FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

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

                   For the quarterly period ended May 1, 1998

                                       OR

          [ ] 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 - 1-6797
                                                 --------

                             TEXFI INDUSTRIES, INC.
     ---------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Delaware                                56-0795032
-------------------------------------      ---------------------------------
  (State or other jurisdiction of                (I.R.S. Employer
   incorporation or organization)               Identification No.)


               1430 Broadway, 13th Floor, New York, New York 10018
            ---------------------------------------------------------
                    (Address of principal executive offices)
                                   (ZIP Code)

                                 (212) 930-7200
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


                  Number of shares of Common Stock outstanding
                          at June 15, 1998 - 8,859,098
                             --------------  ---------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X   No
                                       --  --

<PAGE>


                             TEXFI INDUSTRIES, INC.

                          QUARTERLY REPORT ON FORM 10-Q
                        FOR THE QUARTER ENDED MAY 1, 1998

                         PART I - FINANCIAL INFORMATION


Item 1.  Consolidated Financial Statements

         Texfi  Industries,  Inc. (the  Company") has prepared the  consolidated
financial statements included herein,  without audit,  pursuant to the rules and
regulations of the Securities and Exchange Commission.  The consolidated balance
sheet as of  October  31,  1997  has  been  taken  from  the  audited  financial
statements as of that date.  Certain  information and note disclosures  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations,  although the Company believes that the disclosures are adequate to
make the  information  presented  not  misleading.  It is  suggested  that these
consolidated  financial  statements be read in conjunction with the consolidated
financial  statements and notes thereto  included in the Company's latest Annual
Report on Form 10-K/A.

     The  consolidated   financial   statements   included  herein  reflect  all
adjustments (none of which are other than normal recurring  accruals) which are,
in  the  opinion  of  management,  necessary  for a  fair  presentation  of  the
information  included.  Operating  results for the  thirteen-week and twenty-six
week periods  ended May 1, 1998 are not  necessarily  indicative  of the results
that  may be  expected  for the year  ended  October  30,  1998.  The  following
consolidated financial statements are included:

         Consolidated Statements of Income for the thirteen weeks and twenty-six
         weeks ended May 1, 1998 and May 2, 1997

         Consolidated Balance Sheets as of May 1, 1998 and October 31, 1997

         Consolidated  Statements  of Cash  Flows  for the  thirteen  weeks  and
         twenty-six weeks ended May 1, 1998 and May 2, 1997

         Condensed Notes to Consolidated Financial Statements

                                       2
<PAGE>






                             TEXFI INDUSTRIES, INC.

                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (in thousands, except per share data)
<TABLE>
<CAPTION>
                                         Thirteen Weeks Ended    Twenty-six Weeks Ended
                                         --------------------    ----------------------
                                         May 1,      May 2,       May 1,       May 2,
                                          1998        1997         1998        1997
                                         --------   ---------   ---------     ---------
<S>                                <C>            <C>         <C>         <C>    
Net Sales ...........................  $   34,084  $   54,224   $   75,860  $  102,769
                                       ----------- -----------  ----------  ----------  
Cost and Expenses:
   Cost of goods sold ...............      31,583      46,783       68,077      88,046
   Selling, general and
         administrative .............       3,155       3,930        6,027       7,335
                                       ----------- -----------  ----------  ----------  
      Total .........................      34,738      50,713       74,104      95,381
                                       ----------- -----------  ----------  ----------  

Operating (Loss) Income..............        (654)      3,511        1,756       7,388
                                       ----------- -----------  ----------  ----------  

Other Expense (Income):
   Interest .........................       2,132       2,702        4,286       5,223
   Equity in loss
      of joint venture...............         --          395           --         559
   Impairment of note receivable.....         --           --        1,154          --
   Other,net.........................         (18)       (103)         (19)         21
                                       ----------- -----------  ----------  ----------  

      Total .........................       2,114       2,994        5,421       5,803
                                       ----------- -----------  ----------  ----------  

(Loss) Income before Income Taxes....      (2,768)        517       (3,665)      1,585

Provision for Income Taxes ..........        --            11          --           32

Net (Loss) Income....................  $   (2,768) $      506   $   (3,665)  $   1,553
                                       =========== ===========  ==========  ==========

Net (Loss) Income per Share:
   Basic ............................  $     (.31) $      .06   $     (.41)  $     .18
                                       =========== ===========  ==========  ==========

   Diluted ..........................  $     (.31) $      .06   $     (.41)  $     .18
                                       =========== ===========  ==========  ==========
</TABLE>


See Notes to Consolidated Financial Statements on page 6.


                                       3
<PAGE>


                             TEXFI INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>
                                           (Unaudited)
                                             May 1,        October 31,
                                              1998            1997
                                            ----------     ------------
                                                            Restated
<S>                                         <C>            <C>
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents ...............  $     233         1,434
   Receivables:
      Due from factor........................    21,515        35,494
      Trade..................................     6,136         4,486
      Other .................................       690           815
   Inventories ..............................    16,902        19,914
   Prepaid Expenses..........................     2,594         1,355
                                               ---------       -------
     Total...................................    48,070        63,498

PROPERTY, PLANT AND EQUIPMENT - Net .........    27,238        28,254
PROPERTY, PLANT AND EQUIPMENT HELD FOR
  DISPOSAL - Net ............................     1,290         3,318
OTHER ASSETS ................................     1,574         1,627
                                              ---------       -------
                                               $ 78,172      $ 96,697
                                              =========       =======
LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
   Current maturities of long-term debt .....  $  6,183      $  5,015
   Current maturities of sub. debt...........     4,800          1,200
   Accounts payable .........................    22,847        28,110
   Other liabilities.........................     2,344         3,037
                                              ---------       -------
      Total..................................    36,174        37,362

REVOLVING CREDIT LINE........................    27,390        33,919
LONG-TERM DEBT ..............................     2,000         5,500
SUBORDINATED DEBENTURES .....................    31,945        35,631
OTHER LONG-TERM OBLIGATIONS .................       217           175

COMMON SHAREHOLDERS' DEFICIT:
   Common stock, $1.00 par value ............     8,859         8,859
   Additional paid-in capital ...............    25,534        25,534
   Accumulated deficit.......................   (53,947)      (50,283)
                                              ---------       -------
      Total..................................   (19,554)      (15,890)
                                              ---------       -------
                                               $ 78,172      $ 96,697
                                              =========       =======
</TABLE>

See Notes to Consolidated Financial Statements on page 6.

                                       4

<PAGE>


                             TEXFI INDUSTRIES, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (in thousands)
<TABLE>
<CAPTION>
                                                     Thirteen Weeks Ended       Twenty-six Weeks Ended
                                                        May 1,       May 2,       May 1,            May 2,
                                                        1998         1997         1998              1997
                                                     -----------   ---------    ----------        ---------
<S>                                                  <C>          <C>           <C>              <C>    
OPERATING ACTIVITIES
Net (loss) income ....................               $  (2,768)   $    506      $ (3,665)        $  1,553
Adjustments to reconcile net (loss)
income to net cash provided by (used
in) operating activities:
         Equity in loss of
            joint venture................                   --         395            --              559
       Impairment of note receivable...                     --          --         1,154               --
         Depreciation & amortization ....                1,444       1,300         2,882            2,549
         Provision for losses on accounts
         receivable.......................                   5           7             5              133
         Gain on sale of property, plant
         and equipment....................                  (1)        (67)           (2)             (81)
Change in operating assets and liabilities:
         Accounts receivable .............               4,309      (2,823)       12,449           (1,470)
         Inventories .....................               1,949      (1,653)        3,012           (1,245)
         Prepaid and other assets ........                 252          (1)       (1,185)            (604)
         Accounts payables and accrued
         liabilities .....................                 956       1,274        (5,914)           2,390
                                                     -----------   ---------    ----------        ---------
NET CASH PROVIDED BY (USED IN)
         OPERATING ACTIVITIES                            6,146      (1,062)        8,736            3,784

INVESTING ACTIVITIES
Purchases of property, plant and
 equipment ............................                   (533)     (3,125)       (1,427)          (6,226)
Proceeds from sale-lease back of
 property, plant and equipment.........                     --       1,683            --            4,211
Proceeds from disposition of property,
 plant and equipment...................                    539       1,667         2,029            2,260
                                                     -----------   ---------    ----------        ---------
NET CASH PROVIDED BY
         INVESTING ACTIVITIES                                6         225           602              245

FINANCING ACTIVITIES
Net proceeds from Revolver debt
 borrowings............................                 (3,890)      6,284        (6,528)           3,703
Payments on long-term debt
 obligations...........................                 (2,167)     (2,780)       (2,333)          (4,423)
Investment in joint venture............                    (25)       (884)       (1,179)          (1,318)
Payments for repurchase of subordinated
 debentures ...........................                    (77)       (446)          (86)            (446)
Capitalized loan costs.................                    (71)        (37)         (413)            (117)
Proceeds from employee stock plans.....                     --         420            --              420
                                                     -----------   ---------    ----------        ---------
NET CASH (USED IN) PROVIDED BY
         FINANCING ACTIVITIES                           (6,230)      2,557       (10,539)          (2,181)
                                                     -----------   ---------    ----------        ---------
(DECREASE) INCREASE IN CASH AND
         CASH EQUIVALENTS                                  (78)      1,720        (1,201)           1,848
Cash and cash equivalents
 at beginning of period ................                   311         546         1,434              418
                                                     -----------   ---------    ----------        ---------
CASH AND CASH EQUIVALENTS
         AT END OF PERIOD                             $    233    $  2,266      $    233        $   2,266
                                                     ===========   ==========   ===========       ==========
</TABLE>

See Notes to Consolidated Financial Statements on page 6.

                                       5

<PAGE>

                             TEXFI INDUSTRIES, INC.
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   May 1, 1998

1. Details of certain balance sheet captions are as follows (in thousands):

                                                 May 1,    October 31,
                                                  1998        1997
                                               ----------  -----------
1. INVENTORIES:
  Finished goods .............................  $  3,621     $  5,225
  Goods in process ...........................     8,819       10,092
  Raw materials ..............................     2,653        2,845
  Supplies ...................................     2,565        2,595
                                               ----------  -----------
       Total .................................    17,658       20,757
  Less reserves ..............................       756          843
                                               ----------  -----------
       Inventories-net........................  $ 16,902     $ 19,914
                                               ==========  ===========
PROPERTY, PLANT AND EQUIPMENT:
  Land and land improvements .................  $  2,220     $  2,220
  Buildings ..................................    16,019       16,019
  Machinery, equipment, etc. .................    60,912       59,042
  Construction in progress ...................       648        1,143
                                               ----------  -----------
       Total .................................    79,799       78,424
  Less accumulated depreciation ..............    52,561       50,170
                                               ----------  -----------
       Property, plant and equipment-net .....  $ 27,238     $ 28,254
                                               ==========  ===========
LONG-TERM DEBT:
  Term loan with variable interest ..........    $ 8,000     $ 10,000
  Term loans at 6.75%........................        183          515
                                               ----------  -----------
      Total .................................      8,183       10,515
  Less current maturities ...................      6,183        5,015
                                               ----------  -----------
      Due after one year ....................    $ 2,000      $ 5,500
                                               ==========  ===========
                                               
SUBORDINATED DEBENTURES:                       
   Senior Subordinated Debentures, 8 3/4%      
    due August 1, 1999........................  $ 34,391     $ 34,400
   Subordinated Extendible Debentures,         
    11%, due April 1, 2000 (Series C).........     2,354        2,431
                                               ----------  -----------
   Total .....................................    36,745       36,831
    Less current maturities...................     4,800        1,200
                                               ----------  -----------
   Due after one year.........................  $ 31,945     $ 35,631
                                               ==========  ===========


                                       6

<PAGE>



2.       Statement of Financial  Accounting Standards ("SFAS") 128 "Earnings per
         Share"  replaced  the  previously  computed  primary and fully  diluted
         earnings per share ("EPS") with basic and diluted EPS.  Unlike  primary
         EPS, basic EPS excludes any dilutive effects of options,  warrants,  or
         convertible  securities.  Diluted EPS includes  the dilutive  effect of
         such items. The prior period basic EPS has been recalculated to conform
         to SFAS 128 provisions with no material change.

3.       At May 1, 1998, shares of common stock were reserved for possible
         issuance as follows:

         Stock options .....................................       858,099
         Stock options granted to an entity owned by
           certain Company executive officers...............     1,200,000
         1990 Executive Stock Purchase Plan ................       283,892
         Directors' Deferred Stock Compensation Plan .......        57,153
                                                                 ---------
            Total ...........................................    2,399,144
                                                                 =========


4.       The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that affect the amounts  reported in these  financial
         statements and accompanying  footnotes.  Actual results may differ from
         those estimates and assumptions.

                                       7

<PAGE>


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



RESULTS OF OPERATIONS

         Net sales  for the  thirteen  weeks  ended  May 1,  1998  decreased  to
$34,084,000 as compared to $54,224,000 for the thirteen weeks ended May 1, 1997.
This  $20,140,000  (37.1%)  decrease  resulted from both lower sales of finished
fabrics ($14.6  million) and the divestiture of the Texfi knitted narrow fabrics
business  which  generated  $5.5  million in net sales in the second  quarter of
1997. Year-to-date net sales for 1998 totaling $75,860,000 decreased $26,909,000
(26.2%) when  compared to sales of  $102,769,000  for the same  twenty-six  week
period in fiscal 1997. This decrease  reflects a combination of reduced sales of
$17.2  million at the  Company's  Blends  division  and the  divestiture  of the
Company's  knitted narrow fabrics  business of $9.7 million.  Second quarter and
year-to-date  decreases in finished fabrics sales were attributable to unusually
high  imports of  competing  fabrics and  finished apparel from Asia into United
States'  markets,  specifically  the  Company's  missy  and junior wear markets.

         For the  comparable  thirteen-week  period,  cost of goods  sold,  as a
percentage of net sales,  increased from 86.3% in 1997 to 92.7% in 1998. For the
comparable  twenty-six  week period,  cost of goods sold as a percentage  of net
sales increased from 85.7% in 1997 to 89.7% in 1998, as a result of static fixed
costs despite reductions in sales volume.

         Selling,  general and  administrative  expenses ("SG&A") increased from
7.2% to 9.3% as a percentage  of net sales for the  thirteen  weeks ended May 1,
1998 when compared to same period a year ago and increased from 7.1% to 7.9% for
the comparable twenty-six week periods. These increases,  as a percentage of net
sales, are again primarily due to static fixed costs despite reductions in sales
volume.

                                       8

<PAGE>


         Interest expense decreased  $566,000 (21.0%) from $2,702,000 during the
second  thirteen-week  period in 1997 to $2,136,000 in 1998.  For the comparable
twenty-six  week  periods,  interest  expense  decreased  $933,000  (17.9%) from
$5,223,000  to  $4,286,000.  These  decreases  resulted  from  a  $22.4  million
reduction in total indebtedness  during the twelve-month period from May 2, 1997
through May 2, 1998 as well as lower borrowing rates associated with the amended
and restated credit facility.

         The 1997 second quarter and year-to-date  net income includes  $395,000
and $559,000,  respectively,  equity in loss of joint venture which  represented
the Company's 50%  participation in Rival Sport, LLC ("Rival") entered into with
NHL Enterprises to market and source a branded line of  hockey-related  apparel.
As a condition  precedent to the  Company's  amending and  restating  its credit
facility,  the  Company  was  required  to  divest  its  interest  in Rival  and
accordingly, on December 18, 1997, the Company sold its Rival ownership interest
to an entity affiliated with certain Company executive officers in consideration
for the issuance by the buyer to the Company of a secured $4.5 million  ten-year
balloon  note  which  bears  interest  at 5.0%  per  annum  and  which  requires
prepayments  from a portion of cash  distributions,  if any,  that the buyer may
receive from Rival. As of the end of the first quarter of 1998, due to continued
and  anticipated  future  losses at Rival;  the Company  elected to reserve $4.5
million, the face amount of the note, against its note receivable.

Financial Condition:

                  The Company's business typically  experiences some seasonality
during the fiscal year. This seasonality  results from temporary plant shutdowns
during the  Christmas/New  Year's  holiday  season as well as greater demand for
many of the Company's products that are used in winter fashions during its third
and fourth fiscal quarters.  As a result, sales have generally been lower during
the first half of the Company's  fiscal year than in subsequent  quarters  while
cash requirements increase due to the seasonal timing of certain cash payments.

                                       9

<PAGE>


Financial Condition (continued):

         Working  capital is  comprised  chiefly  of  inventories  and  accounts
receivable. At May 1, 1998, working capital equaled $11.9 million, a decrease of
$14.2  million from the year ended  October 31, 1997.  This  decrease in working
capital  is  due  primarily  to  decreases  in  cash  ($1.2  million),  accounts
receivable  ($12.5  million) and  inventories  ($3.0 million) and an increase in
current maturities of long-term debt and subordinated  debentures ($4.7 million)
which more than offset an  increase in prepaid  expenses  ($1.2  million)  and a
decrease in accounts payable and other liabilities ($6.0 million).

         During  the first two fiscal  quarters  of 1998,  operating  activities
generated net cash of $8.7  million.  This cash was generated as a result of the
$3.7  million  net loss  adjusted  for  impairment  of note  receivable  of $1.1
million, depreciation and amortization of $2.9 million, together with a decrease
in accounts  receivable of $12.5 million and  inventories  of $3.0 million which
offset  increases in prepaid and other  assets of $1.2 million and  decreases in
accounts  payable  and  other  liabilities  of  $5.9  million.  Cash  flow  from
operations, $2.0 million in proceeds from the disposition of property, plant and
equipment  and cash on hand  provided  funds to invest $1.2 million in the joint
venture,  repay  long-term  debt and  subordinated  debentures  of $2.4 million,
purchase property, plant and equipment totaling $1.4 million, pay loan amendment
costs of $413,000 and reduce the revolving line of credit $6.5 million.

         On March 15,  1996,  the Company  entered into a $74.0  million  credit
facility.  On December 19, 1997, the credit facility was amended and restated to
effect the  following  changes:  (a)extend  the term loan to $10.0  million  and
revise the related payment schedule to include 16 equal monthly  installments of
$500,000  beginning in February 1998 and a $2.0 million  balloon payment due May
31, 1999,  (b) reduce the revolving  credit line to $45.0  million,  (c)impose a
Minimum  EBITDA and Minimum  Adjusted  Fixed Charge  Coverage  Ratio and Minimum
Availability  as defined by the facility,  and (d)place  restrictions  on fiscal
year   rental   expense,   additional   indebtedness,    acquisitions,   capital
expenditures, the sale or disposal of fixed assets, and the payment of dividends
or purchase, redemption or distribution on capital stock.

                                       10

<PAGE>



Financial Condition (continued):

         The credit  facility is secured by  substantially  all of the Company's
assets.  The credit  facility  provides for the Company to elect  interest rates
based  upon  either a  Eurodollar  or prime  interest  rate plus an  established
margin.  In addition,  the Company may elect interest periods ranging from 30 to
180 days depending upon the interest rate election.

         As of  May  1,  1998,  the  Company  was in  violation  of  the  credit
facility's  financial ratios and minimum  availability  requirement.  On June 5,
1998,  the Company  entered into a  Forbearance  Agreement  which  provides that
during the  forbearance  period  defined as June 5 through  July 24,  1998,  the
credit facility  lenders will not, solely by reason of the defaults noted above,
exercise any right or remedy  available upon default other than those  expressly
set forth in the Forbearance Agreement. The Forbearance Agreement (a)reduced the
aggregate  revolving  credit line to $31.0 million,  (b)revised both the minimum
availability  requirement and its definition,  (c)increased  applicable interest
margins by 0.50%,  (d)changed  the  interest  payment  periods to  monthly,  and
(e)waived term loan principal payments.

         The Forbearance  Agreement is conditioned on the deferral of management
fees to an entity owned by certain Company executive  officers and the execution
by this  entity of a  guaranty  of  secured  obligations  to the  extent of $1.0
million.  In  consideration,  the entity  receives  from the  Company a ten-year
option  to  purchase  600,000  shares of common  stock and an  amendment  of the
purchase  price and option period  related to that entity's  previous  option to
purchase 600,000 shares of common stock.

         As of May 1, 1998,  funds available  through the revolving  credit line
after giving effect to the June 5, 1998 Forbearance Agreement, approximated $3.6
million.

                                       11

<PAGE>



Financial Condition (continued):

         As of May 1, 1998,  the Company  had  outstanding  approximately  $34.4
million  of its  Senior  Subordinated  Debentures  due  August 1, 1999  ("8-3/4%
Debentures").  The  8-3/4%  Debentures,  which  cannot be called  prior to their
maturity  date,  are  unsecured  obligations  but contain  covenants  that place
limitations on the use of proceeds from disposal of assets and on the incurrence
of additional indebtedness and senior indebtedness (as defined in the indenture)
if such indebtedness  would exceed stated ratios of capitalization  and earnings
after such incurrence. The debenture definition of indebtedness does not include
revolver credit line borrowings or operating lease  obligations.  The Company is
currently  prohibited  from  incurring  additional  indebtedness  because  of  a
violation of the defined limitations.  Debenture holders waived this restriction
on the incurrence of additional  indebtedness with respect to the March 15, 1996
credit  facility.  As a condition to the waiver,  the Company  executed a Second
Supplemental Indenture dated March 15, 1996 which provided that beginning on the
last business day of September  1998 and  continuing on the last business day of
each month  thereafter to and including June 1999, the Company will deposit with
the  trustee  of these  debentures  $600,000  less an  amount  equal  to  8-3/4%
Debentures  repurchased  during the period  prior to the monthly  payment  date.
Total deposits,  including interest earned thereon,  are to be paid as principal
and interest when these  debentures are due. As of May 1, 1998,  $4.8 million of
deposits due are classified as a current liability.

         As of May 1, 1998 the Company  has  approximately  $2.4  million of its
Series C Debentures  outstanding.  The annual interest rate of these  debentures
may be adjusted at the sole  discretion of the Company on April 1st of each year
until  maturity in the year 2000.  The Company set the Series C interest rate at
13% for the period April 1, 1998 through March 31, 1999. The Series C Debentures
are  redeemable on April 1st of each year, in whole or in part, at the option of
the holder or the Company for the principal amount thereof plus accrued interest
through the date of redemption.  As of March 13, 1998 the last day for debenture
holders to exercise  their  redemption  option,  Series C holders with aggregate
principal totaling  approximately  $55,000 had delivered proper notice to redeem
their debenture(s) as of April 1, 1998.

                                       12

<PAGE>


Financial Condition (continued):

         The Company  plans to place into service $5.3 million of machinery  and
equipment  during 1998.  As of the end of the first half,  $1.4 million had been
expended on machinery and equipment  purchases.  This  equipment  primarily will
improve  dyeing and  finishing  capabilities  as well as replace  older  weaving
equipment with new looms in order to improve  production  speed,  efficiency and
product  quality  and expand  styling  diversity.  Management  anticipates  that
substantially all of the equipment will be placed into service through operating
leases and thus not included in the Company's balance sheet.

         Management  believes  cash flows from  operations  and funds  available
under the revolving  credit line will provide the Company with sufficient  funds
to meet its 1998 cash needs,  and,  assuming  no  significant  deterioration  in
current market conditions or interest rates, for the foreseeable future.

Forward Looking Information:

         Statements  contained in the foregoing discussion and elsewhere in this
report that are not based on historical  fact are  considered  "forward  looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995.  These statements are based on management's  present  assumptions as to
future  trends,  and changes in current  economic  trends,  prevailing  interest
rates,  availability  and cost of raw  materials,  laws  affecting the Company's
business and similar factors could affect the validity of such assumptions.

                                       13

<PAGE>

                           PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits

         Exhibits  to this  report  are  listed  in the  accompanying  index  to
            exhibits.

     (b) Reports on Form 8-K

         No reports on Form 8-K were filed during the quarter ended May 1, 1998.

                                       14


<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.

                              TEXFI INDUSTRIES, INC.
                                   (Registrant)



Date:  June 22, 1998         By:S/Robert P. Ambrosini
                                -------------------------
                                  Robert P. Ambrosini
                                  Chief Financial Officer
                              and Executive Vice President



                                       15

<PAGE>




                                                           

                         TEXFI INDUSTRIES, INC.
                           INDEX TO EXHIBITS

*3(a)(1)          Restated Certificate of Incorporation of Registrant
                  dated  August 13, 1969, filed  as  Exhibit (3)(a)(1)  to
                  Registrant's Form 10-K Annual Report for the fiscal year ended
                  October 31, 1980.

*3(a)(2)          Certificate of Amendment of Certificate of Incorporation  of  
                  Registrant  dated March 16, 1972,  filed as Exhibit  (3)(a)(2)
                  to Registrant's Form 10-K Annual Report for  the fiscal year 
                  ended October 31, 1980.

*3(a)(3)          Certificate of Amendment of Certificate of Incorporation  of  
                  Registrant  dated March 27, 1978,  filed as Exhibit  (3)(a)(3)
                  to Registrant's Form 10-K Annual Report for the fiscal year 
                  ended October 31, 1980.

*3(a)(4)          Certificate of Amendment of Certificate of Incorporation  of  
                  Registrant  dated  May 19,  1986,  filed as Exhibit 4.4 to 
                  Registrant's  Form S-8  Registration  Statement
                  (No. 33-14697).

*3(a)(5)          Certificate of Amendment of Certificate of Incorporation  of  
                  Registrant dated March 20, 1987,  filed as Exhibit 4.5 to 
                  Registrant's  Form S-8 Registration Statement (No. 33-14697).

*3(a)(6)          Certificate of Amendment of Certificate of Incorporation of
                  Registrant dated September 28, 1987, filed as Exhibit 4(a)(6)
                  to Registrant's Form S-2 Registration Statement (No.
                  33-16794).

*3(a)(7)          Certificate of Designations of Registrant dated November 20,
                  1987, filed as Exhibit 4(a)(7) to Registrant's Form S-2
                  Registration Statement (No. 33-16794).

*3(a)(8)          Certificate of Designations of Registrant dated March 8,1988
                  filed as Exhibit 4(a)(8) to Registrant's Form S-2 Registration
                  Statement (No. 33-20131).

*3(a)(9)          Certificate of Designations of Registrant dated August 4 1988,
                  filed as Exhibit 4(d)(9) to Registrant's Form 10-Q Quarterly
                  Report for the fiscal quarter ended July 29, 1988.


                                       1
<PAGE>



*3(b)(1)          Bylaws of Registrant, filed as Exhibit 4.6 to Registrant's
                  Form S-8 Registration Statement (No. 33-14697).

*3(b)(2)          Amendment to Bylaws of Registrant, filed as Exhibit 4(b)(2) to
                  Registrant's Form S-2 Registration Statement (No. 33-16794).

*3(b)(3)          Amendment to Bylaws of Registrant adopted by Registrant's
                  Board of Directors on January 18, 1991, filed as Exhibit
                  3(b)(3) to Registrant's Form 10-K Annual Report for the fiscal
                  year ended November 2, 1990.

*3(b)(4)          Amendment to Bylaws of Registrant adopted by Registrant's
                  Board of Directors on August 31, 1994, filed as Exhibit
                  4(b)(4) to Registrant's Form 10-Q Quarterly Report for the
                  fiscal quarter ended July 29, 1994.

*3(b)(5)          Amendment to Bylaws of Registrant adopted by Registrant's
                  Board of Directors on September 7, 1994, filed as Exhibit
                  4(b)(5) to Registrant's Form 10-Q Quarterly Report for the
                  fiscal quarter ended July 29, 1994.

*4(a)(1)          Indenture between Registrant and Rhode Island Hospital Trust
                  National Bank, Trustee, with a copy of Subordinated Debentures
                  due April 1, 1995, Series A, Subordinated Debentures due April
                  1, 1995, Series B and Subordinated Extendible Debentures due
                  April 1, 2000, Series C attached, filed as Exhibit 4(f) to
                  Registrant's Form S-2 Registration Statement (No. 33-32485).

*4(a)(2)          Indenture dated September 8, 1993 between Registrant and The
                  First Union National Bank of North Carolina, Trustee, with
                  copy of 8-3/4% Senior Subordinated Debenture due August 1,
                  1999, filed as Exhibit 4(c)(2) to Registrant's Form 10-Q
                  Quarterly Report for the fiscal quarter ended July 30, 1993.

*4(a)(3)          First Supplemental Indenture dated as of March 10, 1995,
                  between Registrant and First Union National Bank of North
                  Carolina, as Trustee, filed as Exhibit 4(a)(1) to Registrant's
                  Form 8-K Current Report as of March 15, 1996.


                                       2
<PAGE>



*4(a)(4)          Second Supplemental Indenture dated as of March 15,
                  1996,  between  Registrant  and First Union  National  Bank of
                  North  Carolina,  as  Trustee,  filed as  Exhibit  4(a)(2)  to
                  Registrant's Form 8-K Current Report as of March 15, 1996.

*4(b)(1)          Specimen Common Stock ($1 par value) certificates, filed as
                  Exhibit 4.01 to Amendment No. 2 to Registrant's Form S-1
                  Registration Statement (No. 2-41653).

*4(c)(1)          Rights Agreement dated July 22, 1988 between Registrant and
                  The First Union National Bank of North Carolina, as Rights
                  Agent, filed as Exhibit 1 to Registrant's Form 8-K Current
                  Form dated July 22, 1988.

*4(c)(2)          Form of Rights Certificate, filed as Exhibit B to Exhibit 1 to
                  Registrant's Form 8-K Current Form dated July 22, 1988.

*4(c)(3)          Amendment to Rights Agreement between Registrant and The First
                  Union National Bank of North Carolina dated October 31, 1988,
                  filed as Exhibit 4(e)(3) to Registrant's Form S-2 Registration
                  Statement (No. 33-32485).

*4(c)(4)          Second Amendment to Rights Agreement dated May 24, 1994
                  between Registrant and The First Union National Bank of North
                  Carolina, as Rights Agent, filed as Exhibit 4(e)(4) to
                  Registrant's Form 10-Q Quarterly Report for the fiscal quarter
                  ended April 29, 1994.

*4(c)(5)          Third Amendment to Rights Agreement dated December 16, 1994
                  between Registrant and The First Union National Bank of North
                  Carolina, as Rights Agent, filed as Exhibit 4(c)(5) to
                  Registrant's Form 10-K Annual Report for the fiscal year ended
                  October 28, 1994.

*4(d)(1)          Credit agreement dated as of March 15, 1996 among Registrant,
                  as Borrower, certain Lenders referred to therein, NationsBank,
                  N.A., as Agent, and NationsBanc Commercial Corporation, as
                  Disbursing Agent, filed as Exhibit 2(a)(1) to Registrant's
                  Form 8-K Current Report as of March 15, 1996.



                                       3
<PAGE>




*4(d)(2)          Security Agreement dated as of March 15, 1996 between
                  Registrant, as Grantor, and NationsBank, N.A., as Agent for
                  certain Lenders referred to therein, and NationsBanc
                  Commercial Corporation, as Disbursing Agent, filed as Exhibit
                  2(a)(2) to Registrant's Form 8-K Current Report as of March
                  15, 1996.

*4(d)(3)          Form of Deed of Trust and Security Agreement (North Carolina
                  property) dated as of March 15, 1996 between Registrant, as
                  Grantor, TIM, Inc., as Trustee, and NationsBank, N.A., as
                  Beneficiary and Agent for certain Lenders referred to therein,
                  and NationsBanc Commercial Corporation, as Disbursing Agent,
                  filed as Exhibit 2(a)(3) to Registrant's Form 8-K Current
                  Report as of March 15, 1996.

*4(d)(4)          Form of Mortgage and Security Agreement (South Carolina
                  property) dated as of March 15, 1996 between Registrant, as
                  Grantor, and NationsBank, N.A., as Beneficiary and Agent for
                  certain Lenders referred to therein, and NationsBanc
                  Commercial Corporation, as Disbursing Agent, filed as Exhibit
                  2(a)(4) to Registrant's Form 8-K Current Report as of March
                  15, 1996.

*4(d)(5)          Deed to Secure Debt and Security Agreement (Georgia property)
                  dated as of March 15, 1996 between Registrant, as Grantor, and
                  NationsBank, N.A., as Beneficiary and Agent for certain
                  Lenders referred to therein, and NationsBanc Commercial
                  Corporation, as Disbursing Agent, filed as Exhibit 2(a)(5) to
                  Registrant's Form 8-K Current Report as of March 15, 1996.

*4(d)(6)          Form of Assignment of Factoring Proceeds dated as of March 15,
                  1996, filed as Exhibit 2(a)(6) to Registrant's Form 8-K
                  Current Report as of March 15, 1996.

*4(d)(7)          First Amendment dated May 10, 1996 to the Credit Agreement
                  dated as of March 15, 1996 among Registrant, as Borrower,
                  certain Lenders referred to therein, NationsBank, N.A., as
                  Agent, and NationsBanc Commercial Corporation, as Disbursing
                  Agent, filed as Exhibit 2(a)(7) to Registrant's Form 10-Q
                  dated May 3, 1996.
<PAGE>


*4(d)(8)          Waiver Agreement dated June 14, 1996 to the Credit Agreement
                  dated as of March 15, 1996 among Registrant, as Borrower,
                  certain Lenders, referred to therein, NationsBank, N.A., as
                  Agent, and NationsBanc Commercial Corporation, as Disbursing
                  Agent, filed as Exhibit 2(a) (8) to Registrant's Form 10-Q
                  dated May 3, 1996.

*4(d)(9)          Second Amendment dated September 12, 1996 to the Credit
                  Agreement dated as of March 15, 1996 among Registrant, as
                  Borrower, certain Lenders referred to therein, NationsBank,
                  N.A., as Agent, and NationsBanc Commercial Corporation, as
                  Disbursing Agent, filed as Exhibit 2(a)(9) to Registrant's
                  From 10-Q dated August 2, 1996.

*4(d)(10)         Third Amendment dated January 30, 1997 to the Credit Agreement
                  dated as of March 15, 1996 among Registrant, as Borrower,
                  certain Lenders referred to therein, NationsBank, N.A., as
                  Agent, and NationsBanc Commercial Corporation, as Disbursing
                  Agent, filed as Exhibit 4(d)(10) to Registrant's Form 10-Q
                  dated January 31, 1997.

*4(d)(11)         Waiver and Consent Agreement dated June 12, 1997 to the Credit
                  Agreement dated March 15, 1996 among Registrant, as Borrower,
                  certain Lenders referred to therein, and NationsBank, N.A., as
                  Agent, filed as Exhibit 4(d)(11) to Registrant's Form 10-Q for
                  the fiscal quarter ended August 1, 1997.

*4(d)(12)         Fourth  Amendment dated June 19, 1997 to the Credit  Agreement
                  dated March 15, 1996 among  Registrant,  as Borrower,  certain
                  Lenders referred to therein, and NationsBank,  N.A., as Agent,
                  filed as Exhibit 4(d)(12) to Registrant's  Form 10-Q filed for
                  the fiscal quarter ended August 1, 1997.

*4(d)(13)         Fifth Amendment dated October 8, 1997 to the Credit Agreement
                  dated March 15, 1996 among Registrant, as Borrower, certain
                  Lenders referred to therein, and NationsBank, N.A., as Agent
                  filed as Exhibit 4(d)(13) to Registrant's Form 10-K filed for
                  the fiscal year ended October 31, 1997.




                                       5
<PAGE>





*4(d)(14)         Amended  and  Restated  Loan  and  Security   Agreement  dated
                  December 19, 1997 to the Credit Agreement dated March 15, 1996
                  among  Registrant,  as Borrower,  the  Financial  Institutions
                  referred to therein,  and BankBoston,  N.A., as Agent filed as
                  Exhibit 4(d)(14) to Registrant's Form 10-K for the fiscal year
                  ended October 31, 1997.

4(d)(15)          Forbearance Agreement dated June 5, 1998 among Registrant, as
                  Borrower, the Financial Institutions referred to therein, and
                  BankBoston, N.A., as Agent.

11                Computation of Earnings Per Share

* Incorporated by reference to previous filing.



                                       6