UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549









FORM
10-Q




(Mark
one)




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




For the
quarterly period endedApril 30,
2008




OR




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




For the
transition period from _______________ to _______________









Commission
File Number:  0-15535









LAKELAND
INDUSTRIES, INC.





(Exact
name of Registrant as specified in its charter)









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)


(631)
981-9700




(Registrant's
telephone number, including area code)









Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yeso    No
x


Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.


Yes o   No  x


Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


Yes x  No o


Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated file, a non- accelerated filer, or a smaller reporting company. See
the definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12-b-2 of the Exchange Act. (Check one):


Large
      accelerated filer ⁯
            Accelerated
      filer             
            oNon-Accelerated
      filer   ⁯ (Do not check if a smaller reporting
      company)
            Smaller
      reporting company ý





Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12-b-2 of the Exchange
Act).


Yeso   No
x


As of
July 31, 2007, the aggregate market value of the registrant’s common stock held
by non-affiliates of the registrant was $59,612,097 based on the closing price
of the common stock as reported on the National Association of Securities
Dealers Automated Quotation System National Market System.


Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.


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











LAKELAND
INDUSTRIES, INC.


AND
SUBSIDIARIES







FORM
10-Q









The
following information of the Registrant and its subsidiaries is submitted
herewith:






PART I - FINANCIAL INFORMATION:




Item 1.
            Financial Statements (unaudited):
            PageIntroduction
            3Condensed Consolidated Balance Sheets April 30, 2008 and
      January 31, 2008
            4Condensed
      Consolidated Statements of Income for the Three Months EndedApril
      30, 2008 and 2007
            5Condensed
      Consolidated Statement of Stockholders' Equity –Three Months EndedApril
      30, 2008
            6Condensed Consolidated Statements of Cash Flows –Three Months
      Ended April 30, 2008 and 2007
            7Notes to Condensed Consolidated Financial
      Statements
            8Item 2.
            Management's Discussion and Analysis of Financial Condition and
      Results of Operations
            15Item 3.
            Quantitative and Qualitative Disclosures About Market
      Risk
            20Item 4.
            Controls and Procedures
            20PART II - OTHER INFORMATION:Item 6.
            Exhibits and Reports on Form 8-K
            23Signature Page
            24










LAKELAND
INDUSTRIES, INC.


AND
SUBSIDIARIES




PART I -
            FINANCIAL
      INFORMATIONItem1.
            Financial
      Statements:


Introduction




SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS




This 10-Q
may contain certain forward-looking statements.  When used in this
10-Q or in any other presentation, statements which are not historical in
nature, including the words “anticipate,” “estimate,” “should,” “expect,”
“believe,” “intend,” “project” and similar expressions are intended to identify
forward-looking statements.  They also include statements containing a
projection of sales, earnings or losses, capital expenditures, dividends,
capital structure or other financial terms.




The forward-looking statements in
this 10-Q are based upon our management’s beliefs, assumptions and expectations
of our future operations and economic performance, taking into account the
information currently available to us.  These statements are not
statements of historical fact.  Forward-looking statements involve
risks and uncertainties, some of which are not currently known to us that may
cause our actual results, performance or financial condition to be materially
different from the expectations of future results, performance or financial
condition we express or imply in any forward-looking statements.  Some
of the important factors that could cause our actual results, performance or
financial condition to differ materially from expectations are:




·
            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 exchange
rates;


·
            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 customer
demand;


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


·
            Risks
      associated with sales to foreign
buyers;


·
            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 liability
claims;


·
            Liabilities
      under environmental laws and
regulations;


·
            Fluctuations
      in the price of our common stock;


·
            Variations
      in our quarterly results of
operations;


·
            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 common
stock;


·
            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.”


We
believe these forward-looking statements are reasonable; however, you should not
place undue reliance on any forward-looking statements, which are based on
current expectations.  Furthermore, forward-looking statements speak
only as of the date they are made.  We undertake no obligation to
publicly update or revise any forward-looking statements after the date of this
10-Q, whether as a result of new information, future events or
otherwise.  In light of these risks, uncertainties and assumptions,
the forward-looking events discussed in this Form 10-Q might not
occur.  We qualify any and all of our forward-looking statements
entirely by these cautionary factors.


3


LAKELAND
INDUSTRIES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS








ASSETS
            
            April
      30, 2008
            
            
            January
      31, 2008(Unaudited)Current
      assets:Cash
            
            $
            3,001,133
            
            
            $
            3,427,672Accounts
      receivable, net of allowance for doubtful accounts of
    $35,000
            
            
            17,374,429
            
            
            
            14,927,666at
      April 30, 2008 and $45,000 at January 31, 2008Inventories,
      net of reserves of $554,800 at April 30, 2008 and $607,000
            
            
            40,657,828
            
            
            
            48,116,173at
      January 31, 2008Deferred
      income taxes
            
            
            1,969,713
            
            
            
            1,969, 713Other
      current assets
            
            
            2,400,845
            
            
            
            1,828,210Total
      current assets
            
            
            65,403,948
            
            
            
            70,269,434Property
      and equipment, net of accumulated depreciation of
            
            
            13,254,366
            
            
            
            13,324,648$7,415,000
      at April 30, 2008 and $7,055,000 at January 31, 2008Goodwill
            
            
            871,297
            
            
            
            871,297Other
      assets
            
            
            119,389
            
            
            
            157,474$
            79,649,000
            
            
            $
            84,622,853LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
            
            $
            3,753,874
            
            
            $
            3,312,696Accrued
      expenses and other current liabilities
            
            
            1,825,889
            
            
            
            1,684,161Total
      current liabilities
            
            
            5,579,763
            
            
            
            4,996,857Construction
      loan
            
            
            1,809,879
            
            
            
            1,882,085Borrowings
      under revolving credit facility
            
            
            3,467,000
            
            
            
            8,871,000Commitments
      and contingenciesStockholders'
      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 April 30, 2008 and atJanuary
      31, 2008
            
            
            55,233
            
            
            
            55,233Less
      treasury stock, at cost, 93,167 shares at April 30, 2008 and 0 shares
      at
              January
      31, 2008
            
            
            (1,083,963
            )
            
            
            -----Additional
      paid-in capital
            
            
            49,274,002
            
            
            
            49,211,961Other
      comprehensive income (loss)
            
            
            12,157
            
            
            
            (36,073
            )Retained
      earnings (1)
            
            
            20,534,929
            
            
            
            19,641,790Stockholders'
      equity
            
            
            68,792,358
            
            
            
            68,872,911$
            79,649,000
            
            
            $
            84,622,853





(1)
A cumulative total of $17,999,739 has been transferred from retained earnings to
additional paid-in-capital and par value of common stock due to four separate
stock dividends paid in 2002, 2003, 2005 and 2006. As reflected in the Condensed
Consolidated Statement of Stockholders’ Equity, $6,386,916 was included in the
year ended January 31, 2008.





The
accompanying notes are an integral part of these financial
statements.


4





LAKELAND
INDUSTRIES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(UNAUDITED)











THREE
      MONTHS ENDEDApril
      30,2008
            
            
            2007Net
      sales
            
            $
            27,280,157
            
            
            $
            25,596,738Cost
      of goods sold
            
            
            20,601,559
            
            
            
            20,221,780Gross
      profit
            
            
            6,678,598
            
            
            
            5,374,958Operating
      expenses
            
            
            5,230,484
            
            
            
            4,380,147Operating
      profit
            
            
            1,448,114
            
            
            
            994,811Interest
      and other income, net
            
            
            30,074
            
            
            
            43,060Interest
      expense
            
            
            (99,520
            )
            
            
            (53,608
            )Income
      before income taxes
            
            
            1,378,668
            
            
            
            984,263Provision
      for income taxes
            
            
            485,529
            
            
            
            388,415Net
      income
            
            $
            893,139
            
            
            $
            595,848Net
      income per common share:Basic
            
            $
            0.16
            
            
            $
            .11Diluted
            
            $
            0.16
            
            
            $
            .11Weighted
      average common shares outstanding:Basic
            
            
            5,487,260
            
            
            
            5,521,824Diluted
            
            
            5,520,868
            
            
            
            5,538,405











The
accompanying notes are an integral part of these financial
statements.











5


LAKELAND
INDUSTRIES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY


(UNAUDITED)


Three
months ended April 30, 2008







Common
      Stock
              
              
              Additional
                Paid-in
                Capital
              
              
              Treasury Stock
              
              
              Retained
                Earnings
              
              
              Other
      Comprehensive
                Income (loss)
              
              
              TotalShares
              
              
              Amount
              
              
              
              
              
              Shares
              
              
              AmountBalance
      February 1, 2008
              
              
              5,523,288
              
              
              $
              55,233
              
              
              $
              49,211,961
              
              
              
              -----
              
              
              
              -----
              
              
              $
              19,641,790
              
              
              $
              (36,073
              )
              
              $
              68,872,911Net
      Income
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              893,139
              
              
              
              -----
              
              
              
              893,139Stock
      Repurchase Program
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (93,167
              )
              
              $
              (1,083,963
              )
              
              
              -----
              
              
              
              -----
              
              
              
              (1,083,963
              )Other
      Comprehensive Income
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              48,230
              
              
              
              48,230Stock
      Based Compensation
              
              
              -----
              
              
              
              -----
              
              
              
              62,041
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              62,041Balance
      April 30, 2008
              
              
              5,523,288
              
              
              $
              55,233
              
              
              $
              49,274,002
              
              
              
              (93,167
              )
              
              $
              (1,083,963
              )
              
              $
              20,534,929
              
              
              $
              12,157
              
              
              $
              68,792,358








The
accompanying notes are an integral part of these financial
statements.





6


LAKELAND
INDUSTRIES, INC.  AND SUBSIDIARIES


CONDENSED
CONSOLIDATEDSTATEMENTS OF CASH FLOWS


(UNAUDITED)





THREE
      MONTHS ENDEDApril
      30,2008
            
            
            2007Cash
      Flows from Operating Activities:Net
      income
            
            $
            893,139
            
            
            $
            595,848Adjustments
      to reconcile net income to net cash providedby
      operating activities:Stock
      based compensation
            
            
            62,041
            
            
            
            53,114Reserve
      for doubtful accounts
            
            
            (10,000
            )
            
            
            (23,000
            )Reserve
      for inventory obsolescence
            
            
            (52,200
            )
            
            
            97,042Depreciation
      and amortization
            
            
            383,826
            
            
            
            262,017Deferred
      income tax
            
            
            -----
            
            
            
            (64,645
            )Changes
      in operating assets and liabilities:Increase
      in accounts receivable
            
            
            (2,436,763
            )
            
            
            (390,859
            )Decrease
      in inventories
            
            
            7,510,545
            
            
            
            336,645Increase
      in other assets
            
            
            (486,320
            )
            
            
            (672,682
            )Increase
      in accounts payable, accrued expenses and other
liabilities
            
            
            582,906
            
            
            
            1,466,210Net
      cash provided by operating activities
            
            
            6,447,174
            
            
            
            1,659,690Cash
      Flows from Investing Activities:Purchases
      of property and equipment
            
            
            (313,544
            )
            
            
            (305,832
            )Net
      cash used in investing activities
            
            
            (313,544
            )
            
            
            (305,832
            )Cash
      Flows from Financing Activities:Purchases
      of stock under stock repurchase program
            
            
            (1,083,963
            )
            
            
            -----(Payments)
      borrowing under loan agreements
            
            
            (5,476,206
            )
            
            
            298,000Net
      cash (used in) provided by financing activities
            
            
            (6,560,169
            )
            
            
            298,000Net
      (decrease) increase in cash
            
            
            (426,539
            )
            
            
            1,651,858Cash
      and cash equivalents at beginning of period
            
            
            3,427,672
            
            
            
            1,906,557Cash
      and cash equivalents at end of period
            
            $
            3,001,133
            
            
            $
            3,558,415





The
accompanying notes are an integral part of these financial
statements.





7


LAKELAND
INDUSTRIES, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





1.
            Business




Lakeland
Industries, Inc. and Subsidiaries (the "Company"), a Delaware corporation,
organized in  April 1982, manufactures and sells a comprehensive line
of safety garments and accessories for the  industrial protective
clothing and homeland security markets. The principal market for our products
is  the United States. No customer accounted for more than 10% of net
sales during the three month  periods ended April 30, 2008 and 2007,
respectively.


2.      Basis
of Presentation




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.




The results of operations for the three
month period ended April 30, 2008 is not necessarily indicative of the results
to be expected for the full year.




3.     Principles
of Consolidation




The
accompanying condensed consolidated financial statements include the accounts of
the  Company and its wholly-owned subsidiaries.  All
significant inter-company accounts and transactions  have been
eliminated.




4.     Inventories:




Inventories consist of the
following:




April
      30,
            
            
            January
      31,2008
            
            
            2008Raw
      materials
            
            $
            20,603,056
            
            
            $
            25,035,569Work-in-process
            
            
            2,939,787
            
            
            
            2,873,001Finished
      Goods
            
            
            17,114,985
            
            
            
            20,207,603$
            40,657,828
            
            
            $
            48,116,173




Inventories
include freight-in, materials, labor and overhead costs and are stated at the
lower of cost (on a first-in-first-out basis) or market.




5.     Earnings Per
Share:




Basic
earnings per share are based on the weighted average number of common shares
outstanding without consideration of common stock equivalents. Diluted earnings
per share are based on the weighted average number of common and common stock
equivalents. The diluted earnings per share calculation takes into account the
shares that may be issued upon exercise of stock options, reduced by the shares
that may be repurchased with the funds received from the exercise, based on the
average price during the period.




8







The
following table sets forth the computation of basic and diluted earnings per
share at April 30, 2008 and 2007.




Three
      Months EndedApril
      30,2008
            
            
            2007NumeratorNet
      Income
            
            $
            893,139
            
            
            $
            595,848DenominatorDenominator
      for basic earnings per share
            
            
            5,487,260
            
            
            
            5,521,824(Weighted-average
      shares which reflect 36,028 weighted average common shares in the treasury
      as a result of the stock repurchase program)Effect
      of dilutive securities from restricted stock plan and from dilutive effect
      of stock options
            
            
            33,608
            
            
            
            16,581Denominator
      for diluted earnings per share
            
            
            5,520,868
            
            
            
            5,538,405(adjusted
      weighted average shares)Basic
      earnings per share
            
            $
            .16
            
            
            $
            .11Diluted
      earnings per share
            
            $
            .16
            
            
            $
            .11




6.     Revolving
Credit Facility




At
      April 30, 2008, the balance outstanding under our five year revolving
      credit facility amounted to $3.5 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 April 30, 2008 and for the period then
      ended. The weighted average interest rate for the three month period ended
      April 30, 2008 was 3.53%.




7.     Major
Supplier




We
      purchased 9.9% of our raw materials from one supplier during the three
      month period ended April 30, 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 of FY09. Such
      purchases have resumed at normal levels in Q2 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.




8.     Employee
Stock Compensation




The
Company’s Director’s Plan permits the grant of share options and shares to its
Directors for up to  60,000 shares of common stock as stock
compensation.  All stock options under this Plan are
granted  at the fair market value of the common stock at the grant
date.  This date is fixed only once a year upon  a Board
Member’s re-election to the Board at the Annual Shareholders’ meeting which is
the third  Wednesday in June pursuant to the Director’s Plan and our
Company By-Laws.  Directors’ stock  options vest ratably
over a 6 month period and generally expire 6 years from the grant
date.





9





The following table represents our
stock options granted, exercised, and forfeited during the firstquarter of
fiscal 2009.





Stock
      Options
            Number
              of
      Shares
            Weighted
      Average
              Exercise
      Price per
              Share
            Weighted
      Average
              Remaining
              Contractual
      Term
            Aggregate
              Intrinsic
              ValueOutstanding
      at January 31, 2008
            17,567
            $13.48
            2.65
      years
            8,618Outstanding
      at April 30, 2008
            17,567
            $13.48
            2.40
      years
            17,243Exercisable
      at  April 30, 2008
            17,567
            $13.48
            2.40
      years
            17,243





Restricted Stock Plan and Performance
Equity Plan




On June
21, 2006, the shareholders of the Company approved a restricted stock
plan.  A total of  253,000 shares of restricted stock were
authorized under this plan.  Under the restricted stock
plan,  eligible employees and directors are awarded performance-based
restricted shares of the Corporation’s  common stock.  The
amount recorded as expense for the performance-based grants of restricted
stock  are based upon an estimate made at the end of each reporting
period as to the most probable outcome  of this plan at the end of the
three year performance period. (e.g., baseline, minimum, maximum
or  zero).  In addition to the grants with vesting based
solely on performance, certain awards pursuant to  the plan have a
time-based vesting requirement, under which awards vest from three to four years
after  issuance, subject to continuous employment and certain other
conditions.  Restricted stock has the  same voting rights as
other common stock. Restricted stock awards do not have voting rights, and
the  underlying shares are not considered to be issued and outstanding
until vested.





The
Company has granted up to a maximum of 139,484 restricted stock awards as of
April 30, 2008. All of these restricted stock awards are non-vested at April 30,
2008 (96,639 shares at “baseline” and 54,784 shares at “minimum”) and have a
weighted average grant date fair value of $12.99. The Company recognizes expense
related to performance-based awards over the requisite service period using the
straight-line attribution method based on the outcome that is
probable.




As
of April 30, 2008, unrecognized stock-based compensation expense related to
restricted stock  awards totaled $713,704, before income taxes, based
on the maximum performance award level.   Such unrecognized
stock-based compensation expense related to restricted stock awards
totaled  $499,741 and $290,711 at the baseline and minimum performance
levels, respectively. The cost of  these non-vested awards is expected
to be recognized over a weighted-average period of three
years.   The board has estimated its current performance level to
be at the minimum level and expenses have  been recorded
accordingly.  The performance based awards are not considered stock
equivalents for  EPS purposes.





Stock-Based Compensation




The
      Company recognized total stock-based compensation costs of $62,041 and
      $53,114 for the three months ended April 30, 2008 and 2007, respectively,
      all of which 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 $22,335 and $19,121 for the
      three months ended April 30, 2008 and 2007,
  respectively.





10





9.         Manufacturing
Segment Data




Domestic and international sales are as
follows in millions of dollars:




Three
      Months EndedApril
      30,2008
            
            
            2007Domestic
            
            $
            23.2
            
            
            
            84.9
            %
            
            $
            23.2
            
            
            
            90.5
            %International
            
            
            4.1
            
            
            
            15.1
            %
            
            
            2.4
            
            
            
            9.5
            %Total
            
            $
            27.3
            
            
            
            100
            %
            
            $
            25.6
            
            
            
            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), Celaya,
      Mexico (primarily disposable, glove and chemical suit production) St.
      Joseph, Missouri and Shillington, Pennsylvania (primarily 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. 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 Canada, Europe, Chile and China which sell
      and distribute products shipped from the United States, Mexico or
      China.




The table below represents information about reported manufacturing
segments for the three month periods noted therein:




Three
      Months Ended
              April
      30,
              (in
      millions of dollars)2008
            
            
            2007Net
      Sales:North
      America and other foreign
            
            $
            27.2
            
            
            $
            26.0China
            
            
            5.4
            
            
            
            3.0India
            
            
            .1
            
            
            
            .1Less
      inter-segment sales
            
            
            (5.4
            )
            
            
            (4.2
            )Consolidated
      sales
            
            $
            27.3
            
            
            $
            25.6Operating
      Profit:North
      America and other foreign
            
            $
            1.1
            
            
            $
            .8China
            
            
            .8
            
            
            
            .4India
            
            
            (.2
            )
            
            
            (.1
            )Less
      inter-segment profit
            
            
            (.2
            )
            
            
            (.1
            )Consolidated
      profit
            
            $
            1.5
            
            
            $
            1.0Identifiable
      Assets (at Balance Sheet date):North
      America and other foreign
            
            $
            63.8
            
            
            $
            63.2China
            
            
            11.4
            
            
            
            9.0India
            
            
            4.4
            
            
            
            4.3Consolidated
      assets
            
            $
            79.6
            
            
            $
            76.5Depreciation  and
      Amortization Expense:North
      America and other foreign
            
            $
            .2
            
            
            $
            .2China
            
            
            .1
            
            
            
            .1India
            
            
            .1
            
            
            
            -----Consolidated
      depreciation expense
            
            $
            .4
            
            
            $
            .3





11


10.   Adoption
of FIN 48





UNCERTAIN TAX POSITIONS.Effective February 1, 2007, the first day of fiscal 2008, the Company
adopted the provisions of Financial Accounting Standards Board (“FASB”)
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”).
FIN 48 prescribes recognition thresholds that must be met before a tax position
is recognized in the financial statements and provides guidance on
de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. Under FIN 48, an entity may only recognize
or continue to recognize tax positions that meet a "more likely than not"
threshold. The Company recorded the cumulative effect of applying FIN 48 as a
$419,000 debit to the opening balance of accumulated deficit as of February 1,
2007, the date of adoption.





The
Company’s policy is to recognize interest and penalties related to income tax
issues as components of income tax expense. The Company had approximately
$85,000 of accrued interest as of April 30, 2008.





The
Company is subject to U.S. federal income tax, as well as income tax in multiple
U.S. state and local jurisdictions and a number of foreign
jurisdictions.   The Company’s Federal Income Tax returns for the
fiscal years ended January 31, 2003, 2004 and 2005 have been audited by the
Internal Revenue Service. Such audits are complete with one issue in dispute
relating to deductions taken by the Company for charitable contributions of its
stock in trade, and one other issue in dispute which would result in a timing
difference. Such issues are in the Appellate Division of the Internal Revenue
Service. An initial meeting was held in May 2007 and several meetings have since
been held. Since the final result of these issues cannot be estimated by
management at this time, management has recorded a charge of $419,000
representing the government’s position plus interest.





An audit
of the Company’s US federal tax returns for the year ended January 31, 2007 has
just commenced.




11.   Related
Party Transactions




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.





On March
1, 1999, we entered into a one year (renewable for four additional one year
terms) lease agreement with Harvey Pride, Jr., our Vice President of
Manufacturing, for a 2,400 sq. ft. customer service office located next to our
existing Decatur, Alabama facility at an annual rent of $18,000. This lease was
renewed on March 1, 2004 through March 31, 2009 at the same rental
rate.





12.   Derivative
Instruments and Foreign Currency Exposure




The
Company has foreign currency exposure, principally through 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.
 
 The
Company accounts for its foreign exchange derivative instruments under Statement
of Financial  Accounting Standards (“SFAS”) No. 133, “Accounting for
Derivative Instruments and Hedging  Activities,” as amended. 
This standard requires recognition of all derivatives as either assets
or




12




liabilities
at fair value and may result in additional volatility in both current period
earnings and other comprehensive income as a result of recording recognized and
unrecognized gains and losses from  changes in the fair value of
derivative instruments.





The
      Company had one derivative instrument outstanding at April 30, 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 April 30, 2007.  The
      change in the fair market value of the effective hedge portion of the
      foreign currency forward exchange contracts was an increase of $48,230 for
      the three month period ended April 30, 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
      period ended April 30, 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.





13.   Subsequent
Event




On May
13, 2008 (the “Final Closing Date”), Lakeland Industries, Inc., a Delaware
corporation (“Lakeland”), completed the acquisition (the “Acquisition”) of
Qualytextil, S.A., (“Qualytextil”) a corporation organized under the laws of
Brazil, pursuant to a Stock Purchase Agreement (the “Stock Purchase
Agreement”)





The
Acquisition was financed through Lakeland’s existing revolving credit facility
as amended. Further, in related transactions to accommodate the Qualytextil
acquisition, Wachovia Bank, N.A. has increased the Revolving Line of Credit from
$25,000,000 to $30,000,000 and has reworked several covenants to allow for the
acquisition.





The
Purchase Price was determined to be a multiple of seven times the 2007 EBITDA of
Qualytextil, some of which was used to repay outstanding debts at closing. The
2007 EBITDA was $R3,118,000 (USD$1.9 million) and the total amount paid at
closing, including the repayment of such outstanding debts, is $R21,826,000
(approximately $13.2 million USD).




In
connection with the closing of such acquisition, a total of $R6.3 million
(USD$3.8 million) was used to repay outstanding debts of Qualytextil, $R7.8
million (USD$4.7 million) was retained in the various escrow funds as described,
and the balance of $R7.7 million (USD$4.7 million) was paid to the Sellers at
closing.




There are
provisions for an adjustment of the initial Purchase Price, based on results of
a post-closing audit of the April 30, 2008 Balance Sheet and also based on
results of 2008 EBITDA.





There is
also a provision for a Supplementary Purchase Price - Subject to Qualytextil’s
EBITDA in 2010 being equal to or greater than $R4,449,200 (USD$2.7 million), the
Purchaser shall then pay to the Sellers the difference between six (6) times
Qualytextil’s EBITDA in 2010 and seven (7) times the 2007 EBITDA
($R21,826,000.00) (USD$13.2 million), less any unpaid disclosed or undisclosed
contingencies (other than Outstanding Debts) from pre-closing which exceeds
$R100,000.00 (USD$.06 million) ("Supplementary Purchase
Price"). The Supplementary Purchase Price in no event shall be greater
than $R27,750,000.00 (USD$16.8 million), subject to certain
restrictions.





All
sellers also have executed employment contracts with terms expiring December 31,
2011 which contain a non-compete provision extending seven years from
termination of employment.





14.   Reclassification




$85,000
in April 30, 2007 was reclassified from Cost of Goods Sold to Operating Expenses
to conform with current year classifications.


13


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




You
should read the following summary together with the more detailed business
information and  consolidated financial statements and related notes
that appeared in our Form 10-K and Annual   Report and in the
documents that were incorporated by reference into our Form 10-K for the
year  ended January 31, 2008.  This Form 10-Q may contain
certain “forward-looking” information within  the meaning of the
Private Securities Litigation Reform Act of 1995.  This information
involves risks  and uncertainties.  Our actual results may
differ materially from the results discussed in the forward- looking
statements.




Overview




We
manufacture and sell a comprehensive line of safety garments and accessories for
the industrial  protective clothing and homeland security markets. Our
products are sold by our in-house sales force  and independent sales
representatives to a network of over 1000 safety and mill supply
distributors.  These distributors in turn supply end user industrial
customers such as chemical/petrochemical,  automobile, steel, glass,
construction, smelting, janitorial, pharmaceutical and high
technology  electronics manufacturers, as well as hospitals and
laboratories. In addition, we supply federal, state  and local
governmental agencies and departments such as fire and police departments,
airport crash  rescue units, the Department of Defense, the Centers
for Disease Control, and numerous other  agencies of the federal and
state governments.
 
 We have
operated manufacturing facilities in Mexico since 1995 and in China since 1996.
Beginning  in 1995, we moved the labor intensive sewing operation for
our limited use/disposable protective  clothing lines to these
facilities. Our facilities and capabilities in China and Mexico 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 our facilities in Mexico and
China, we have seen improvements in the  profit margins for these
products. We continue to move production of our reusable woven
garments  and gloves to these facilities and expect to continue this
process through fiscal 2008. As a result, we  expect to see continuing
profit margin improvements for these product lines over
time.


Critical
Accounting Policies and Estimates




The
preparation of our financial statements in conformity with accounting principles
generally  accepted in the United States requires us to make estimates
and judgments that affect the reported  amounts of assets,
liabilities, net sales and expenses, and disclosure of contingent assets and
liabilities.  We base estimates on our past experience and on various
other assumptions that we believe to be  reasonable under the
circumstances and we periodically evaluate these estimates.


We
believe the following critical accounting policies affect our more significant
judgments and  estimates used in the preparation of our consolidated
financial statements.


Revenue Recognition.The
Company derives its sales primarily from its limited use/disposable protective
clothing and secondarily from its sales of high-end chemical protective suits,
fire fighting and heat protective apparel, gloves and arm guards, and reusable
woven garments. Sales are recognized when goods are shipped at which time title
and the risk of loss passes to the customer. Sales are reduced for sales returns
and allowances. Payment terms are generally net 30 days for United States sales
and net 90 days for international sales.





Substantially
all the Company’s sales are made through distributors. There are no significant
differences across product lines or customers in different geographical areas in
the manner in which the Company’s sales are made.





Rebates
are offered to a limited number of our distributors, who participate in a rebate
program.






14




Rebates
are predicated on total sales volume growth over the previous year. The Company
accrues for any such anticipated rebates on a pro-rata basis throughout the
year.
 
 Our sales
are generally final; however requests for return of goods can be made and must
be received within 90 days from invoice date. No returns will be accepted
without a written authorization. Return products may be subject to a restocking
charge and must be shipped freight prepaid. Any special made-to-order items are
not returnable. Customer returns have historically been
insignificant.
 
 Customer
pricing is subject to change on a 30-day notice; exceptions based on meeting
competitors pricing are considered on a case by case basis.
 
 Inventories.Inventories
include freight-in, materials, labor and overhead costs and are stated at
the  lower of cost (on a first-in, first-out basis) or market.
Provision is made for slow-moving, obsolete or  unusable
inventory.
 
 Allowance for Doubtful Accounts.We establish an allowance for doubtful accounts to provide
for  accounts receivable that may not be collectible. In establishing
the allowance for doubtful accounts, we  analyze the collectibility of
individual large or past due accounts customer-by-customer. We
establish  reserves for accounts that we determine to be doubtful of
collection.
 
 Income Taxes and Valuation Reserves.We are required to estimate our income taxes in each of
the  jurisdictions in which we operate as part of preparing our
consolidated financial statements. This  involves estimating the
actual current tax in addition to assessing temporary differences resulting
from  differing treatments for tax and financial accounting purposes.
These differences, together with net  operating loss carry forwards
and tax credits, are recorded as deferred tax assets or liabilities on
our  balance sheet. A judgment must then be made of the likelihood
that any deferred tax assets will be  realized from future taxable
income. A valuation allowance may be required to reduce deferred
tax  assets to the amount that is more likely than not to be realized.
In the event we determine that we may  not be able to realize all or
part of our deferred tax asset in the future, or that new estimates
indicate  that a previously recorded valuation allowance is no longer
required, an adjustment to the deferred tax  asset is charged or
credited to net income in the period of such determination.
 
 Valuation of Goodwill and Other
Intangible Assets.On February 1, 2002, we adopted Statement
of  Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other
Intangible Assets,” which  provides that goodwill and other intangible
assets are no longer amortized, but are assessed for  impairment
annually and upon occurrence of an event that indicates impairment may have
occurred.  Goodwill impairment is evaluated utilizing a two-step
process as required by SFAS No. 142. Factors  that we consider
important that could identify a potential impairment
include:  significant  underperformance relative to expected
historical or projected future operating results; significant  changes
in the overall business strategy; and significant negative industry or economic
trends. When  we determine that the carrying value of intangibles and
goodwill may not be recoverable based upon  one or more of these
indicators of impairment, we measure any potential impairment based on
a  projected discounted cash flow method.  Estimating future
cash flows requires our management to  make projections that can
differ materially from actual results.
 
 Self-Insured Liabilities.We
have a self-insurance program for certain employee health benefits.
The  cost of such benefits is recognized as expense based on claims
filed in each reporting period, and an  estimate of claims incurred
but not reported during such period. Our estimate of claims incurred
but  not reported is based upon historical trends. If more claims are
made than were estimated or if the costs  of actual claims increases
beyond what was anticipated, reserves recorded may not be sufficient
and  additional accruals may be required in future periods. We
maintain separate insurance to cover the  excess liability over set
single claim amounts and aggregate annual claim amounts.
 
 Significant
Balance Sheet Fluctuation April 30, 2008 as compared to January 31,
2008
  Cash
decreased by $.427 million as borrowings under the revolving credit facility
decreased by $5.5 million at April 30, 2008. Accounts receivable increased by
$2.45 million as sales for the three months




15


ended
April 30, 2008 increased by 9.3% from the three months ended January 31,
2008.  Inventory decreased by $7.46 million with a decrease in
inventory reserves of $.052 million, an increase in intercompany profit
elimination of $.117 million resulting from increased intercompany sales shipped
from China, and a decrease of $3.4 million in finished goods inventory and a
decrease in raw materials and work in process of $4.37 million. Deferred income
taxes did not change in Q1FY09. Other assets include $.02 million rebates
related to the purchase of raw material. Accounts payable increased by $.441
million as raw material purchased increased in the month of April 2008. Other
current assets increased by $.6 million, mainly due to prepaid insurance
policies with policy years the same as the Company’s fiscal year, VAT and other
taxes refundable in Chile and China, and prepaid acquisition costs relating to
the Qualytextil acquisition.





At
      April 30, 2008 the Company had an outstanding loan balance of $3.467
      million under its facility with Wachovia Bank, N.A. compared with $8.871
      million at January 31, 2008.  Total stockholder’s equity
      decreased principally due to the stock repurchase program of $1.1 million
      initiated in Q1 FY09, offset by the net income for the period of $0.9
      million.





Three
months ended April 30, 2008 as compared to the three months ended April 30,
2007




Net Sales.Net sales
increased $1.68 million, or 6.6% to $27.3 million for the three months ended
April 30, 2008 from $25.6 million for the three months ended April 30,
2007.  The net increase was mainly due to foreign sales. External
sales from China increased by $1.3 million, or 350% driven by sales to the new
Australian distributor. Canadian sales increased by $0.07 million, or 5.2%, UK
sales increased by $.04 million or 43.5%, Chile sales increased by $0.3 million,
or 372%. US domestic sales of disposables decreased by $0.9 million, chemical
suit sales increased by $0.08 million, wovens increased by $0.5 million,
reflective sales increased by $0.2 million and glove sales were
flat.





Gross Profit.Gross profit
increased $1.30 million or 24.3% to $6.68 million for the three months ended
April 30, 2008 from $5.37 million for the three months ended April 30,
2007.  Gross profit as a percentage of net sales increased to 24.5%
for the three months ended April 30, 2008 from 21% for the three months ended
April 30, 2007, primarily due to a one time plant restructuring charge in Mexico
of $0.5 million in the previous year, the end of the sales rebate program in the
prior year to meet competitive conditions, and favorable claims experience in
our medical insurance program, offset by gross losses in India of $0.2 million
resulting from delayed start up conditions.





Operating Expenses.Operating
expenses increased $.85 million, or 19% to $5.2 million for the three months
ended April 30, 2008 from $4.4 million for the three months ended April 30,
2007.  As a percentage of sales, operating expenses increased to 19.2%
for the three months ended April 30, 2008 from 17.1% for the three months ended
April 30, 2007.  The $.85 million increases in operating expenses in
the three months ended April 30, 2008 as compared to the three months ended
April 30, 2007 were comprised of:





o
            $0.32
      million additional freight out costs resulting from significantly higher
      prevailing carrier rates and higher
volume.


o           $0.26
million in costs relating to the proxy contest.


o
            $0.24
      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           $0.10
million miscellaneous increases.


o           $(.07)
million reduction in medical expenses charged to administrative
expenses.




Operating profit. Operating
profit increased 45.6% to $1.45 million for the three months ended
April  30, 2008 from $.99 million for the three months ended April 30,
2007.  Operating margins were 5.3%  for the three months
ended April 30, 2008 compared to 3.9% for the three months ended April
30,  2007.


Interest
Expenses.  Interest expenses increased by $.046 million for the
three months ended April 30, 2008 as compared to the three months ended April
30, 2007 due to higher borrowing levels


16





outstanding,
partially offset by lower interest rates.





Income Tax
      Expense.  Income tax expenses consist of federal, state,
      and foreign income taxes.  Income tax expenses increased $.097
      million, or 25.0%, to $.486 million for the three months April 30, 2008
      from $.388 million for the three months ended April 30,
      2007.  Our effective tax rates were 35.2% and 39.5% for the
      three months ended April 30, 2008 and 2007, respectively. Our effective
      tax rate for 2008 was impacted by higher statutory rates and a prior
      period adjustment for tax expense in China and some losses in India not
      eligible for tax credits. Such Indian losses increased the overall
      effective tax rate by approximately 2.0% and the China tax adjustment
      increased the effective tax rate by 2.7%. Without such items, the
      effective rate for the quarter ending April 30, 2008 would have been
      approximately 30.6%. The 2007 period 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 $.297 million, or 49.9% to
      $.893 million for the three months ended April 30, 2008 from $.596 million
      for the three months ended April 30, 2007. The increase in net income
      primarily resulted from an increase in sales, 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.





Liquidity
and Capital Resources




Cash Flows.As of April 30,
2008 we had cash and cash equivalents of $3.0 million and
working  capital of $59.8 million decreases of $.4 million and $5.5
million, respectively, from January 31,  2008. Our primary sources of
funds for conducting our business activities have been cash
flow  provided by operations and borrowings under our credit
facilities described below.  We require  liquidity and
working capital primarily to fund increases in inventories and accounts
receivable  associated with our net sales and, to a lesser extent, for
capital expenditures.





Net
      cash provided by operating activities of $6.4 million for the three months
      ended April 30, 2008 was due primarily to net income from operations of
      $0.9 million, an increase in accounts payable accrued expenses and other
      liabilities of $0.6 million, and a decrease in inventories of $7.5
      million, offset by an increase in accounts receivable of $2.4 million. Net
      cash used in investing activities of $0.3 million in the three months
      ended April 30, 2008, was due to purchases of property and
      equipment.





We
currently have one credit facility - a $30 million revolving credit, of which
$3.47 million of  borrowings were outstanding as of April 30,
2008.  Our credit facility requires that we comply
with  specified financial covenants relating to fixed charge ratio,
debt to EBIDTA coverage, and inventory  and accounts receivable
collateral coverage ratios.  These restrictive covenants could affect
our  financial and operational flexibility or impede our ability to
operate or expand our business.  Default  under our credit
facility would allow the lender to declare all amounts outstanding to be
immediately  due and payable.  Our lender has a security
interest in substantially all of our assets to secure the debt  under
our credit facility.  As of April 30, 2008, we were in compliance with
all covenants contained in  our credit facility.
 
 We
believe that our current cash position of $3.0 million, our cash flow from
operations along with  borrowing availability under our $30 million
revolving credit facility will be sufficient to meet our  currently
anticipated operating, capital expenditures and debt service requirements for at
least the next  12 months.
 
 Capital Expenditures. Our
capital expenditures principally relate to purchases of
manufacturing  equipment, computer equipment, and leasehold
improvements, as well as payments related to the  construction of our
new facilities in China. Our facilities in China are not encumbered by
commercial  bank mortgages and thus Chinese commercial mortgage loans
may be available with respect to these  real  estate assets
if we need additional liquidity. Our capital expenditures are expected to
be  approximately $1.1 million for capital equipment, primarily
computer equipment and apparel





17


manufacturing equipment in fiscal 2009,
exclusive of our Brazil acquisition.




Foreign Currency
Exposure.The Company has foreign currency exposure,
principally through 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.
 
 The
Company accounts for its foreign exchange derivative instruments under Statement
of Financial  Accounting Standards (“SFAS”) No. 133, “Accounting for
Derivative Instruments and Hedging  Activities,” as amended. 
This standard requires recognition of all derivatives as either assets
or  liabilities at fair value and may result in additional volatility
in both current period earnings and other  comprehensive income as a
result of recording recognized and unrecognized gains and losses
from  changes in the fair value of derivative
instruments.





The
      Company had one derivative instrument outstanding at April 30, 2008 and
      April 30, 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  $48,230, for the three month period ended April 30,
      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 April
      30, 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
      $0.0160.





Item
      3.
            Quantitative and Qualitative Disclosures About Market
    Risk




There
have been no significant changes in market risk from that disclosed in our
Annual Report on Form 10-K for the fiscal year ended January 31,
2008.




Item
      4.
            Controls
      andProcedures




Evaluation of Disclosure Controls
and Procedures - Lakeland Industries, Inc.’s Chief Executive Officer and
Chief Financial Officer, after evaluating the effectiveness of Lakeland
Industries,Inc.’s disclosure controls and procedures (as defined in Rule
13a-15(e) or 15d-15(c) under the Securities Exchange Act) as of the end of the
period covered by this report, have concluded that, based on the evaluation of
these controls and procedures, the Company’s disclosure controls and procedures
were not effective as of April 30, 2008. Our Chief Executive Officer and Chief
Financial Officer have concluded that we have material weaknesses in our
internal control over financial reporting as of April 30, 2008.




A control
system, no matter how well conceived and operated, can provide only reasonable
assurance that the objectives of the control system are met. Our management,
including our chief executive officer and chief financial officer, does not
expect that our disclosure controls and procedures or internal control over
financial reporting will prevent all errors and fraud. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues within our company have been
detected. These inherent limitations include the reality that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
errors or mistakes. The design of any control system is also based, in part,
upon certain assumptions about the likelihood of future events, and
there




18




can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions. Over time, controls may become inadequate because
of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a control
system, misstatements due to error or fraud may occur and not be
detected.




A
material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis.





Management
has identified a material weakness in its period-end financial reporting process
relating to employee withholding for medical insurance. The employee withholding
for medical insurance was not offset against the expenses as a result of human
error and was not identified on review due to the favorable claim experience
resulting in lowered expenses. This control deficiency resulted in an adjustment
to our April 30, 2008 financial statements and could have resulted in an
overstatement of  cost of sales and operating expenses that would have
resulted in an understatement of net earnings in the amount of $127,000 to the
interim financial statements if not detected and prevented.




Previous Material Weaknesses -Management had previously identified two material weaknesses at January
31, 2008, in its period-end financial reporting process relating to the
elimination of inter-company profit in inventory and the inadequate review of
inventory cutoff procedures and financial statement reconciliations from one of
our China subsidiaries.  The material weakness which related to the
elimination of inter-company profit in inventory resulted from properly designed
controls that did not operate as intended due to human error. The material
weakness that resulted in the inventory cut-off error was as a result of the
improper reconciliation of the conversion of one of our China subsidiaries’
financial statements from Chinese GAAP to U.S. GAAP. We engaged a CPA firm in
China to assist management in this conversion, and the Chinese CPA firm’s review
as well as management’s final review did not properly identify the error in the
reconciliation. These control deficiencies resulted in audit adjustments to our
January 31, 2008 financial statements and could have resulted in a misstatement
to cost of sales that would have resulted in a material misstatement to the
annual and interim financial statements if not detected and
prevented.




As
described below under the heading “Changes in Internal Controls Over
Financial Reporting,” we have taken a number of steps designed to improve
our accounting for our Chinese subsidiaries and the elimination of intercompany
profit in inventory.




Changes in Internal Control Over
Financial Reporting –Except as described
below, there have been no changes in our internal control over financial
reporting since January 31, 2008 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.




Remediation - In response to
the material weaknesses identified at year end, we continue the process of
initiating additional review procedures to reduce the likelihood of future human
error and are transitioning to internal accounting staff with greater knowledge
of U.S. GAAP to improve the accuracy of the financial reporting of our Chinese
subsidiary.  We have automated key elements of the calculation of
intercompany profits in inventory and formalized the review process of the data
needed to calculate this amount. With the implementation of this corrective
action we believe that the previously reported material weakness relating to
intercompany profit elimination has been remediated as of the first quarter of
the fiscal year 2009, and the weakness relating to the Chinese subsidiaries is a
phased-in approach planned to be completely in effect before
year-end.




In
response to the material weakness identified at April 30, 2008, we will initiate
additional review procedures to reduce the likelihood of future human error on
the assets and liabilities trial balance amounts.




Lakeland
Industries, Inc.’s management, with the participation of Lakeland Industries,
Inc.’s Chief Executive Officer and Chief Financial Officer, has evaluated
whether any change in the Company’s


19


internal
control over financial reporting occurred during the first quarter of fiscal
2009.  Based on that evaluation, management concluded that there has
been a change in Lakeland Industries, Inc.’s internal control over financial
reporting during the first quarter of fiscal 2009 that has materially affected,
or is reasonably likely to materially affect, Lakeland Industries, Inc.’s
internal control over financial reporting, in the area of employee withholding
for medical insurance discussed above. As previously reported, during our fourth
fiscal quarter of the fiscal year ended January 31, 2008, our controller of many
years has retired. This may have indirectly contributed to the material
weaknesses which resulted from human error.





We
believe the above remediation steps will provide us with the infrastructure and
processes necessary to accurately prepare our financial statements on a
quarterly basis. We will continue to implement these remedial steps to ensure
operating effectiveness of the improved internal controls over financial
reporting.








20







PART
II. OTHER INFORMATION




Items 1, 2, 3, 4 and 5 are not
applicable







Item
      6.
            
            Exhibits and
      Reports on Form 8-K:







Reports
      on Form 8-K:




a
      -
            On
      February 6, 2008, the Company filed a Form 8-K under Item 5.02 relating to
      the contract renewal between Gary A. Pokrassa and Lakeland Industries,
      Inc. dated January 31, 2008.




b
      -
            On
      February 19, 2008, the Company filed a Form 8-K under Item 8.01, relating
      to the letter of intent between Qualytextil, S.A. and Lakeland Industries,
      Inc.




c
      -
            On
      February 21, 2008, the Company filed a Form 8-K under Item 1.01 relating
      to the amendment to the Company’s revolving line of credit with Wachovia
      Bank, N.A., dated February 15, 2008; and under Item 8.01 for the purpose
      of furnishing a press release announcing the Company’s Board of Directors
      authorized the repurchase of Lakeland’s outstanding
  stock.




d
      -
            On
      March 19, 2008, the Company filed a Form 8-K under Item 8.01, for the
      purpose of furnishing a press release in connection with the notice it
      received from the Holtzman Opportunity Fund, L.P. that it intends to
      nominate two individuals for election to the Company’s Board of Directors.
      Also on March 19, 2008, the Company delivered a letter to its employees in
      connection with such stockholder’s
notice




e
      -
            On
      March 31, 2008, the Company filed a Form 8-K under Item 1.01 for the
      purpose of furnishing a press release announcing that on January 21, 2008,
      the Company entered into an exclusive product distribution agreement with
      Wesfarmers Industrial and Safety.





f
      -
            On
      April 14, 2008, the Company filed a Form 8-K under Item 2.02 for the
      purpose of furnishing a press announcing the Company's FY 2008 financial
      results for the reporting period ended January 31,
      2008.




g
      -
            On
      April 16, 2008, the Company filed a Form 8-K under Item 8.01 for the
      purpose of furnishing a press release calling on Seymour Holtzman to
      withdraw his notice of nomination, dated March 17, 2008, in connection
      with the Company’s 2008 Annual Meeting of Stockholders, and terminate his
      proxy contest against the Company.





h
      -
            On
      April 16, 2008, the Company filed a Form 8-K under Item 8.01 for the
      purpose of furnishing a press release confirming that it has received a
      notice from Seymour Holtzman withdrawing his notice of intent to nominate
      two individuals for election at Lakeland’s 2008 annual meeting of
      stockholders and advising Lakeland that he has no intent of nominating
      anyone for election as a director at the 2008 annual
    meeting.







21







_________________SIGNATURES_________________




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














LAKELAND INDUSTRIES,
      INC.(Registrant)Date:  June
      9, 2008
            /s/ Christopher J.
      RyanChristopher
      J. Ryan,Chief
      Executive Officer, President,Secretary
      and General Counsel(Principal
      Executive Officer and Authorized
              Signatory)Date:
      June 9, 2008
            /s/Gary
      PokrassaGary
      Pokrassa,Chief
      Financial Officer(Principal
      Accounting Officer and Authorized
              Signatory)





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