**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**


(Mark
      one)


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


For
      the
      quarterly period ended **October 31, 2006**


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 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 an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act).


YES x NO o




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


YES o NO x




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 December 7, 2006Common
                Stock, $0.01 par value per share
            5,521,824
                shares.





**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
            1Condensed
                Consolidated Balance Sheets October 31, 2006 and January 31,
                2006
            2Condensed
                Consolidated Statements of Income for the Three and Nine Months EndedOctober
                31, 2006 and 2005
            3Condensed
                Consolidated Statement of Stockholders' Equity -Nine Months EndedOctober
                31, 2006
            4Condensed
                Consolidated Statements of Cash Flows -Nine Months Ended October
                31, 2006
                and 2005
            5Notes
                to Condensed Consolidated Financial Statements
            6Item
                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
            20**PART
                II - OTHER INFORMATION:**Item
                6.
            Exhibits
                and Reports on Form 8-K
            20Signature
                Page
            21











*Index*


**LAKELAND
      INDUSTRIES, INC.**


**AND
      SUBSIDIARIES**


**PART
      I -**  **FINANCIAL
      INFORMATION**




Item
      1.  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.


1
 *Index*


**LAKELAND
      INDUSTRIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





**ASSETS**
            
            October
                31, 2006 (Unaudited)
            
            January
                31, 2006Current
                assets:Cash
            
            $
            3,442,035
            
            $
            1,532,453Accounts
                receivable, net of allowance for doubtfulaccounts
                of $126,000 at October 31, 2006 and $323,000 at January 31,
                2006
            
            
            13,101,408
            
            
            14,221,281Inventories,
                net of reserves of $365,000 at October 31,2006
                and at January 31, 2006
            
            
            45,178,433
            
            
            45,243,490Deferred
                income taxes
            
            
            1,255,684
            
            
            917,684Other
                current assets
            
            
            2,986,845
            
            
            1,804,552Total
                current assets
            
            
            65,964,405
            
            
            63,719,460Property
                and equipment, net of accumulated
              depreciation
                of $6,570,000 at October 31, 2006
              and
                $6,201,000 January 31, 2006
            
            
            7,587,325
            
            
            7,754,765Goodwill
            
            
            871,297
            
            
            871,297Other
                assets
            
            
            2,790,710
            
            
            118,330$
            77,213,737
            
            $
            72,463,852**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            3,018,064
            
            $
            2,536,756Accrued
                expenses and other current liabilities
            
            
            1,186,498
            
            
            1,302,544Total
                current liabilities
            
            
            4,204,562
            
            
            3,839,300Pension
                liability
            
            
            345,990
            
            
            469,534Deferred
                income taxes
            
            
            86,982
            
            
            86,982Borrowings
                under revolving credit facility
            
            
            7,878,000
            
            
            7,272,000Commitments
                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 5,521,824 shares at October
              31,
                2006 and 5,017,046 shares at January 31, 2006
            
            
            55,219
            
            
            50,170Additional
                paid-in capital
            
            
            48,918,911
            
            
            42,431,221Retained
                earnings (1)
            
            
            15,724,073
            
            
            18,314,645Stockholders'
                equity
            
            
            64,698,203
            
            
            60,796,036$
            77,213,737
            
            $
            72,463,852








(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
      nine months ended October 31, 2006.














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


2
 *Index*


**LAKELAND
      INDUSTRIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME**


**(UNAUDITED)**








THREE
                MONTHS ENDED
            
            NINE
                MONTHS ENDEDOctober
                31,
            
            October
                31,2006
            
            2005
            
            2006
            
            2005Net
                sales
            
            $
            23,262,933
            
            $
            22,717,196
            
            $
            74,571,820
            
            $
            73,515,270Cost
                of goods sold
            
            
            17,626,698
            
            
            17,034,455
            
            
            55,937,033
            
            
            55,870,020Gross
                profit
            
            
            5,636,235
            
            
            5,682,741
            
            
            18,634,787
            
            
            17,645,250Operating
                expenses
            
            
            4,579,291
            
            
            3,652,724
            
            
            13,330,136
            
            
            10,862,850Operating
                profit4,752,383 4,264,519
            
            
            1,056,944
            
            
            2,030,017
            
            
            5,304,651
            
            
            6,782,400Interest
                and other income, net
            
            
            123,737
            
            
            47,104
            
            
            156,722
            
            
            136,128Interest
                expense
            
            
            (79,696
            )
            
            (38,842
            )
            
            (266,469
            )
            
            (42,854
            )Income
                before income taxes
            
            
            1,100,985
            
            
            2,038,279
            
            
            5,194,904
            
            
            6,875,674Provision
                for income taxes
            
            
            120,935
            
            
            725,376
            
            
            1,398,560
            
            
            2,201,584Net
                income
            
            $
            980,050
            
            $
            1,312,903
            
            $
            3,796,344
            
            $
            4,674,090Net
                income per common share*:Basic
            
            $
            .18
            
            $
            .24
            
            $
            .69
            
            $
            .85Diluted
            
            $
            .18
            
            $
            .24
            
            $
            .69
            
            $
            .85Weighted
                average common shares outstanding*:Basic
            
            
            5,521,824
            
            
            5,518,751
            
            
            5,520,567
            
            
            5,518,751Diluted
            
            
            5,531,497
            
            
            5,524,109
            
            
            5,526,561
            
            
            5,523,632


*Adjusted
      for the 10% stock dividend to shareholders of record on April 30, 2005 and
      August 1, 2006.








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










3
 *Index*


**LAKELAND
      INDUSTRIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY**


**(UNAUDITED)**


Nine
      months ended October 31, 2006








Common
                Stock
            
            Additional
              Paid-in
            
            RetainedShares
            
            Amount
            
            Capital
            
            Earnings
            
            TotalBalance,
                January 31, 2006
            
            
            5,017,046
            
            $
            50,170
            
            $
            42,431,221
            
            $
            18,314,645
            
            $
            60,796,036Net
                Income
            
            
            
            
            
            
            
            
            
            
            
            3,796,344
            
            
            3,796,344Exercise
                of Stock Options
            
            
            2,662
            
            
            27
            
            
            11,849
            
            
            ----
            
            
            11,87610%
                Stock Dividend
            
            
            502,116
            
            
            5,022
            
            
            6,381,894
            
            
            (6,386,916
            )
            
            ---Stock
                Based Compensation
            
            
            
            
            
            
            
            
            21,350
            
            
            
            
            
            21,350Restricted
                Stock Compensation
            
            
            
            
            
            
            
            
            72,597
            
            
            
            
            
            72,597Balance
                October 31, 2006
            
            
            5,521,824
            
            $
            55,219
            
            $
            48,918,911
            
            $
            15,724,073
            
            $
            64,698,203





(Reflects
      four separate 10% stock dividends issued on July 31, 2002, 2003, April 30,
      2005
      and August 1, 2006, which resulted in a cumulative transfer of $17,999,739
      from
      retained earnings to additional paid-in capital and par value of common stock).














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








4
 *Index*


**LAKELAND
      INDUSTRIES, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


(UNAUDITED)





NINE
                MONTHS ENDEDOctober
                31,2006
            
            2005Cash
                Flows from Operating Activities:Net
                income
            
            $
            3,796,344
            
            $
            4,674,090Adjustments
                to reconcile net income to net cash providedby
                (used in) operating activities:Stock
                based compensation
            
            
            93,947
            
            
            --Reserve
                for doubtful accounts
            
            
            (197,000
            )
            
            -----Reserve
                for inventory obsolescence
            
            
            (40
            )
            
            (37,000
            )Depreciation
                and amortization
            
            
            798,484
            
            
            726,686Deferred
                income tax
            
            
            (338,000
            )
            
            -Changes
                in operating assets and liabilities:Decrease
                in accounts receivable
            
            
            1,316,873
            
            
            605,524Decrease
                (Increase) in inventories
            
            
            65,097
            
            
            (14,526,167)*Increase
                in other assets
            
            
            (3,854,674
            )
            
            149,822Increase
                in accounts payable, accrued expenses and other
                liabilities:
            
            
            241,720
            
            
            1,010,064Net
                cash provided by (used in) operating activities
            
            
            1,922,751
            
            
            (7,396,981
            )Cash
                Flows from Investing Activities:Purchases
                of property and equipment
            
            
            (631,045
            )
            
            (4,000,457
            )Purchase
                of Mifflin Valley
            
            
            
            
            
            (1,765,852
            )Net
                cash used in investing activities
            
            
            (631,045
            )
            
            (5,766,309
            )Cash
                Flows from Financing Activities:Proceeds
                from exercise of stock options
            
            
            11,876
            
            
            -----Borrowing
                under loan agreements
            
            
            606,000
            
            
            8,401,000Net
                cash provided by financing activities
            
            
            617,876
            
            
            8,401,000Net
                increase (decrease) in cash
            
            
            1,909,582
            
            
            (4,762,290
            )Cash
                and cash equivalents at beginning of period
            
            
            1,532,453
            
            
            9,185,382Cash
                and cash equivalents at end of period
            
            $
            3,442,035
            
            $
            4,423,092


*Inventory
      increased as production increased for the second half demand and accelerated
      purchases made on raw materials in anticipation of the October 1, 2005 price
      increase.





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














5
 *Index*





**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 nine month periods
      ended October 31, 2006 and 2005, 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, 2006.





The
      results of operations for the three and nine month periods ended October 31,
      2006 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, Laidlaw Adams & Peck, Inc., a
      Delaware Corporation and its Subsidiary MeiYang Protective Products Co., Ltd.,
      (a Chinese corporation), Lakeland Protective Wear, Inc. (a Canadian
      corporation), Weifang Lakeland Safety Products Co. Ltd. (a Chinese corporation),
      Qing Dao Maytung Healthcare Co., Ltd. (a Chinese corporation), Lakeland
      Industries Europe Ltd. (a British corporation), Lakeland de Mexico S.A. de
      C.V
      (a Mexican corporation), Mifflin Valley, Inc. (a Delaware corporation) Lakeland
      Industries, Inc. Agencia en Chile, Lakeland India Private Ltd. (an Indian
      corporation) Lakeland Japan, Inc. (A Japanese Corporation) and Lakeland
      Protective Real Estate (a Canadian Corporation). All significant inter-company
      accounts and transactions have been eliminated.


6
 *Index*


In
      January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable
      Interest Entities”. This interpretation provides guidance with respect to the
      consolidation of certain entities, referred to as variable interest entities,
      in
      which an investor is subject to a majority of the risk of loss from the variable
      interest entity’s activities, or is entitled to receive a majority of the
      variable interest entity’s residual returns. This interpretation also provides
      guidance with respect to the disclosure of variable interest entities in which
      an investor maintains an interest but is not required to consolidate. The
      provisions of the interpretation were effective immediately for all variable
      interest entities created after January 31, 2003, or in which we obtained an
      interest after that date. In December 2003, the FASB issued a revision to this
      pronouncement, FIN 46R, which clarified certain provisions and modified the
      effective date from October 1, 2003 to March 15, 2004 for variable interest
      entities created before February 1, 2003. The two entities which leased property
      and buildings to the Company and were owned by related parties, were
      consolidated in our financial statements for the year ended January 31, 2005
      are
      River Group Holding Co., L.L.P. and POMS Holding Co. Several of the owners
      of
      these entities were directors and officers of Lakeland. Under FIN 46, it is
      likely that leases between an entity and its related parties would be considered
      a variable interest, even if there is no residual value guarantee or purchase
      option. The FASB staff’s view is that these elements are implied in a
      related-party lease even though they may not be explicitly stated in the lease
      agreement.





Effective
      February 1, 2004 we adopted this pronouncement. As a result, certain entities
      which leased property to the Company and were owned by related parties were
      determined to be Variable Interest Entities and have been consolidated since
      the
      Company’s April 30, 2004 quarterly financial statements. Creditors, or
      beneficial interest holders, of the consolidated variable interest entities
      have
      no recourse to the general credit of the Company.





On
      April
      25, 2005, the Company purchased property and buildings from POMS Holding Co.
      for
      a net purchase price of $2,067,584. Reference is made to the Company’s filing on
      Form 8-K dated April 25, 2005.





In
      April
      2005, the Company entered into a real estate purchase contract with River Group
      Holding Co. to purchase a warehouse and the real property underlying it for
      $928,686. The Company recorded the purchase on its April 30, 2005 financial
      statements. The purchase of this property was completed on May 25, 2005. Thus,
      the Company deemed the impact of FIN 46R to be de minimis for the October 31,
      2005 financial statements.




There
      are
      no variable interest entities in which the “Company” is not the primary
      beneficiary.





***4.***  ***Business
      Combinations***




On
      August
      1, 2005, the Company acquired the assets and operations and assumed certain
      liabilities of Mifflin Valley, Inc., (“Mifflin”) of Shillington, PA for an
      initial purchase price of $1.58 million, subject to certain adjustments. 
Final payment was made in November 2005 following the audit of a closing date
      balance sheet. The final price amounted to $1.86 million and included
      adjustments for the payoff of a revolving loan of $.186 million and adjustments
      for inventory, fixed asset values and allowance for doubtful accounts. Mifflin
      did approximately $2.6 million of sales in 2004, and $1.5 million for the six
      months ended June 30, 2005.  Mifflin is a manufacturer of protective
      clothing specializing in safety and visibility, largely for the Emergency
      Services market, and also for the entire public safety and traffic control
      market.  Mifflin specializes in customized garments to suit customers’
needs, coupled with quality, service, price and delivery.  Mifflin’s
      products include flame retardant garments for the Fire Industry, Nomex clothing
      for utilities, and high visibility reflective outerwear for Departments of
      Transportation. The purchase was effective as of July 1, 2005 and the
      results of Mifflin’s operations have been included since July 1 in the Company’s
      reported results.





7
 *Index*


***5.***  ***Inventories:***




Inventories
      consist of the following:


October
                31,
            
            January
                31,2006
            
            2006Raw
                materials
            
            $
            22,583,473
            
            $
            18,656,894Work-in-process
            
            
            2,829,145
            
            
            1,996,027Finished
                Goods
            
            
            19,765,815
            
            
            24,590,569$
            45,178,433
            
            $
            45,243,490


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.





***6.***  ***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.




The
      following table sets forth the computation of basic and diluted earnings per
      share at October 31, 2006 and 2005, adjusted, retroactively, for the 10% Stock
      dividends to Shareholders on April 30, 2005 and August 1, 2006.


**Three
                Months Ended**
            
            **Nine
                Months**
              **Ended****October
                31,**
            
            **October
                31,****2006**
            
            **2005**
            
            **2006**
            
            **2005**NumeratorNet
                Income
            
            $
            980,050
            
            $
            1,312,903
            
            $
            3,796,344
            
            $
            4,674,090DenominatorDenominator
                for basic earnings per share
            
            
            5,521,824
            
            
            5,518,751
            
            
            5,520,567
            
            
            5,518,751(Weighted-average
                shares)Effect
                of dilutive securities
            
            
            9,673
            
            
            5,358
            
            
            5,994
            
            
            4,881Denominator
                for diluted earnings per share
            
            
            5,531,497
            
            
            5,524,109
            
            
            5,526,561
            
            
            5,523,632(adjusted
                weighted average shares)Basic
                earnings per share
            
            $
            .18
            
            $
            .24
            
            $
            .69
            
            $
            .85Diluted
                earnings per share
            
            $
            .18
            
            $
            .24
            
            $
            .69
            
            $
            .85























8
 *Index*


***7.*** ***Revolving
      Credit Facility***




At
      October 31, 2006, the balance outstanding under our $25 million five year
      revolving credit facility amounted to $7.9 million. 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 October 31, 2006 and for the period then ended. The weighted average interest
      rate for the three month and nine month periods ended October 31, 2006 was
      6.09%
      and 5.77%, respectively.





***8.
      Major Supplier***




We
      purchased 63.7% of our raw materials from one supplier during the nine-month
      period ended October 31, 2006. 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.




***9.***  ***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.




Effective
      February 1, 2006, the Company’s Plan is accounted for in accordance with the
      recognition and measurement provisions of Statement of Financial Accounting
      Standards (“FAS” No. 123 (R)”), which replaces FAS No. 123, Accounting for
      Stock-Based Compensation, and supersedes Accounting Principles Board Opinion
      (“APB”) No. 25, Accounting for Stock Issued to Employees, and related
      interpretations. FAS 123 (R) requires compensation costs related to share-based
      payment transactions including employee stock options, to be recognized in
      the
      financial statements. In addition, the Company adheres to the guidance set
      forth
      within Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin
      (“SAB”) No. 107, which provides the Staff’s views regarding the interaction
      between SFAS No. 123(R) and certain SEC rules and regulations and provides
      interpretations with respect to the valuation of share-based payments for public
      companies.




Prior
      to
      February 1, 2006, the Company accounted for similar transactions in accordance
      with APB No. 25 which employed the intrinsic value method of measuring
      compensation cost. Accordingly, compensation expense was not recognized for
      fixed stock options if the exercise price of the option equaled or exceeded
      the
      fair value of the underlying stock at the grant date.




While
      FAS
      No. 123 encouraged recognition of the fair value of all stock-based awards
      on
      the date of grant as expense over the vesting period, companies were permitted
      to continue to apply the intrinsic value-based method of accounting prescribed
      by APB No. 25 and disclose certain pro-forma amounts as if the fair value
      approach of SFAS No. 123 had been applied. In December 2002, FAS No. 148,
      Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment
      of SFAS No. 123, was issued, which, in addition to providing alternative methods
      of transition for a voluntary change to the fair value method of accounting
      for
      stock-based employee compensation, required more prominent pro-forma disclosures
      in both the annual and interim financial statements. The Company complied with
      these disclosure requirements for all applicable periods prior to February
      1,
      2006.




9
 *Index*


In
      adopting FAS 123(R), the Company applied the modified prospective approach
      to
      transition. Under the modified prospective approach, the provisions of FAS
      123(R) are to be applied to new awards and to awards modified, repurchased,
      or
      cancelled after the required effective date. Additionally, compensation cost
      for
      the portion of awards for which the requisite service has not been rendered
      that
      are outstanding as of the required effective date shall be recognized as the
      requisite service is rendered on or


after
      the
      required effective date. The compensation cost for that portion of awards shall
      be based on the grant-date fair value of those awards as calculated for either
      recognition or pro-forma disclosures under FAS 123.




The
      following table represents our stock options granted, exercised, and forfeited
      during the third quarter of 2007.




Stock
                Options
            Number
              of
                Shares
            Weighted
              Average
              Exercise
                Price
              per
                Share
            Weighted
              Average
              Remaining
              Contractual
              Term
            Aggregate
              Intrinsic
                ValueOutstanding
                at July 31, 2006
            19,031
            $12.79
            3.1
                years
            $30,085Outstanding
                at October 31, 2006
            19,031
            $12.79
            2.9
                years
            $34,199Exercisable
                at October 31, 2006
            16,831
            $12.75
            2.9
                years
            $34,199




***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 have 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 131,893 restricted stock awards as of
      October 31, 2006. All of these restricted stock awards are non-vested at October
      31, 2006 (88,223 shares at “baseline” and 45,543 shares at “minimum”) and have a
      weighted average grant date fair value of $13.09. 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
      October 31, 2006, unrecognized stock-based compensation expense related to
      restricted stock awards totaled $1,569,659, before income taxes, based on the
      maximum performance award level. Such unrecognized stock-based compensation
      expense related to restricted stock awards totaled $1,060,699 and $563,157
      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




10
 *Index*


***Share-Based
      Compensation***




The
      Company adopted SFAS No. 123R on February 1, 2006, under the modified
      prospective method of adoption. The Corporation recognized total stock-based
      compensation costs of $93,947, of which $72,597 results from the 2006 Equity
      Incentive Plan, and $21,350 results from the Non-Employee Directors Option
      Plan
      for the nine months ended October 31, 2006 and $0 for October 31, 2005,
      respectively. These amounts are reflected in selling, general and administrative
      expenses. The total income tax benefit recognized for stock-based compensation
      arrangements was $33,821 and $0 for the nine months ended October 31, 2006
      and
      October 31, 2005, respectively.




***Adoption
      of New Accounting Standards for Share-Based Payment***




As
      more
      fully disclosed in Note 1 of Notes to Consolidated Financial Statements included
      in Item 8 of the Corporation’s Annual Report on Form 10-K for the year ended
      January 31, 2006, in December 2004, the Financial Accounting Standards Board
      (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123
      (revised 2004) (SFAS No. 123R), *Share-Based
      Payment* .




The
      following table illustrates the effect on net income and earnings per share
      as
      if the fair value recognition provisions of FAS No. 123 had been applied to
      all
      outstanding and unvested awards in the prior year comparable
      period.




**Three
                Months Ended**
              **October
                31,**
              **2005**
            
            **Nine
                Months Ended October 31,**
              **2005**NumeratorNet
                income
            
            $
            1,312,
                903
            
            $
            4,674,090Less:Option
                expense based on fair value method
            
            
            ------
            
            
            9,627Pro
                formaBasic
                earnings per share:
            
            $
            1,312,903
            
            $
            4,664,463As
                reported
            
            $
            .24
            
            $
            .85Pro
                forma
            
            $
            .24
            
            $
            .85Diluted
                earnings per common share:As
                reported
            
            $
            .24
            
            $
            .85Pro
                forma
            
            $
            .24
            
            $
            .84







The
      fair
      value of these options was estimated at the date of grant using the
      Black-Scholes option-pricing model with the following assumptions for the
      quarters and nine months ended October 31, 2005 expected volatility of 87%
      and
      64%, respectively; risk-free interest rate of 3.6% and 2.93%, respectively;
      expected dividend yield of 0.0%; and expected life of six years. All stock-based
      awards were fully vested at October 31, 2005. Earnings per share and options
      granted have been adjusted to reflect the 10% stock dividends to stockholders
      of
      record as of April 30, 2005. During the three months ended October 31, 2005,
      no
      options were granted or exercised.

























11
 *Index*


***10.
      Manufacturing Segment Data***




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





Three
                Months Ended
            
            Nine
                Months EndedOctober
                31,
            
            October
                31,**2006**
            
            **2005**
            
            **2006**
            
            **2005**Domestic
            
            $
            20.6
            
            
            88.4
            %
            
            20.7
            
            
            91.2
            %
            $
            66.3
            
            
            88.9
            %
            
            65.7
            
            
            89.4
            %International
            
            
            2.7
            
            
            11.6
            %
            
            2.0
            
            
            8.8
            %
            
            8.3
            
            
            11.1
            %
            
            7.8
            
            
            10.6
            %Total
            
            $
            23.3
            
            
            100
            %
            $
            22.7
            
            
            100
            %
            $
            74.6
            
            
            100
            %
            $
            73.5
            
            
            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 facilities 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, 2006. 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 small 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
      and nine months noted therein:


Three
                Months Ended
              October
                31,
              (in
                millions of dollars)
            
            Nine
                Months Ended October 31, 2006
              (in
                millions of dollars)2006
            
            2005
            
            2006
            
            2005Net
                Sales:North
                America
            
            $
            24.5
            
            $
            23.8
            
            $
            78.3
            
            $
            77.7China
            
            
            3.0
            
            
            2.1
            
            
            8.6
            
            
            6.9Less
                inter-segment sales
            
            
            (4.2
            )
            
            (3.2
            )
            
            (12.3
            )
            
            (11.1
            )Consolidated
                sales
            
            $
            23.3
            
            $
            22.7
            
            $
            74.6
            
            $
            73.5Operating
                Profit:North
                America
            
            $
            .57
            
            $
            2.1
            
            $
            4.0
            
            $
            5.8China
            
            
            .5
            
            
            (-
            )
            
            1.4
            
            
            1.2Less
                inter-segment profit (loss)
            
            
            (.07
            )
            
            (.1
            )
            
            (.1
            )
            
            (.2
            )Consolidated
                profit
            
            $
            1.0
            
            $
            2.0
            
            $
            5.3
            
            $
            6.8Identifiable
                Assets (at Balance Sheet date or change during quarter):North
                America
            
            $
            2.9
            
            $
            6.8
            
            $
            69.7
            
            $
            63.9China
            
            
            .5
            
            
            ---
            
            
            7.5
            
            
            9.8Consolidated
                assets
            
            $
            3.4
            
            $
            6.8
            
            $
            77.2
            
            $
            73.7Depreciation
                and Amortization Expense:North
                America
            
            $
            .2
            
            $
            .1
            
            $
            .5
            
            $
            .4China
            
            
            .1
            
            
            .1
            
            
            .3
            
            
            .3Consolidated
                depreciation expense
            
            $
            .3
            
            $
            .2
            
            $
            .8
            
            $
            .7





12
 *Index*


***11.
      Effects of Recent Accounting Pronouncements***





In
      July
      2006 the FASB issued Financial Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes* (“FIN 48”),
      as an interpretation of SFAS No. 109, *Accounting
      for Income Taxes.* FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise’s financial statements in accordance with SFAS No. 109 and
      prescribes a recognition threshold of more-likely-than-not to be sustained
      upon
      examination. Measurement of the tax uncertainty occurs if the recognition
      threshold has been met. FIN 48 also provides guidance on derecognition,
      classification, interest, penalties, accounting in interim periods, disclosure,
      and transition. FIN 48 will be effective beginning February 1, 2007.
      Differences between the amounts recognized in the statements of financial
      position prior to the adoption of FIN 48 and the amounts reported after
      adoption should be accounted for as a cumulative-effect adjustment recorded
      to
      the beginning balance of retained earnings. The Company is still evaluating
      the
      impact, if any, the adoption of this interpretation will have on the Company’s
      financial position, cash flows, and results of operations.




In
      September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
      Accounting Bulletin No. 108, Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements (“SAB
      108”). SAB 108 provides interpretive guidance on how the effects of the
      carryover or reversal of prior year misstatements should be considered in
      quantifying a current year misstatement. The SEC staff believes that registrants
      should quantify errors using both a balance sheet and an income statement
      approach and evaluate whether either approach results in quantifying a
      misstatement that, when all relevant quantitative and qualitative factors are
      considered, is material. SAB 108 is effective for the Company’s fiscal year
      ending January 31, 2007. We do not expect SAB 108 to have a material impact
      on
      our consolidated financial statements.




In
      September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ,
      which clarifies the definition of fair value, establishes guidelines for
      measuring fair value, and expands disclosures regarding fair value measurements.
      SFAS No. 157 does not require any new fair value measurements and
      eliminates inconsistencies in guidance found in various prior accounting
      pronouncements. SFAS No. 157 will be effective for the Company on
      February 1, 2008. The Company is currently evaluating the impact of
      adopting SFAS No. 157 on the Company’s financial position, cash flows, and
      results of operations.




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No. 158, Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and
      132(R) (FAS
      158). FAS 158 requires an employer to recognize the over-funded or
      under-funded status of a defined benefit postretirement plan as an asset or
      liability in its balance sheet and to recognize changes in funded status in
      the
      year in which the changes occur through comprehensive income. Additionally,
      FAS
      158 requires an employer to measure the funded status of a plan as of the date
      of its year-end balance sheet, with limited exceptions. The Company will be
      required to adopt the recognition and disclosure provisions of FAS 158 as of
      January 31, 2007.





***12.
      Real Estate Purchases***





The
      Company entered into an agreement to construct distribution facilities in
      Brantford, Ontario at a cost of approximately $2,200,000. In order to finance
      the acquisition, the Company has arranged a term loan in the amount of
      $2,000,000 bearing interest at the Business Development Bank of Canada’s
      floating base rate minus 1.25% and is repayable in monthly principal
      installments of $8,350 plus interest.





***13.
      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 owned by the seller an annual rental of $55,560, or
      a per
      square foot rental of $3.00. 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,


13
 *Index*


2006
      rented 12,000 sq ft of warehouse space in PA from this employee, on a month
      by
      month basis, for the monthly amount of $3.35 per square foot.





***14.
      Formation of New Subsidiaries***




On
      March
      13, 2006 Lakeland Industries, Inc. Agencia en Chile was formed to facilitate
      the
      opening of a new sales and warehousing operation in Santiago, Chile to service
      South American markets. On May 26, 2006, Lakeland Protective Real Estate was
      formed to obtain a $2 million mortgage for a new warehouse to be built in
      Canada.





***15.
      Contingencies - Tax Audit***




The
      Company’s Federal Income Tax returns for the fiscal years ended January 31, 2003
      and 2004 are currently under audit by the Internal Revenue Service. The final
      results of these audits cannot be estimated by management. It is anticipated
      that the audits will be concluded by late Fiscal 2007.




***16.
      Mexican Tax Situation***




In
      August
      2001, Guanajuato Mexico, Secretaria de Hacienda Credito Publico (“Hacienda”)
      began an audit of our wholly-owned subsidiary Lakeland de Mexico de SA de CV.
      The audit resulted in a claim by Hacienda for 9,195,254 Mexican Pesos
      (approximately $800,000 USD, based on exchange rate on June 7, 2006) in December
      2002 alleging that it was not proven that Lakeland’s imports into Mexico were
      re-exported, and therefore, no tariffs or taxes were due. In June 2002
      Hacienda’s own Legal Department in an administrative opinion dismissed this
      deficiency in total. In December 2003 the Hacienda Audit Department changed
      tactics and reinstated the deficiency based on new legal theories. In response
      to this second claim, in March 2004 Lakeland de Mexico filed a Nullity
      Proceeding against Hacienda at the Tribunal Federal de Justica Fiscal
      Administrativa, Celaya, Guanajuato to nullify Hacienda’s tax liens and
      deficiencies. On August 4, 2006 we were officially notified that the above
      described legal proceedings was decided in Lakeland’s favor by a three judge
      panel. It is standard procedure for the opposing side to ask for a review from
      a
      higher court judge. This review was requested, and we anticipate it will be
      concluded in early 2007.





***17.
      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, Great Britain Pound, and Mexican Peso. Such contracts 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. There were no material open foreign currency hedge contracts
      at October 31, 2006.





***18.
      Subsequent Event***




In
      November, 2006, the Company closed on its contract to buy the Industrial Glove
      assets of RFB Latex, Ltd. (RFB) of New Delhi, India for a purchase price of
      approximately $3.4 million, subject to reconciliation of operations over the
      prior year and an audit. Such assets consist of long-term land leases, buildings
      and equipment. This purchase price is in addition to the cumulative outlay
      of
      approximately $1.5 million through November 15, 2006 which consists of the
      cost
      of the purchase option, inventory, receivables, operating losses to date and
      working capital. The company may, subject to Indian law, liquidate its existing
      subsidiary and set up a new subsidiary which will consummate the purchase
      transaction.



















14
 *Index*





**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,
      2006. 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 800 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
      are at the half way point of moving 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.* We
      derive
      our sales primarily from our limited use/disposable protective clothing and
      secondarily from our sales of high-end chemical protective suits, reusable
      woven
      garments, fire fighting and heat protective apparel, and gloves and arm guards..
      Sales are recognized when goods are shipped to our distributors at which time
      title and the risk of loss passes. 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.




*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


15
 *Index*


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. The Company’s Federal Income
      Tax returns for the fiscal years ended January 31, 2003 and 2004 are currently
      under audit by the Internal Revenue Service. The final results of these audits
      cannot be estimated by management at this time, but management does not believe
      the results of the audit will have a material effect on the financial condition
      of the Company.




*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 October 31, 2006 as compared to January 31,
      2006**





Cash
      increased by $1.9 million as borrowings under the revolving credit facility
      increased by $0.60 million at October 31, 2006. Accounts receivable decreased
      by
      $1.1 million as sales for the three months ended October 31, 2006 decreased
      by
      7.8% from the three months ended January 31, 2006. Deferred income taxes
      increased by a $0.338 million tax benefit for the India operations. Other
      current assets increased principally due to prepaid income taxes of $1.5 million
      for the US and Canada. Other assets includes $2.7 million related to the
      purchases of the Indian operations.





At
      October 31, 2006 the Company had an outstanding loan balance of $7.878 million
      under its facility with Wachovia Bank, N.A. compared with $7.272 million at
      January 31, 2006. Total stockholder’s equity increased by the net income for the
      period of $3.9 million.





**Nine
      months ended October 31, 2006 as compared to the nine months ended October
      31,
      2005**





*Net
      Sales* .
      Net
      sales increased $1.06 million, or 1.4% to $74.6 million for the nine months
      ended October 31, 2006 from $73.5 million for the nine months ended October
      31,
      2005. The increase was primarily due to growth in sales by our UK subsidiary
      of
      $670,000, new revenue from India and Chile of $709,000 and the acquired Mifflin
      Valley, Inc., of $1,193,000 which had revenue in the 9 months ending October
      2006 of $2,308,000 compared with $1,115,000 for the nine months ending October
      2005, and growth in China external sales of $533,000, offset significantly
      by
      decreased sales in disposable, chemical protection garments and woven garments
      and lower selling prices in these three categories to meet competitive market
      conditions. Sales in these three product lines decreased by $2,137,000 over
      the
      prior nine month period.





*Gross
      Profit* .
      Gross
      profit increased $.99 million or 5.6% to $18.6 million for the nine months
      ended
      October 31, 2006 from $17.6 million for the nine months ended October 31, 2005.
      Gross profit as a percentage of net sales increased to 25.0% for the nine months
      ended October 31, 2006 from 24.0% for the


16
 *Index*


nine
      months ended October 31, 2005, primarily due to aggressive raw material
      purchasing in the latter part of FY 06 and in FY 07 which benefited the Company
      as lower costs through approximately the end of June 2006, ongoing cost
      reduction programs in component and service-purchasing, shifting production
      from
      the US to China and Mexico, the reassignment of certain personnel to SGA
      departments from COGS departments as described below and the inclusion of
      Mifflin Valley, Inc. results which has higher gross profit margins than most
      of
      Lakeland’s other product lines have overall, partially offset by rising raw
      material costs.





*Operating
      Expenses* .
      Operating expenses increased $2.4 million or 22.7% to $13.3 million for the
      nine
      months ended October 31, 2006 from $10.9 million for the nine months ended
      October 31, 2005. As a percentage of sales, operating expenses increased to
      17.8% for the nine months ended October 31, 2006 from 14.8% for the nine months
      ended October 31, 2005. The $2.4 million increase in operating expenses in
      the
      nine months ended October 31, 2006 as compared to the nine months ended October
      31, 2005 is comprised of:





o
            $0.30
                million of Mifflin Valley operating expenses included for the full
                nine
                months ended October 2006 in excess of the four months through October
                included in the nine months ended October
                2005.


o
            $0.24
                million of labor costs resulting from personnel reassigned to SGA
                departments who had been assigned to COGS departments in
                2005.


o
            $0.75
                million of SGA costs from new entities in India, Chile and
                Japan.


o
            $0.51
                million net increases in sales salaries and commissions, mainly in
                Disposables, Wovens and Canada and related payroll taxes. Several
                senior
                level sales personnel were added to support lagging sales in Disposables,
                support new woven product introductions and coordinate international
                sales
                efforts.


o
            $0.22
                million of net increases in insurance and employee benefits mainly
                resulting from a more negative experience in our self insured medical
                plan.


o
            $0.07
                million increase in administrative
                payroll.


o
            $0.04
                million in foreign currency
                fluctuation.


o
            $0.09
                million in share-based
                compensation.


o
            $0.06
                million in higher professional and consulting fees, largely resulting
                from
                audit fees.


o
            $0.09
                million in increased bad debt expense resulting from two large accounts
                reserved against.


o
            $0.03
                million miscellaneous net expense
                increases.





Operating
      Profit decreased 21.8% to $5.3 million for the nine months ended October 31,
      2006 from $6.8 million for the nine months ended October 31, 2005. Operating
      margins were 7.1% for the nine months ended October 31, 2006 compared to 9.2%
      for the nine months ended October 31, 2005.





*Interest
      Expenses* .
      Interest expenses increased by $0.224 million for the nine months ended October
      31, 2006 as compared to the nine months ended October 31, 2005 because of higher
      amounts borrowed at increasing interest rates under our credit
      facility.




*Income
      Tax Expense* .
      Income
      tax expenses consist of federal, state, and foreign income taxes. Income tax
      expenses decreased $0.803 million, or 36.5%, to $1.40 million for the nine
      months October 31, 2006 from $2.20 million for the nine months ended October
      31,
      2005. Our effective tax rates were 26.9% and 32.0% for the nine months ended
      October 31, 2006 and 2005, respectively. Our effective tax rate varied from
      the
      federal statutory rate of 34% due primarily to lower foreign taxes, primarily
      resulting from greater profits from outsourced production, partially offset
      by state taxes and by losses in Chile and Japan which are not eligible for
      tax
      credits and for India in which a U.S. tax benefit of $338,000 was recorded
      at
      October 31, 2006.





*Net
      Income* .
      Net
      income decreased $0.878 million, or 18.8% to $3.8 million for the nine months
      ended October 31, 2006 from $4.7 million for the nine months ended October
      31,
      2005. The decrease in net income primarily resulted from lower sales volumes
      in
      our disposable and chemical protective suit lines and meeting competitive market
      prices in our disposable garment division in the second quarter, the increased
      operating expenses described above, and the combined operating losses of
      $1,017,000 of the new foreign operations. Earnings per share
      were


17
 *Index*


$0.69
      for
      the nine months ended October 31, 2006 compared to $0.85 for the nine months
      ended October 31, 2005 (after reflecting adjustments resulting from the 10%
      stock dividend payable to holders of record August 1, 2006).




**Three
      months ended October 31, 2006 as compared to the three months ended October
      31,
      2005**





*Net
      Sales* .
      Net
      sales increased $.546 million, or 2.4% to $23.3 million for the three months
      ended October 31, 2006 from $22.7 million for the three months ended October
      31,
      2005. The net increase was comprised of increased sales in disposable garments
      of $321,000, lower government spending in our Chemical Protective garments
      $39,000, growth in sales in our Canadian and UK subsidiaries of $453,000, new
      revenue from India and Chile of $359,000, and a decrease in Mifflin Valley,
      Inc.
      of $167,000 (acquired in July 2005) which had revenue in the quarter ended
      October 2006 of $694,000 compared with $861,000 for the quarter ended October
      2005. Sales in our Wovens, Gloves and fire suits declined by $380,000 compared
      to the same period last year.





*Gross
      Profit* .
      Gross
      profit decreased $0.046 million or 0.8% to $5.64 million for the three months
      ended October 31, 2006 from $5.68 million for the three months ended October
      31,
      2005. Gross profit as a percentage of net sales decreased to 24.2% for the
      three
      months ended October 31, 2006 from 25.0% for the three months ended October
      31,
      2005, primarily due to higher raw material cost, costs related to the new
      foreign subsidiaries partially offset by ongoing cost reduction programs in
      component and service-purchasing , shifting production from the US to China
      and
      Mexico, the reassignment of certain personnel to SGA departments from COGS
      departments as described below.





*Operating
      Expenses* .
      Operating expenses increased $0.93 million, or 25.4% to $4.6 million for the
      three months ended October 31, 2006 from $3.7 million for the three months
      ended
      October 31, 2005. As a percentage of sales, operating expenses increased to
      19.7% for the three months ended October 31, 2006 from 16.1% for the three
      months ended October 31, 2005. The $0.93 million increase in operating expenses
      in the three months ended October 31, 2006 as compared to the three months
      ended
      October 31, 2005 were comprised of:





o
            $0.65
                million of SGA costs from new entities in India, Chile and
                Japan.


o
            $0.06
                million of net increases in insurance and employee benefits mainly
                resulting from a more negative experience in our self insured medical
                plan.


o
            ($0.05)
                million lower freight out costs resulting from slight relief in prevailing
                carrier rates.


o
            $0.05
                million in share-based compensation.


o
            $0.13
                million in higher professional and consulting fees, largely resulting
                from
                audit fees.


o
            ($0.03)
                million in reduced bank charges resulting from reduced use of credit
                cards
                and a re-negotiation of the fee
                structure.


o
            $0.08
                million in increased bad debt exposure resulting from two large accounts
                reserved against.


o
            $0.04
                million miscellaneous increases.




Operating
      profit decreased 45.9% to $1.10 million for the three months ended October
      31,
      2006 from $2.03 million for the three months ended October 31, 2005. Operating
      margins were 4.7% for the three months ended October 31, 2006 compared to 8.9%
      for the three months ended October 31, 2005.





*Interest
      Expenses* .
      Interest expenses increased by $0.041 million for the three months ended October
      31, 2006 as compared to the three months ended October 31, 2005 because of
      higher amounts borrowed and increasing interest rates under our credit
      facility.





*Income
      Tax Expense* .
      Income
      tax expenses consist of federal, state, and foreign income taxes. Income tax
      expenses decreased $0.604 million, or 83%, to $0.121 million for the three
      months October 31, 2006 from $0.725 million for the three months ended October
      31, 2005. Our effective tax rates were 10.9% and 35.6% for the three months
      ended October 31, 2006 and 2005, respectively. Our effective tax rate varied
      from the federal statutory rate of 34% due primarily to lower foreign taxes,
      primarily resulting from greater profits resulting from outsourced production
      partially offset by state taxes and by start up losses in Chile and Japan which
      are not eligible for tax credits and for India in which a U.S. tax benefit
      of
      $338,000 was


18
 *Index*


recorded
      at October 31, 2006. Included in this was approximately $90,000 of tax benefit
      attributable to losses incurred in periods prior to the third fiscal quarter.
      These losses became eligible for the tax benefit as a result of the planned
      liquidation of the existing Indian subsidiary.





*Net
      Income* .
      Net
      income decreased $0.33 million, or 25.3% to $0.980 million for the three months
      ended October 31, 2006 from $1.31 million for the three months ended October
      31,
      2005. The decrease in net income primarily resulted from lower sales volumes
      in
      our gloves and fire suit lines and meeting competitive conditions in our
      disposable garment division, the increased operating expenses described above,
      and the combined operating losses of $695,000 of the new foreign
      operations . Earnings
      per share were $0.18 for the three months ended October 31, 2006 compared to
      $0.24 for the three months ended October 31, 2005 (after reflecting adjustments
      resulting from the 10% stock dividend payable to holders of record August 1,
      2006).








**Liquidity
      and Capital Resources**




**Cash******Flows**




As
      of
      October 31, 2006 we had cash and cash equivalents of $3.4 million and working
      capital of $61.7 million, increases of $1.91 million and $1.9 million,
      respectively, from January 31, 2006. 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 $1.9 million for the nine months ended
      October 31, 2006 was due primarily to net income from operations of $3.9
      million, an increase in accounts payable of $0.24 million, a decrease in
      inventories of $0.065 million and a decrease in accounts receivable of $1.3
      million. Net cash used in investing activities of $0.631 million in the nine
      months ended October 31, 2006, was due to purchases of property and equipment.




Net
      cash
      used in operating activities of $7.4 million for the nine months ended October
      31, 2005 was due primarily to net income from operations of $4.7 million, an
      increase in inventories of $14.5 million, an decrease in accounts receivable
      of
      $0.61 million, an increase in accounts payable of $1.0 million. Net cash used
      in
      investing activities of $5.8 million in the nine months ended October 31, 2005,
      was due to purchases of property and equipment and the acquisition of Mifflin
      Valley.




We
      currently have one credit facility - a $25 million revolving credit, of which
      $7.9 million of borrowings were outstanding as of October 31, 2006. 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 October 31, 2006, we were in compliance with
      all covenants contained in our credit facility.




We
      believe that our current cash position of $3.4 million, our cash flow from
      operations along with borrowing availability under our $25 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 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
      $1.2 million for capital equipment, primarily computer equipment and apparel
      manufacturing equipment in fiscal 2007, and approximately $2


19
 *Index*


million
      for a new Canadian facility (some of which will be incurred in FY 08).




*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, Great Britain Pound and Mexican Peso. Such contracts 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. There were no material open foreign currency hedge contracts
      at October 31, 2006.




**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,
      2006.




**Item
      4.****Controls
      and Procedures**




*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 effective.




*Changes
      in Internal Control Over Financial Reporting* -
      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 internal control over financial
      reporting occurred during the third quarter of fiscal 2007. Based on that
      evaluation, management concluded that there has been no change in Lakeland
      Industries, Inc.’s internal control over financial reporting during the third
      quarter of fiscal 2007 that has materially affected, or is reasonably likely
      to
      materially affect, Lakeland Industries, Inc.’s internal control over financial
      reporting.




Through
      the thirty three months ended October 31, 2006 additional expense has been
      incurred relating to documenting and testing the systems of internal controls.
      The Company hired internal auditors in 2004 and 2005 and has contracted with
      an
      independent consultant for services related to overall Sarbanes-Oxley Act
      compliance and more specifically Section 404, in February 2004. The total
      cumulative amount expensed so far is approximately $1,032,000 including $83,250
      in additional director fees.








**PART
      II. OTHER INFORMATION**




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





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




a
                -
            On
                August 31, 2006, the Company filed a Form 8-K under Item 2.02, relating
                to
                a Notice of Teleconference call for 4:30 PM September 7, 2006.


On
                September 7, 2006, the Company filed a Form 8-K for the purpose of
                furnishing under Items 2.02 and 9.01 a press release announcing results
                of
                operations for the 2nd quarter ended July 31,
                2006.





20
 *Index*





**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:
                December 7, 2006
            /s/
                Christopher J. RyanChristopher
                J. Ryan,Chief
                Executive Officer, President,Secretary
                and General Counsel(Principal
                Executive Officer andAuthorized
                Signatory)Date:
                December 7, 2006
            /s/Gary
                PokrassaGary
                Pokrassa,Chief
                Financial Officer(Principal
                Accounting Officer andAuthorized
                Signatory)














21