UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-Q

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

For the quarterly period ended December 29, 2000.

           ( )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  333-24189
                       ----------


                                   GFSI, INC.
               (Exact name of registrant specified in its charter)


        Delaware                                               74-2810748
---------------------------------------------            -----------------------
(State or other jurisdiction of incorporation              (I.R.S. Employer)
        or organization)                                   Identification No.

                              9700 Commerce Parkway
                              Lenexa, Kansas 66219
                    (Address of principal executive offices)

        Registrant's telephone number, including area code (913) 888-0445
                                                           --------------

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.

             (1)  Yes   (X)                       No (   )
             (2)  Yes   (X)                       No (   )

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

Common stock,  $0.01 par value per share - 1 share issued and  outstanding as of
February 1, 2001.





<PAGE>



                            GFSI, INC. AND SUBSIDIARY
                          Quarterly Report on Form 10-Q
                     For the Quarter Ended December 29, 2000
                                      INDEX


                                                                           Page
                                                                           ----

PART I - FINANCIAL INFORMATION

      ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
               Consolidated Balance Sheets                                     3
               Consolidated Statements of Income                               4
               Consolidated Statements of Cash Flows                           5
               Notes to Consolidated Financial Statements                      6


      ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF
                 OPERATIONS                                                    8

      ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES
                 ABOUT MARKET RISK                                            11

PART II - OTHER INFORMATION                                                   12

SIGNATURE PAGE                                                                13



                                        -2-

<PAGE>



GFSI, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data)


<TABLE>
<CAPTION>
                                                                        June 30,     December 29,
                                                                          2000           2000
                                                                        --------     ------------
<S>                                                                    <C>              <C>

Assets
Current assets:
     Cash & cash equivalents                                           $   1,446        $  9,850
     Accounts receivable, net                                             29,801          32,763
     Inventories, net                                                     40,140          32,561
     Prepaid expenses and other current assets                             1,117           1,333
     Deferred income taxes                                                 1,122           1,122
                                                                        --------        --------
Total current assets                                                      73,626          77,629
Property, plant and equipment, net                                        19,356          18,659
Other assets:
     Deferred financing costs, net                                         6,192           5,800
     Other                                                                     5               7
                                                                        --------        --------
Total assets                                                            $ 99,179        $102,095
                                                                        ========        ========

Liabilities and stockholder's equity (deficiency)
Current liabilities:
     Accounts payable                                                   $  5,317        $  6,726
     Accrued interest expense                                              4,000           3,995
     Accrued expenses                                                      7,668           7,544
     Income taxes payable                                                     93           1,736
     Current portion of long-term debt                                     6,953           7,823
                                                                        --------        --------
Total current liabilities                                                 24,031          27,824
Deferred income taxes                                                      1,049           1,049
Revolving credit agreement                                                    --              --
Other long-term obligations                                                  552             531
Long-term debt, less current portion                                     160,356         156,106

Stockholder's equity (deficiency):
     Common stock, $.01 par value, 10,000 shares
          authorized, one share issued and outstanding
          at June 30, 2000 and December 29, 2000                             --              --
     Additional paid-in capital                                           58,127          58,127
     Accumulated deficiency                                             (144,936)       (141,542)
                                                                        --------        --------
Total stockholder's deficiency                                           (86,809)        (83,415)
                                                                        --------        --------
Total liabilities and stockholder's equity (deficiency)                 $ 99,179        $102,095
                                                                        ========        ========
</TABLE>

NOTE: The consolidated  balance sheet at June 30, 2000 has been derived from the
audited  financial  statements  at that date,  but does not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements.

See notes to consolidated financial statements.



                                        -3-

<PAGE>



GFSI, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands)

<TABLE>
<CAPTION>


                                                          Quarter Ended                            Six Months Ended
                                                --------------------------------         ----------------------------------
                                                December 31,        December 29,         December 31,          December 29,
                                                   1999                 2000                 1999                  2000
                                                -----------         ------------         ------------          ------------
<S>                                              <C>                 <C>                  <C>                   <C>

Net sales                                        $  51,506            $  50,136            $ 106,345             $ 102,586
Cost of sales                                       30,834               30,825               64,446                63,152
                                                 ---------            ---------            ---------             ---------
Gross profit                                        20,672               19,311               41,899                39,434

Operating expenses:
     Selling                                         5,267                5,707               11,691                11,732
     General and administrative                      5,769                6,972               11,947                13,533
                                                 ---------             --------            ---------              --------
                                                    11,036               12,679               23,638                25,265
                                                 ---------             --------            ---------              --------
Operating income                                     9,636                6,632               18,261                14,169

Other income (expense):
     Interest expense                              (4,401)              (4,296)               (8,857)               (8,512)
     Other, net                                        34                  106                   130                   156
                                                 ---------           ---------             ---------              --------
                                                   (4,367)              (4,190)               (8,727)               (8,356)
                                                 --------            ---------             ---------              --------
Income before income taxes                          5,269                2,442                 9,534                 5,813
Provision for income taxes                          2,048                  952                 3,722                 2,267
                                                 --------            ---------             ---------             ---------
Net income                                       $  3,221            $   1,490             $   5,812             $   3,546
                                                 ========            =========             =========             =========
</TABLE>


See notes to consolidated financial statements.



                                        -4-

<PAGE>


GFSI, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousand)
<TABLE>
<CAPTION>


                                                                                             Six Months Ended
                                                                                       December 31,      December 29,
                                                                                           1999              2000
                                                                                       ------------      ------------
<S>                                                                                      <C>              <C>

Cash flows from operating activities:
Net income                                                                                $ 5,812         $ 3,546
Adjustments to reconcile net income to net cash provided by
    operating activities:
     Depreciation                                                                           1,605           1,603
     Amortization of deferred financing costs                                                 578             583
     (Gain) loss on sale or disposal of property, plant and equipment                         (16)            (55)
Changes in operating assets and liabilities:
     Accounts receivable, net                                                              (7,399)         (2,962)
     Inventories, net                                                                      (1,214)          7,578
     Prepaid expenses, other current assets and other assets                                 (346)           (217)
     Income taxes payable                                                                   3,125           1,643
     Accounts payable, accrued expenses and other
         long-term obligations                                                             (1,694)          1,256
                                                                                          -------         -------
Net cash provided by operating activities                                                     451          12,975
                                                                                          -------         -------

Cash flows from investing activities
     Proceeds from sales of property, plant and equipment                                      43             140
     Purchases of property, plant and equipment                                            (1,154)           (897)
                                                                                          -------        --------
Net cash used in investing activities                                                      (1,111)           (757)
                                                                                          -------        --------

Cash flows from financing activities:
     Deferred financing costs                                                                  --            (190)
     Distributions to GFSI Holdings, Inc.                                                      --            (151)
     Payments on long-term debt and capital lease obligations                              (6,494)         (3,473)
                                                                                         --------        --------
Net cash used in financing activities                                                      (6,494)         (3,814)
                                                                                         --------        --------

Net increase (decrease) in cash and cash equivalents                                       (7,154)          8,404
Cash and cash equivalents at beginning of period                                           10,264           1,446
                                                                                         --------        --------
Cash and cash equivalents at end of period                                               $  3,110        $  9,850
                                                                                         ========        ========
Supplemental cash flow information:
     Interest paid                                                                       $  8,199        $  8,518
                                                                                         ========        ========
     Income taxes paid                                                                   $    597        $    623
                                                                                         ========        ========
Non-cash financing activities:
      Equipment purchased under capital lease                                            $    166        $     94
                                                                                         ========        ========
</TABLE>

See notes to consolidated financial statements.



                                        -5-

<PAGE>

                            GFSI, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                December 29, 2000

1.   BASIS OF PRESENTATION

     The accompanying  unaudited consolidated financial statements of GFSI, Inc.
(the  "Company")  include the  accounts  of the Company and the  accounts of its
wholly owned  subsidiary,  Event 1, Inc. ("Event 1"). All intercompany  balances
and transactions  have been  eliminated.  The unaudited  consolidated  financial
statements have been prepared in accordance with generally  accepted  accounting
principles for interim  financial  information and with the instructions to Form
10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange
Commission.  Accordingly,  they  do  not  include  all of  the  information  and
footnotes  required  by  generally  accepted  accounting  principles  for annual
financial  statement  reporting  purposes.  In the  opinion of  management,  all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair  presentation  of the  financial  position and results of operations of the
Company have been included.  Operating  results for the interim  periods are not
necessarily indicative of the results that may be expected for the entire fiscal
year. For further  information,  refer to the financial statements and footnotes
thereto for the year ended June 30, 2000 included in the Company's Annual Report
on Form 10-K.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.


2.   CREDIT AGREEMENT AMENDMENT

     On December 1, 2000, the Company entered into Amendment No. 2 to the Credit
Agreement, dated February 27, 1997, by and among the Company, Bank One (formerly
the First National Bank of Chicago),  and the other lenders  parties thereto (as
amended,  the "Credit  Agreement").  The  Amendment  reduces the secured line of
credit to $40 million from $50  million,  adjusts  some of the  financial  ratio
covenants and  increases the interest rate margins 1.5% on borrowings  under the
Credit  Agreement.  At December 29, 2000,  interest  rates on the Company's Term
loan A and Term loan B were 10.0% and 10.5%,  respectively.  In connection  with
the Amendment, the Company recorded $189,922 in deferred financing charges which
will be amortized over the remaining life of the Credit Agreement.


3.   COMMITMENTS AND CONTINGENCIES

     The Company,  in the normal course of business,  may be threatened  with or
named as a defendant in various  lawsuits.  It is not possible to determine  the
ultimate  disposition  of these matters,  however,  management is of the opinion
that there are no known  claims or known  contingent  claims  that are likely to
have  a  material  adverse  effect  on  the  results  of  operations,  financial
condition, or cash flows of the Company.


4.   NEW ACCOUNTING STANDARDS

     During the first quarter of fiscal 2001, the Company adopted the provisions
of Statement of Financial  Accounting Standards ("SFAS") No. 133 "Accounting for
Derivative  Instruments and Hedging Activities".  This statement,  as amended by
SFAS No. 137 and SFAS No. 138,  establishes  accounting and reporting  standards
for derivative instruments and for hedging activities.  It requires an entity to
recognize all  derivatives  as either assets or  liabilities in the statement of
financial   position  and  measure  those   instruments   at  fair  value.   The
implementation of this statement did not have a material impact on the Company's
financial position, results of operations or cash flows.


                                        -6-

<PAGE>



     In December  1999,  the staff of the  Securities  and  Exchange  Commission
issued Staff Accounting  Bulletin No. 101 entitled  "Revenue  Recognition".  The
bulletin,  as  amended,  is to be adopted,  if needed,  no later than the fourth
fiscal  quarter  of fiscal  years  commencing  after  December  15,  1999,  with
retroactive  adjustment to the first fiscal quarter of that year. The effect, if
any, of complying  with the  accounting  described in this bulletin has not been
determined by management.

In September  2000, the FASB's Emerging Issues Task Force released its consensus
on EITF Issue No. 00- 10, "Accounting for Shipping and Handling Fees and Costs".
EITF No. 00-10 sets forth  guidance on how a seller of goods should  classify in
the income statement: (a) amounts billed to a customer for shipping and handling
and (b) costs  incurred  for  shipping  and  handling.  Currently,  the  Company
includes  both the  amounts  billed  to  customers  and the costs  incurred  for
shipping and handling as operating expenses.  Under the EITF, the amounts billed
to customers for shipping and handling must be reported as revenues.  Management
intends to implement this EITF no later than the fourth quarter of fiscal 2001.



                                        -7-

<PAGE>


             ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                      FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     The  discussions  set forth in this Form 10-Q should be read in conjunction
with the financial  information  included herein and the Company's Annual Report
on Form 10-K for the year  ended  June 30,  2000.  Management's  discussion  and
analysis of financial  condition and results of operations and other sections of
this report contain forward-looking statements relating to future results of the
Company.   Such   forward-looking   statements   are   identified   by   use  of
forward-looking words such as "anticipates",  "believes",  "plans", "estimates",
"expects",  and  "intends"  or words or  phrases of  similar  expression.  These
forward-looking  statements  are  subject  to  various  assumptions,  risks  and
uncertainties,  including but not limited to,  changes in political and economic
conditions,  demand for the  Company's  products,  acceptance  of new  products,
developments  affecting  the  Company's  products and to those  discussed in the
Company's  filings with the  Securities  and Exchange  Commission.  Accordingly,
actual  results  could  differ   materially  from  those   contemplated  by  the
forward-looking statements.


         The  following  sets forth the amount and  percentage  of net sales for
each of the periods indicated (dollars in thousands).  Certain reclassifications
have been made to fiscal  year 2000  amounts to conform to the fiscal  year 2001
presentation:

<TABLE>
<CAPTION>

                                           Quarter Ended                                       Six Months Ended
                           December 31, 1999        December 29, 2000           December 31, 1999       December 29, 2000
                           -----------------        -----------------           -----------------       -----------------
<S>                         <C>                     <C>                         <C>                     <C>

Licensed Apparel            $ 15,585    30.3%        $ 15,484    30.9%          $ 38,713    36.4%       $ 36,859    35.9%
Resort                        12,626    24.5%          11,349    22.6%            27,010    25.4%         24,360    23.7%
Corporate                     18,268    35.5%          18,453    36.8%            33,258    31.3%         34,835    34.0%
Event 1                        2,983     5.7%           3,023     6.0%             3,815     3.6%          3,173     3.1%
Other                          2,044     4.0%           1,827     3.7%             3,549     3.3%          3,359     3.3%
                            --------                 --------                   --------                --------
Total                       $ 51,506                 $ 50,136                   $106,345                $102,586
                            ========                 ========                   ========                ========
</TABLE>



RESULTS OF OPERATIONS

     The following table sets forth certain historical financial  information of
the Company,  expressed as a percentage  of net sales,  for the quarters and six
month periods ended December 31, 1999 and December 29, 2000.

<TABLE>
<CAPTION>

                                       Quarter Ended                            Six Months Ended
                            December 31,          December 29,         December 31,         December 29,
                                1999                  2000                 1999                 2000
                            ------------         -------------         -------------        -----------
<S>                          <C>                  <C>                  <C>                  <C>

Net sales                       100.0%                100.0%               100.0%              100.0%
Gross profit                     40.1                  38.5                 39.4                38.4
EBITDA                           20.3                  14.8                 18.7                15.4
Operating income                 18.7                  13.2                 17.2                13.8

</TABLE>



                                        -8-

<PAGE>



     EBITDA  represents  operating income plus  depreciation  and  amortization.
While EBITDA should not be construed as a substitute  for operating  income or a
better  indicator of liquidity than cash flow from operating  activities,  which
are determined in accordance with generally accepted accounting  principles,  it
is included herein to provide additional information with respect to the ability
of the Company to meet its future debt service,  capital expenditure and working
capital requirements.  In addition,  the Company believes that certain investors
find  EBITDA to be a useful  tool for  measuring  the  ability of the Company to
service its debt.  EBITDA is not necessarily a measure of the Company's  ability
to fund its cash needs.  See the  Consolidated  Statements  of Cash Flows of the
Company herein for further information.


COMPARISON  OF OPERATING  RESULTS FOR THE QUARTERS AND SIX MONTH  PERIODS  ENDED
DECEMBER 29, 2000 AND DECEMBER 31, 1999.

         Net Sales.  Net sales for the second  quarter of fiscal 2001, the three
months  ended  December  29, 2000,  decreased  2.7% to $50.1  million from $51.5
million in the second quarter of fiscal 2000. Net sales for the first six months
of fiscal 2001 decreased 3.5% to $102.6 million from $106.3 million in the first
six  months  of fiscal  2000.  The  decrease  in net  sales  primarily  reflects
decreases  in net  sales  for the six  months  ended  December  29,  2000 at the
Company's Resort and Licensed Apparel  divisions of 9.8% and 4.8%  respectively,
which  were  partially  offset by a 4.7%  increase  at the  Company's  Corporate
division.

         Gross  Profit.  Gross  profit  for the second  quarter  of fiscal  2001
decreased  6.6% to $19.3  million  from $20.7  million in the second  quarter of
fiscal 2000. Gross profit for the first six months of fiscal 2001 decreased 5.9%
to $39.4 million from $41.9 million in the first six months of fiscal 2000.  The
decrease in gross profit is primarily a result of the decline in net sales noted
above and  increases in overhead  costs as a percent of sales due to product mix
changes from higher priced seasonal outerwear to lower priced products.  For the
second  quarter  of  fiscal  2001,  gross  profit as a  percentage  of net sales
decreased to 38.5%  compared to 40.1% in the second  quarter of fiscal 2000. For
the first six months of fiscal 2001,  gross profit as a percentage  of net sales
decreased to 38.4% compared to 39.4% in the first six months of fiscal 2000.

         Operating Expenses. Operating expenses for the second quarter of fiscal
2001  increased  14.9% to $12.7 million from $11.0 million in the second quarter
of fiscal 2000. For the first six months,  operating  expenses increased 6.9% to
$25.3  million  from  $23.6  million  in the  first six  months of fiscal  2000.
Operating expenses as a percentage of net sales increased to 25.3% from 21.4% in
the  prior  year  second  quarter.  For the first  six  months  of fiscal  2001,
operating expenses as a percentage of net sales increased to 24.6% from 22.2% in
the prior year  period.  The  increase in  operating  expenses in fiscal 2001 is
attributable to the fall of fiscal 2000 benefitting  from one-time  reversals of
operating expenses due to changes in estimates of those expenses.

         EBITDA. EBITDA for the second quarter of fiscal 2001 decreased 29.0% to
$7.4 million from $10.4  million in the second  quarter of fiscal 2000.  For the
first six months,  EBITDA decreased 20.6% to $15.8 million from $19.9 million in
the first six months of fiscal 2000.  The decrease for both periods is primarily
a result of the decrease in net sales and related  gross profit and the increase
in operating  expenses  described  above.  EBITDA as a  percentage  of net sales
decreased  to 14.8%  from 20.3% in the second  quarter of fiscal  2000.  For the
first six months of fiscal 2001,  EBITDA as a percentage  of sales  decreased to
15.4% from 18.7% in the first six months of fiscal 2000.

         Operating  Income.  Operating  income for the second  quarter of fiscal
2001 decreased  31.2% to $6.6 million from $9.6 million in the second quarter of
fiscal 2000. For the first six months, operating income decreased 22.4% to $14.2
million from $18.3 million in the first six months of fiscal 2000.  The decrease
is  attributable  to the  decrease  in net sales and  related  gross  profit and
increase in operating expenses described above. Operating income as a percentage
of net sales decreased for the second quarter of fiscal 2001 to 13.2% from 18.7%
in fiscal 2000,  and to 13.8% for the first six months of fiscal 2001 from 17.2%
in the first six months of fiscal 2000.

         Other Income (Expense).  Other expense for the second quarter of fiscal
2001 decreased to $4.2 million from $4.4 million in the second quarter of fiscal
2000.  For the first six months of fiscal 2001 other  expense  decreased to $8.4
million  from $8.7  million  in the first six months of fiscal  year  2000.  The
decrease  for the periods is primarily a result of  decreased  interest  expense
associated with borrowings under the Company's Credit Agreement due to declining
balances on the Company's long-term debt.


                                       -9-

<PAGE>



         Income  Taxes.  The  effective  income  tax rates for the three and six
month periods ended  December 29, 2000 and December 31, 1999 were  consistent at
39.0%.

         Net Income.  Net income for the second  quarter of fiscal 2001 was $1.5
million  compared to $3.2 million in the second  quarter of fiscal 2000. For the
first six months of fiscal 2001,  net income was $3.5  million  compared to $5.8
million in the first six months of fiscal 2000. The decreases in net income were
for the reasons discussed above.

LIQUIDITY AND CAPITAL RESOURCES

Cash  provided by operating  activities  for the first six months of fiscal 2001
was $13.0  million  compared to $451,000 in the first six months of fiscal 2000.
The change in cash provided by operating  activities between the two periods was
primarily  attributable to declining inventory balance and other operating asset
changes  in the first six  months of 2001  compared  to the first six  months of
2000.

     Cash used in investing  activities  for the first six months of fiscal 2001
was $757,000  compared to $1.1 million in the first six months of 2000. The cash
used in both  periods  was  related  to  acquisitions  of  property,  plant  and
equipment.

     Cash used in financing  activities  for the first six months of fiscal 2001
was $3.8  million  compared  to $6.5  million  in the first six months of fiscal
2000. Scheduled debt repayments were paid in the first six months of fiscal 2001
whereas  debt  payments  in the first six months of fiscal  2000  included  both
scheduled payments and prepayments.

     The  Company  believes  that  cash  flow  from  operating   activities  and
borrowings  under the Credit  Agreement  will be adequate to meet the  Company's
short-term  and long-term  liquidity  requirements  prior to the maturity of its
credit  facilities  in 2007,  although no assurance can be given in this regard.
Under the Credit  Agreement,  the  Revolver  provides  $40 million of  revolving
credit  availability  (of which  approximately  $9.3  million was  utilized  for
outstanding commercial and stand-by letters of credit at December 29, 2000).

     GFSI Holdings,  Inc. ("Holdings"),  the sole stockholder of the Company, is
dependent  upon the cash flows of the  Company to provide  funds to pay  certain
ordinary  course  expenses  incurred on behalf of the Company and to service the
indebtedness  represented  by the  $50.0  million  of  11.375%  Series  B Senior
Discount Notes due 2009 (the "Discount Notes").  The Discount Notes will accrete
at a rate of 11.375%, compounded semi- annually to an aggregate principal amount
of $108.5  million at September 15, 2004.  Thereafter,  the Discount  Notes will
accrue interest at the rate of 11.375% per annum, payable semi-annually, in cash
on March 15 and  September  15 of each  year,  commencing  on  March  15,  2005.
Holdings  will be  dependent  on the  Company  to provide  funds to service  the
indebtedness.  Additionally,  the remaining  cumulative non-cash preferred stock
issued by Holdings  ("Holdings  Preferred Stock") will accrue dividends totaling
approximately  $407,000  annually.  Holdings  Preferred Stock may be redeemed at
stated value  (approximately $3.4 million) plus accrued dividends with mandatory
redemption in 2009.

SEASONALITY AND INFLATION

     The   Company   experiences   seasonal   fluctuations   in  its  sales  and
profitability,  with  generally  higher  sales and gross profit in the first and
second quarters of its fiscal year. The  seasonality of sales and  profitability
is primarily due to higher volume at the College  Bookstore  division during the
first two  fiscal  quarters.  This  pattern  of sales  affects  working  capital
requirements and liquidity,  as the Company generally must finance higher levels
of inventory  during these periods prior to fully  receiving  payment from these
customers. Sales and profitability at the Company's Resort, Corporate and Sports
Specialty divisions typically show no significant  seasonal  variations.  As the
Company  continues to expand into other  markets in its Resorts,  Corporate  and
Sports Specialty divisions, seasonal fluctuations in sales and profitability are
expected to decline. Cash requirements of Event 1 are seasonal,  with increasing
sales and profitability in the third and fourth quarters of fiscal years.

     The  impact  of  inflation  on  the  Company's   operations  has  not  been
significant  to date.  However,  there can be no  assurance  that a high rate of
inflation  in the  future  would not have an  adverse  effect  on the  Company's
operating results.

                                       -10-

<PAGE>



                    ITEM 3.   QUANTITATIVE AND QUALITATIVE
                             DISCLOSURES ABOUT MARKET RISK



     The   Company's   market  risk   exposure  is  primarily  due  to  possible
fluctuations in interest rates. Derivative financial instruments are used by the
Company to manage its exposure on variable  rate debt  obligations.  The Company
enters  into such  agreements  for hedging  purposes  and not with a view toward
speculating in the underlying  instruments.  No such agreements were outstanding
at December 29, 2000. The Company uses a balanced mix of debt  maturities  along
with both fixed rate and  variable  rate debt to manage its exposure to interest
rate changes.  The fixed rate portion of the Company's  long-term  debt does not
bear significant interest rate risk. The variable rate debt would be affected by
interest  rate  changes to the extent the debt is not  matched  with an interest
rate swap or cap agreement or to the extent, in the case of the revolving credit
agreement,  that  balances are  outstanding.  An immediate 10 percent  change in
interest  rates  would not have a material  effect on the  Company's  results of
operations  over the next fiscal year,  although there can be no assurances that
interest rates will not significantly change.




                                       -11-

<PAGE>



PART II - OTHER INFORMATION


Item 1.  Legal Proceedings
-------  -----------------

There has been no change to matters discussed in  Business-Legal  Proceedings in
the Company's Form 10-K as filed with the Securities and Exchange  Commission on
September 29, 2000.


Item 2.  Changes in Securities
-------  ---------------------

None


Item 3.  Defaults Upon Senior Securities
-------  -------------------------------
None


Item 4.  Submission of Matters to a Vote of Security Holders
-------  ---------------------------------------------------

None


Item 5.  Other Information
-------  -----------------

None


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

     (a)  Exhibits.  The following exhibits are included with this report:

          Exhibit 10-1(c) - Amendment No. 2 dated as of December 1, 2000
                            to Credit Agreement

     (b)  Reports on Form 8-K. The Company filed a Current Report on Form 8-K on
          December 27, 2000 to report the replacement of its independent  public
          accountants.



                                       -12-

<PAGE>


SIGNATURES


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


GFSI, INC.
February 13, 2001
                              /s/ ROBERT G. SHAW
                              ---------------------------------------
                              Robert G. Shaw, Sr. Vice President of Finance and
                              Principal Accounting Officer



                                       -13-