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 31, 1999.


           ( )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             (I.R.S. Employer Identification No.)
incorporation or organization)

                              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, 2000.


                                        1

<PAGE>



                            GFSI, INC. AND SUBSIDIARY
                          Quarterly Report on Form 10-Q
                     For the Quarter Ended December 31, 1999

                                      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                                          7

PART II - OTHER INFORMATION                                            11

SIGNATURE PAGE                                                         12


                                        2


<PAGE>



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

                                                      July 2,    December 31,
                                                       1999          1999
                                                      ------     ------------
Assets
Current assets:

     Cash & cash equivalents                        $  10,264     $   3,110
     Accounts receivable, net                          28,381        35,780
     Inventories, net                                  36,323        37,538
     Prepaid expenses and other current assets            561           907
     Deferred income taxes                              1,790         1,790
                                                    ---------     ---------
Total current assets                                   77,319        79,125
Property, plant and equipment, net                     20,245        19,933
Other assets:
     Deferred financing costs, net                      7,348         6,770
     Other                                                  5             5
                                                    ---------     ---------
Total assets                                        $ 104,917     $ 105,833
                                                    =========     =========

Liabilities and stockholder's equity
(deficiency)
Current liabilities:
     Accounts payable                               $   8,289     $   7,135
     Accrued interest expense                           4,484         4,437
     Accrued expenses                                   7,948         7,627
     Income taxes payable                                 413         3,538
     Current portion of long-term debt                  6,550         6,919
                                                    ---------     ---------
Total current liabilities                              27,684        29,656
Deferred income taxes                                   1,183         1,183
Revolving credit agreement                               --            --
Other long-term obligations                               737           566
Long-term debt, less current portion                  174,328       167,631

Stockholder's equity (deficiency):
     Common stock, $.01 par value, 10,000 shares
        authorized, one share issued and outstanding
        at July 2, 1999 and December 31, 1999              --            --
     Additional paid-in capital                        54,527        54,527
     Accumulated deficiency                          (153,542)     (147,730)
                                                    ---------     ---------
Total stockholder's deficiency                        (99,015)      (93,203)
                                                    ---------     ---------
Total liabilities and stockholder's equity
     (deficiency)                                   $ 104,917     $ 105,833
                                                    =========     =========

NOTE: The  consolidated  balance sheet at July 2, 1999 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
                                  --------------------------------        -------------------------------
                                    January 1,         December 31,        January 1,         December 31,
                                      1999                1999                1999                1999
                                   ----------         ------------         ----------         -----------
<S>                                 <C>                 <C>                 <C>                 <C>

Net sales                           $  55,377           $  51,506           $ 115,422           $ 106,345
Cost of sales                          31,900              30,834              67,727              64,446
                                    ---------           ---------           ---------           ---------
Gross profit                           23,477              20,672              47,695              41,899

Operating expenses:
     Selling                            5,684               5,267              12,106              11,691
     General and administrative         7,344               5,769              14,534              11,947
                                    ---------           ---------           ---------           ---------
                                       13,028              11,036              26,640              23,638
                                    ---------           ---------           ---------           ---------
Operating income                       10,449               9,636              21,055              18,261

Other income (expense):
     Interest expense                  (4,668)             (4,401)             (9,581)             (8,857)
     Other, net                            25                  34                  60                 130
                                    ---------           ---------           ---------           ---------
                                       (4,643)             (4,367)             (9,521)             (8,727)
                                    ---------           ---------           ---------           ---------
Income before income taxes              5,806               5,269              11,534               9,534
Provision for income taxes              2,324               2,048               4,624               3,722
                                    ---------           ---------           ---------           ---------
Net income                          $   3,482           $   3,221           $   6,910           $   5,812
                                    =========           =========           =========           =========


See notes to consolidated financial statements.

</TABLE>



                                        4



<PAGE>

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

                                                          Six Months Ended
                                                     ---------------------------
                                                      January 1,    December 31,
                                                        1999           1999
                                                      ----------    -----------
Cash flows from operating activities:
Net income                                             $  6,910       $  5,812
Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation                                         1,516          1,605
     Amortization of deferred financing costs               576            578
     (Gain) loss on sale or disposal of property,
       plant and equipment                                   71            (16)
     Deferred income taxes                                 (112)          --
Changes in operating assets and liabilities:
     Accounts receivable, net                            (7,553)        (7,399)
     Inventories, net                                     8,379         (1,214)
     Prepaid expenses, other current assets and
       other assets                                         194           (346)
     Income taxes payable                                 2,377          3,125
     Accounts payable, accrued expenses and other
         long-term obligations                             (854)        (1,694)
                                                       --------       --------
Net cash provided by operating activities                11,504            451
                                                       --------       --------

Cash flows from investing activities
     Proceeds from sales of property, plant
       and equipment                                        183             43
     Purchases of property, plant and equipment          (1,077)        (1,154)
                                                       --------       --------
Net cash used in investing activities                      (894)        (1,111)
                                                       --------       --------

Cash flows from financing activities:
     Net changes to short-term borrowings and
       revolving credit agreement                        (4,600)          --
     Payments on long-term debt and capital
       lease obligations                                 (2,227)        (6,494)
                                                       --------       --------
Net cash used in financing activities                    (6,827)        (6,494)
                                                       --------       --------

Net increase (decrease) in cash and cash equivalents      3,783         (7,154)
Cash and cash equivalents at beginning of period          1,346         10,264
                                                       --------       --------
Cash and cash equivalents at end of period             $  5,129       $  3,110
                                                       ========       ========
Supplemental cash flow information:
     Interest paid                                     $  9,076       $  8,199
                                                       ========       ========
     Income taxes paid                                 $  2,346       $    597
                                                       ========       ========
Non-cash financing activities:
      Equipment purchased under capital lease              --         $    166
                                                                      ========

See notes to consolidated financial statements.



                                        5

<PAGE>



                            GFSI, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                December 31, 1999


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 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 July 2, 1999  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.       Reclassifications
         -----------------

     Certain  reclassifications have been made to the fiscal year 1999 statement
of income amounts to conform to the fiscal year 2000 presentation.


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 Standard
         -----------------------

     Statement of Financial  Accounting  Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities" was issued in June 1998. This
statement   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.  This  statement  is
effective for all quarters of fiscal years  beginning  after June 15, 2000.  The
Company is in the process of  determining  what impact the  adoption of SFAS No.
133 will have on its financial position and results of operations.



                                        6

<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  July 2,  1999.  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):


<TABLE>
<CAPTION>
                              Quarter Ended                      Six Months Ended
                   ------------------------------------  -------------------------------------
                   January 1, 1999    December 31, 1999  January 1, 1999    December 31, 1999
                   ---------------    -----------------  ---------------    ------------------
<S>                <C>                <C>                <C>                <C>
Resort             $ 15,276   27.6%   $ 15,174   29.5%   $  32,532   28.2%  $  32,031    30.1%
Corporate            21,946   39.6%     18,269   35.5%      41,203   35.7%     33,259    31.3%
College Bookstore     9,917   17.9%      9,927   19.2%      28,110   24.4%     27,359    25.7%
Sports Specialty      3,559    6.4%      3,112    6.0%       6,829    5.9%      6,335     6.0%
Event 1               3,355    6.1%      2,983    5.8%       3,533    3.1%      3,815     3.6%
Other                 1,324    2.4%      2,041    4.0%       3,215    2.7%      3,546     3.3%
                   --------           --------           ---------          ---------
Total              $ 55,377           $ 51,506           $ 115,422          $ 106,345
                   ========           ========           =========          =========
</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 January 1, 1999 and December 31, 1999.


                         Quarter Ended              Six Months Ended
                    -------------------------   --------------------------
                    January 1,   December 31,   January 1,    December 31,
                      1999          1999           1999          1999
                     ------      ------------   ---------     ------------

Net sales             100.0%       100.0%         100.0%        100.0%
Gross profit           42.4         40.1           41.3          39.4
EBITDA                 20.2         20.3           19.6          18.7
Operating income       18.9         18.7           18.2          17.2



                                       7


<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 31, 1999 and January 1, 1999.

     Net Sales.  Net sales for the  second  quarter  of fiscal  2000,  the three
months  ended  December  31, 1999,  decreased  7.0% to $51.5  million from $55.4
million in the second quarter of fiscal 1999. Net sales for the first six months
of fiscal 2000 decreased 7.9% to $106.3 million from $115.4 million in the first
six  months  of fiscal  1999.  The  decrease  in net  sales  primarily  reflects
decreases  in net  sales  for the six  months  ended  December  31,  1999 at the
Company's Corporate, Sports Specialty and College Bookstore divisions of 19%, 7%
and 3% respectively.  These declines were attributable to increased  competition
and difficulties  attributable to the  installation of the Company's  Enterprise
Resource Planning System. The Corporate division has also experienced a shift in
the buying patterns of its customers from outerwear to other  products,  and had
some vacancies in its sales representative force during the first half of fiscal
2000.  These decreases in net sales were partially  offset by an increase in net
sales in the Event 1  subsidiary  of 8% for the six months  ended  December  31,
1999.

     Gross Profit.  Gross profit for the second quarter of fiscal 2000 decreased
11.9% to $20.7 million from $23.5 million in the second  quarter of fiscal 1999.
Gross  profit for the first six months of fiscal 2000  decreased  12.2% to $41.9
million from $47.7 million in the first six months of fiscal 1999.  The decrease
in gross  profit is  primarily  a result of the decline in net sales noted above
and  increases  in  production  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  2000,  gross  profit as a  percentage  of net sales
decreased to 40.1%  compared to 42.4% in the second  quarter of fiscal 1999. For
the first six months of fiscal 2000,  gross profit as a percentage  of net sales
decreased to 39.4% compared to 41.3% in the first six months of fiscal 1999.

     Operating  Expenses.  Operating  expenses for the second  quarter of fiscal
2000  decreased  15.3% to $11.0 million from $13.0 million in the second quarter
of fiscal 1999. For the first six months,  operating expenses decreased 11.3% to
$23.6  million from $26.6  million in the first six months of fiscal  1999.  The
decrease in  operating  expenses is primarily  related to costs  incurred in the
first half of fiscal 1999  associated  with the  Company's  Enterprise  Resource
Planning  System  installation  that was completed in the fourth quarter of 1999
and to management cost control  efforts.  Operating  expenses as a percentage of
net sales  decreased to 21.4% from 23.5% in the prior year second  quarter.  For
the first six months of fiscal 2000,  operating  expenses as a percentage of net
sales decreased to 22.2% from 23.1% in the prior year period.

     EBITDA.  EBITDA for the second  quarter of fiscal  1999  decreased  6.7% to
$10.4 million from $11.2 million in the second  quarter of fiscal 1999.  For the
first six months,  EBITDA decreased 12.0% to $19.9 million from $22.6 million in
the first six months of fiscal 1999.  The decrease for both periods is primarily
a result of the decrease in net sales and related gross profit  described above.
EBITDA as a percentage of net sales  increased to 20.3% from 20.2% in the second
quarter of fiscal  1999.  For the first six months of fiscal  2000,  EBITDA as a
percentage  of sales  decreased  to 18.7%  from 19.6% in the first six months of
fiscal 1999.

     Operating  Income.  Operating  income for the second quarter of fiscal 2000
decreased 7.8% to $9.6


                                       8

<PAGE>


million from $10.5 million in the second  quarter of fiscal 1999.  For the first
six months, operating income decreased 13.3% to $18.3 million from $21.1 million
in the first six months of fiscal  1999.  The  decrease is  attributable  to the
decrease in net sales and related gross profit described above. Operating income
as a percentage of net sales  decreased for the second quarter of fiscal 2000 to
18.7% from 18.9% in fiscal 1999, and to 17.2% for the first six months of fiscal
2000 from 18.2% in the first six months of fiscal 1999.


     Other Income (Expense). Other expense for the second quarter of fiscal 2000
decreased  to $4.4  million  from $4.6  million in the second  quarter of fiscal
1999.  For the first six months of fiscal 2000 other  expense  decreased to $8.7
million  from $9.5  million  in the first six months of fiscal  year  1999.  The
decrease  for the periods is primarily a result of  decreased  interest  expense
associated with borrowings under the Company's $115 million Credit Agreement due
to declining balances on the Company's long-term debt.

         Income Taxes.  The effective income tax rates for the six month periods
ended December 31, 1999 and January 1, 1999 were 39.0% and 40.0%, respectively.

         Net Income.  Net income for the second  quarter of fiscal 2000 was $3.2
million  compared to $3.5 million in the second  quarter of fiscal 1999. For the
first six months of fiscal 2000,  net income was $5.8  million  compared to $6.9
million in the first six months of fiscal 1999.


Liquidity and Capital Resources
-------------------------------

     Cash  provided by operating  activities  for the first six months of fiscal
2000 was  $451,000  compared to $11.5  million in the first six months of fiscal
1999.  The change in cash  provided  by  operating  activities  between  the two
periods was primarily  attributable  to increased use of cash to fund changes in
inventory  balances  in the first six months of 2000  compared  to the first six
months of 1999 and decreased  income for the six months ended  December 31, 1999
compared to the six months ended January 1, 1999.

     Cash used by  investing  activities  in the first six months of fiscal 2000
was $1.1 million  compared to $894,000 in the first six months of 1999. 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 2000
was $6.5  million  compared  to $6.8  million  in the first six months of fiscal
1999. In November 1999, the Company made a $3.3 million term debt prepayment due
to Excess Cash Flows, as defined in the Credit Agreement,  in 1999. In the first
six months of fiscal 1999,  the Company  repaid $4.6  million of revolving  loan
balances.  The Company  continues to review  opportunities to prepay portions of
its outstanding debt utilizing available cash.

     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  $50 million of  revolving
credit  availability  (of which  approximately  $18.0  million was  utilized for
outstanding commercial and stand-by letters of credit at December 31, 1999).

     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  $425,000  annually.  Holdings  Preferred Stock may be redeemed at
stated value  (approximately $3.6 million) plus accrued dividends with mandatory
redemption in 2009.


                                        9

<PAGE>



Derivative and Market Risk Disclosure
-------------------------------------

     The   Company's   market  risk   exposure  is  primarily  due  to  possible
fluctuations in interest rates.  Derivative financial instruments,  including an
interest  rate swap  agreement 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.  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.


Year 2000 Compliance
--------------------

     The Company  continues to assess the impact that the year 2000 will have on
its internal computer  systems,  facilities and production  equipment,  critical
business partners and business-critical third parties.

     The Company has a program to identify,  evaluate and  implement  changes to
all of its  internal  computer  systems as  necessary  to address  the Year 2000
issue.  As part of the program,  in fiscal year 1999,  the Company  upgraded and
implemented its Enterprise Resource Planning System ("ERP"), including Year 2000
functionality,  designed  to improve  the overall  efficiency  of the  Company's
operations  and to  enable  management  to  more  closely  track  the  financial
performance  of each of its sales and  operating  areas.  It is not practical to
segregate the cost of the Year 2000  functionality  from the cost of the upgrade
and implementation of the ERP.

     All of the Company's  production and operations  departments have completed
their   inventory,   assessment  and  remediation   efforts  in  regard  to  all
non-information   technology  systems  which  include  hardware,   software  and
associated  embedded computer  technologies that are used to operate the Company
facilities and equipment.

     The Company has  identified,  prioritized  and is continuing to communicate
with all critical  business  partners,  including all  third-party  suppliers of
goods and  services,  to  ascertain  the  status of their  Year 2000  compliance
programs.  The Company  intends to monitor the progress of these  critical third
parties.

     The  Company  does not  anticipate  that the Year 2000  issues  related  to
internally-controllable  systems will significantly  impact the overall business
operations or financial results of the Company.  However, the Company could face
significant  disruptions in business  operations and financial losses if certain
business-critical,  third parties, such as utility providers,  telecommunication
systems, transportation service providers or certain government entities, do not
successfully  continue  their  Year  2000  remediation  plans.  The  Company  is
currently in the process of identifying and developing contingency plans for the
most  reasonable  likely  worst case  scenarios.  To date,  the  Company has not
experienced any significant disruptions due to Year 2000 issues.

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


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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 anticipated to be 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.



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 30, 1999.

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 27 - Financial Data Schedule (SEC Use Only)

     (b) Reports on Form 8-K

         No reports on Form  8-K were filed by the Registrant during
         the reporting period.


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<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 11, 2000
                                        /s/ ROBERT G. SHAW
                                        ---------------------------------------
                                        Robert G. Shaw, Sr. Vice President of
                                        Finance and Principal Accounting Officer






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