SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


For the Quarter ended                          (Commission File Number):  1-4814
September 30, 2001


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


          New York                                         22-1715274
          --------                                         ----------
(State or other jurisdiction of                          (IRS Employer
incorporation or organization)                         Identification No.)



                  463 Seventh Avenue, New York, New York 10018
                 ---------------------------------------------
              (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code: (646) 473-4200

Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15 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
                                ---            ---

Number of shares of Common Stock outstanding                          82,186,265
As of November 9, 2001




<PAGE>


                              ARIS INDUSTRIES, INC.

                                TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

     Item 1. Financial Statements

          a.   Consolidated Condensed Balance Sheets as of
               September 30, 2001 and December 31, 2000 .....................  3

          b.   Consolidated Condensed Statements of
               Operations for the Nine-Months Ended
               September 30, 2001 and September 30, 2000 ....................  4

          b.   Consolidated Condensed Statements of
               Operations for the Three-Months Ended
               September 30, 2001 and September 30, 2000 ....................  5

          c.   Consolidated Condensed Statements of Cash
               Flows for the Nine-Months Ended September
               30, 2001 and September 30, 2000 ..............................  6

          d.   Notes to Consolidated Condensed Financial
               Statements ...................................................  7

     Item 2. Management's Discussion and Analysis of
             Financial Condition and Results of Operations .................. 15

     Item 3. Quantitative and Qualitative Disclosures About
             Market Risk .................................................... 20

PART II. OTHER INFORMATION

     Item 1. Legal Proceedings .............................................. 20

     Item 2. Changes in Securities and Use of Proceeds ...................... 21

     Item 3. Defaults upon Senior Securities ................................ 21

     Item 4. Submission of Matters to a Vote of Security
             Holders ........................................................ 21

     Item 5. Other Information .............................................. 21

     Item 6. Exhibits and Reports on Form 8-K ............................... 21

SIGNATURES .................................................................. 22



<PAGE>

                            ARIS INDUSTRIES, INC.
                              AND SUBSIDIARIES

                    CONSOLIDATED CONDENSED BALANCE SHEETS
                                 (Unaudited)
                    (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                                     September 30,      December 31,
ASSETS                                                                                                   2001               2000
                                                                                                     -------------      ------------
Current assets:
<S>                                                                                                   <C>               <C>
   Cash and cash equivalents .......................................................................    $   791           $  2,389
   Receivables, net ................................................................................      3,749             33,888
   Inventories .....................................................................................      5,427             15,919
   Prepaid expenses and other current assets .......................................................        321              1,359
                                                                                                        -------           --------
         Total current assets ......................................................................     10,288             53,555

Property and equipment, net ........................................................................      7,081              9,963

Goodwill, net ......................................................................................     34,794             36,151

Other assets .......................................................................................        489                540
                                                                                                        -------           --------
         TOTAL ASSETS ..............................................................................    $52,652           $100,209
                                                                                                        =======           ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Borrowings under revolving credit facility ......................................................    $ 3,750           $ 38,679
   Loans payable to related parties ................................................................      9,060                --
   Current portion of long-term debt ...............................................................      7,600              9,700
   Current portion of capitalized lease obligations ................................................        806              1,150
   Accounts payable ................................................................................      7,137             26,354
   Accrued expenses and other current liabilities ..................................................      3,014             10,955
                                                                                                        -------           --------
         Total current liabilities .................................................................     31,367             86,838

Long-term debt .....................................................................................     12,742              5,242
Capitalized lease obligations ......................................................................      1,105              1,478
Other liabilities ..................................................................................      2,644              3,165
                                                                                                        -------           --------
         Total liabilities .........................................................................     47,858             96,723
                                                                                                        -------           --------

Commitments and contingencies

Stockholders' Equity:
   Preferred stock, $.01 par value: 10,000 shares authorized; none
      issued and outstanding .......................................................................         --                 --
   Common stock, $.01 par value: 200,000 shares authorized
      82,186 issued and outstanding at September 30, 2001
      and 80,665 issued and outstanding at December 31, 2000 .......................................        822                807
   Additional paid-in capital ......................................................................     84,038             80,753
   Accumulated deficit .............................................................................    (79,900)           (77,879)
   Unearned compensation ...........................................................................       (166)              (195)
                                                                                                        -------           --------

         Total stockholders' equity ................................................................      4,794              3,486
                                                                                                        -------           --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .........................................................    $52,652           $100,209
                                                                                                        =======           ========
</TABLE>

See accompanying notes to consolidated condensed financial statements



                                      -3-
<PAGE>


                     ARIS INDUSTRIES, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                                                         Nine-             Nine-
                                                                                                      Months Ended      Months Ended
                                                                                                      September 30,    September 30,
                                                                                                          2001              2000
                                                                                                      -------------    -------------
<S>                                                                                                   <C>              <C>
REVENUES:
   SALES TO CUSTOMERS ..............................................................................    $25,831          $145,348
   SALES TO LICENSEE ...............................................................................     13,285               --
   ROYALTY INCOME ..................................................................................      9,080             1,913
   COMMISSION INCOME ...............................................................................        660                --
                                                                                                       --------          --------
TOTAL REVENUES .....................................................................................     48,856           147,261
                                                                                                       --------          --------
COST OF GOODS SOLD:
   COST OF SALES TO CUSTOMERS ......................................................................    (17,419)          (98,517)
   COST OF SALES TO LICENSEE .......................................................................    (10,484)               --
                                                                                                       --------          --------
TOTAL COST OF GOODS SOLD ...........................................................................    (27,903)          (98,517)
                                                                                                       --------          --------
GROSS PROFIT .......................................................................................     20,953            48,744

OPERATING INCOME (EXPENSES):
   SELLING AND ADMINISTRATIVE EXPENSES .............................................................    (23,937)          (57,382)
   START-UP COSTS ..................................................................................         --            (1,757)
   RESTRUCTURING AND OTHER COSTS ...................................................................      1,679            (1,502)
                                                                                                       --------          --------
LOSS FROM OPERATIONS ...............................................................................     (1,305)           (11,897)

INTEREST EXPENSE, NET ..............................................................................     (2,611)           (4,047)
                                                                                                       --------          --------
LOSS BEFORE INCOME TAX PROVISION AND EXTRAORDINARY ITEM ............................................     (3,916)          (15,944)

   INCOME TAX PROVISION ............................................................................       (103)              (40)
                                                                                                       --------          --------
LOSS BEFORE EXTRAORDINARY ..........................................................................     (4,019)          (15,984)

EXTRAORDINARY ITEM:
   GAIN ON EXTINGUISHMENT OF DEBT, NET .............................................................      1,998                --
                                                                                                       --------          --------
NET LOSS ...........................................................................................   ($ 2,021)         ($15,984)
                                                                                                       ========          ========
BASIC INCOME/(LOSS) PER SHARE:
   LOSS BEFORE EXTRAORDINARY ITEM ..................................................................   ($  0.05)          ($ 0.20)
   EXTRAORDINARY ITEM ..............................................................................    $  0.02                --
                                                                                                       --------          --------
NET LOSS ...........................................................................................   ($  0.03)          ($ 0.20)
                                                                                                       --------          --------
PER SHARE DATA:
   Weighted average shares outstanding - Basic .....................................................     81,836            79,553

</TABLE>

See accompanying notes to consolidated condensed financial statements



                                      -4-
<PAGE>



                     ARIS INDUSTRIES, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                                                         Three-            Three-
                                                                                                      Months Ended      Months Ended
                                                                                                      September 30,    September 30,
                                                                                                          2001              2000
                                                                                                      -------------    -------------
<S>                                                                                                   <C>              <C>
REVENUES:
   SALES TO CUSTOMERS ..............................................................................    $ 1,506           $58,262
   SALES TO LICENSEE ...............................................................................      3,807               --
   ROYALTY INCOME ..................................................................................      3,609               752
   COMMISSION INCOME ...............................................................................         --                --
                                                                                                        -------           -------
TOTAL REVENUES .....................................................................................      8,922            59,014
                                                                                                        -------           -------
COST OF GOODS SOLD:
   COST OF SALES TO CUSTOMERS ......................................................................          5           (41,749)
   COST OF SALES TO LICENSEE .......................................................................     (3,006)               --
                                                                                                        -------           -------
TOTAL COST OF GOODS SOLD ...........................................................................     (3,001)          (41,749)
                                                                                                        -------           -------
GROSS PROFIT .......................................................................................       5,921           17,265

OPERATING INCOME (EXPENSES):
   SELLING AND ADMINISTRATIVE EXPENSES .............................................................     (5,063)          (18,741)
   START-UP COSTS ..................................................................................         --              (124)
   RESTRUCTURING AND OTHER COSTS ...................................................................         --              (249)
                                                                                                        -------           -------
INCOME/(LOSS) FROM OPERATIONS ......................................................................        858            (1,849)

INTEREST EXPENSE, NET ..............................................................................       (760)           (1,544)
                                                                                                        -------           -------
INCOME/(LOSS) BEFORE INCOME TAX PROVISION AND EXTRAORDINARY ITEM ...................................         98            (3,393)

   INCOME TAX PROVISION ............................................................................         (6)               31
                                                                                                        -------           -------
INCOME/(LOSS) BEFORE EXTRAORDINARY ITEM ............................................................         92            (3,362)

EXTRAORDINARY ITEM:
   GAIN ON EXTINGUISHMENT OF DEBT ..................................................................        107                --
                                                                                                        -------           -------
NET INCOME/(LOSS) ..................................................................................    $   199           ($3,362)
                                                                                                        =======           =======
BASIC INCOME/(LOSS) PER SHARE:
   LOSS BEFORE EXTRAORDINARY ITEM ..................................................................    $  0.00           ($ 0.04)
   EXTRAORDINARY ITEM ..............................................................................    $  0.00                --
                                                                                                        -------           -------
NET INCOME/(LOSS) ..................................................................................    $  0.00           ($ 0.04)
                                                                                                        -------           -------
DILUTED INCOME/(LOSS) PER SHARE:
   LOSS BEFORE EXTRAORDINARY ITEM ..................................................................    $  0.00           ($ 0.04)
   EXTRAORDINARY ITEM ..............................................................................    $  0.00                --
                                                                                                        -------           -------
NET INCOME/(LOSS) ..................................................................................    $  0.00           ($ 0.04)
                                                                                                        -------           -------
PER SHARE DATA:
   Weighted average shares outstanding - Basic .....................................................     82,165            79,625
   Weighted average shares outstanding - Diluted ...................................................     82,736            79,625

</TABLE>

See accompanying notes to consolidated condensed financial statements



                                      -5-
<PAGE>




                              ARIS INDUSTRIES, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                           Nine-           Nine-
                                                                                                       Months Ended    Months Ended
                                                                                                       September 30,   September 30,
                                                                                                           2001            2000
                                                                                                       -------------   -------------
<S>                                                                                                    <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss ......................................................................................        ($ 2,021)      ($15,984)


   Adjustments to reconcile net loss to net cash provided by / (used in)
     operating activities:
           Depreciation and amortization .........................................................           4,645          4,346
           Non-cash stock based compensation .....................................................              29            329
           Extraordinary gain on extinguishment of debt ..........................................          (1,998)            --
           Reversal of accrued restructuring charges .............................................          (1,679)            --

   Change in operating assets and liabilities:
           Decrease / (increase) in receivables ..................................................          30,139         (5,014)
           Decrease / (increase) in inventories ..................................................          10,492         (9,155)
           Decrease in prepaid expenses and other current assets .................................           1,038            307
           Decrease / (increase) in other assets .................................................              51           (233)
           (Decrease) / increase in accounts payable .............................................         (13,919)        14,340
           (Decrease) / increase in accrued expenses and other current liabilities ...............          (6,262)           508
           (Decrease) / increase in other liabilities ............................................            (521)           141
                                                                                                          --------        -------
                          Net cash provided by / (used in) operating activities ..................          19,994        (10,415)
                                                                                                          --------        -------
CASH FLOWS FROM INVESTING ACTIVITIES:
           Capital expenditures ..................................................................            (406)        (3,682)
                                                                                                          --------        -------
                          Net cash used in investing activities ..................................            (406)        (3,682)
                                                                                                          --------        -------
CASH FLOWS FROM FINANCING ACTIVITIES:
           Repayments of long-term debt and capital leases .......................................          (2,817)        (2,384)
           Stock options exercised ...............................................................              --            116
           Proceeds from issuance of convertible debentures ......................................           7,500             --
           Proceeds of loans from related parties ................................................           9,060             --
           (Decrease) / increase in borrowings under revolving credit facility ...................         (34,929)        17,080
                                                                                                          --------        -------
                          Net cash (used in)/provided by financing activities ....................         (21,186)        14,812
                                                                                                          --------        -------

NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS ...........................................          (1,598)           715

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ...................................................           2,389          1,109
                                                                                                          --------        -------
CASH AND CASH EQUIVALENTS, END OF PERIOD .........................................................        $    791        $ 1,824
                                                                                                          --------        -------

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
           Issuance of common stock in settlement of accounts payable ............................        $  3,300        #     0
                                                                                                          ========        =======

</TABLE>

See accompanying notes to consolidated condensed financial statements





                                      -6-
<PAGE>


                     ARIS INDUSTRIES, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1. BASIS OF PRESENTATION

The consolidated condensed financial statements as of September 30, 2001 and for
the three and nine-month periods ended September 30, 2001 and 2000, are
unaudited and reflect all adjustments consisting of normal recurring adjustments
and extraordinary gains, restructuring and other costs (See Note 7) which are,
in the opinion of management, necessary for a fair presentation of financial
position, operating results and cash flows for the periods.

The consolidated condensed balance sheet as of December 31, 2000 was derived
from audited financial statements but does not include all disclosures required
by generally accepted accounting principles. The accompanying consolidated
condensed financial statements have been prepared in accordance with accounting
standards appropriate for interim financial statements and should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000. The
operating results for the three and nine-month periods ended September 30, 2001
are not necessarily indicative of the operating results to be expected for the
year ending December 31, 2001.


2. LIQUIDITY RISKS

These consolidated condensed financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.

As of September 30, 2001 the Company had a working capital deficit of
$21,079,000, an improvement of $12,204,000 in working capital, as compared to a
working capital deficit of $33,283,000 at December 31, 2000. In addition, the
Company was not in compliance with certain covenants contained in its credit
facility. As a result, the Company has classified the long-term portion of its
term loan under the credit facility as a current liability. However, the Company
has been advised by its lenders that they are willing to work with the Company
as an on going licensing business. As a result of the Company's changing from a
manufacturer and branded business to a licensing company, borrowings under the
revolving credit facility were reduced from $38,679,000 at December 31, 2000 to
$3,750,000 as of September 30, 2001. In addition, the Company reached agreements
with vendors for negotiated settlements.

On January 17, 2001, the Company entered into a multi-year licensing agreement
(the "Agreement") with Grupo Xtra of New York, Inc. ("Grupo"). Under the terms
of the Agreement, Grupo has the exclusive rights in the United States, Puerto
Rico, Israel and the Caribbean Islands to license for production, marketing,
advertising and distribution all products under the tradenames owned by the
Company, which include XOXO(R), Fragile(R) and Members Only(R), as well as
tradenames currently licensed by the Company, which include Baby Phat(R) and
Brooks Brothers Golf(R) (collectively, the



                                       7
<PAGE>



"Licensed Products"). Brooks Brothers has notified the Company that it will not
allow Grupo to continue as a sub-licensee past December 31, 2001 due to certain
breaches in the license agreement by Grupo.

As a result of the Agreement, the Company commenced a transition to a licensing
and brand management business. In the first quarter of 2001, the Company
substantially reduced its workforce and terminated its production and sales
operations. The Company's transition continued during the second and third
quarters of 2001 with the closing of its warehousing and shipping facility in
New Bedford, Massachusetts and further reductions in its workforce.

The Company is financing its operations during the transition through cash
received from the turnover of inventory and royalty income under the Grupo
Agreement and other licenses. The Company had accounts receivable and inventory,
net of reserves, aggregating $9,176,000 at September 30, 2001. The Company has
reduced its borrowings from the revolving credit facility from $38,679,000 at
December 31, 2000 to $3,750,000 as of September 30, 2001. The Grupo Agreement
provides for minimum royalties to the Company of $8,100,000 in 2001, of which
$5,050,000 has been received through September 30, 2001. Minimum royalties to be
received by the Company increase to $9,234,000 in 2002 and increase in each
subsequent year through December 31, 2005, reaching $13,500,000 in fiscal 2005.
In addition, the Company has eighteen additional licensees which provide minimum
royalties of $3,065,000 in 2001; $3,844,000 in 2002; $5,496,000 in 2003;
$6,319,000 in 2004 and $7,069,000 in 2005. In January 2001, the Company received
a $2,000,000 loan from its principal stockholder which is payable on demand.
Although the Company is not in compliance with certain covenants of its credit
facility, the lenders have allowed the financing to continue under the facility
with the expectation that borrowings under the facility will be substantially
repaid in 2001. There can be no assurance that the lenders will continue to
cooperate with the Company.

The Company believes that the adjustment to the terms of existing finance
agreements and the additional financing discussed above will be sufficient to
transition and sustain its operations as a licensing and brand management
business and to payoff the remaining indebtedness under the credit facility. The
Company has reduced its borrowings under the revolving credit facility from
$38,679,000 at December 31, 2000 to $3,750,000 as of September 30, 2001.
However, the Company is dependent upon Grupo to fulfill its obligations under
the Agreement, including its obligation to purchase substantially all of the
Company's inventory. There can be no assurance that the Company's lenders will
continue the credit facility or that the timing of cash receipts will be
sufficient to meet obligations as they become due. However, the Company's lead
bank advised us that it is willing to discuss a restructuring of the Company's
term loan and the extension of the maturity date. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.


3. THE GRUPO AGREEMENT

On January 17, 2001, the Company entered into a trademark license and operating
Agreement with Grupo, which became effective March 1, 2001. Under the Agreement,
Grupo received the exclusive right, for an initial term of 5 years (the "Initial
Term"), renewable at its option for four additional 5-year periods, to
manufacture, market and distribute at wholesale women's clothing, jeanswear and
sportswear under the XOXO(R) and Fragile(R) trademarks and sportswear and
outerwear under the



                                       8
<PAGE>


Members Only trademark and, subject to Aris' rights as a licensee with respect
thereto, Baby Phat apparel and Brooks Brothers Golf apparel in the United
States, Puerto Rico, the Caribbean Islands and Israel. Brooks Brothers has
notified the Company that it will not allow Grupo to continue as a sub-licensee
past December 31, 2001 due to certain breaches in the license agreement by
Grupo. The Grupo Agreement provides for royalties ranging from 7% to 9% of
Grupo's net sales of the licensed products. Minimum annual royalties are
$8,100,000 for 2001 and increase by 14% per year until they reach $13,500,000 in
fiscal 2005. As a result of the Grupo Agreement, for the nine-months ended
September 30, 2001, the Company recognized royalty income of $6,407,000,
commission income of $660,000 and a benefit of approximately $2,801,000 from the
sale of inventory that had been deemed obsolete and written down that was
subsequently sold under the agreement with Grupo at original cost. The Company
anticipates that its remaining reserves for inventory obsolescence of
approximately $1,199,000 will be reduced further in the fourth quarter of fiscal
2001 and the remaining benefit will be recognized as Grupo completes its
purchase of the Company's inventory of Licensed Products at cost.

Under the Agreement, Grupo is solely responsible for manufacturing, marketing
and distributing at wholesale to retailers the Licensed Products sold
thereunder, subject to Aris' rights, as licensor or sub-licensor, to approve all
designs and otherwise act to maintain the integrity of the licensed trademarks.
As a result, certain key members of the Company will continue to be actively
involved in the design and marketing of the Licensed Products. Grupo also agreed
to assume a substantial portion of the Company's future contractual commitments,
other than those relating to its existing licensing business, corporate
functions, indebtedness and retained employees. In addition, the Company will
continue to operate its XOXO Retail stores.

On September 17, 2001, the Company and Grupo mutually agreed to amend the Grupo
Agreement to rescind that portion of the Agreement which provided for the
issuance to Grupo of shares of the Company's common stock having a market value
of $1,000,000 at the beginning of each year during the initial five-year term of
the Agreement. As a result of this amendment the Company reversed the $1,000,000
liability that had been recorded in accrued expenses in the first quarter of
2001. In addition, the Company reversed approximately $333,000, through
September 2001, of charges included in cost of goods sold through September 30,
2001, relating to amortization of the $1,000,000.

As a result of the Grupo Agreement, Aris intends to concentrate on growing its
brands through licensing arrangements for a wider variety of products on a
global scale, and by expanding its XOXO(R) retail business.

4. SALE OF CONVERTIBLE DEBENTURES

In February 2001, the Company entered into a Securities Purchase Agreement with
KC Aris Fund I, L.P. ("KC") pursuant to which the Company is to issue
Convertible Debentures in the aggregate sum of $10,000,000. To date, KC has
purchased $7,500,000 of Debentures. The Debentures mature in three years, bear
interest at the rate of 8.5% per annum, payable quarterly, and are convertible
into shares of common stock at the rate of $.46 per share. Through September 30,
2001, the Company has incurred approximately $400,000 of interest expense
relating to the Debentures. The Company used the proceeds to pay down a portion
of borrowings under its revolving credit facility.



                                       9
<PAGE>


5. PAYABLES REDUCTION

During the three-months ended September 30, 2001 the Company continued the
process of negotiating settlements with its vendors. The Company reached
agreements with vendors for amounts due which resulted in a net gain of $107,000
in the quarter. During the first and second quarters of fiscal 2001, the Company
negotiated settlements with vendors for amounts due which resulted in a net gain
of $1,891,000. These gains are reflected as an extraordinary item within the
accompanying statements of operations.

The Company also settled a disputed claim with a vendor, pursuant to which the
Company issued 1,500,000 shares of its common stock with a market value of
$1,050,000 and agreed to pay $2,500,000 in cash. In addition, the Company agreed
that, in the event the market value of such shares as of December 31, 2001 is
less than $3,300,000, the Company will either, at its option (x) pay to such
vendor in cash an amount, or (y) issue to such vendor additional shares of
common stock having a share value equal to the difference between $3,300,000 and
the greater of the share value as of December 31, 2001 and $1,050,000. As a
result of this transaction, the Company has reduced its trade accounts payable
due to such vendor by $3,300,000 and has recorded an increase in common stock
and additional paid-in capital for the value of the common stock issued. At the
September 30, 2001 price a total of approximately 10,227,000 shares of the
Company's stock would be issuable.


6. DEBT

The Company's long-term indebtedness consists, in part, of its obligations to
BNY Financial Corporation ("BNY") under the Series A Junior Secured Note
Agreement dated June 30, 1993, pursuant to which BNY is owed $6,342,000, plus
interest at the rate of 7% per annum, with a final maturity date of November 3,
2002. On October 30, 2001, the Company received a forbearance from BNY relating
to the $1,100,000 principal payment due November 5, 2001. Under the terms of the
forbearance, the Company paid BNY $500,000 in principal along with the normally
scheduled interest payment on November 5, 2001 and received a deferral until
March 3, 2002 on the balance of $600,000 principal due. The principal of BNY's
Note is payable on November 3 of each year as follows:

              YEAR                                 AMOUNT
              2001                               $  500,000
              2002                               $5,842,000


BNY is also entitled to receive mandatory prepayments based upon 50% of certain
"excess cash flows" of the Company as defined in the Company's note agreements
with BNY.

During February 1999, the Company entered into a Financing Agreement with CIT
Commercial Services Group, Inc. ("CIT") and certain other financial
institutions, whereby such lenders agreed to provide a revolving credit facility
of up to $65,000,000, for working capital loans and letters of credit financing,
which expires on February 26, 2002. In connection with the XOXO transaction, the
Company's Financing Agreement was amended to increase the revolving credit
facility to up to $80,000,000, and provide a term loan of $10,000,000. As of
September 30, 2001 the revolving credit facility has been reduced to $3,750,000
and the term loan has been reduced to $6,500,000.



                                       10
<PAGE>



Availability under the revolving credit facility is based on a formula of
eligible receivables and inventory, as defined. At September 30, 2001,
outstanding letters of credit amounted to $1,051,000 and there was no
availability under the credit facility. These letters of credit were issued as
security deposits on various leases.

In April 2000, the Company entered into an amendment of the Financing Agreement,
under which the lenders waived compliance with certain covenant violations at
December 31, 1999, and increased the interest rate on the Company's revolving
credit facility to prime plus one-quarter percent and increased the interest
rate on the Company's term loan to prime plus three-quarter percent. The
amendment also provided for an overadvance facility based on seasonal needs.

The term loan is payable in quarterly installments of $500,000, plus interest,
with a final payment of $5,500,000 due on February 26, 2002, the maturity date.
The Company is required to make certain mandatory prepayments based upon "excess
cash flows" as defined in the amendment to the agreement.

The obligations under the Financing Agreement are collateralized by liens on
substantially all of the assets of the Company. The agreement contains
restrictive covenants that, among other requirements, restrict the payment of
dividends, additional indebtedness, leases, capital expenditures, investments
and the sale of assets or merger of the Company with another entity. The
covenants also require the Company to meet certain financial ratios and maintain
levels of net worth.

In connection with certain amendments to the credit facility, the Company's
chief executive officer agreed to provide a personal guarantee on $3,000,000 of
indebtedness outstanding under the Financing Agreement.

As of September 30, 2001, the Company was not in compliance with certain
covenants contained in its Financing Agreement. The Company's lenders have
indicated that they have no current intention to take action with respect to
such non-compliance but have not waived the covenant violations. The lenders
have allowed the continuance of financing under the revised terms of the
Financing Agreement with the expectation that borrowings under the facility will
be substantially repaid in 2001. As a result, the Company has classified the
long-term portion of its term loan under the Financing Agreement as a current
liability. There can be no assurance that the lenders will continue to cooperate
with the Company.


7. RESTRUCTURING AND OTHER COSTS

As of December 31, 2000, the Company had accrued a restructuring charge of
$4,187,000 in connection with a restructuring of its operations which included
moving and consolidating its headquarters, showrooms and warehouses into
existing XOXO facilities in California. At September 30, 2001, the unpaid
portion of the restructuring reserve aggregated $1,089,912, as a result of cash
payments made and a reversal of approximately $1,679,000 in accrued rental costs
resulting from a settlement of the Company's lease obligation on its New
Bedford, Massachusetts, warehouse. Under the settlement agreement, the Company
was released from all obligations under the lease in exchange for cash payments
of $850,000. The Company made the final payment under the settlement agreement
in September 2001.



                                       11
<PAGE>


During the nine and three-month periods ended September 30, 2000 the Company
recorded charges of $1,253,000 and $13,000, respectively, associated with the
restructuring of its corporate office and distribution facilities. These charges
related primarily to employee severance costs.



8. INVENTORIES


                           September  30, 2001              December 31, 2000
                           -------------------              -----------------
                             (In Thousands)                  (In Thousands)

Finished Goods                $      3,253                     $     8,620

Work-in process                        -0-                           3,515

Raw materials                        2,174                           3,784
                              ------------                     -----------
                              $      5,427                     $    15,919
                              ============                     ===========


The decrease in the Company's inventory from December 31, 2000 in the amount of
$15,919,000 to $5,427,000 as of September 30, 2001 was primarily due to the
Company changing from a manufacturer and branded business to a licensing
company.


9. PER SHARE DATA

Basic (loss) income per common share is computed by dividing net (loss) income
available for common shareholders, by the weighted average number of shares of
common stock outstanding during each period. Diluted income per share is
computed assuming the conversion of stock options and warrants with a market
value greater than the exercise price using the treasury stock method and a
conversion of convertible debt into common stock.

Options and warrants to purchase 12,239,245 and 10,711,645 shares of Common
Stock were outstanding as of September 30, 2001 and September 30, 2000,
respectively, but were not included in the computation of diluted earnings per
share because the effect would be anti-dilutive. In addition, conversion rights
under the Convertible Debentures to convert the Debentures into approximately
16,000,000 shares of Common Stock were not included in the computation of
diluted earnings per share because the result would be anti-dilutive.


10. BUSINESS SEGMENTS

In accordance with SFAS No. 131, "Disclosure About Segments of an Enterprise and
Related Information", our principal segments are grouped between the generation
of revenues from royalties and retail stores. The licensing segment derives its
revenues from royalties associated from the use of the Company's brand names,
principally XOXO, Fragile and Members Only and, subject to Aris'




                                       12
<PAGE>


rights as a licensee with respect thereto, Baby Phat and Brooks Brothers Golf.
The Retail Store segment is comprised of four full-price retail stores which
principally sell products under the XOXO brand name.

Segment information for the three and nine-month periods ended September 30,
2001 for the Retail Stores is set forth below. As a result of the Company's
change to a licensing and brand management business on March 1, 2001, as
discussed in Note 3 above relating to the Grupo Agreement, separate segment data
for the licensing segment is not ascertainable due to the blended nature of
operations during the current year. In addition, there is no segment data to
report for the three and nine-month periods ended September 30, 2000 as the
Company has changed its business operations in the current year (See Note 3).

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
      Retail Stores Financial Information                Three Months Ended                Nine Months Ended
                (in thousands)                           September 30, 2001                September 30, 2001
--------------------------------------------------------------------------------------------------------------------

<S>                                                      <C>                               <C>
Revenues                                                       $1,500                            $4,694
--------------------------------------------------------------------------------------------------------------------

Cost of Goods Sold                                                504                              1,527
--------------------------------------------------------------------------------------------------------------------

Selling and administrative expenses                             1,097                             3,378
--------------------------------------------------------------------------------------------------------------------

Net loss                                                         (205)                             (527)
--------------------------------------------------------------------------------------------------------------------

Depreciation and amortization                                     104                               316
(included in selling and administrative
expenses)
--------------------------------------------------------------------------------------------------------------------

Capital Expenditures                                              ---                               ---
--------------------------------------------------------------------------------------------------------------------

Current Assets                                                                                    1,422
--------------------------------------------------------------------------------------------------------------------

Other Assets                                                                                      1,437
--------------------------------------------------------------------------------------------------------------------

</TABLE>



11. RELATED PARTY TRANSACTIONS

In June 2000, First A.H.S. Acquisition Corp. ("AHS"), a company owned by the
Company's chief executive officer, entered into an agreement (the "Letter of
Credit Agreement") with the Company's principal commercial lender to facilitate
the opening of up to $17,500,000 in letters of credit for inventory for the
Company. Pursuant to the Letter of Credit Agreement, AHS purchased inventory
which will be held at the Company's warehouse facilities. Such inventory will be
sold to the Company at cost when the Company is ready to ship the merchandise to
the customer. As of September 30, 2001, the Company owes AHS $7,060,541. In
connection with the Letter of Credit Agreement, the chief executive officer has
guaranteed up to $7,000,000 of AHS obligations to the Company's principal
commercial lender.

During January 2001, the Company's chief executive officer loaned the Company
$2,000,000. The loan is payable on demand and bears interest at prime plus one
quarter percent.



                                       13
<PAGE>


The Company's chief executive officer personally guaranteed $3,000,000 of
indebtedness outstanding under the Financing Agreement.


12. COMMITMENTS AND CONTINGENCIES


Licensing Agreements

The Company has been granted several license agreements to manufacture and
distribute men's and women's apparel products bearing the licensors' labels. The
agreements expire at various dates through 2011. The Company is required to make
royalty and advertising payments based on a percentage of sales, as defined in
the respective agreements, subject to minimum payment thresholds. Future minimum
royalty and advertising payments required under the license agreements are as
follows (in thousands):


         2001.....................     $  1,985
         2002.....................        2,534
         2003.....................        2,670
         2004.....................        2,820
         2005.....................        1,264
         Thereafter ..............        7,835
                                       --------
         Total minimum
               royalty payments        $ 19,108
                                       ========

Grupo has assumed these obligations, but the Company remains liable if Grupo
does not perform.

In April 2000, Perry Ellis International ("PEI") and the Company mutually agreed
not to continue the "Perry Ellis America" jeanswear and loungewear licenses
after the Year 2000. In June 2001 the Company reached a settlement agreement
with Perry Ellis International for royalties due under the terminated licenses.
Under the terms of the settlement the Company agreed to pay PEI $900,000 of
which $225,000 was paid upon signing the agreement and $75,000 is due PEI on the
first day of each month starting with July 2001 and ending with March 2002.
Through November 1, 2001 $525,000 has been paid to PEI under the terms of the
agreement.


Contingencies

The Company, in the ordinary course of its business, is the subject of, or a
party to, various pending or threatened legal actions involving private
interests. While it is not possible at this time to predict the outcome of any
litigation, the Company may not be able to satisfy an adverse judgement in
certain of these actions, which may have a material adverse effect on its
financial position, results of operations or cash flows.




                                       14
<PAGE>

                     ARIS INDUSTRIES, INC. AND SUBSIDIARIES

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

Introduction

The following analysis of the financial condition and results of operations of
Aris Industries, Inc. (the "Company") for the three and nine- month periods
ended September 30, 2001 and September 30, 2000 should be read in conjunction
with the consolidated condensed financial statements, including the notes
thereto, included on pages 3 through 14 of this report.


FORWARD LOOKING STATEMENTS

Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical in nature, are
intended to be, and are hereby identified as, "forward looking statements" for
purposes of the safe harbor provided by Section 21E of the Securities Exchange
Act of 1934, as amended by Public Law 104-67. The Company cautions readers that
forward looking statements, including without limitation, those relating to the
Company's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs, and income, are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward looking statements, due to several important factors
herein identified, among others, and other risks and factors identified from
time to time in the Company's reports filed with the Securities and Exchange
Commission.


ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 141 AND 142

In June 2001, the Financial Accounting Standards Board issued Statement No. 141,
Business Combinations (effective July 1, 2001) and Statement No. 142, Goodwill
and Other Intangibles (effective January 1, 2002). Under Statement 142, the
Company will no longer amortize goodwill but, instead, will test such goodwill
for impairment on an annual basis.


FINANCIAL CONDITION


LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2001, the Company had a working capital deficit of
approximately $21,079,000 compared to a working capital deficit of approximately
$33,283,000 at December 31, 2000. The reduction in the working capital deficit
was due to the proceeds received by the Company from the sale of Debentures, the
reversal of the restructuring reserve relating to the Company's New Bedford
warehouse facility, settlement of trade obligations at a discount and a benefit
from the sale of inventory that had been deemed obsolete and written down and
was subsequently sold to Grupo at original cost. During this period, the Company
financed its working capital requirements and capital expenditures principally
through its credit facilities, sale of Debentures, a loan from its principal
stockholder, the ongoing purchase of the Company's inventory by Grupo along with
licensing revenue from Grupo and the Company's other licensees.

On February 26, 1999, simultaneous with the closing of the Simon Purchase
Transaction, the



                                       15
<PAGE>


Company and its subsidiaries entered into a Financing Agreement with CIT
Commercial Services Group, Inc. ("CIT") and certain other financial
institutions, whereby such lenders agreed to provide a revolving credit facility
(the "Credit Facility") of up to $65,000,000 for working capital loans and
letters of credit financing, which expires on February 26, 2002. In connection
with the XOXO transaction, the Company's Financing Agreement was amended to
increase the revolving credit line to up to $80,000,000, and to provide for a
term loan of $10,000,000. The term loan initially bore interest, which is paid
monthly, at prime plus one-half percent and principal is payable in quarterly
installments of $500,000, which commenced on January 1, 2000, with a balloon
payment of $5,500,000 on February 26, 2002, the maturity date. The bank has
indicated a willingness to extend the maturity date. The Company is required to
make certain mandatory prepayments based upon "excess cash flows" as defined in
the amendment to the loan agreement.

The obligations under the Financing Agreement are collateralized by
substantially all of the assets of the Company. The Financing Agreement contains
various financial and other covenants and conditions, including, but not limited
to, limitations on paying dividends, making acquisitions and incurring
additional indebtedness.

During April 2000, the Company entered into an amendment of the Financing
Agreement, under which the lenders waived compliance with certain financial
covenant requirements for 1999 with which the Company was not in compliance with
and amended the covenants for the year ended December 31, 2000. In addition, the
amendment provided an overadvance facility based on seasonal needs. The
amendment also increased the interest rate on the Company's revolving credit
facility to prime plus one-quarter percent and increased the interest rate on
the Company's term loan to prime plus three-quarter percent. In connection with
the waivers and amendment, the Company's chief executive officer agreed to
provide a personal guarantee on $3,000,000 of indebtedness outstanding under the
Financing Agreement.

The Company was not in compliance, as of September 30, 2001, with certain
covenants contained in its loan agreements. The Company's lenders have indicated
that they have no current intention to take action with respect to such
non-compliance but have not waived the covenant violations. As a result, the
Company has classified the long term portions of its term loan as a current
liability. There can be no assurance that the lenders will continue to cooperate
with the Company.

In June 2000, First A.H.S. Acquisition Corp. ("AHS") a company owned by the
Company's chief executive officer, entered into an agreement (the "Letter of
Credit Agreement") with the Company's principal commercial lender to facilitate
the opening of up to $17,500,000 in letters of credit for inventory for the
Company. Pursuant to the Letter of Credit Agreement, the chief executive officer
entered into a guaranty agreement limited to $7,000,000 of the reimbursement of
AHS' obligations under the Letter of Credit Agreement. AHS owes the lender
$7,060,541 under the Letter of Credit Agreement, and the Company owes AHS the
same amount.

In February 2001, the Company entered into a Securities Purchase Agreement with
KC Aris Fund I, L.P. ("KC") pursuant to which the Company is to issue
Convertible Debentures in the aggregate sum of $10,000,000. To date, KC has
purchased $7,500,000 of Debentures. The Debentures mature in three years, bear
interest at the rate of 8.5% per annum, payable quarterly, and are convertible
into shares of common stock at the rate of $.46 per share. Through September 30,
2001, the Company has incurred approximately $400,000 of interest expense
relating to the Debentures. The Company used the proceeds to pay down a portion
of borrowings under its revolving credit facility.



                                       16
<PAGE>


As a result of the Grupo Agreement, the Company no longer requires financing to
purchase inventory or to finance future accounts receivable. The Company is
currently reducing its revolving line of credit through the sale of inventory to
Grupo and the payment of royalties by Grupo pursuant to the Grupo Agreement
along with other licensee royalty payments. The Company expects that the sale of
inventory to Grupo and payment of royalties by Grupo and other licensees will
generate sufficient funds to pay off the revolving line of credit and to satisfy
negotiated settlements with creditors.

The Company is financing its ongoing operations from the following sources: (i)
royalty revenues from Grupo and other licenses; (ii) excess funds over the
amount necessary to satisfy the revolving line of credit generated from sale of
inventory. The Company believes that the financing discussed above will be
sufficient to transition and sustain its operations as a licensing and brand
management business and to payoff its revolving line of credit. However, the
Company is dependent upon Grupo to fulfill its obligations under the Agreement,
including its obligation to purchase substantially all of the Company's
inventory on a timely basis. There can be no assurance that the Company's
lenders will continue the credit facility, or not require the Company to re-pay
all indebtedness or that the timing of cash receipts will be sufficient to meet
obligations as they become due.

As of November 1, 2001, the Company had aggregate accounts receivable and
inventory net of reserves in the amount of $6,224,000. The balance on its
revolving credit facility was $4,235,000 and outstanding letters of credit
issued on the Company's behalf aggregating $958,000.

The Company's long-term indebtedness consists, in part, of its obligations to
BNY Financial Corporation ("BNY") under the Series A Junior Secured Note
Agreement dated June 30, 1993, pursuant to which BNY is owed $6,342,000, plus
interest at the rate of 7% per annum, with a final maturity date of November 3,
2002. On October 23, 2001, the Company received a forbearance from BNY relating
to the $1,100,000 principal payment due November 5, 2001. Under the terms of the
forbearance, the Company paid BNY $500,000 in principal along with the normally
scheduled interest payment on November 5, 2001 and received a deferral until
March 3, 2002 on the balance of $600,000 principal due. The principal of BNY's
Note is payable on November 3 of each year as follows:


              YEAR                                 AMOUNT
              2001                               $  500,000
              2002                               $5,842,000


BNY is also entitled to receive mandatory prepayments based upon 50% of certain
"excess cash flows" of the Company as defined in the Company's note agreements
with BNY.


RESULTS OF OPERATIONS

The Company reported net income of $199,000 for the three-month period ended
September 30, 2001 and a net loss of $2,021,000 for the nine-month period ended
September 30, 2001, compared to net losses of $3,362,000 and $15,984,000 for the
three and nine-month periods ended September 30, 2000.




                                       17
<PAGE>



During the three-months ended September 30, 2001, the Company's profitability
was attributable to increased licensing revenue due to the Grupo Agreement and
additional licensees of the Company along with the gains recognized in
connection with reversals of inventory reserves related to previously
marked-down inventory that was subsequently sold to Grupo at original cost and
the Company reversed approximately $333,000 of charges previously included in
cost of goods sold through June 30, 2001, relating to the amortization of the
Company's stock issueable under the Grupo Agreement that was subsequently
rescinded (See Note 3). This was offset by costs associated with the closing of
the Company's New Bedford, Massachusetts, warehouse and shipping facility, which
was closed on June 22, 2001, legal expenses incurred as the Company continues
its negotiated settlements with its vendors and expenses incurred in connection
with the consolidation of the Company's office space.

The Company's loss for the nine-month period ended September 30, 2001, was, in
part, attributable to its transition from a manufacturing operation to a
licensing and brand management business. This resulted in phase-out costs
associated with the consolidation of its facilities, reduction of its workforce
and legal expenses incurred as the Company continues its negotiated settlements
with its vendors, offset by the reversals of restructuring and inventory
reserves related to previously reserved inventory that was subsequently sold to
Grupo at original cost.

During the three and nine-month periods ended September 30, 2000, the Company
incurred restructuring and other costs in the amounts of $249,000 and $1,502,000
respectively, relating to the continuing restructuring of its corporate offices
and distribution facilities. In addition, the Company incurred $124,000 and
$1,757,000 respectively, in start-up costs associated with new licensing
arrangement for product launches which were abandoned by the Company.


REVENUES


Sales to Customers
------------------

The Company's net sales to customers during the three and nine-month periods
ended September 30, 2000, decreased from $58,262,000 and $145,348,000
respectively, to $1,506,000 and $25,831,000 respectively, during the three and
nine-month periods ended September 30, 2001. These decreases of $56,756,000 and
$119,517,000 respectively, were due to the Company's transition from a
manufacturing and distributing operation into a licensing and brand management
business along with the discontinuance of formerly licensed product lines. This
transition to a licensing company substantially reduced sales but increased
royalty revenues derived from the Company's Members Only, XOXO and Fragile
trademarks.


Sales to Licensee
-----------------

The decrease in sales to customers during the three and nine-month periods ended
September 30, 2001, was partially offset by sales of $3,807,000 and $13,285,000
respectively, of inventory to the Company's new licensee under its Agreement to
purchase inventory from the Company at cost.


Royalty Income
--------------

The Company's royalty income increased from $752,000 during the three-months
ended September 30, 2000, to $3,609,000 for the three-months ended September 30,
2001. This increase was attributable, in part, to $2,706,000 in royalty income
earned under the Company's new license Agreement with Grupo. For the calendar
year 2001 the guaranteed minimum royalty due from Grupo is $8,100,000. In
addition to the Grupo Agreement, royalty revenues derived from the license of



                                       18
<PAGE>


the Company's Members Only, XOXO and Fragile trademarks in the following
categories of mens sportswear, mens tailored suits and sportcoats, eyeglasses,
activewear essentials, shoes, swimwear, handbags, leather and suede sportswear,
girls sportswear, girls swimwear, girls outerwear, school supplies and, in
Canada, men's outerwear increased from $752,000 for the three-months ended
September 30, 2000 to $903,000 during the three-months ended September 30, 2001.
This increase is due to the Company's ongoing program of expanding its licensing
base which had ten licensees as of September 30, 2000 as compared to eighteen
licensees, excluding Grupo, as of September 30, 2001.

The Company's royalty income increased from $1,913,000 during the nine-months
ended September 30, 2000, to $9,080,000 for the nine-months ended September 30,
2001. This increase was attributable to $6,407,000 in royalty income earned
under the Company's new license Agreement with Grupo. In addition to the Grupo
Agreement, royalty revenues derived from the license of the Company's Members
Only, XOXO and Fragile trademarks in the following categories of mens
sportswear, mens tailored suits and sportcoats, eyeglasses, activewear
essentials, shoes, swimwear, handbags, leather and suede sportswear, girls
sportswear, girls swimwear, girls outerwear, school supplies and, in Canada,
men's outerwear increased from $1,913,000 for the nine-months ended September
30, 2000 to $2,673,000 during the nine-months ended September 30, 2001. This
increase is due to the Company's ongoing program of expanding its licensing base
which had ten licensees as of September 30, 2000 as compared to eighteen
licensees, excluding Grupo, as of September 30, 2001.


Commission Income
-----------------

During the nine-months ended September 30, 2001, the Company earned $660,000 in
selling commissions from Grupo on sales of Members Only products.


GROSS PROFIT

Gross Profit for the three-months ended September 30, 2001 was $5,921,000 or
66.4% of revenues compared to $17,265,000 or 29.3% of revenues for the
three-months ended September 30, 2000. Gross profit as a percentage of revenues
was positively impacted by an increase in royalty income as the Company
completed its second full quarter as a licensing and brand management business,
a reduction in the Company's reserve for inventory obsolescence of approximately
$801,000 related to the sale at original cost of previously reserved inventory
and the Company's reversal of approximately $333,000 of charges previously
included in cost of goods sold relating to the amortization of the Company's
stock issuable under the Grupo Agreement that was subsequently rescinded (See
Note 3)

Gross Profit for the nine-months ended September 30, 2001 was $20,953,000 or
42.9% of revenues compared to $48,744,000 or 33.1% of revenues for the
nine-months ended September 30, 2000. Gross profit was positively impacted by an
increase in royalty and commission income and a reduction in the Company's
reserve for inventory obsolescence of approximately $2,801,000 related to the
sale at original cost of previously reserved inventory.


SELLING AND ADMINISTRATIVE EXPENSES

Selling and Administrative expenses were $5,063,000 or 56.7% of revenue for the
three-months ended September 30, 2001 as compared to $18,741,000 or 31.8% of
revenue for the three-months



                                       19
<PAGE>


ended September 30, 2000. The increase in Selling and Administrative expenses as
a percentage of revenues is attributable to the Company's transition into a
licensing and brand management business. Under the terms of the Agreement,
effective March 1, 2001 Grupo assumed the majority of the Company's
responsibilities for Selling and Administrative expenses except for expenses
relating to the Company's corporate functions and costs incurred in the
operation of the Company's New Bedford warehouse, which closed on June 22, 2001.

Selling and Administrative expenses were $23,937,000 or 49.0% of revenue for the
nine-months ended September 30, 2001 as compared to $57,382,000 or 39.0% of
revenue for the nine-months ended September 30, 2000. The increase in Selling
and Administrative expenses as a percentage of revenues is attributable to the
Company's transition into a licensing and brand management business.


START-UP COSTS OF NEW LICENSING OPERATIONS

During the three and nine-month periods ended September 30, 2000, the Company
incurred $124,000 and $1,757,000 respectively, of start-up costs relating to
various license agreements. These start-up costs consisted of salaries, samples
and related supplies directly attributable to newly licensed operations. The
Company does not expect to incur such costs during fiscal 2001.


RESTRUCTURING AND OTHER COSTS

During the nine-month period ended September 30, 2001, the Company recognized a
recovery of approximately $1,679,000 of restructuring charges that were accrued
in the fourth quarter of 2000 relating to the remaining rent due under the
Company's lease of its New Bedford, Massachusetts warehouse. Under the terms of
the settlement agreement reached with its landlord, the Company was released
from all obligations under the lease in exchange for cash payments of $850,000.

During the nine-month period ended September 30, 2000 the Company recorded
charges of $1,502,000 associated with the restructuring of its corporate office
and distribution facilities. These charges related primarily to employee
severance costs.


INTEREST EXPENSE

Interest expense for the three-months ended September 30, 2001 was $760,000 as
compared to $1,544,000 for the three-months ended September 30, 2000. This
decrease was primarily attributable to a reduction in borrowings under the
Company's financing agreement as a result of the transition into a licensing and
brand management business, as previously discussed, along with reductions in the
prime lending rate offset by interest incurred on the $7,500,000 Convertible
Debentures financing during the quarter and related party loans.

Interest expense for the nine-months ended September 30, 2001 was $2,611,000 as
compared to $4,047,000 for the nine-months ended September 30, 2000. This
decrease was primarily attributable to a reduction in borrowings under the
Company's financing agreement as a result of the transition into a licensing and
brand management business, as previously discussed, along with reductions in the
prime lending rate offset by interest incurred on the $7,500,000 Convertible
Debentures financing during the period and related party loans.



                                       20
<PAGE>



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable




                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

On March 1, 2001, TrizecHahnSwig, LLC, the landlord of the Company's premises at
1411 Broadway, commenced a non-payment proceeding against the Company in the
Civil Court of the City of New York. The proceeding seeks rent in the amount of
$600,000 and possession of the premises. The Company is defending the proceeding
on the basis that the Landlord orally agreed to terminate the lease as of
January 31, 2001. In June 2001, the State Court of the State of New York, County
of New York, dismissed the Company's claim based on the oral agreement making it
unlikely that the Civil Court will uphold the Company's defense. If the Company
is unsuccessful, it may continue to be liable for the remaining lease payments
unless the landlord re-leases the premises for the balance of the term of the
Company's lease. The Company is currently negotiating to sublease the premises.

Della Femina, Rothschild, Jeary & Partners has brought an action against the
Company in the Supreme Court of the State of New York, County of New York, for
fees of approximately $400,000 claimed to be due in connection with advertising
services performed by Della Femina. On August 1, 2001, the parties settled the
lawsuit by the Company agreeing to pay $215,000 in six equal monthly
installments beginning on August 1, 2001.

The Company and Perry Ellis International, Inc. ("PEI") agreed to settle PEI's
claims in the amount of $1,300,000 against the Company by the Company's
agreement to pay $900,000 over eight months and the Company's agreement to pay
9/13 of any royalties over $1,300,000 found to be due from the Company.


ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS

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




                                       21
<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

None





                                   SIGNATURES
                                   ----------

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                                   ARIS INDUSTRIES, INC.
                                                        (Registrant)

Date: November 9, 2001                       By /s/
                                             -----------------------------------
                                                       Paul Spector
                                             Chief Financial Officer / Treasurer




                                       22
<PAGE>


(c) INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                                       Filed as Indicated Exhibit
                                                                                        to Document Referenced in
    Exhibit No.                                Description                                    Footnote No.
    -----------                                -----------                                    ------------

<S>                  <C>                                                               <C>
        3.3          Restated Certificate of Incorporation filed on June 30, 1993                  (3)

        3.4          Amended and Restated By-Laws effective June 30, 1993                          (3)

        3.5          Amendment to the Restated Certificate of Incorporation filed                 (20)
                     with the Secretary of State on July 29, 1999

        3.6          Amendment to the Restated Certificate of Incorporation filed                 (21)
                     with the Secretary of State in January 2001

       10.67         Series A Junior Secured Note Agreement dated as of June 30,                   (3)
                     1993 between Registrant and BNY Financial Corporation.

       10.68         Series A Junior Secured Note dated as of June 30, 1993 issued                 (3)
                     by Registrant to BNY Financial Corporation.

       10.72         Secondary Pledge Agreement dated as of June 30, 1993 between                  (3)
                     Registrant, BNY Financial Corporation and AIF II, L.P.

       10.81         Form of Indemnification Agreement dated as of June 30, 1993                   (3)
                     between Registrant and each member of Registrant's Board of
                     Directors.

       10.99         Warrant dated September 30, 1996 issued by Aris Industries,                  (10)
                     Inc. to Heller Financial, Inc.

      10.111         Securities Purchase Agreement, dated as of February 26, 1999,                (17)
                     between Aris Industries, Inc., Apollo Aris Partners, L.P.,
                     AIF, L.P., The Simon Group, L.L.C. and Arnold Simon.

      10.112         Shareholders Agreement, dated as of February 26, 1999, between               (17)
                     Aris Industries, Inc., Apollo Aris Partners, L.P., AIF, L.P.,
                     The Simon Group, L.L.C. and Charles S. Ramat.

      10.113         Equity Registration Rights Agreement, dated as of February 26,               (17)
                     1999, between Aris Industries, Inc., Apollo Aris Partners,
                     L.P., AIF, L.P., The Simon Group, L.L.C. and Charles S. Ramat.

</TABLE>



                                       23
<PAGE>
<TABLE>
<CAPTION>
                                                                                       Filed as Indicated Exhibit
                                                                                        to Document Referenced in
    Exhibit No.                                Description                                    Footnote No.
    -----------                                -----------                                    ------------

<S>                  <C>                                                               <C>
      10.115         Financing Agreement dated February 26, 1999 by and among the                 (18)
                     Company and its Subsidiaries and CIT Commercial Group, Inc.
                     and the other Financial Industries named therein.

      10.116         Agreement and Plan of Merger dated July 19, 1999 by and among                (19)
                     Aris Industries, Inc., XOXO Acquisition Corp. and Lola, Inc.
                     and its shareholders ("Agreement and Plan of Merger").  The
                     exhibits and schedules to the Agreement and Plan of Merger are
                     listed on the last page of such Agreement.  Such exhibits and
                     schedules have not been filed by the Registrant, who hereby
                     undertakes to file such exhibits and schedules upon request of
                     the Commission.

      10.117         Amendment No. 1 to Agreement and Plan of Merger.                             (19)

      10.118         Employment Agreement by and among the Registrant, Europe Craft               (19)
                     Imports, Inc., ECI Sportswear, Inc., XOXO and Gregg Fiene,
                     dated August 10, 1999.

      10.119         Employment Agreement by and among the Registrant, ECI, ECI                   (19)
                     Sportswear, Inc., XOXO and Gregg Fiene, dated August 10, 1999.

      10.120         Shareholders' Agreement by and among the Registrant, The Simon               (19)
                     Group, LLC, Gregg Fiene, Michele Bohbot and Lynne Hanson,
                     dated August 10, 1999.

      10.121         Amendment No. 2 to Financing Agreement by and among Aris                     (19)
                     Industries, Inc., Europe Craft Imports, Inc., ECI Sportswear,
                     Inc., Stetson Clothing Company, Inc., XOXO; the Financial
                     Institutions from time to time party to the Financing
                     Agreement, as Lenders; and The CIT Group/Commercial Services,
                     Inc. as Agent, dated August 10, 1999.

      10.122         Amended and Restated 1993 Stock Option Plan                                  (16)

      10.123         Employment Agreement with Steven Feiner                                      (21)

      10.124         Employment Agreement with Maurice Dickson                                    (21)

      10.125         Agreement between the Company and certain of its subsidiaries                (21)
                     and Grupo Xtra dated January, 2001

</TABLE>



                                       24
<PAGE>


<TABLE>
<CAPTION>
                                                                                       Filed as Indicated Exhibit
                                                                                        to Document Referenced in
    Exhibit No.                                Description                                    Footnote No.
    -----------                                -----------                                    ------------

<S>                  <C>                                                               <C>
      10.126         Form Securities Purchase Agreement Dated as of February, 2001                (21)
                     between the Company and KC Aris Fund I, L.P.

        21.          List of Subsidiaries                                                         (21)

        23.          Consent of PricewaterhouseCoopers LLP                                        (21)

       23.1          Consent of Deloitte & Touche LLP                                             (21)

</TABLE>

----------------

(1)       Omitted

(2)       Omitted.

(3)       Filed as the indicated Exhibit to the Report on Form 8-K dated June
          30, 1993 and incorporated herein by reference.

(4)-(9)   Omitted.

(10)      Filed as the indicated Exhibit to the Report on Form 8-K dated
          September 30, 1996 and incorporated herein by reference.

(11)      Omitted.


(13)      Omitted

(14)      Omitted

(15)      Omitted

(16)      Filed as Annex A to the Company's Proxy Statement filed with the
          Commission on May 27, 1999, and incorporated herein by reference.

(17)      Filed as the indicated Exhibit to the Report on Form 8-K dated
          February 26, 1999 and incorporated herein by reference.

(18)      Filed as Exhibit 10.115 to the Annual Report on Form 10-K filed with
          the Commission on or about April 13, 1999 and incorporated herein by
          reference.

(19)      Filed as Exhibit to the Report on Form 8-K dated August 24, 1999.

(20)      Omitted.

(21)      Filed as Exhibit to Annual Report on Form 10-K filed with the
          Commission on April 16, 2001.

-----------------------------

*     The Schedules and Exhibits to such Agreements have not been filed by the
      Company, who hereby undertakes to file such schedules and exhibits upon
      request of the Commission.



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