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 March 31, 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
May 1, 2000.

<PAGE>



                            GFSI, INC. AND SUBSIDIARY
                          Quarterly Report on Form 10-Q
                      For the Quarter Ended March 31, 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                                                7

PART II - OTHER INFORMATION                                                  11

SIGNATURE PAGE                                                               12



                                        -2-

<PAGE>


<TABLE>

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

                                                                                       July 2,               March 31,
                                                                                         1999                   2000
                                                                                      ----------            -----------
<S>                                                                                   <C>                   <C>
ASSETS
Current assets:
     Cash & cash equivalents                                                          $   10,264            $    5,423
     Accounts receivable, net                                                             28,381                30,442
     Inventories, net                                                                     36,323                36,956
     Prepaid expenses and other current assets                                               561                 1,395
     Deferred income taxes                                                                 1,790                 1,790
                                                                                      ----------            ----------
Total current assets                                                                      77,319                76,006
Property, plant and equipment, net                                                        20,245                19,410
Other assets:
     Deferred financing costs, net                                                         7,348                 6,481
     Other                                                                                     5                     5
                                                                                      ----------            ----------
Total assets                                                                          $  104,917            $  101,902
                                                                                      ==========            ==========

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
Current liabilities:
     Accounts payable                                                                $     8,289            $    5,355
     Accrued interest expense                                                              4,484                 1,022
     Accrued expenses                                                                      7,948                11,128
     Income taxes payable                                                                    413                 3,884
     Current portion of long-term debt                                                     6,550                 6,972
                                                                                       ---------             ---------
Total current liabilities                                                                 27,684                28,361
Deferred income taxes                                                                      1,183                 1,183
Revolving credit agreement                                                                    --                    --
Other long-term obligations                                                                  737                   556
Long-term debt, less current portion                                                     174,328               164,027

Stockholder's equity (deficiency):
     Common stock, $.01 par value, 10,000 shares authorized, one share
          issued and outstanding at July 2, 1999 and March 31, 2000.                          --                    --
     Additional paid-in capital                                                           54,527                54,527
     Accumulated deficiency                                                             (153,542)             (146,752)
                                                                                       ---------            -----------
Total stockholder's deficiency                                                           (99,015)              (92,225)
                                                                                       ---------            -----------
Total liabilities and stockholder's equity (deficiency)                                $ 104,917            $  101,902
                                                                                       =========            ==========

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.
</TABLE>


                                        -3-

<PAGE>


<TABLE>

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

                                                   Quarter Ended                      Nine Months Ended
                                         ------------------------------        -----------------------------
                                           April 2,           March 31,          April 2,          March 31,
                                             1999                2000              1999               2000
                                          --------            ---------        ---------           ---------
<S>                                      <C>                  <C>              <C>                 <C>
Net sales                                $  44,807            $  47,297        $ 160,229            $ 153,642
Cost of sales                               26,170               28,501           93,897               92,947
                                          --------             --------        ---------            ---------
Gross profit                                18,637               18,796           66,332               60,695

Operating expenses:
     Selling                                 6,385                6,722           18,491               18,413
     General and administrative              6,911                6,009           21,445               17,956
                                          --------            ---------         --------            ---------
                                            13,296               12,731           39,936               36,369
                                          --------             --------         --------            ---------
Operating income                             5,341                6,065           26,396               24,326

Other income (expense):
     Interest expense                       (4,499)              (4,429)         (14,081)             (13,286)
     Other, net                                 81                  (33)             141                   97
                                          --------             --------        ---------            ---------
                                            (4,418)              (4,462)         (13,940)             (13,189)
                                          --------             --------        ---------            ---------
Income before income taxes                     923                1,603           12,456               11,137
Provision for income taxes                     414                  626            5,037                4,348
                                          --------             --------        ---------            ---------
Net income                                $    509             $    977        $   7,419            $   6,789
                                          ========             ========        =========            =========


                 See notes to consolidated financial statements.
</TABLE>

                                      -4-


<PAGE>


<TABLE>

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

                                                                                   Nine Months Ended
                                                                              --------------------------
                                                                              April 2,         March 31,
                                                                                1999             2000
                                                                              --------         ---------
<S>                                                                           <C>              <C>
Cash flows from operating activities:
Net income                                                                    $  7,419         $  6,789
Adjustments to reconcile net income to net cash provided by
    operating activities:
     Depreciation                                                                2,272            2,401
     Amortization of deferred financing costs                                      867              867
     Loss on sale or disposal of property, plant and equipment                      71               64
     Deferred income taxes                                                        (112)              --
Changes in operating assets and liabilities:
     Accounts receivable, net                                                   (1,583)          (2,062)
     Inventories, net                                                           10,463             (632)
     Prepaid expenses, other current assets and other assets                       247             (834)
     Income taxes payable                                                        2,298            3,471
     Accounts payable, accrued expenses and other
         long-term obligations                                                  (3,025)          (3,396)
                                                                             ---------          -------
Net cash provided by operating activities                                       18,917            6,668
                                                                             ---------          -------

Cash flows from investing activities
     Proceeds from sales of property, plant and equipment                          183               52
     Purchases of property, plant and equipment                                 (1,337)          (1,516)
                                                                             ---------         --------
Net cash used in investing activities                                           (1,154)          (1,464)
                                                                             ---------         --------

Cash flows from financing activities:
     Net changes to short-term borrowings and revolving credit agreement        (5,600)              --
     Payments on long-term debt and capital lease obligations                   (3,488)         (10,045)
                                                                             ---------         ---------
Net cash used in financing activities                                           (9,088)         (10,045)
                                                                             ---------         --------

Net increase (decrease) in cash and cash equivalents                             8,675           (4,841)
Cash and cash equivalents at beginning of period                                 1,346           10,264
                                                                             ---------         --------
Cash and cash equivalents at end of period                                   $  10,021         $  5,423
                                                                             =========         ========

Non-cash financing activities:
     Equipment purchased under capital lease                                 $       -         $    166
                                                                             =========         ========

Supplemental cash flow information:
     Interest paid                                                           $  16,213         $ 15,375
                                                                             =========         ========
     Income taxes paid                                                       $   2,823         $    877
                                                                             =========         ========

                 See notes to consolidated financial statements.

</TABLE>

                                        -5-

<PAGE>



                            GFSI, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 31, 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 accounting principles generally
accepted in the United States of America 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  accounting
principles   generally  accepted  in  the  United  States  of  America  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 statements
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, as amended
by SFAS No. 137, 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                                       Nine Months Ended
                               April 2, 1999            March 31, 2000              April 2, 1999               March 31, 2000
                            -------------------      --------------------       --------------------        ---------------------
<S>                          <C>          <C>        <C>            <C>         <C>            <C>          <C>           <C>
Resort                      $ 12,629      28.2%      $ 13,136       27.8%       $  45,161      28.2%        $  45,167      29.4%
Corporate                     16,487      36.8%        16,420       34.7%          57,690      36.0%           49,679      32.3%
College Bookstore              6,891      15.4%         8,122       17.2%          35,001      21.9%           35,481      23.1%
Sports Specialty               2,895       6.5%         3,391        7.2%           9,724       6.0%            9,726       6.3%
Event 1                        4,718      10.6%         4,492        9.5%           8,251       5.2%            8,307       5.4%
Other                          1,187       2.5%         1,736        3.6%           4,402       2.7%            5,282       3.5%
                            --------                 --------                   ---------                    ---------
Total                       $ 44,807                 $ 47,297                   $ 160,229                    $ 153,642
                            ========                 ========                   =========                    =========
</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
nine month periods ended April 2, 1999 and March 31, 2000.


                           Quarter Ended              Nine Months Ended
                    -------------------------      ----------------------
                    April 2,        March 31,      April 2,     March 31,
                      1999            2000           1999         2000
                    --------        ---------      --------     ---------
Net sales            100.0%          100.0%         100.0%       100.0%
Gross profit          41.6            39.7          41.4          39.5
EBITDA                13.6            14.5          17.9          17.4
Operating income      11.9            12.8          16.5          15.8



                                       -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 accounting  principles  generally  accepted in
the United  States of  America,  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 Nine Month
   Periods Ended March 31, 2000 and April 2, 1999
---------------------------------------------------------------

         Net Sales.  Net sales for the third  quarter of fiscal 2000,  the three
months ended March 31, 2000,  increased 5.6% to $47.3 million from $44.8 million
in the third  quarter of fiscal  1999.  Net sales for the first  nine  months of
fiscal 2000  decreased  4.1% to $153.6  million from $160.2 million in the first
nine months of fiscal 1999.  The increase in net sales for the third  quarter of
fiscal 2000 is due to  increases in the  Company's  Resort,  College  Bookstore,
Sports  Speciality  and  Other  divisions  of  4.0%,  17.9%,  17.1%  and  46.3%,
respectively,  partially  offset by small  decreases  in sales at the  Company's
Corporate  Division and Event 1 subsidiary of 0.4% and 4.8%,  respectively.  The
decrease  in net sales for the nine  month  period is due to a  decrease  in net
sales for the nine  months  ended  March  31,  2000 at the  Company's  Corporate
division of 13.9% partially  offset by small  increases in the other  divisions.
The  decline  was   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.

         Gross  Profit.  Gross  profit  for the third  quarter  of  fiscal  2000
increased  0.9% to $18.8  million  from $18.6  million  in the third  quarter of
fiscal  1999.  Gross  profit for the first nine months of fiscal 2000  decreased
8.5% to $60.7  million  from $66.3  million  in the first nine  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 third quarter of fiscal 2000, gross profit as a percentage of
net sales  decreased to 39.7%  compared to 41.6% in the third  quarter of fiscal
1999. For the first nine months of fiscal 2000,  gross profit as a percentage of
net sales  decreased  to 39.5%  compared  to 41.4% in the first  nine  months of
fiscal 1999.

         Operating Expenses.  Operating expenses for the third quarter of fiscal
2000  decreased 4.2% to $12.7 million from $13.3 million in the third quarter of
fiscal  1999.  For the first  nine  months of fiscal  2000,  operating  expenses
decreased  8.9% to $36.4  million from $39.9 million in the first nine 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 26.9% from 29.7% in the prior
year third quarter. For the first nine months of fiscal 2000, operating expenses
as a  percentage  of net sales  decreased  to 23.7% from 24.9% in the prior year
period.

         EBITDA.  EBITDA for the third quarter of fiscal 2000 increased 12.5% to
$6.9  million from $6.1  million in the third  quarter of fiscal  1999.  For the
first nine months of fiscal 2000,  EBITDA  decreased  6.8% to $26.7 million from
$28.7  million in the first nine months of fiscal  1999.  The increase in EBITDA
for the third  quarter is due to the net sales  increase and  operating  expense
decrease  discussed  above.  The decrease in EBITDA for the nine month period 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 14.5% from
13.6% in the third  quarter of fiscal 1999.  For the first nine months of fiscal
2000, EBITDA as a percentage of sales decreased to 17.4% from 17.9% in the first
nine months of fiscal 1999.

                                        -8-

<PAGE>



         Operating Income. Operating income for the third quarter of fiscal 2000
increased 13.6% to $6.1 million from $5.3 million in the third quarter of fiscal
1999. For the first nine months of fiscal 2000,  operating income decreased 7.8%
to $24.3 million from $26.4 million in the first nine months of fiscal 1999. The
increase  in  operating  income  for the third  quarter  is due to the net sales
increase  and  operating  expense  decrease  discussed  above.  The  decrease in
operating  income for the nine month period is  attributable  to the decrease in
net sales and  related  gross  profit  described  above.  Operating  income as a
percentage of net sales  increased for the third quarter of fiscal 2000 to 12.8%
from 11.9% in fiscal 1999,  and  decreased to 15.8% for the first nine months of
fiscal 2000 from 16.5% in the first nine months of fiscal 1999.

         Other Income (Expense).  Other expense for the  third quarter of fiscal
2000 was consistent  with the third quarter of fiscal 1999 at $4.4 million.  For
the first nine months of fiscal 2000 other  expense  decreased to $13.2  million
from $13.9  million in the first nine months of fiscal year 1999.  The  decrease
for the nine month period 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 nine month periods
ended March 31, 2000 and April 2, 1999 were 39.0% and 40.4%, respectively.

         Net  Income.   Net  income  for the third quarter  of  fiscal  2000 was
$977,000 compared to $509,000 in the third quarter of fiscal 1999. For the first
nine months of fiscal 2000, net income was $6.8 million compared to $7.4 million
in the first nine months of fiscal 1999.


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

         Cash  provided  by  operating  activities  for the first nine months of
fiscal 2000 was $6.7 million  compared to $18.9 million in the first nine 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 accounts  receivable  and inventory  balances and decreased net income in the
first nine months of 2000 compared to the first nine months of 1999.

         Cash used by  investing  activities  in the first nine months of fiscal
2000 was $1.5 million compared to $1.2 million in the first nine 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 nine months of fiscal
2000 was $10.0  million  compared  to $9.1  million in the first nine  months of
fiscal  1999.  In November  1999,  the  Company  made a $3.3  million  term debt
prepayment  due to fiscal  1999  Excess  Cash  Flows,  as  defined in the Credit
Agreement.  On  March  31,  2000,  the  Company  made an  additional  term  debt
prepayment of $2 million.  In the first nine months of fiscal 1999,  the Company
repaid $5.6 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 revolving loan facility provides $50 million of
revolving credit availability (of which approximately $22.1 million was utilized
for outstanding commercial and stand-by letters of credit at March 31, 2000).


                                        -9-

<PAGE>



         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.


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.


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  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.

                                       -10-

<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  Annual  Report on 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.


                                       -11-

<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.
May 12, 2000
                                /s/ ROBERT G. SHAW
                               ---------------------------------------
                               Robert G. Shaw, Sr. Vice President of Finance and
                               Principal Accounting Officer




                                       -12-