 |   |   |   | 874,593 |   |
| Stock      Based Compensation -      Restricted Stock Plan |   | -----                                                        |      |   |                                       | -----  |   |                             |   | 126,812 |                               |   |   | -----                                             |    |   |                                | -----  |   |   |   | ----- |   |   |   | ----- |   |   |   | 126,812 |   |
| Issuance      of Director Stock Options                    |   |                                                         | -----     |   |                                       |   | -----  |                             |   |    | 31,544                             |   |   |                                              | -----   |   |                                |   | ----- |   |   |   | ----- |   |   |   | ----- |   |   |   | 31,544 |   |
| Balance      July 31, 2008                                 |   |                                                         | 5,523,288 |   |                                       | $      | 55,233 |                             |   | $       | 49,370,317                         |   |   |                                              | 102,587 |   |                                | $      | (1,201,005 | ) |   | $ | 22,159,446 |   |   | $ | 838,520 |   |   | $ | 71,222,511 |   |

----

M

|                                                                                      |   | SIX      MONTHS ENDED |        |
|-------------------------------------------------------------------------------------------|--------|-----------------------|-------------|
|                                                                                      |   | July      31,         |        |
|                                                                                      |   | 2008                  |        |   | 2007 |   |
| Cash      Flows from Operating Activities:                                                |   |                  |        |   |   |   |
| Net      income                                                                           |   | $                     | 2,517,656   |   |   | $ | 1,362,898 |   |
| Adjustments      to reconcile net income to net cash provided                             |   |                  |        |   |   |   |   |   |
|   by      operating activities:                                                 |   |                  |        |   |   |   |   |   |
| Stock      based compensation                                                             |   |                  | 158,356     |   |   |   | 108,283 |   |
| Reserve      for doubtful accounts                                                        |   |                  | 26,317      |   |   |   | (13,500 | ) |
| Reserve      for inventory obsolescence                                                   |   |                  | (100        | ) |   |   | 330,490 |   |
| Depreciation      and amortization                                                        |   |                  | 826,644     |   |   |   | 513,933 |   |
| Deferred      income tax                                                                  |   |                  | (28,000     | ) |   |   | (83,619 | ) |
| Changes      in operating assets and liabilities:                                         |   |                  |        |   |   |   |   |   |
| (Increase)      decrease in accounts receivable                                           |   |                  | (1,179,837  | ) |   |   | 2,655,850 |   |
| (Increase)      decrease in inventories                                                   |   |                  | 3,028,909   |   |   |   | (3,091,465 | ) |
| (Increase)      in other assets                                                           |   |                  | (361,735    | ) |   |   | (1,222,161 | ) |
| (Decrease)      increase in accounts payable, accrued expenses and other      liabilities |   |                  | (270,954    | ) |   |   | 1,552,652 |   |
| Net      cash provided by operating activities                                            |   |                  | 4,717,256   |   |   |   | 2,113,361 |   |
|                                                                                      |   |                  |        |   |   |   |   |   |
| Cash      Flows from Investing Activities:                                                |   |                  |        |   |   |   |   |   |
| Acquisition      of Qualytextil, SA                                                       |   |                  | (13,640,450 | ) |   |   | ----- |   |
| Purchases      of property and equipment                                                  |   |                  | (702,162    | ) |   |   | (1,149,944 | ) |
| Net      cash used in investing activities                                                |   |                  | (14,342,612 | ) |   |   | (1,149,944 | ) |
|                                                                                      |   |                  |        |   |   |   |   |   |
| Cash      Flows from Financing Activities:                                                |   |                  |        |   |   |   |   |   |
| Purchases      of stock under stock repurchase program                                    |   |                  | (1,201,005  | ) |   |   | ----- |   |
| Proceeds      from exercise of stock option                                               |   |                  | -----       |   |   |   | 6,690 |   |
| Borrowing      to fund Qualytextil acquisition                                            |   |                  | 13,344,466  |   |   |   | ----- |   |
| Payments      under loan agreements                                                       |   |                  | (1,680,425  | ) |   |   | (1,236,000 | ) |
| Net      cash provided by (used in) financing activities                                  |   |                  | 10,463,036  |   |   |   | (1,229,310 | ) |
|                                                                                      |   |                  |        |   |   |   |   |   |
| Net      increase (decrease) in cash                                                      |   |                  | 837,680     |   |   |   | (265,893 | ) |
| Cash      and cash equivalents at beginning of period                                     |   |                  | 3,427,672   |   |   |   | 1,906,557 |   |
| Cash      and cash equivalents at end of period                                           |   | $                     | 4,265,352   |   |   | $ | 1,640,664 |   |

----

O

|   | The      condensed consolidated financial statements included herein have been      prepared by us, without audit, pursuant to the rules and regulations of      the Securities and Exchange Commission and reflect all adjustments      (consisting of only normal and recurring adjustments) which are, in the      opinion of management, necessary to present fairly the consolidated      financial information required therein.  Certain information and      note disclosures normally included in financial statements prepared in      accordance with accounting principles generally accepted in the United      States of America (“GAAP”) have been condensed or omitted pursuant to such      rules and regulations. While we believe that the disclosures are adequate      to make the information presented not misleading, it is suggested that      these condensed consolidated financial statements be read in conjunction      with the consolidated financial statements and the notes thereto included      in our Annual Report on Form 10-K filed with the Securities and Exchange      Commission for the year ended January 31,2008. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                |   | July      31, |       |   | January      31, |   |
|---------------------|--------|---------------|------------|--------|------------------|--------|
|                |   | 2008          |       |   | 2008             |   |
| Raw      materials  |   | $             | 21,498,163 |   |             | $      | 25,035,569 |   |
| Work-in-process     |   |          | 2,615,455  |   |             |   | 2,873,001 |   |
| Finished      Goods |   |          | 24,282,668 |   |             |   | 20,207,603 |   |
|                |   | $             | 48,396,286 |   |             | $      | 48,116,173 |   |

----

|                                                                                                                                                                                                                                                               |   | Three      Months Ended |      |   | Six      Months Ended |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                                               |   | July      31,           |      |   | July      31          |   |
|                                                                                                                                                                                                                                                               |   | 2008                    |      |   | 2007                  |   |   | 2008 |   |   | 2007 |   |
| Numerator                                                                                                                                                                                                                                                          |   |                    |      |   |                  |   |   |   |   |   |   |   |
| Net      Income                                                                                                                                                                                                                                                    |   | $                       | 1,624,517 |   |                  | $      | 767,050 |   |   | $ | 2,517,656 |   |   | $ | 1,362,898 |   |
| Denominator                                                                                                                                                                                                                                                        |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|      Denominator      for basic earnings per share                                                                                                                                                                                        |   |                    | 5,421,520 |   |                  |   | 5,522,604 |   |   |   | 5,454,209 |   |   |   | 5,522,214 |   |
|      (Weighted-average      shares which reflect 101,768 and 69,079 weighted average common shares in      the treasury as a result of the stock repurchase program) for the three      and six months ended July 31, 2008, respectively. |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| -    Effect      of dilutive securities from restricted stock plan and from dilutive effect      of stock options                                                                                                                              |   |                    | 37,670    |   |                  |   | 20,803 |   |   |   | 36,481 |   |   |   | 18,692 |   |
| Denominator      for diluted earnings per share                                                                                                                                                                                                                    |   |                    | 5,459,191 |   |                  |   | 5,543,407 |   |   |   | 5,490,690 |   |   |   | 5,540,906 |   |
| (adjusted      weighted average shares)                                                                                                                                                                                                                            |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings per share                                                                                                                                                                                                                                      |   | $                       | 0.30      |   |                  | $      | 0.14 |   |   | $ | 0.46 |   |   | $ | 0.25 |   |
| Diluted      earnings per share                                                                                                                                                                                                                                    |   | $                       | 0.30      |   |                  | $      | 0.14 |   |   | $ | 0.46 |   |   | $ | 0.25 |   |

|   | At      July 31, 2008, the balance outstanding under our five year revolving      credit facility amounted to $20.3 million. In May 2008 the facility was      increased from $25 million to $30 million (see Note 13). The credit      facility is collateralized by substantially all of the assets of the      Company. The credit facility contains financial covenants, including, but      not limited to, fixed charge ratio, funded debt to EBIDTA ratio, inventory      and accounts receivable collateral coverage ratio, with respect to which      the Company was in compliance at July 31, 2008 and for the period then      ended. The weighted average interest rate for the six month period ended      July 31, 2008 was 3.24%. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We      purchased 41% of our raw materials from one supplier during the six month      period ended July 31, 2008. We normally purchase approximately 75% of our      raw material from this suppler. We carried higher inventory levels      throughout FY08 and limited our material purchases in Q1 and Q2 of FY09.      Such purchases have resumed at normal levels in Q3 FY09. We expect this      relationship to continue for the foreseeable future. If required, similar      raw materials could be purchased from other sources; however, our      competitive position in the marketplace could be adversely      affected. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

| Stock      Options                                 | Numberof      Shares | Weighted      AverageExercise      Price perShare | Weighted      AverageRemainingContractual      Term | AggregateIntrinsicValue |
|----------------------------------------------------|----------------------|---------------------------------------------------|-----------------------------------------------------|-------------------------|
| Outstanding      at January 31, 2008               | 17,567               | $13.48                                            | 2.65      years                                     | 8,618                   |
| Granted      in the six months ended July 31, 2008 | 3,000                | $13.10                                            | 5.89      years                                     | -----                   |
| Outstanding      at July 31, 2008                  | 20,567               | $13.42                                            | 3.24      years                                     | 18,060                  |
| Exercisable      at  July 31, 2008       | 17,567               | $13.48                                            | 2.40      years                                     | 18,060                  |

|   | The      Company recognized total stock-based compensation costs of $137,354 and      $108,283 for the six months ended July 31, 2008 and 2007, respectively, of      which $126,812 results from the 2006 Equity Incentive Plan and $10,533      results from the Director Option Plan in 2008. All of the 2007 expenses      results from the 2006 Equity Incentive Plan.  These amounts are      reflected in selling, general and administrative expenses.  The      total income tax benefit recognized for stock-based compensation      arrangements was $49,447 and $38,982 for the six months ended July 31,      2008 and 2007, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|          |          | Three      Months Ended |   |   | Six      Months Ended |   |
|---------------|---------------|-------------------------|--------|--------|-----------------------|--------|
|          | July      31, | July      31,           |
|          |          | 2008                    |   |   | 2007                  |   |   | 2008 |   |   | 2007 |   |
| Domestic      |          | $                       | 20.1   |   |                  |   | 72.7 | % |   | $ | 18.7 |   |   |   | 86 | % |   | $ | 42.5 |   |   |   | 77.6 | % |   | $ | 41.3 |   |   |   | 87.3 | % |
| International |          |                    | 7.5    |   |                  |   | 27.3 | % |   |   | 3.0 |   |   |   | 14 | % |   |   | 12.3 |   |   |   | 22.4 | % |   |   | 6.0 |   |   |   | 12.7 | % |
| Total         |          | $                       | 27.6   |   |                  |   | 100 | % |   | $ | 21.7 |   |   |   | 100 | % |   | $ | 54.8 |   |   |   | 100 | % |   | $ | 47.3 |   |   |   | 100 | % |

|   | We      manage our operations by evaluating each of our geographic locations. Our      North American operations include our facilities in Decatur, Alabama      (primarily the distribution to customers of the bulk of our products and      the manufacture of our chemical, glove and disposable products), Jerez,      Mexico (primarily disposable, glove and chemical suit production) St.      Joseph, Missouri and Shillington, Pennsylvania (primarily fire,      hi-visibility and woven products production). We also maintain three      manufacturing facilities in China (primarily disposable and chemical suit      production) and a glove manufacturing facility in New Delhi, India. On May      13, 2008 we acquired Qualytextil S.A. which manufactures primarily fire      protective apparel for the Brazilian market. Our China facilities and our      Decatur, Alabama facility produce the majority of the Company’s      products. The accounting policies of these operating entities are the same      as those described in Note 1 to our  Annual Report on Form 10-K      for the year ended January 31, 2008. We evaluate the performance of these      entities based on operating profit which is defined as income before      income taxes, interest expense and other income and expenses. We have      sales forces in the U.S.A., Brazil, Canada, Europe, Chile, China and India      which sell and distribute products shipped from the United States, Mexico,      Brazil, China, and recently India. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   | Three      Months EndedJuly      31,(in      millions of dollars) |   |   | Six      Months EndedJuly      31,(in      millions of dollars) |   |
|--------------------------------------------------------|--------|-------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------|--------|
|                                                   |   | 2008                                                              |   |   | 2007                                                            |   |   | 2008 |   |   | 2007 |   |
| Net      Sales:                                        |   |                                                              |   |   |                                                            |   |   |   |   |   |   |   |
| North      America and other foreign                   |   | $                                                                 | 24.1   |   |                                                            | $      | 22.24 |   |   | $ | 51.3 |   |   | $ | 48.24 |   |
| Brazil                                                 |   |                                                              | 3.1    |   |                                                            |   | ----- |   |   |   | 3.1 |   |   |   | ----- |   |
| China                                                  |   |                                                              | 6.1    |   |                                                            |   | 3.46 |   |   |   | 11.4 |   |   |   | 6.46 |   |
| India                                                  |   |                                                              | .1     |   |                                                            |   | .10 |   |   |   | .2 |   |   |   | .90 |   |
| Less      inter-segment sales                          |   |                                                              | (5.8   | )      |                                                            |   | (4.1 | ) |   |   | (11.2 | ) |   |   | (8.3 | ) |
| Consolidated      sales                                |   | $                                                                 | 27.6   |   |                                                            | $      | 21.7 |   |   | $ | 54.8 |   |   | $ | 47.3 |   |
| Operating      Profit:                                 |   |                                                              |   |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| North      America and other foreign                   |   | $                                                                 | .69    |   |                                                            | $      | .44 |   |   | $ | 1.77 |   |   | $ | 1.25 |   |
| Brazil                                                 |   |                                                              | .79    |   |                                                            |   | ----- |   |   |   | .79 |   |   |   | ----- |   |
| China                                                  |   |                                                              | .97    |   |                                                            |   | .60 |   |   |   | 1.75 |   |   |   | .98 |   |
| India                                                  |   |                                                              | (.19   | )      |                                                            |   | (.12 | ) |   |   | (.41 | ) |   |   | (.24 | ) |
| Less      inter-segment profit                         |   |                                                              | (.07   | )      |                                                            |   | ----- |   |   |   | (.26 | ) |   |   | (.08 | ) |
| Consolidated      profit                               |   |                                                              | 2.19   |   |                                                            | $      | .92 |   |   | $ | 3.64 |   |   | $ | 1.91 |   |
| Identifiable      Assets (at Balance Sheet date):      |   |                                                              |   |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| North      America and other foreign                   |   |                                                              | -----  |   |                                                            |   | ----- |   |   | $ | 71.4 |   |   | $ | 63.3 |   |
| Brazil                                                 |   |                                                              | -----  |   |                                                            |   | ----- |   |   |   | 13.9 |   |   |   | ----- |   |
| China                                                  |   |                                                              | -----  |   |                                                            |   | ----- |   |   |   | 11.6 |   |   |   | 8.4 |   |
| India                                                  |   |                                                              | -----  |   |                                                            |   | ----- |   |   |   | 4.2 |   |   |   | 4.3 |   |
| Consolidated      assets                               |   |                                                              | -----  |   |                                                            |   | ----- |   |   | $ | 101.1 |   |   | $ | 76.0 |   |
| Depreciation  and      Amortization Expense: |   |                                                              |   |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| North      America and other foreign                   |   | $                                                                 | .28    |   |                                                            | $      | .15 |   |   | $ | .43 |   |   | $ | .31 |   |
| Brazil                                                 |   |                                                              | .00    |   |                                                            |   | ----- |   |   |   | .07 |   |   |   | ----- |   |
| China                                                  |   |                                                              | .07    |   |                                                            |   | .11 |   |   |   | .14 |   |   |   | .20 |   |
| India                                                  |   |                                                              | .09    |   |                                                            |   | ----- |   |   |   | .18 |   |   |   | ----- |   |
| Consolidated      depreciation expense                 |   | $                                                                 | .44    |   |                                                            | $      | .26 |   |   | $ | .82 |   |   | $ | .51 |   |

----

|   | In      connection with the asset purchase agreement, dated August 1, 2005,      between the Company and Mifflin Valley, Inc., the Company entered into a      five year lease agreement with the seller (now an employee of the Company)      to rent the manufacturing facility in Shillington, Pennsylvania owned by      the seller at an annual rental of $57,504, or a per square foot rental of      $3.25.  This amount was obtained prior to the acquisition from      an independent appraisal of the fair market rental value per square      feet.  In addition the Company has, starting January 1, 2006      rented a second 12,000 sq ft of warehouse space in Blandon, Pennsylvania      from this employee, on a month to month basis, for the monthly amount of      $3.00 per square foot. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The      Company has foreign currency exposure, principally through its investment      in Brazil, sales in Canada and the UK and production in Mexico and      China.  Management has commenced a hedging program to offset      this risk by purchasing forward contracts to sell the Canadian Dollar,      Euro and Great Britain Pound.  Such contracts for the Euro and      Pound are largely timed to expire with the last day of the fiscal quarter,      with a new contract purchased on the first day of the following quarter,      to match the operating cycle of the company.  Management has      decided not to hedge its long position in the Chinese Yuan or the      Brazilian Real. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company had one derivative instrument outstanding at July 31, 2008 which      was treated as a cash flow hedge intended for forecasted purchases of      merchandise by the Company’s Canadian subsidiary.  The Company had      the same derivative instrument outstanding at July 31, 2007.  The      change in the fair market value of the effective hedge portion of the      foreign currency forward exchange contracts was an increase of $84,244 for      the six month period ended July 31, 2008 and was recorded in other      comprehensive income. It will be released into operations based on the      timing of the sales of the underlying inventory.  The release to      operations will be reflected in cost of products sold.  During the      six-month period ended July 31, 2008, the Company recorded an immaterial      loss in cost of goods sold for the remaining portion of the foreign      currency forward exchange contract that did not qualify for hedge      accounting treatment.  The derivative instrument was in the form      of a foreign currency “participating forward” exchange contract. The      “participating forward” feature affords the Company full protection on the      downside and the ability to retain 50% of any gains, in exchange for a      premium at inception.  Such premium is built into the contract      in the form of a different contract rate in the amount of      $0.016. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Brazilian financial statements, when translated into USD pursuant to SFAS      52, “Foreign      Currency Translation” resulted in      a Currency Translation Adjustment (CTA) of $790,349, which is included in      other Comprehensive Income on the BalanceSheet. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Current      assets                                                            |   | ($000      USD) |   |
|--------------------------------------------------------------------------------|--------|-----------------|--------|
|    Cash      and equivalents                                    |   | $               | 34     |   |
|    Accounts      receivables                                    |   |            | 1,199  |   |
|    Inventory                                                    |   |            | 3,309  |   |
|    Other      current assets                                    |   |            | 210    |   |
|      Total      current assets                        |   |            | 4,752  |   |
|                                                                           |   |            |   |   |
| Fixed      assets                                                              |   |            | 1,249  |   |
| Intangible      (Brands and Patents)                                           |   |            | 186    |   |
| Other      non-current assets                                                  |   |            | 606    |   |
|      Total      assets                                |   |            | 6,791  |   |
|                                                                           |   |            |   |   |
| Current      Liabilities                                                       |   |            |   |   |
|    Loans                                                        |   |            | 3,093  |   |
|    Trade      payables and other current liabilities            |   |            | 3,477  |   |
|      Total      current liabilities                   |   |            | 6,570  |   |
|                                                                           |   |            |   |   |
| Other      non-current liabilities                                             |   |            | 82     |   |
| Net      assets acquired                                                       |   |            | 137    |   |
|                                                                           |   |            |   |   |
|                                                                           |   |            |   |   |
| Total      cost of acquisition of Qualytextil, SA                              |   | $               | 13,640 |   |
| Less      net assets acquired                                                  |   |            | (137   | ) |
| Less      debt repayment at closing                                            |   |            | (3,890 | ) |
| Goodwill      at closing                                                       |   |            | 9,613  |   |
| FAS      52 foreign currency translation adjustment at July 31,      2008 |   |            | 485    |   |
| Goodwill      at July 31, 2008 arising from Qualytextil, SA                    |   | $               | 10,098 |   |

----

|            | Q1      FY 09 | Q2      FY 09 | Q2      FY 09YTD | Q1      FY 08 | Q2      FY 08 | Q2      FY 08YTD |
|-----------------|---------------|---------------|------------------|---------------|---------------|------------------|
| Sales           | $29,245       | $27,565       | $56,810          | $27,112       | $23,519       | $50,631          |
| Net      Income | 1,158         | 1,625         | 2,801            | 580           | 934           | 1,515            |
| EPS             | $0.21         | $0.30         | $0.51            | $0.11         | $0.17         | $0.27            |

s

|   | We      have operated manufacturing facilities in Mexico since 1995, in China      since 1996, in India since 2006 and in Brazil since May of 2008. Beginning      in 1995, we moved the labor intensive sewing operation for our limited      use/disposable protective clothing lines to China and Mexico. Our      facilities and capabilities in China, Mexico, India and Brazil allow      access to a less expensive labor pool than is available in the United      States and permit us to purchase certain raw materials at a lower cost      than they are available domestically. As we have increasingly moved      production of our products to ourfacilities |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | Cash      increased by $.84 million as borrowings under the revolving credit      facility increased by $11.4 million at July 31, 2008, mainly due to the      funding of the Qualytextil acquisition. Accounts receivable increased by      $2.4 million resulting from seasonal variation and inclusion of      Qualytextil receivables.  Inventory increased by $0.3 million,      mainly due to inclusion of Brazil, offset by lower levels of raw material      purchasing. Accounts payable increased by $1.3 million as raw material      purchases increased in the month of July 2008 and with the inclusion of      Qualytextil. Other current assets increased by $.81 million, mainly due to      Qualytextil prepayments, VAT and other taxes refundable in Chile and      China, and prepaid acquisition costs relating to the Qualytextil      acquisition. Other assets increased by $1.0 million, mainly due to the      inclusion of Qualytextil. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At      July 31, 2008 the Company had an outstanding loan balance of $20.3 million      under its facility with Wachovia Bank, N.A. compared with $8.871 million      at January 31, 2008, with the increase mainly due to the funding of the      Qualytextil acquisition. Total stockholders’ equity increased principally      due to the net income for the period of $2.5 million, and the foreign      exchange gains from the Brazilian operations, offset by the Company’s      stock repurchase program of $1.2 million initiated in Q1    FY09. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | o | $.92      million in operating costs incurred by Qualytextil, SA in Brazil, now      included in Q2 FY09 operating results not previously    included. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $.22      million additional freight out costs resulting from significantly higher      prevailing carrier rates and highervolume. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $.09      million in costs relating to the proxycontest. |
|--------|---|----------------------------------------------------------|

|   | o | $.04      million in increased operating costs in China were the result of the large      increase in   direct international sales made by China, and      are now allocated to SG&A costs. Previously these SG&A costs were      allocated to cost of goods sold. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Income Tax      Expense.  Income tax expenses consist of federal, state,      and foreign income taxes.  Income tax expenses increased $.20      million, or 115%, to $.37 million for the three months July 31, 2008 from      $.17 million for the three months ended July 31, 2007.  Our      effective tax rates were 18.6% and 18.4% for the three months ended July      31, 2008 and 2007, respectively. Included in the current year tax expense      is a reduction of $207,000 of income tax expense resulting from the      settlement with the IRS (See Note 10) and the inclusion of Brazilian      operations with an effective tax rate of 16.5%. Our effective tax rate for      2008 was impacted by higher statutory rates in China and some losses in      India not eligible for tax credits. The effective tax rate for 2007      reflected an unusually low mix of domestic profits combined with higher      profits in China. The 2007 China profits were taxed at a statutory rate of      12.5%. The China statutory tax rate increased to 25% effective January 1,      2008. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  Net      Income.  Net income increased $.86 million, or 111.8% to      $1.62 million for the three months ended July 31, 2008 from $.77 million      for the three months ended July 31, 2007. The increase in net income      primarily resulted from the inclusion of the Qualytextil acquisition, and      an increase in sales and profits across all  operations. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | o | $.92 | million      in operating costs incurred by Qualytextil, SA in Brazil, now included in      Q2 FY09 operating results not previously  included. |
|--------|---|------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $.54 | million      additional freight out costs resulting from significantly higher      prevailing carrier rates and highervolume. |
|--------|---|------|-------------------------------------------------------------------------------------------------------------------------------|

|   | o | $.53 | million      in additional selling expenses, travel and commission exclusive of      Brazil. |
|--------|---|------|----------------------------------------------------------------------------------------------|

|   | o | $.30 | million      in costs relating to the proxycontest. |
|--------|---|------|-----------------------------------------------------|

|   | o | $.28 | million      in increased operating costs in China were the result of the large      increase in direct international sales made by China, are now allocated to      SG&A costs, previously allocated to cost of goods  sold. |
|--------|---|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $.10 | million      in additional startup costs in India andChile. |
|--------|---|------|-------------------------------------------------------------|

|   | o | $(.05) | million      miscellaneous reductions. |
|--------|---|--------|----------------------------------------|

|   | Income Tax      Expense.  Income tax expenses consist of federal, state,      and foreign income taxes.  Income tax expenses increased $.30      million, or 52.7%, to $.86 million for the six months July 31, 2008 from      $.56 million for the six months ended July 31, 2007.  Our      effective tax rates were 25.4% and 29.2% for the six months ended July 31,      2008 and 2007, respectively. Included in the current year tax expense is a      reduction of $207,000 of income tax expense resulting from the settlement      with the IRS (See Note 10) and the inclusion of Brazilian operations with      an effective tax rate of 16.5%. The 2007 period reflected a 12.5%      statutory rate for China (raised to 25% effective January 1, 2008) and was      impacted by the $500,000 charge for the Mexico plant restructuring for      which no tax credit was available. Without this $500,000 charge, the      effective tax rate for the 2007 period would have been    26.1% |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  Net      Income.  Net income increased $1.2 million, or 85% to      $2.5 million for the six months ended July 31, 2008 from $1.4 million for      the six months ended July 31, 2007. The increase in net income primarily      resulted from the inclusion of the Brazilian operations, an increase in      sales in other divisions, the one-time charge for the Mexico plant      restructuring in the previous year, and favorable claim experience in our      medical insurance program, offset by larger losses in    India. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Net      cash provided by operating activities of $4.7 million for the six months      ended July 31, 2008 was due primarily to net income from operations of      $2.5 million, a decrease in accounts payable accrued expenses and other      liabilities of $.3 million, and an increase in inventories of $3.0      million, with a decrease in accounts receivable of $1.2 million. Net cash      used in investing activities of $14.3 million in the six months ended July      31, 2008, was mainly due to the Qualytextil acquisition, and also the      purchases of property andequipment. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Foreign Currency      Exposure.  The Company has foreign currency exposure,      principally through its investment in Brazil, sales in Canada and the UK      and production in Mexico and China.  Management has commenced a      hedging program to offset this risk by purchasing forward contracts to      sell the Canadian Dollar, Euro and Great Britain Pound.  Such      contracts for the Euro and Pound are largely timed to expire with the last      day of the fiscal quarter, with a new contract purchased on the first day      of the following quarter, to match the operating cycle of the      company.  Management has decided not to hedge its long positions      in the Chinese Yuan and BrazilianReal. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The      Company had one derivative instrument outstanding at July 31, 2008 and      July 31, 2007 which was treated as a cash flow hedge intended for      forecasted purchases of merchandise by the Company’s Canadian      subsidiary.  The change in the fair market value of the effective      hedge portion of the foreign currency forward exchange contracts was a      gain of  $84,244, for the six month period ended July 31, 2008      and was recorded in other comprehensive (income) loss (see Note 12).       It will be released into operations based on the timing of the sales of      the underlying inventory.  The release to operations will be      reflected in cost of products sold.  During the period ended July 31,      2007, the Company recorded an immaterial loss in cost of goods sold for      the remaining portion of the foreign currency forward exchange contract      that did not qualify for hedge accounting treatment.  The      derivative instrument was in the form of a foreign currency “participating      forward” exchange contract. The “participating forward” feature affords      the Company full protection on the downside and the ability to retain 50%      of any gains, in exchange for a premium at inception.  Such      premium is built into the contract in the form of a different contract      rate in the amount of $0.016. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

v

e

----

----

----

R

m

| Reports      on Form 8-K: |
|---------------------------|

|   | a      - | On      May 6, 2008, the Company filed a Form 8-K under item 8.01 stating that on      May 2, 2008, the Company extended the final closing date for the      acquisition of Qualytextil, S.A. for Friday, May 9, 2008 due to standard      and customary closing conditions inBrazil. |
|--------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b      - | On      May 15, 2008, the Company filed a Form 8-K under items 1.01, 2.01, and      7.01. Item 1.01 relates to the Stock Purchase Agreement with Miguel      Antonio dos Guimarães Bastos, Elder Marcos Vieira da Conceição, and Márcia      Cristina Vieira da Conscição Antunes, together with, Nordeste Empreendedor      Fundo Mútuo de Investimento em Empresas Emergentes, and Qualytextil S.A.,      organized under the laws of the nation of Brazil. Item 2.01 relates to      that on May 13, 2008, the Qualytextil acquisition was completed. Item 7.01      relates to that on May 14, 2008, Lakeland issued a press release      announcing the completion of the acquisition of    Qualytextil. |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c      - | On      May 16, 2008, the Company filed a Form 8-K under item 7.01 for the purpose      of furnishing a press release in announcing that on May 16, 2008, at its      2008 Annual Meeting of Stockholders, it intends to seek stockholder      approval for the repeal of the supermajority voting requirements      applicable to certain business combinations that are currently contained      in its Restated Certificate ofIncorporation. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d      - | On      June 9, 2008, the Company filed a Form 8-K under item 2.02 for the purpose      of furnishing a press release announcing the Company's Q1 FY09 financial      results for the reporting period ended April 30,      2008.   |
|--------|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e      - | On      June 20, 2008, the Company filed a Form 8-K under Items 5.02, 5.03 and      8.01. Item 5.02 relates to a two year employment agreement between      Christopher J. Ryan and Lakeland Industries, Inc. dated April 11, 2008.      Items 5.03 and 8.01 relate to that on June 18, 2008, the Board of      Directors and shareholders approved and adopted of the Amended and      Restated Bylaws and Certificate of Incorporation of the      Company. |
|--------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f      - | On      July 25, 2008 the Company filed a Form 8-K/A under Item 9.01 amending the      initial Form 8-K, dated May 15, 2008 in order to include audited      historical financial statements of Qualytextil and pro forma financial      information that were not included in the initial Form  8-K |
|--------|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a.     | 10.1      On July 31, 2008, the Company’s Board of Directors ratified and Greg      Pontes executed an Employment Agreement between Lakeland Industries, Inc.      and Greg Pontes dated July 1, 2008, which agreement took effect on August      29, 2008. A copy of stated agreement is filed herein. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                          |

|   | b. | 31.1      Certification Pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the      Exchange Act, Signed by Chief Executive Officer (filed      herewith) |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | 31.2      Certification Pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the      Exchange Act, Signed by Chief Financial Officer (filed      herewith) |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | 32.1      Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002, Signed by Chief Executive      Officer (filed herewith) |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e. | 32.1      Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002, Signed by Chief Financial      Officer (filed herewith) |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

N

|                                    | LAKELAND INDUSTRIES,      INC.                              |
|-----------------------------------------|-------------------------------------------------------------|
|                                    | (Registrant)                                                |
|                                    |                                                        |
|                                    |                                                        |
| Date:  September      9, 2008 | /s/ Christopher J.      Ryan                                |
|                                    | Christopher      J. Ryan,                                   |
|                                    | Chief      Executive Officer, President,                    |
|                                    | Secretary      and General Counsel                          |
|                                    | (Principal      Executive Officer and AuthorizedSignatory)  |
|                                    |                                                        |
|                                    |                                                        |
| Date:      September 9, 2008            | /s/Gary      Pokrassa                                       |
|                                    | Gary      Pokrassa,                                         |
|                                    | Chief      Financial Officer                                |
|                                    | (Principal      Accounting Officer and AuthorizedSignatory) |