<PAGE>

================================================================================

                       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 quarterly period ended March 31, 2002

                          Commission File No. 333-72321

                              BGF Industries, Inc.
             (Exact name of registrant as specified in its charter)

       Delaware                              2221                56-1600845
(State of incorporation)    (Primary Standard Industrial      (I.R.S. Employer
                             Classification Code Number)     Identification No.)


  3802 Robert Porcher Way, Greensboro, North Carolina             27410
  (Address of registrant's principal executive office)          (Zip Code)

                                 (336) 545-0011
              (Registrant's telephone number, including area code)

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

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 [_]

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date: 1,000 shares of common stock, $1.00 par value, as of May 13, 2002.

================================================================================

<PAGE>

                              BGF INDUSTRIES, INC.
           QUARTERLY REPORT FOR THE THREE MONTHS ENDED MARCH 31, 2002

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            Page No.
                                                                                            --------
<S>                                                                                         <C>
PART I.        FINANCIAL INFORMATION

Item  1.       Consolidated Financial Statements

               Consolidated Balance Sheets as of March 31, 2002 (unaudited)
               and December 31, 2001                                                            1

               Consolidated Statements of Operations and Comprehensive Income
               (Loss) for the three months ended March 31, 2002 and 2001
               (unaudited)                                                                      2

               Consolidated Statements of Cash Flows for the three months
               ended March 31, 2002 and 2001 (unaudited)                                        3

               Notes to the Consolidated Financial Statements                                   4

Item 2.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations
                      Overview                                                                  7
                      Results of Operations                                                     8
                      Liquidity and Capital Resources                                          10
                      Disclosure Regarding Forward Looking Statements                          11

Item 3.        Quantitative and Qualitative Disclosures About Market Risk                      12

PART II.       OTHER INFORMATION

Item  6.       Exhibits and Reports on Form 8-K                                                14
</TABLE>

                                      (i)

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                           CONSOLIDATED BALANCE SHEETS
                    (dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                             March 31,     December 31,
                                                                               2002           2001
                                                                               ----           ----
                                                                           (unaudited)
<S>                                                                         <C>             <C>
                                 ASSETS

Current assets:
     Cash and cash equivalents                                              $       10      $       22
     Trade accounts receivable, net                                             16,978          12,710
     Inventories                                                                36,427          39,037
     Other current assets                                                        5,850           4,693
                                                                            ----------      ----------
           Total current assets                                                 59,265          56,462
Net property, plant and equipment                                               60,032          62,155
Other noncurrent assets, net                                                    16,935          16,982
                                                                            ----------      ----------
     Total assets                                                           $  136,232      $  135,599
                                                                            ==========      ==========

                 LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

Current liabilities:
     Book overdraft                                                         $    4,540      $    2,528
     Accounts payable                                                            8,205           4,171
     Accrued liabilities                                                         5,268           7,642
                                                                            ----------      ----------
           Total current liabilities                                            18,013          14,341
Long-term debt, net of discount of  $1,367 and $1,417, respectively            124,633         125,583
Post-retirement and pension benefit obligations                                  5,778           5,415
                                                                            ----------      ----------
     Total liabilities                                                         148,424         145,339
                                                                            ----------      ----------

Commitments and contingencies

Stockholder's equity (deficit):
     Common stock, $1.00 par value. Authorized 3,000 shares; issued
       and outstanding 1,000 shares                                                  1               1
     Capital in excess of par value                                             34,999          34,999
     Retained earnings                                                          69,442          71,981
     Accumulated other comprehensive loss                                         (255)           (342)
     Loan to parent                                                           (116,379)       (116,379)
                                                                            ----------      ----------
           Total stockholder's equity (deficit)                                (12,192)         (9,740)
                                                                            ----------      ----------
           Total liabilities and stockholder's equity (deficit)             $  136,232      $  135,599
                                                                            ==========      ==========
</TABLE>



        The accompanying notes are an integral part of the consolidated
                              financial statements.

                                        1

<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                         AND COMPREHENSIVE INCOME (LOSS)
                             (dollars in thousands)



<TABLE>
<CAPTION>
                                                           For the Three Months
                                                             Ended March 31,
                                                        -----------------------
                                                            2002          2001
                                                        -----------------------
<S>                                                     <C>            <C>
                                                              (unaudited)

Net sales                                               $   36,343     $ 46,558
Cost of goods sold                                          35,822       38,301
                                                        ----------     --------
         Gross profit                                          521        8,257
Selling, general and administrative expenses                 1,343        2,700
                                                        ----------     --------
     Operating income (loss)                                  (822)       5,557
Interest expense                                             3,333        3,296
Other income, net                                                -         (121)
                                                        ----------     ---------
                                                            (4,155)       2,382
Income tax expense (benefit)                                (1,616)         916
                                                        ----------     --------
         Net income (loss)                                  (2,539)       1,466
                                                        ----------     --------
Other comprehensive income (loss) net of tax:
Cumulative effect of change in accounting principle              -          183
Change in fair value of cash flow hedge                         87         (235)
                                                        ----------     ---------
Total comprehensive income (loss)                       $   (2,452)    $  1,414
                                                        ==========     ========
</TABLE>



               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                        2

<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                 For the Three Months
                                                                                    Ended March 31,
                                                                            ---------------------------
                                                                                  2002           2001
                                                                            ---------------------------
                                                                                       (unaudited)
  <S>                                                                       <C>                <C>
  Cash flows from operating activities:
    Net income (loss)                                                       $   (2,539)        $  1,466
    Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
        Depreciation                                                             2,271            2,112
        Amortization of other noncurrent assets                                    188              242
        Amortization of discount on notes                                           50               50
        Deferred income taxes                                                   (1,153)          (1,132)
        Post-retirement and pension benefit obligations                            363              229
        Loss on disposal of equipment                                                -              184
    Change in assets and liabilities:
        Trade accounts receivable, net                                          (4,268)           6,098
        Other current assets                                                        (4)             665
        Inventories                                                              2,610           (8,134)
        Other assets                                                              (141)             175
        Accounts payable                                                         5,128           (1,645)
        Accrued liabilities                                                     (2,287)          (2,054)
                                                                            ----------         --------
           Net cash provided by (used in) operating activities                     218           (1,744)
                                                                            ----------         --------

  Cash flows from investing activities:
       Purchases of property, plant and equipment                               (1,242)          (2,771)
                                                                            ----------         --------
            Net cash used in investing activities                               (1,242)          (2,771)
                                                                            -----------        --------
  Cash flows from financing activities:
       Book overdraft                                                            2,012           (1,480)
       Proceeds from revolver                                                   17,000           10,000
       Payments on revolver                                                    (18,000)          (4,000)
                                                                            ----------         --------
           Net cash provided by financing activities                             1,012            4,520
                                                                            ----------         --------

Net (decrease) increase in cash and cash equivalents                               (12)               5
Cash and cash equivalents at beginning of period                                    22                8
                                                                            ----------         --------
Cash and cash equivalents at end of period                                  $       10         $     13
                                                                            ==========         ========

Supplemental disclosure of non-cash investing activities:
    Property and equipment financed in accounts payable                     $      319         $  1,861
                                                                            ==========         ========
</TABLE>

         The accompanying notes are an integral part of the consolidated
                              financial statements.

                                       3

<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (dollars in thousands)

1.   Basis of Presentation

      The accompanying unaudited interim consolidated financial statements of
BGF Industries, Inc. have been prepared in accordance with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X, and accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of items of a normal recurring nature) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2002 are not necessarily indicative of the results
to be expected for the full year. The Company believes that the disclosures are
adequate to make the information presented not misleading.

      These financial statements should be read in conjunction with the audited
consolidated financial statements of BGF Industries, Inc. as of and for the year
ended December 31, 2001 on file with the Securities and Exchange Commission in
the 2001 Annual Report on Form 10-K.

2.   Inventories

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                                March 31,     December 31,
                                                                                  2002            2001
                                                                               ---------      -----------
                                                                              (unaudited)
     <S>                                                                      <C>             <C>
     Supplies                                                                    $  1,815       $ 2,001
     Raw materials                                                                  2,904         2,591
     Stock-in-process                                                               5,781         5,507
     Finished goods                                                                25,927        28,938
                                                                                 --------       -------
                                                                                 $ 36,427       $39,037
                                                                                 ========       =======
</TABLE>

3.       Other Noncurrent Assets

     Other noncurrent assets consist of the following:

<TABLE>
<CAPTION>
                                                                                March 31,     December 31,
                                                                                  2002            2001
                                                                               ----------     -----------
                                                                               (unaudited)
     <S>                                                                       <C>             <C>
     Excess of acquisition cost over assigned value of net assets acquired       $ 5,809        $ 5,809
     Debt issuance costs                                                           5,214          5,073
                                                                                 -------        -------
                                                                                  11,023         10,882
     Accumulated amortization                                                     (3,103)        (2,915)
                                                                                 -------        -------
                                                                                   7,920          7,967
     Deferred income taxes                                                         8,534          8,534
     Other                                                                           481            481
                                                                                 -------        -------
                                                                                 $16,935        $16,982
                                                                                 =======        =======
</TABLE>

                                        4

<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (dollars in thousands)

4.   Accrued Liabilities

     Accrued liabilities consist of the following:

                                                    March 31,       December 31,
                                                      2002              2001
                                                  ------------      ------------
                                                   (unaudited)

     Payroll                                          $   397         $   163
     Profit sharing and other benefits                    151             154
     Interest                                           2,316           4,836
     Restructuring                                        399             467
     Medical benefits                                     921             921
     Other                                              1,084           1,101
                                                      -------         -------
                                                      $ 5,268         $ 7,642
                                                      =======         =======

5.   Long-term Debt

     Long-term debt consists of the following:

                                                   March 31,      December 31,
                                                      2002           2001
                                                  -----------     ------------
                                                 (unaudited)

     Senior Credit Facility:
        Revolving Credit Facility                   $  26,000      $  27,000
     Senior subordinated notes, net of
          unamortized discount                         98,633         98,583
                                                   ----------     ----------
                                                    $ 124,633      $ 125,583
                                                   ==========     ==========

     On September 28, 2001, the Company amended its senior credit facility.
Under the terms of the amendment, the Company paid off the existing term loan of
$15.6 million, reduced the availability under the revolver from $60 million to
$50 million, and renegotiated the interest rate to 2.75 points over LIBOR
through 2002, at which time the rate will revert back to the initial rate under
the senior credit facility. The senior credit facility matures in September
2003. In addition, the amendment significantly modified the financial covenants
through the end of 2002.

     Management believes that BGF will be able to satisfy the amended financial
covenant levels under the senior credit facility through 2002, although there
can be no assurance that these covenants will be met. The possibility exists
that certain financial covenants will not be met if business conditions render
actual outcomes and results materially different from those predicted. Failure
to comply with such covenants would constitute a default under the senior credit
facility and the lender would be entitled to accelerate the maturity of the
indebtedness outstanding thereunder.

     At March 31, 2002, BGF had outstanding debt of $26.0 million under the
Senior Credit Facility, with additional available borrowings of $9.0 million.
BGF is continuing its efforts to reduce inventory levels and improve working
capital, while implementing additional cost-saving

                                       5

<PAGE>

initiatives. Based upon current and anticipated levels of operations, BGF
believes that its cash flows from operations, combined with short-term
availability under the senior credit facility, will be adequate to meet
liquidity needs with respect to existing obligations and operations for fiscal
2002. However, BGF's future performance is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond its control.

     BGF is currently negotiating a new longer term financing arrangement with
another lender and expects it to be finalized in the second quarter of 2002.
However, there can be no assurance that such a refinancing will be consummated.

6.  Segment Information

     BGF operates in one business segment that manufactures specialty woven and
non-woven fabrics for use in a variety of industrial and commercial
applications. BGF's principal market is the United States. Net sales information
by geographic area is presented below, with sales based on the location of the
customer. BGF does not have any long-lived assets outside the United States.

                                             For the Three Months Ended
                                                      March 31
                                           --------------------------------
                                                2002            2001
                                           --------------------------------
                                                     (unaudited)

     United States                           $ 34,917         $ 43,935
     Foreign                                    1,426            2,623
                                             --------         --------
                                             $ 36,343         $ 46,558
                                             ========         ========


7.   Commitments and Contingencies

     From time to time, BGF is involved in various legal proceedings and
environmental matters arising in the ordinary course of business. Management
believes, however, that the ultimate resolution of such matters will not have a
material adverse impact on BGF's financial position or results or operations.

8.   Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" ("SFAS No. 141")
and Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"). SFAS No. 141 requires that all business
combinations be accounted for under the purchase method. The statement applies
to all business combinations initiated after June 30, 2001.

     SFAS No. 142 requires that an intangible asset that is acquired shall be
initially recognized and measured based on its fair value. The statement also
provides that goodwill should not be amortized, but shall be tested for
impairment annually, or more frequently if circumstances indicate potential
impairment, through a comparison of fair value to its carrying amount. The
Company adopted the provisions of SFAS No. 142 effective January 1, 2002. In
accordance with SFAS No. 142, the Company ceased amortizing goodwill on the same
date. The Company will complete its transitional goodwill impairment test in the
second quarter of 2002. Any impairment loss resulting from the transitional
impairment test will be reflected as a cumulative effect of a

                                       6

<PAGE>

change in accounting principle. In light of the changes in market conditions and
the unprecedented downturn in the electronics market, the Company may have
impairment of goodwill under SFAS 142 as of January 1, 2002. Net income for the
quarter ended March 31, 2001, exclusive of amortization of goodwill, was $1,511.
The net book value of goodwill as of March 31, 2002 and December 31, 2001 was
$4,725.

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

     This Quarterly Report contains forward-looking statements with respect to
our operations, industry, financial condition and liquidity. These statements
reflect our assessment of a number of risks and uncertainties. Our actual
results could differ materially from the results anticipated in these forward
looking statements as a result of certain factors set forth in this Quarterly
Report. An additional statement made pursuant to the Private Securities
Litigation Reform Act of 1995 and summarizing certain of the principal risks and
uncertainties inherent in our business is included herein under the caption
"Disclosure Regarding Forward Looking Statements." You are encouraged to read
this statement carefully.

     You should read the following discussion and analysis in conjunction with
the accompanying consolidated financial statements and related notes, and with
our audited consolidated financial statements and related notes as of and for
the year ended December 31, 2001 set forth in our 2001 Annual Report on Form
10-K.

Overview

     Our business focuses on the production of value-added specialty woven and
non-woven fabrics made from glass, carbon and aramid yarns. Our fabrics are a
critical component in the production of a variety of electronic, filtration,
composite, insulation, construction and commercial products. Our glass fiber
fabrics are used by our customers in printed circuit boards, which are integral
to virtually all advanced electronic products, including computers and cellular
telephones. Our fabrics are also used by our customers to strengthen, insulate
and enhance the dimensional stability of hundreds of products that they make for
their own customers in various markets, including aerospace, transportation,
construction, power generation and oil refining.

                                       7

<PAGE>

Results of Operations

         The following table summarizes our historical results of operations as
a percentage of net sales:

                                                          For the Three Months
                                                            Ended March 31,
                                                       -------------------------
                                                           2002         2001
                                                       -------------------------
                                                              (unaudited)

Net sales                                                100.0 %       100.0 %
Cost of goods sold                                        98.6 %        82.3 %
                                                        ------        ------
  Gross profit                                             1.4 %        17.7 %
Selling, general and administrative expenses               3.7 %         5.8 %
                                                        ------        ------
  Operating income (loss)                                 (2.3)%        11.9 %
Interest expense                                           9.2 %         7.1 %
Other income, net                                            -          (0.3)%
                                                        ------        ------
  Income (loss) before income taxes                      (11.5)%         5.1 %
  Income tax expense (benefit)                            (4.5)%         2.0 %
                                                        ------        ------
  Net income (loss)                                       (7.0)%         3.1 %
                                                        ======        ======


         EBITDA, as presented below, is defined as net income before interest
expense, income taxes, depreciation, amortization expense and non-recurring
non-cash charges. EBITDA is calculated as follows (in thousands):

                                                  For the Three Months
                                                    Ended March 31,
                                               ----------------------------
                                                    2002         2001
                                               ----------------------------
                                                       (unaudited)

    Net income (loss)                             $(2,539)      $ 1,466
    Depreciation and amortization                   2,272         2,157
    Interest                                        3,333         3,296
    Taxes                                          (1,616)          916
                                                  -------       -------
    EBITDA                                        $ 1,450       $ 7,835
                                                  =======       =======

         EBITDA for the quarter ended March 31, 2002 decreased $6.3 million, or
80.8%, to $1.5 million from $7.8 million for the quarter ended March 31, 2001.

         We believe that EBITDA is a widely accepted financial indicator of a
company's ability to service and/or incur indebtedness. EBITDA does not
represent and should not be considered as an alternative to net income or cash
flow from operations as determined by generally accepted accounting principles,
and EBITDA does not necessarily indicate whether cash flow will be sufficient
for cash requirements. Not every company calculates EBITDA in exactly the same
fashion. As a result, EBITDA as presented above may not necessarily be
comparable to similarly titled measures of other companies.

                                       8

<PAGE>

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

         Net Sales. Net sales decreased $10.2 million, or 21.9%, to $36.3
million in the three months ended March 31, 2002, from $46.5 million in the
three months ended March 31, 2001. Sales of electronics fabrics used in
multi-layer and rigid printed circuit boards decreased $9.8 million, or 45.1%
and sales of glass, carbon and aramid fibers used in various composite materials
decreased $2.4 million, or 17.0%, during the first quarter of 2002 as compared
to the first quarter of 2001. The decrease in sales of electronics fabrics was
primarily a result of significant inventory adjustments in the electronics
industry that began during the first quarter of 2001. In addition, the decrease
in capital spending in the information technology and telecommunications
industries has led fabricators of printed circuit boards to reduce production,
thus negatively impacting our sales to these customers.

         Our second largest market, fabrics used in composite materials, held up
well prior to September 11, 2001. However, we experienced a decline in orders
from customers in the aerospace industry due to uncertainty over airline traffic
recovery. It is unknown if this decrease will be fully or partially offset by
the market for refurbishing existing aircraft or increased purchases by the
military.

         In response to these market conditions, we reduced production schedules
and focused on operating cost reductions. In 2001, we furloughed production
employees, thereby reducing our production workforce by approximately 25%. In
addition to the furlough of production employees, we have reduced a number of
salaried positions, in order to cut costs in future periods. The reduction of
production schedules resulted in a $10.8 million decrease in inventory from the
end of the third quarter 2001 to the end of the first quarter of 2002.

         Gross Profit Margins. Gross profit margins decreased to 1.4% in the
three months ended March 31, 2002, from 17.7% in the three months ended March
31, 2001, due primarily to the shifts in product mix discussed above as well as
lower sales and production volumes resulting in less absorption of fixed costs.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $1.4 million, or 51.9%, to $1.3 million in the
three months ended March 31, 2002, from $2.7 million in the three months ended
March 31, 2001. This was primarily due to decreased accruals for profit sharing
and management fees and bonuses and a decrease in sales commission expense.

         Operating Income. As a result of the aforementioned factors, operating
income decreased $6.4 million to $(0.8) million, or (2.3)% of net sales, in the
three months ended March 31, 2002, from $5.6 million, or 12.0% of net sales, in
the three months ended March 31, 2001.

         Interest Expense. Interest expense remained at $3.3 million in the
three months ended March 31, 2002 compared to the three months ended March 31,
2001.

         Income Tax Expense (Benefit). The effective tax rate in the three
months ended March 31, 2002 and 2001 of 38.9% and 38.5%, respectively, was
higher than the federal statutory rate of 35.0% primarily due to the effect of
state income taxes.

         Net Income (Loss). As a result of the aforementioned factors, net
income (loss) decreased $4.0 million to a net loss of $(2.5) million in the
three months ended March 31 2002, from $1.5 million in the three months ended
March 31, 2001.

                                       9

<PAGE>

Liquidity and Capital Resources

         Our primary sources of liquidity are cash flows from operations and
borrowings under our senior credit facility. Our future need for liquidity will
arise primarily from interest payments on our 10 1/4% Series B Senior
Subordinated Notes due 2009, principal and interest payments on the senior
credit facility, and the funding of our capital expenditures and working capital
requirements. There are no mandatory payments of principal on our notes
scheduled prior to their maturity.

         On September 28, 2001, we amended our senior credit facility. Under the
terms of the amendment, we paid off the existing term loan of $15.6 million,
reduced the availability under the revolver from $60 million to $50 million, and
locked in the interest rate to 2.75 points over LIBOR through 2002 at which time
the rate will revert back to the initial rate under the senior credit facility.
In addition, the amendment significantly modified the financial covenants
through the end of 2002. Although no assurances can be provided, the terms of
this amendment are favorable to us and should allow us to operate with
sufficient liquidity throughout the current downturn in the electronics
industry. This forward-looking statement is subject to risks and uncertainties
that exist in our operations and business environment. See "Disclosure Regarding
Forward-Looking Statements."

         We believe that we will be able to satisfy the amended financial
covenant levels under the senior credit facility through 2002, although there
can be no assurance that these covenants will be met. The possibility exists
that certain financial covenants will not be met if business conditions render
actual outcomes and results materially different from those predicted. Failure
to comply with such covenants would constitute a default under the senior credit
facility, and the lenders under the facility would be entitled to accelerate the
maturity of the indebtedness outstanding thereunder.

         At March 31, 2002, BGF had outstanding debt of $26.0 million under the
Senior Credit Facility, with additional available borrowings of $9.0 million. We
are continuing our efforts to reduce inventory levels and improve working
capital, while implementing cost-saving initiatives. Based upon current and
anticipated levels of operations, we believe that our cash flows from
operations, combined with short-term availability under the senior credit
facility, will be adequate to meet liquidity needs with respect to existing
obligations and operations for fiscal 2002. However, our future performance is
subject to general economic, financial, competitive, legislative, regulatory and
other factors that are beyond its control.

         We are currently negotiating a new longer term financing arrangement
with another lender and currently expect it to be finalized in the second
quarter of 2002. However, there can be no assurance that such a refinancing will
be consummated.

         Net Cash Provided by Operating Activities. Net cash provided by
operating activities for the three months ended March 31, 2002 was $0.2 million,
compared with $(1.7) million in the three months ended March 31, 2001 and was
primarily the result of a net loss of $(2.5) million, adjusted for non-cash
adjustments to net income for depreciation of $2.3 million, deferred income
taxes of $(1.1) million, a decrease in inventory of $2.6 million, an increase in
accounts payable and accrued expenses of $2.8 million and an increase in trade
accounts receivable of $(4.3) million. These operating results were driven by an
increase in sales in the first quarter 2002 from the fourth quarter 2001 as well
as efforts to reduce inventory levels and production costs. We

                                       10

<PAGE>

expect operating cash flows to improve throughout fiscal 2002 as a result of
working capital management and an increase in sales during 2002 as compared to
the trend experienced during the last three quarters of 2001.

         Net Cash Used in Investing Activities. Net cash used in investing
activities was $1.2 million for the three months ended March 31, 2002 and was
the result of purchases of property, plant and equipment. We currently expect
our capital expenditures during 2002 to be approximately $3.0 million.

         Net Cash Provided by Financing Activities. Net cash provided by
financing activities was $1.0 million for the three months ended March 31, 2002
and was primarily the result of an increase in the book overdraft of $2.0
million, net proceeds on the revolver of $17.0 million, and payments on the
revolver loan of $18.0 million.

         We previously reported in our 2001 Form 10-K that we expected to
receive approximately $6.0 million in federal tax refunds due to the recently
signed Job Creation and Worker Assistance Act of 2002. This tax benefit has been
realized by our parent company, Glass Holdings Corp, as it related to Glass
Holdings' consolidated tax returns. The board of directors of Glass Holdings has
not yet determined if it will invest this money into BGF. We expect this
determination to be made during the second quarter of 2002. In addition, we do
not anticipate that this determination will have a significant impact on our
ability to consummate financing.

         Our ability to make scheduled payments of principal or to pay the
interest or liquidated damages, if any, on, or to refinance, our indebtedness,
including the notes, or to fund planned capital expenditures will depend on our
future performance. Our future performance is generally subject to economic,
financial, competitive, legislative, regulatory and other factors that are
beyond our control. Based upon the current level of our operations, we believe
that cash flow from operations and available cash, together with availability
under the senior credit facility, will be adequate to meet our current liquidity
needs for fiscal 2002. However, we cannot assure you that we will generate
sufficient cash flow from operations or that future borrowings will be available
under our senior credit facility in an amount sufficient to enable us to service
our indebtedness, including the notes, or to fund our other liquidity needs. In
addition, we may need to refinance all or a portion of the principal of the
notes on or prior to maturity. We cannot assure you that we will be able to
effect any refinancing on commercially reasonable terms or at all.

Disclosure Regarding Forward-Looking Statements

         Some of the information in this Quarterly Report may contain
forward-looking statements. These statements include, in particular, statements
about our plans, strategies and prospects within the meaning of Section 27A of
the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. You can identify forward-looking statements by our use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate," "continue" or other similar words. Although we believe that our
plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, we cannot assure you that our plans,
intentions or expectations will be achieved. Such statements are based on our
current plans and expectations and are subject to risks and uncertainties that
exist in our operations and our business environment that could render actual
outcomes and results materially different from those predicted. When considering
such forward-looking statements, you should keep in mind the following important
factors that could cause our actual results to differ materially from those
contained in any forward-looking statements:

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<PAGE>

         .        the impact of Owens Corning's unpredictable bankruptcy
                  proceeding on the ongoing operations of Advanced Glassfiber
                  Yarns, an affiliate experiencing financial difficulties and a
                  major supplier, which could result in the risk that obtaining
                  raw materials from sources other than Advanced Glassfiber
                  Yarns would be more costly;
         .        our significant level of indebtedness and limitations on our
                  ability to incur additional debt;
         .        our dependence upon some of our suppliers to provide us with
                  materials and services;
         .        downturns in the electronics industry and the movement of
                  electronics industry production outside of North America;
         .        the effect of highly competitive markets and recent
                  competition from Asia for heavyweight glass fiber fabrics;
         .        our concentrated customer base and the competitive nature of
                  our markets;
         .        a disruption of production at one of our facilities;
         .        an easing of import restrictions and duties with respect to
                  glass fiber fabrics;
         .        whether or not we are able to comply with environmental and
                  safety and health laws and requirements;
         .        whether or not we are able to address technological advances
                  in the markets we serve;
         .        changes in economic conditions generally; and
         .        whether or not we are able to satisfy the covenants and other
                  provisions under our various financial instruments.

         This list of risks and uncertainties, however, is not intended to be
exhaustive. You should also review the other cautionary statements we make in
this Quarterly Report and other reports and registration statements we file with
the SEC. All forward-looking statements attributable to us or persons acting for
us are expressly qualified in their entirety by our cautionary statements.

         We do not have, and expressly disclaim, any obligation to release
publicly any updates or changes in our expectations or any changes in events,
conditions or circumstances on which any forward-looking statement is based.

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

              The effects of potential changes in currency exchange rates and
interest rates are discussed below. Our market risk discussion includes
"forward-looking statements" and represents an estimate of possible changes in
fair value that would occur assuming hypothetical future movements in interest
and currency exchange rates. These disclosures are not precise indicators of
expected future losses, but only indicators of reasonably possible losses. As a
result, actual future results may differ materially from those presented. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Disclosure Regarding Forward-Looking Statements."

         Our senior credit facility is subject to market risks, including
interest rate risk. Our financial instruments are not currently subject to
commodity price risk. We are exposed to market risk related to changes in
interest rates on borrowings under our senior credit facility. The senior credit
facility bears interest based on LIBOR. Our risk management strategy is to use
derivative financial instruments, such as swaps, to hedge interest rate
exposures. In addition, we are exposed to foreign currency exchange rate risk
mainly as a result of our purchases of fixed assets from Japanese sources. Our
risk management strategy is to use derivative financial instruments to hedge
these foreign currency exposures. Our overall objective is to limit the impact
of foreign

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<PAGE>

currency and interest rate changes on earnings and cash flows. We do not enter
into derivatives for trading or speculative purposes.

         On September 28, 2001, we amended our senior credit facility. Under the
terms of the amendment, we paid off the existing Term Loan of $15.6 million and
reduced the availability under the revolver from $60 million to $50 million.
Simultaneously, we also amended our interest rate swap term from March 31, 2004
to September 30, 2003 and redesignated the swap to cover only the revolver
portion of our senior credit facility.

         At March 31, 2002, the notional amount of the interest rate swap
agreement was $19.2 million. Under this agreement, we have secured a fixed LIBOR
rate of interest of 5.04% on the notional amount that is reduced in a manner to
amortize fully by the maturity date of the revolver portion of our senior credit
facility. This swap effectively changes our payment of interest on $19.2 million
of variable rate debt to a fixed rate for the contract period.

         The fair value of the interest rate swap agreement represents the
estimated receipts or payments that would be made to terminate the agreement. At
March 31, 2002, we would have paid approximately $393,000 to terminate the
agreement. A 100 basis point decrease in LIBOR would increase the amount paid by
approximately $136,000. The fair value is based on dealer quotes, considering
current interest rates. The unrealized loss on this derivative instrument is a
component of other comprehensive income (loss).

         Actual gains and losses in the future may differ materially from the
above analysis, however, based on changes in the timing and amount of interest
rate movements and our actual exposures and hedges.

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<PAGE>

                           PART II - OTHER INFORMATION

Item 6.      Exhibits and Reports on Form 8-K

             (a)  Exhibits

                  None

             (b)  Reports on Form 8-K

                  None

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                                   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.

                                            BGF INDUSTRIES, INC.



                                            /s/ Philippe R. Dorier
                                            ------------------------------------

                                            Philippe R. Dorier
                                            Chief Financial Officer
                                            (Principal Financial and Accounting
                                            Officer)

Date:  May 13, 2002

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