================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                    FORM 10-Q

                                   ----------

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

                  For the quarterly period ended June 30, 2007
                                       OR

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

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

         Pennsylvania                    1-7753              25-1001433
         ------------                    ------              ----------
 State or other jurisdiction of       (Commission          (I.R.S. Employer
 incorporation or organization)       file number)        Identification No.)

          10011 Pines Blvd., Suite #201, Pembroke Pines, Florida 33024
          ------------------------------------------------------------
               (Address of principal executive offices)(Zip Code)

                                 (954) 436-8909
                                 --------------
               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 [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

   Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

       Title of each class                    Outstanding at August 14, 2007
       -------------------                    ------------------------------
Common Stock, Par Value $.20 Per Share               3,006,693 shares

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

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                            DECORATOR INDUSTRIES, INC
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS
                                                                         June 30,      December 30,
                                                                           2007           2006
                                                                       -----------     -----------
                                                                       (UNAUDITED)
<S>                                                                    <C>             <C>
Current Assets:
     Cash and Cash Equivalents                                         $    32,904     $    11,379
     Accounts Receivable, less allowance for
        doubtful accounts ($258,809 and $201,355)                        5,082,722       3,725,167
     Inventories                                                         6,265,827       5,651,252
     Income Taxes Receivable                                                25,044         633,130
     Other Current Assets                                                  492,189         351,015
                                                                       -----------     -----------
Total Current Assets                                                    11,898,686      10,371,943
                                                                       -----------     -----------
Property and Equipment
     Land, Buildings & Improvements                                      9,193,421       9,191,174
     Machinery, Equipment, Furniture & Fixtures                          7,741,201       7,630,186
                                                                       -----------     -----------
Total Property and Equipment                                            16,934,622      16,821,360
     Less: Accumulated Depreciation and Amortization                     7,518,307       7,118,193
                                                                       -----------     -----------
Net Property and Equipment                                               9,416,315       9,703,167
                                                                       -----------     -----------
Goodwill, less accumulated Amortization of $1,348,569                    3,195,371       2,731,717
Identifiable intangible asset, less accumulated Amortization
     of $2,231,713 and $1,907,713                                        1,663,278       1,987,278
Other Assets                                                               309,594         204,466
                                                                       -----------     -----------
Total Assets                                                           $26,483,244     $24,998,571
                                                                       ===========     ===========
                   LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts Payable                                                  $ 3,563,671     $ 1,900,471
     Current Maturities of Long-term Debt                                  617,233         206,815
     Checks Issued But Not Yet Presented                                   590,660         588,245
     Accrued Expenses:
        Compensation                                                       528,704         804,929
        Other                                                            1,874,494       1,489,125
                                                                       -----------     -----------
Total Current Liabilities                                                7,174,762       4,989,585
                                                                       -----------     -----------

Long-Term Debt                                                           1,192,000       1,741,444
Deferred Income Taxes                                                      841,000         839,000
                                                                       -----------     -----------
Total Liabilities                                                        9,207,762       7,570,029
                                                                       -----------     -----------
Stockholders' Equity
     Common Stock $.20 par value: Authorized shares, 10,000,000;
        Issued shares, 4,628,053                                           925,611         925,611
     Paid-in Capital                                                     1,823,601       1,797,810
     Retained Earnings                                                  22,490,108      22,698,567
                                                                       -----------     -----------
                                                                        25,239,320      25,421,988
     Less: Treasury stock, at cost: 1,621,360 and 1,627,388 shares       7,963,838       7,993,446
                                                                       -----------     -----------
Total Stockholders' Equity                                              17,275,482      17,428,542
                                                                       -----------     -----------
Total Liabilities and Stockholders' Equity                             $26,483,244     $24,998,571
                                                                       ===========     ===========
</TABLE>

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

                                        1

<PAGE>

                            DECORATOR INDUSTRIES, INC
                             STATEMENTS OF EARNINGS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                       For the Thirteen Weeks Ended                        For the Twenty-Six Weeks Ended
                              -----------------------------------------------    ------------------------------------------------
                                June 30,                  July 1,                   June 30,                 July 1,
                                 2007                      2006                      2007                     2006
                              ------------             ------------               ------------             ------------
<S>                           <C>             <C>      <C>             <C>        <C>            <C>       <C>             <C>
Net Sales                     $ 12,671,235    100.0%   $ 14,478,669    100.0%     $ 24,918,652   100.0%    $ 29,140,984    100.0%
Cost of Products Sold           10,421,302     82.2%     11,745,484     81.1%       20,738,310    83.2%      23,449,981     80.5%
                              ------------             ------------               ------------             ------------
Gross Profit                     2,249,933     17.8%      2,733,185     18.9%        4,180,342    16.8%       5,691,003     19.5%
Selling and Administrative
  Expenses                       2,149,300     17.0%      2,243,365     15.5%        4,221,578    16.9%       4,340,669     14.9%
                              ------------             ------------               ------------             ------------
Operating Income/(Loss)            100,633      0.8%        489,820      3.4%          (41,236)   -0.1%       1,350,334      4.6%

Other Income (Expense)
       Interest, Investment
            and Other Income        32,290      0.3%         26,915      0.2%           55,491     0.2%          58,127      0.2%
       Interest Expense            (19,323)    -0.2%        (19,043)    -0.1%          (42,584)   -0.2%         (37,809)    -0.1%
                              ------------             ------------               ------------             ------------
Earnings Before Income Taxes       113,600      0.9%        497,692      3.5%          (28,329)   -0.1%       1,370,652      4.7%
Provision for Income Taxes          50,000      0.4%        185,000      1.3%                0     0.0%         510,000      1.7%
                              ------------             ------------               ------------             ------------
Net Income/(Loss)             $     63,600      0.5%   $    312,692      2.2%     $    (28,329)   -0.1%    $    860,652      3.0%
                              ============             ============               ============             ============
EARNINGS PER SHARE
       Basic                  $       0.02             $       0.10               $      (0.01)            $       0.29
                              ============             ============               ============             ============
       Diluted                $       0.02             $       0.10               $      (0.01)            $       0.28
                              ============             ============               ============             ============
Weighted Average Number of
   Shares Outstanding
       Basic                     3,004,209                2,985,524                  3,002,719                2,968,016
       Diluted                   3,024,121                3,040,076                  3,002,719                3,021,382
</TABLE>

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

                                       2
<PAGE>

                            DECORATOR INDUSTRIES, INC
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                             For the Twenty-six Weeks Ended
                                                             ------------------------------
                                                                June 30,         July 1,
                                                                  2007            2006
                                                             ------------      ------------
<S>                                                           <C>              <C>
Cash Flows From Operating Activities:
   Net (Loss)/Income                                          $   (28,329)     $   860,652
   Adjustments to Reconcile Net (Loss)/Income to Net Cash
   Provided by Operating Activities
      Depreciation and Amortization                               740,557          706,466
      Provision for Losses on Accounts Receivable                  59,077           16,563
      Deferred Taxes                                              (11,000)           4,000
      Stock-Based Compensation                                     14,899           27,885
      Gain on Disposal of Assets                                  (13,127)            (725)
   Increase/(Decrease) from Changes in:
      Accounts Receivable                                      (1,416,632)      (1,169,907)
      Inventories                                                (394,962)        (847,148)
      Prepaid Expenses                                            479,912         (287,469)
      Other Assets                                               (105,128)        (499,579)
      Accounts Payable                                          1,663,200        1,083,400
      Accrued Expenses                                            (60,772)         926,145
                                                              -----------      -----------
Net Cash Provided by Operating Activities                         927,695          820,283
                                                              -----------      -----------
Cash Flows From Investing Activities:
   Net cash paid for acquisitions                                (538,654)              --
   Capital Expenditures                                          (110,922)        (673,344)
   Proceeds from Property Dispositions                             19,647            3,200
                                                              -----------      -----------
Net Cash Used in Investing Activities                            (629,929)        (670,144)
                                                              -----------      -----------
Cash Flows From Financing Activities:
   Long-term Debt Payments                                       (109,026)         (98,959)
   Dividend Payments                                             (180,130)        (178,396)
   Change in Checks Issued but Not Yet Presented                    2,415               --
   Proceeds from Exercise of Stock Options                             --          164,453
   Net Borrowings under Line-of-Credit Agreement                  (30,000)          19,000
   Issuance of Stock for Directors Trust                           40,500           40,500
                                                              -----------      -----------
Net Cash Used in Financing Activities                            (276,241)         (53,402)

Net Increase in Cash and Cash Equivalents                          21,525           96,737
Cash and Cash Equivalents at Beginning of Year                     11,379          490,377
                                                              -----------      -----------
Cash and Cash Equivalents at End of Period                    $    32,904      $   587,114
                                                              ===========      ===========
Supplemental Disclosures of Cash Flow Information:
   Cash Paid for:
      Interest                                                $    38,601      $    32,543
      Income Taxes                                            $    49,511      $   282,451
</TABLE>

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

                                       3
<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              TWENTY-SIX WEEKS ENDED JUNE 30, 2007 AND JULY 1, 2006
                                   (UNAUDITED)

NOTE 1.  In the opinion of management, the accompanying unaudited financial
         statements contain all adjustments necessary to present fairly the
         Company's financial position as of June 30, 2007, the changes therein
         for the twenty-six week period then ended and the results of operations
         for the twenty-six week periods ended June 30, 2007 and July 1, 2006.

NOTE 2.  The financial statements included in the Form 10-Q are presented in
         accordance with the requirements of the form and do not include all of
         the disclosures required by accounting principles generally accepted in
         the United States of America. For additional information, reference is
         made to the Company's annual report on Form 10-K for the year ended
         December 30, 2006. The results of operations for the twenty-six week
         periods ended June 30, 2007 and July 1, 2006 are not necessarily
         indicative of operating results for the full year.

NOTE 3.  INVENTORIES

         Inventories at June 30, 2007 and December 30, 2006 consisted of the
         following:

                                   June 30,     December 30,
                                     2007           2006
                                  ----------    ------------
Raw Material and Supplies         $5,212,632     $4,737,878
In Process and Finished Goods      1,053,195        913,374
                                  ----------    ------------
Total Inventory                   $6,265,827     $5,651,252
                                  ==========    ============

NOTE 4.  EARNINGS PER SHARE

         Basic earnings per share is computed by dividing net income by
         weighted-average number of shares outstanding. Diluted earnings per
         share includes the dilutive effect of stock options. No dilution is
         shown for the twenty-six weeks ended June 30, 2007 since the effect of
         the stock options on the net loss is antidilutive. In accordance with
         SFAS No. 128, the following is a reconciliation of the numerators and
         denominators of the basic and diluted EPS computations:

<TABLE>
<CAPTION>
                                      For the Thirteen Weeks Ended    For the Twenty-Six Weeks Ended
                                      ----------------------------    ------------------------------
                                        June 30,         July 1,         June 30,         July 1,
                                          2007            2006            2007             2006
                                      ------------     -----------    ------------      ------------
<S>                                    <C>             <C>             <C>              <C>
Numerator:
   Net income/(loss)                   $    63,600     $   312,692     $   (28,329)     $   860,652
                                       ===========     ===========     ===========      ===========
Denominator:
   Weighted-average number of
       common shares outstanding         3,004,209       2,985,524       3,002,719        2,968,016

   Dilutive effect of
       stock options on net income          19,912          54,552               0           53,366
                                       -----------     -----------     -----------      -----------
                                         3,024,121       3,040,076       3,002,719        3,021,382
                                       ===========     ===========     ===========      ===========
   Diluted earnings per share:         $      0.02     $      0.10     $     (0.01)     $      0.28
                                       ===========     ===========     ===========      ===========
</TABLE>


                                       4
<PAGE>

                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              TWENTY-SIX WEEKS ENDED JUNE 30, 2007 AND JULY 1, 2006
                                   (UNAUDITED)

NOTE 5.  BUSINESS ACQUISITION

         On June 1, 2007, the Company acquired certain assets of Superior
         Drapery ("Superior") for $820,752. The assets included inventory,
         accounts receivable and office furniture and equipment. A second
         closing payment of up to $169,613 may be due on August 31, 2007. Any
         uncollected accounts receivable, acquired from Superior, will reduce
         the amount of the second payment. Additional payments for the business
         may be made over the next five years depending on the sales and
         profitability of the business. The additional payments will be no more
         than $1,250,000.

         Superior is a supplier of window treatments and bed coverings sold
         mostly to motels located in the northeastern United States.

                                       5
<PAGE>

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

CAUTIONARY STATEMENT: THIS QUARTERLY REPORT ON FORM 10-Q MAY CONTAIN STATEMENTS
RELATING TO FUTURE EVENTS, INCLUDING RESULTS OF OPERATIONS, THAT ARE CONSIDERED
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS REPRESENT THE
COMPANY'S EXPECTATIONS OR BELIEF AS TO FUTURE EVENTS AND, BY THEIR VERY NATURE,
ARE SUBJECT TO RISKS AND UNCERTAINTIES WHICH MAY RESULT IN ACTUAL EVENTS
DIFFERING MATERIALLY FROM THOSE ANTICIPATED. IN PARTICULAR, FUTURE OPERATING
RESULTS AND FUTURE LIQUIDITY WILL BE AFFECTED BY THE LEVEL OF DEMAND FOR
RECREATIONAL VEHICLES, MANUFACTURED HOUSING AND HOTEL/MOTEL ACCOMMODATIONS AND
MAY BE AFFECTED BY CHANGES IN ECONOMIC CONDITIONS, INTEREST RATE FLUCTUATIONS,
COMPETITIVE PRODUCTS AND PRICING PRESSURES WITHIN THE COMPANY'S MARKETS, THE
COMPANY'S ABILITY TO CONTAIN ITS MANUFACTURING COSTS AND EXPENSES, AND OTHER
FACTORS. FORWARD-LOOKING STATEMENTS BY THE COMPANY SPEAK ONLY AS OF THE DATE
MADE, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE SUCH
STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS.

FINANCIAL CONDITION

The Company's financial ratios changed as illustrated below. The financial
condition remains strong, and the long-term debt to total capitalization ratio
remained low at 6.46%

                              June 30,     December 30,
                                2007          2006
                             ----------    ------------
Current Ratio                   1.66:1        2.08:1
Quick Ratio                     0.79:1        0.95:1
LT Debt to Total Capital        6.46%         9.08%
Working Capital              $4,723,924     $5,382,358


The decrease in the Company's Current Ratio, Quick Ratio, and Working Capital;
and the improvement in the Company's Long Term Debt to Total Capital is mostly
due to the effects of a balloon payment on the Company's loan secured by its
Elkhart, Indiana facility, which will become due in June 2008, as this balloon
payment has been reclassified from long term liabilities to short term
liabilities.

At June 30, 2007, the Company had outstanding borrowings of $377,000 on its line
of credit. The Company expects to continue to use its line of credit in 2007. In
the second quarter of 2007, the Company received over $649,000 in refunds for
overpayments of estimated 2006 federal and state income taxes. These refunds
helped provide greater liquidity for the remainder of fiscal 2007.

On June 1, 2007, the Company acquired certain assets of Superior Drapery
("Superior") for $820,752. The assets included inventory, accounts receivable
and office furniture and equipment. A second closing payment of up to $169,613
may be due on August 31, 2007. Any uncollected accounts receivable, acquired
from Superior, will reduce the amount of the second payment. Additional payments
for the business may be made over the next five years depending on the sales and
profitability of the business.

                                       6

<PAGE>

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

In January 2004, the Company began assigning certain account receivables under a
"Receivables Servicing and Credit Approved Receivables Purchasing Agreement"
with CIT Group/Commercial Services Inc. Only receivables from sales to the
hospitality industry may be assigned to CIT. Under the agreement CIT provides
credit checking, credit approval, and collection responsibilities for the
assigned receivables. If CIT approves an order from a hospitality customer and
the resulting receivables are not paid or disputed by the customer within ninety
days of sale, CIT will pay the receivable to the Company and assume ownership of
the receivable. CIT begins collection efforts for the assigned receivables (both
approved and not approved) when they are due (hospitality sales are made on Net
30 terms). Hospitality customers are instructed to make payments directly to CIT
and CIT then wires collected funds to the Company. The Company pays CIT
six-tenths of a percent of all assigned receivables. Management believes this
cost is mostly offset by reductions in Bad Debt expense and collection costs.
The Company entered into this arrangement to take advantage of CIT's extensive
credit checking and collection capabilities. Management believes this
arrangement has improved liquidity.

Days Sales Outstanding (DSO) in accounts receivable were 33.0 days at June 30,
2007 compared to 31.0 and 35.1 days at December 30, 2006 and July 1, 2006,
respectively. Net accounts receivable was $5,082,722 at June 30, 2007, compared
to $3,725,167 and $5,726,759 at December 30, 2006 and July 1, 2006,
respectively. The increase in accounts receivable from fiscal year end is due to
the Superior acquisition as well as the seasonality of the Company's sales,
while the decrease in accounts receivable from a year ago is due to the reduced
sales volumes in the current year, partially offset by the increased receivables
from the Superior acquisition. Inventories were $6,265,827 at June 30, 2007, as
compared to $5,651,252 and $6,647,701 at December 30, 2006 and July 1, 2006,
respectively. The increase in inventory from fiscal year end is due to the
Superior acquisition and the seasonality of the Company's sales. The decrease in
inventory compared to the prior year is due to decreased sales as well as the
Company's actions to decrease its inventory levels, partially offset by
additional inventories from the Superior acquisition.

Capital expenditures were $110,922 for the twenty-six weeks ended June 30, 2007,
compared to $673,344 for the same period of the prior year. The major reason for
this decrease was $379,819 in expenditures in the prior year to purchase a
building previously leased by the Company's Red Bay, Alabama operation. Capital
spending for the balance of 2007 should be significantly less than for the
comparable period of 2006.

Management does not foresee any events which will adversely affect its liquidity
during 2007.

SALES BY MARKET

The following table represents net sales to each of the three different markets
that the Company serves for the thirteen and twenty-six week periods ended June
30, 2007 and July 1, 2006:

(dollars in thousands)

<TABLE>
<CAPTION>
                                For the Thirteen Weeks Ended                      For the Twenty-Six Weeks Ended
                         --------------------------------------------      --------------------------------------------
                             June 30, 2007            July 1, 2006            June 30, 2007             July 1, 2006
                         -------------------      -------------------      -------------------      -------------------
                           Net         % of         Net         % of         Net         % of         Net          % of
                          Sales        total       Sales        total       Sales        total       Sales        total
                         -------     -------      -------     -------      -------     -------      -------     -------
<S>                      <C>              <C>     <C>              <C>     <C>              <C>     <C>              <C>
Recreational Vehicle     $ 6,998          55%     $ 8,250          57%     $14,383          58%     $17,377          60%
Manufactured Housing       2,248          18%       2,542          18%       4,162          17%       5,350          18%
Hospitality                3,425          27%       3,687          25%       6,374          25%       6,414          22%
                         -------     -------      -------     -------      -------     -------      -------     -------

Total Net Sales          $12,671         100%     $14,479         100%     $24,919         100%     $29,141         100%
                         =======                  =======                  =======                  =======
</TABLE>

                                       7
<PAGE>

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

RESULTS OF OPERATIONS

THIRTEEN WEEK PERIOD ENDED JUNE 30, 2007, (SECOND QUARTER 2007) COMPARED TO
THIRTEEN WEEK PERIOD ENDED JULY 1, 2006, (SECOND QUARTER 2006)

The following table shows a comparison of the results of operations between
Second Quarter 2007 and Second Quarter 2006:

<TABLE>
<CAPTION>
                                       Second Quarter      %      Second Quarter       %        $ Increase
                                            2007        of Sales       2006         of Sales    (Decrease)      % Change
                                       --------------   --------  --------------    --------   ------------     --------
<S>                                     <C>               <C>      <C>                <C>      <C>                <C>
Net Sales                               $ 12,671,235      100%     $ 14,478,669       100%     $ (1,807,434)     -12.5%
Cost of Products Sold                     10,421,302     82.2%       11,745,484      81.1%       (1,324,182)     -11.3%
                                        ------------    --------    ------------    --------   ------------
Gross Profit                               2,249,933     17.8%        2,733,185      18.9%         (483,252)     -17.7%

Selling and Administrative Expenses        2,149,300     17.0%        2,243,365      15.5%          (94,065)      -4.2%
                                        ------------    --------    ------------    --------   ------------
Operating Income                             100,633      0.8%          489,820       3.4%         (389,187)     -79.5%

Other Income (Expense)
    Interest, Investment and
       Other Income                           32,290      0.3%           26,915       0.2%            5,375       20.0%
    Interest Expense                         (19,323)    -0.2%          (19,043)     -0.1%             (280)       1.5%
                                        ------------    --------    ------------    --------   ------------
Earnings Before Income Taxes                 113,600      0.9%          497,692       3.5%         (384,092)     -77.2%
Provision for Income Taxes                    50,000      0.4%          185,000       1.3%         (135,000)     -73.0%
                                        ------------    --------    ------------    --------   ------------
Net Income                              $     63,600      0.5%     $    312,692       2.2%     $   (249,092)     -79.7%
                                        ============    ========   ============     ========   ============
</TABLE>

Net sales for the Second Quarter 2007 were $12,671,235, compared to $14,478,669
for the same period in the previous year, a 12.5% decrease. Sales to the
Company's recreational vehicle customers decreased 15.2% in Second Quarter 2007
when compared to the same period of the prior year. The recreational vehicle
industry reported a 10.3% decrease in shipments during the Second Quarter 2007
compared to the same period of the prior year. Sales to the Company's
manufactured housing customers decreased 11.6% in Second Quarter 2007 when
compared to the same period of the prior year. The manufactured housing industry
decreased shipments by 18.1% over the same period. Sales to the Company's
hospitality customers decreased 7.1% in the Second Quarter 2007 when compared to
the same period of the prior year.

Cost of products sold increased to 82.2% of net sales in the Second Quarter 2007
compared to 81.1% of net sales a year ago. The major reason for the increase in
this percentage was due to fixed expenses being spread over a lower sales
volume.

                                       8
<PAGE>

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

Selling and administrative expenses were $2,149,300 in the Second Quarter 2007
versus $2,243,365 in the Second Quarter 2006. The percentage of selling and
administrative expenses to net sales increased from 15.5% to 17.0% as fixed
expenses were spread over a lower sales volume.

Interest expense increased to $19,323 in the Second Quarter 2007 from $19,043 in
the Second Quarter 2006, as the effective interest rates and outstanding loan
balances did not change significantly in the current quarter.

Net income was $63,600 in the Second Quarter 2007 compared to $312,692 in the
Second Quarter 2006. This decrease is the result of lower sales. Diluted
earnings per share decreased from $0.10 per share during the Second Quarter 2006
to $0.02 per share during the Second Quarter 2007.

TWENTY-SIX WEEK PERIOD ENDED JUNE 30, 2007, (FIRST SIX MONTHS 2007) COMPARED TO
TWENTY-SIX WEEK PERIOD ENDED JULY 1, 2006, (FIRST SIX MONTHS 2006)

The following table shows a comparison of the results of operations between
First Six Months 2007 and First Six Months 2006:

<TABLE>
<CAPTION>
                                            First                     First
                                          Six Months       %        Six Months          %        $ Increase
                                            2007       of Sales       2006          of Sales    (Decrease)     % Change
                                        -------------  --------   ------------     ---------   ------------    --------
<S>                                     <C>               <C>     <C>                 <C>      <C>                <C>
Net Sales                               $  24,918,652     100%    $ 29,140,984        100%     $ (4,222,332)     -14.5%
Cost of Products Sold                      20,738,310    83.2%      23,449,981       80.5%       (2,711,671)     -11.6%
                                        -------------  --------  ------------     ---------   ------------
Gross Profit                                4,180,342    16.8%       5,691,003       19.5%       (1,510,661)     -26.5%

Selling and Administrative Expenses         4,221,578    16.9%       4,340,669       14.9%         (119,091)      -2.7%
                                        -------------  --------   ------------     ---------   ------------
Operating (Loss)/Income                       (41,236)   -0.1%       1,350,334        4.6%       (1,391,570)    -103.1%

Other Income (Expense)
    Interest, Investment and
       Other Income                            55,491     0.2%          58,127        0.2%           (2,636)      -4.5%
    Interest Expense                          (42,584)   -0.2%         (37,809)      -0.1%           (4,775)      12.6%
                                        -------------  --------   ------------     ---------   ------------
Earnings Before Income Taxes                  (28,329)   -0.1%       1,370,652        4.7%       (1,398,981)    -102.1%
Provision for Income Taxes                          0     0.0%         510,000        1.7%         (510,000)    -100.0%
                                        -------------  --------   ------------     ---------   ------------
Net (Loss)/Income                       $     (28,329)   -0.1%    $    860,652        3.0%     $   (888,981)    -103.3%
                                        =============  ========   ============     =========   ============
</TABLE>

                                       9
<PAGE>

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

Net sales for the First Six Months 2007 were $24,918,652, compared to
$29,140,984 for the same period in the previous year, a 14.5% decrease. Sales to
the Company's recreational vehicle customers decreased 17.2% in the First Six
Months 2007 when compared to the same period of the prior year. The recreational
vehicle industry reported a 12.9% decrease in shipments during the first half of
2007 compared to the same period of the prior year. Sales to the Company's
manufactured housing customers decreased 22.2% in the First Six Months 2007 when
compared to the same period of the prior year. The manufactured housing industry
decreased shipments by 27.5% over the same period. The Company believes that a
portion of the prior year industry manufactured housing sales is attributable to
the rebuilding efforts from the 2005 Gulf Coast hurricanes. Sales to the
Company's hospitality customers decreased 0.6%.

Cost of products sold increased to 83.2% of net sales in the First Six Months
2007 compared to 80.5% of net sales a year ago. The major reason for the
increase in this percentage was higher costs of materials, an increase in the
percentage of labor costs to sales and a higher percentage for factory overhead
due to fixed expenses being spread over a lower sales volume.

Selling and administrative expenses were $4,221,578 in the First Six Months 2007
versus $4,340,669 in the First Six Months 2006. Lower salaries, wages, and
commissions due to the decrease in sales were the primary reason for this
decrease. The percentage of selling and administrative expenses to net sales
increased from 14.9% to 16.9% as fixed expenses were spread over a lower sales
volume.

Interest expense increased to $42,584 in the First Six Months 2007 from $37,809
in the First Six Months 2006, due to greater outstanding borrowings during the
First Six Months 2007 on the company's revolving line of credit compared to the
same period of the prior year

Net loss was $28,329 in the First Six Months of 2007 compared to $860,652 of net
income in the First Six Months 2006. This decrease is the result of lower sales
in 2007. Diluted earnings per share decreased from $0.28 during the First Six
Months 2006 to a diluted loss per share of $0.01 during the First Six Months
2007.

EBITDA

EBITDA represents income before income taxes, interest expense, depreciation and
amortization and is an approximation of cash flow from operations before tax.
The Company uses EBITDA as an internal measure of performance and believes it is
a useful and commonly used measure of financial performance in addition to
income before taxes and other profitability measures under U.S. Generally
Accepted Accounting Principles ("GAAP").

EBITDA is not a measure of performance under GAAP. EBITDA should not be
construed as an alternative to operating income and income before taxes as an
indicator of the Company's operations in accordance with GAAP. Nor is EBITDA an
alternative to cash flow from operating activities in accordance with GAAP. The
Company's definition of EBITDA can differ from that of other companies.

                                       10
<PAGE>

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

The following table reconciles Net Income, the most comparable measure under
GAAP, to EBITDA for the thirteen and twenty-six week periods ended June 30, 2007
and July 1, 2006:

<TABLE>
<CAPTION>
                                    For the Thirteen Weeks Ended     For the Twenty-Six Weeks Ended
                                    ----------------------------     ------------------------------
                                      June 30,         July 1,          June 30,         July 1,
                                       2007             2006             2007            2006
                                    ------------     -----------     ------------      ------------
<S>                                  <C>             <C>              <C>              <C>
Net Income/(Loss)                    $    63,600     $   312,692      $   (28,329)     $   860,652

Add:
     Interest                             19,323          19,043           42,584           37,809
     Taxes                                50,000         185,000               --          510,000
     Depreciation & Amortization         366,903         353,252          740,557          706,466
     Gain on Disposal of Assets               --              (5)         (13,127)            (725)
                                     -----------     -----------      -----------      -----------
EBITDA                               $   499,826     $   869,982      $   741,685      $ 2,114,202
                                     ===========     ===========      ===========      ===========
</TABLE>

Item 4.  Controls and Procedures.

(a) The Company's principal executive officer and principal financial officer
have reviewed the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2007 and have
concluded that they were adequate and effective.

(b) During the most recent fiscal quarter, there were no changes in the
Company's internal control over financial reporting identified in connection
with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or
15d-15 that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

                                       11
<PAGE>

                           PART II - OTHER INFORMATION

Item 6.  Exhibits

         31.1  -  Certification of Principal Executive Officer

         31.2  -  Certification of Principal Financial Officer

         32    -  Certificate required by 18 U.S.C.ss.1350.

                                       12
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                     DECORATOR INDUSTRIES, INC.
                                            (Registrant)


Date: August 14, 2007            By: /s/ William A. Bassett
                                     -------------------------------------------
                                     William A. Bassett, Chief Executive Officer
                                     and President

Date: August 14, 2007            By: /s/ Michael K. Solomon
                                     -------------------------------------------
                                     Michael K. Solomon, Chief Financial Officer

                                       13