UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                QUARTERLY REPORT

        UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


                  For the Quarterly Period Ended March 31, 2001
                           Commission File No. 0-5200



                                  BONTEX, INC.
             (Exact name of registrant as specified in its charter)


                    VIRGINIA                     54-0571303
          (State or other jurisdiction of     (I.R.S. Employer
           incorporation or organization)     Identification No.)


        ONE BONTEX DRIVE, BUENA VISTA, VIRGINIA           24416-1500
        (Address of principal executive offices)          (Zip Code)


     Registrant's telephone number, including area code   540-261-2181

Indicate by checkmark whether the registrant (1) has filed all reports 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 the description and number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable date.


           Class                               Outstanding at May 10, 2001
 Common Stock - $.10 par value                           1,572,824




<PAGE>


                                  BONTEX, INC.
                                    FORM 10-Q
                        NINE MONTHS ENDED MARCH 31, 2001


                                      INDEX



PART I.           FINANCIAL INFORMATION                                 Page No.

         Item 1.  Financial Statements

         CONDENSED CONSOLIDATED BALANCE SHEETS
         March 31, 2001 and June 30, 2000......................................3

         CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE
         INCOME (LOSS) AND CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
         STOCKHOLDERS' EQUITY
         Nine Months and Three Months Ended March  31, 2001 and 2000...........4

         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
         Nine Months Ended March 31, 2001 and 2000.............................5

         CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS......6-7

         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations.................................8-10

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk..11


PART II.          OTHER INFORMATION

         Item 1.  Legal Proceedings...........................................12

         Item 5.  Other Information...........................................12

         Item 6.  Exhibits and Reports on Form 8-K............................12



                                        2


<PAGE>

<TABLE>
<CAPTION>


                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                          BONTEX, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
             (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


                                                                                March 31,           June 30,
                                                                                  2001                2000
                                                                               (unaudited)
<S>     <C>    <C>    <C>    <C>    <C>    <C>

ASSETS
Current assets:
Cash and cash equivalents                                                   $            413     $          457
Trade accounts receivable, less allowance for doubtful
   Accounts of $131 ($170 at June '00)                                                11,049             12,187
Other receivables                                                                        433                378
Inventories                                                                            5,884              5,465
Deferred income taxes                                                                    142                135
Income taxes refundable                                                                    5                 49
Other current assets                                                                     253                120
                                                                           -----------------   ----------------
         TOTAL CURRENT ASSETS                                                         18,179             18,791
                                                                           -----------------   ----------------
Property, plant and equipment:
Land and land improvements                                                               282                350
Buildings and building improvements                                                    5,340              5,525
Machinery, furniture and equipment                                                    17,820             17,797
Construction in progress                                                                 328                526
                                                                           -----------------   ----------------
Less accumulated depreciation and amortization                                        13,918             13,491
                                                                           -----------------   ----------------
   Net property, plant and equipment                                                   9,852             10,707

Deferred income taxes                                                                    888                736
Other assets, net                                                                        561                651
                                                                           -----------------   ----------------
         TOTAL ASSETS                                                       $         29,480     $       30,885
                                                                           =================   ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Short-term borrowings                                                    $          8,511     $        8,251
   Long-term debt due currently                                                        1,172                626
   Accounts payable                                                                    7,434              7,756
   Accrued expenses                                                                    1,746              1,902
   Income taxes payable                                                                  475                594
                                                                           -----------------   ----------------
         TOTAL CURRENT LIABILITIES                                                    19,338             19,129

Long-term debt, less current portion                                                   1,231              2,327
Deferred income taxes                                                                     38                 42
Other long-term liabilities                                                              509                439
                                                                           -----------------   ----------------
         TOTAL LIABILITIES                                                            21,116             21,937
                                                                           -----------------   ----------------

Stockholders' equity:
Preferred stock of no par value.  Authorized 10,000,000
   shares; none issued                                                                     -                  -
Common stock of $.10 par value.  Authorized 10,000,000 shares;
   issued and outstanding 1,572,824 shares                                               157                157
Additional capital                                                                     1,551              1,551
Retained earnings                                                                      7,174              7,461
Accumulated other comprehensive income(loss)                                            (518)              (221)
                                                                           -----------------   ----------------
         TOTAL STOCKHOLDERS' EQUITY                                                    8,364              8,948
                                                                           -----------------   ----------------
         TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                           $         29,480     $       30,885
                                                                           =================   ================
</TABLE>

See accompanying condensed notes to unaudited condensed consolidated financial
statements.


                                        3

<PAGE>


<TABLE>
<CAPTION>


                          BONTEX, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME(LOSS)
                         AND COMPREHENSIVE INCOME (LOSS)
     AND CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)


                                                              Nine Months Ended              Three Months Ended
                                                                   March 31,                      March 31,
                                                             2001            2000           2001            2000

<S>                                                             <C>         <C>          <C>           <C>
Net Sales                                                $     31,472    $    28,479    $    11,576     $    10,466
Cost of Sales                                                  24,158         20,921          8,917           7,506
                                                           ----------    -----------    -----------     -----------

         Gross Profit                                           7,314          7,558          2,659           2,960

Selling, General and Administrative Expenses                    7,849          7,676          2,761           2,636
                                                           ----------    -----------    -----------     -----------

         Operating Income (Loss)                                 (535)          (118)          (102)            324
                                                           ----------    -----------    -----------     -----------

Other (Income) Expense:
   Interest expense                                               657            594            220             206
   Interest income                                                 (7)             -             (1)              -
   Foreign currency exchange (gain) loss                           21            (33)            25             (12)
   Other, net                                                    (795)            64              1              23
                                                           ----------    -----------    -----------     -----------
Total Other (Income)Expense, Net                                 (124)           625            245             217
                                                           ----------    -----------    -----------     -----------

Income (Loss) Before Income Taxes                                (411)          (743)          (347)            107
Income Tax Expense (Benefit)                                     (124)          (112)          (114)             88
                                                           ----------    -----------    -----------     -----------

Net income (loss)                                                (287)          (631)          (233)             19

Other Comprehensive Loss
   Foreign currency translation adjustment                       (297)          (308)          (191)           (198)
                                                           ----------    -----------    -----------     -----------

Comprehensive Loss                                       $       (584)   $      (939)   $      (424)     $     (179)
                                                           ==========    ===========    ===========     ===========

Net income (loss) per share                              $       (.18)   $      (.40)   $      (.15)     $      .01
                                                           ==========    ===========    ===========     ===========

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY:

Stockholders' Equity beginning balance                   $      8,948    $     9,893    $     8,788     $     9,133

   Net income (loss)                                             (287)          (631)          (233)             19
   Other comprehensive loss
     Foreign currency translation adjustment                     (297)          (308)          (191)           (198)
                                                           ----------    -----------    -----------     -----------

Stockholders' Equity, ending balance                     $      8,364    $     8,954    $     8,364     $     8,954
                                                           ==========    ===========    ===========     ===========

</TABLE>

See accompanying condensed notes to unaudited condensed consolidated financial
statements.

                                        4

<PAGE>


<TABLE>
<CAPTION>

                                  BONTEX, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)


                                                                                           Nine Months Ended
                                                                                               March 31,
                                                                                       2001                2000

<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash Flows from Operating Activities:
   Cash received from customers                                                    $    31,981         $    28,499
   Cash paid to suppliers and employees                                                (31,816)            (26,844)
   Interest received                                                                         6                   4
   Interest paid                                                                          (696)               (583)
   Income taxes paid, net of refunds                                                       (75)                 (3)
                                                                             -----------------    ----------------
           Net cash provided by (used in) operating activities                            (600)              1,073
                                                                             -----------------    ----------------

Cash Flows from Investing Activities:
   Proceeds from sale of property, plant and equipment                                     863                   -
   Acquisition of property, plant and equipment                                           (524)               (599)
                                                                             -----------------    ----------------
           Net cash provided by (used in) investing activities                             339                (599)
                                                                             -----------------    ----------------

Cash Flows from Financing Activities:
   Increase (decrease) in short-term borrowings, net                                       665                (520)
   Long-term debt incurred                                                                  49                 547
   Principal payments on long-term debt                                                   (483)               (600)
                                                                             -----------------    ----------------
           Net cash provided by (used in) financing activities                             231                (573)
                                                                             -----------------    ----------------

Effect of Exchange Rate Changes on Cash                                                    (14)                 (7)
                                                                             -----------------    ----------------
Net Decrease in Cash and Cash Equivalents                                                  (44)               (106)
Cash and Cash Equivalents at Beginning of Period                                           457                 336
                                                                             -----------------    ----------------
Cash and Cash Equivalents at End of Period                                         $       413         $       230
                                                                             =================    ================

Reconciliation of Net Income (Loss) to Net Cash Provided by (Used in)
Operating Activities:
     Net loss                                                                      $      (287)        $      (631)
     Adjustments to reconcile net loss to net cash provided by (used in)
       Operating activities:
       Depreciation and amortization                                                       982               1,002
       Gain on sale of property, plant and equipment                                      (803)                  -
       Provision for bad debts                                                              32                 135
       Deferred income taxes                                                              (163)               (201)
       Change in assets and liabilities:
         (Increase) decrease in trade accounts and other receivables                       381                (199)
         (Increase) decrease in inventories                                               (751)                429
         Increase in other assets                                                         (100)               (265)
         Increase (decrease) in accounts payable and accrued expenses                       86                 612
         Increase (decrease) in income taxes                                              (101)                 82
         Increase in other liabilities                                                     124                 109
                                                                             -----------------    ----------------
                  Net cash provided by (used in) operating activities              $      (600)       $      1,073
                                                                             =================    ================
</TABLE>

See accompanying condensed notes to unaudited condensed consolidated financial
statements.

                                        5

<PAGE>



                          BONTEX, INC. AND SUBSIDIARIES
    CONDENSED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        MARCH 31, 2001 AND JUNE 30, 2000
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

1.   The accompanying unaudited condensed consolidated financial statements have
     been prepared by Bontex, Inc. and its subsidiaries ("Bontex" or the
     "Company") in accordance with generally accepted accounting principles in
     the United States of America for interim financial reporting information
     and the instructions to Form 10-Q and Article 10 of Regulation S-X.
     Accordingly, they do not include all of the information and notes required
     by generally accepted accounting principles in the United States of America
     for complete financial statements. In the opinion of management, all
     material reclassifications and adjustments, consisting of normal recurring
     accruals, considered necessary for a fair presentation of the results of
     operations, financial position and cash flows for each period shown, have
     been included. Operating results for interim periods are not necessarily
     indicative of the results for the full year. The unaudited condensed
     consolidated financial statements and condensed notes are presented as
     permitted by Form 10-Q and do not contain certain information included in
     the Company's annual consolidated financial statements and notes. For
     further information, refer to the consolidated financial statements and
     notes thereto included in the Company's Annual Report on Form 10-K for the
     year ended June 30, 2000.

2.   The last in, first out (LIFO) method of inventory pricing is used by the
     Company in the United States. Inventories of the European subsidiaries are
     valued at the lower of cost or market using the first-in, first- out (FIFO)
     and weighted average bases. Inventories are summarized as follows:

<TABLE>
<CAPTION>

                                                                     March 31,              June 30,
                                                                        2001                  2000
                                                                          (Dollars in Thousands)

<S>                                                                <C>                  <C>
     Finished goods                                                $       4,342        $        3,849
     Raw Materials                                                         1,246                 1,222
     Supplies                                                                666                   708
                                                                     -----------          ------------
     Inventories at FIFO and weighted average cost                         6,254                 5,779
     LIFO reserves                                                           370                   314
                                                                     -----------          ------------
                                                                   $       5,884        $        5,465
                                                                     ===========          ============
</TABLE>


3.   Business segment information related to the North American and European
     operations follows:

<TABLE>
<CAPTION>

                                                     North
                                                   American         European
                                                  Operations       Operations     Eliminations     Consolidated

<S>                     <C> <C>
Nine Months Ended March 31, 2001

Net Sales                                       $       12,635   $      19,140  $         (303)    $       31,472

Net Income (Loss)                                         (307)             20               -               (287)

</TABLE>


                                        6

<PAGE>


<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Nine Months Ended March 31, 2000

Net Sales                                       $       12,210   $      16,503  $         (234)    $       28,479

Net Loss                                                  (442)           (189)              -               (631)
</TABLE>


4.   Net loss per share has been computed on the basis of the weighted average
     number of common shares outstanding during each period (1,572,824 shares).
     Diluted earnings per share is not presented because the effect of stock
     options is anti-dilutive.

5.   During fiscal year 2000, the Ministere Des Finances, the Belgian tax
     authority, completed an examination of Bontex S.A.'s, the Company's Belgian
     subsidiary, tax returns for 1997, 1998 and 1999 and extended the tax
     examination to 1995 and 1996 based on certain items. Bontex S.A. has
     received notices of proposed tax adjustments to these tax returns. The
     proposed tax adjustments arise from items which are considered disallowed
     expenses by tax authorities, including commissions paid to certain
     distributors and clients, certain travel expenses and various smaller items
     including allowances for doubtful receivables and certain insurance
     premiums. The proposed tax adjustments by the Belgian authorities
     approximate $820,000. The Company believes, based in part on written
     opinion of external counsel, it has meritorious legal defenses to many of
     the claims and the Company intends to defend such claims. The Company has
     responded to the Belgian tax authority with a Memorandum. The Belgian tax
     authority has acknowledged receipt of this Memorandum and has stated that
     it will reply to same within six months of its receipt. The Belgian tax
     authority also stated that the Company would have an additional three
     months to respond to this reply by the Belgian tax authority. The Company's
     best estimate of the most likely amount payable for the foregoing tax
     matters is $239,000, and accordingly, a provision for this amount was
     accrued at June 30, 2000.

6.   Included in other income for the nine months ended March 31, 2001, is a
     gain of $803,000 from the sale of Bontex Inc.'s warehouse facility in
     Newark, New Jersey. The New Jersey Institute of Technology purchased the
     facility for $863,000. The Company's net book value in the property was
     approximately $60,000. The entire proceeds were applied to the payment of
     short-term debt.



                                        7

<PAGE>



                                  BONTEX, INC.
            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
              FOR THE NINE MONTHS AND QUARTER ENDED MARCH 31, 2001
                                   (UNAUDITED)


Except for historical data set forth herein, the following discussion contains
forward-looking statements within the meaning of the Private Securities
Litigation Act of 1995. Forward-looking statements include, for example,
statements about future results of operations or market conditions and involve
risks, uncertainties and assumptions. Actual results may differ materially from
these forward-looking statements. Factors that could cause or contribute to
those differences include, but are not limited to, excessive worldwide footwear
inventories, a shrinking U.S. domestic market for Bontex products, decreased
sales to key customers, increased foreign competition, the substitution by key
customers of lower-margin products for higher-margin products, increased
competition from non-woven materials, the reduction of prices by competitors,
the increase in the relative prices of Bontex's products due to foreign currency
devaluations, increased pulp and latex prices, capital illiquidity, unexpected
foreign tax liabilities, decreases in the Company's borrowing base, an inability
to obtain additional sources of financing and any default under existing loan
covenants.


RESULTS OF OPERATIONS

The results of operations for the nine months ended March 31, 2001, reflect an
increase in operating losses as compared to the same period last year. During
the nine months ended March 31, 2001, the Company generated a consolidated
operating loss of $535,000 and a net loss of $287,000 or $.18 per share as
compared to a consolidated operating loss of $118,000 and a net loss of $631,000
or $.40 per share for the corresponding prior year period. Consolidated net
sales increased $3.0 million or 10.5 percent to $31.5 million for the nine
months ended March 31, 2001. The Company's improved sales are a result of the
Company's efforts to promote additional elastomeric cellulose and nonwoven
insole footwear products, particularly in Asia. If foreign currency exchange
rates had remained unchanged from the corresponding period last year, net sales
would have been almost $34.0 million, or an increase of 19.4 percent or
approximately $5.5 million for the nine months ended March 31, 2001.

The decrease in net loss for the nine months ended March 31, 2001 can be
attributed to a non-recurring gain of $803,000 from the sale of property during
the second quarter. Net loss for the nine months ended March 31, 2001, excluding
the effect of this non-recurring item would have been a net loss of $882,000.

During the third quarter, consolidated net sales increased $1.1 million or 10.6
percent to $11.6 million. Sales increases were mainly the result of marketing
efforts with certain customers, as well as increases in sales to Asian and other
markets. During the three months ended March 31, 2001, consolidated operating
loss was $102,000 as compared to operating income of $324,000 for the same
period last year. The deterioration in operating results reflects increased raw
material costs and competitive selling prices.

Gross profit as a percentage of net sales (i.e., Gross Margin) for the nine
months ended March 31, 2001, decreased from 26.5 to 23.2 percent compared to the
same period last year. This decrease in profit margins is primarily attributable
to competitive pricing pressures and higher raw material costs.

Relative to the prior year, the market price of pulp has increased over the past
twelve months and may continue to increase during 2001. The Company has delayed
the impact of certain of the pulp cost increases by entering in May 2001 into
agreements with a supplier for purchasing pulp. These agreements went into
effect retroactively as of January 1, 2001, and run through June 30, 2006. These
agreements allow the Company to purchase a significant amount of the pulp used
in the Company's manufacturing process at prices based on the PIX Pulp

                                        8

<PAGE>



Benchmark index. Additionally, management has announced a price increase for its
finished products that is expected to be fully implemented during calendar year
2001. It is difficult to predict future raw material costs and future selling
prices, and there can be no assurance that raw material prices will not have an
adverse impact on the Company's operations or competitive position.

Compared to the same nine month period as last year, Selling, General &
Administrative (SG&A) expenses increased $173,000 or 2.3 percent but, as a
percent of net sales, SG&A costs decreased from 27.0 percent to 24.9 percent.
The decrease in SG&A costs as a percentage of sales is mainly due to sales
increasing at a higher rate than costs, reflecting the benefits from Company's
marketing efforts, and cost control measures.

Interest expense increased $63,000 for the nine months ended March 31, 2001, as
compared to the same period last year due to increased short-term borrowings.
The increase in short-term borrowings reflects the financing of higher
inventories and the decrease in payables.

Included in other income is a gain of $803,000 from the sale of Bontex Inc.'s
warehouse facility in Newark, New Jersey. The New Jersey Institute of Technology
purchased the facility for $863,000. The Company's net book value in property
was approximately $60,000.

Other comprehensive loss, foreign currency translation adjustment, totaled
$297,000 for the nine months ended March 31, 2001, and is primarily the result
of the decrease in Euro verses the US Dollar since June 30, 2000.


FINANCIAL CONDITION

Consolidated stockholders' equity decreased $584,000 from June 30, 2000, and
totaled $8.4 million at the end of March 2001. Financial ratios at March 31,
2001, generally decreased from June 30, 2000, because of the negative operating
results. The fluctuation in foreign currency exchange rates resulted in a
translation decrease of $1.5 million in consolidated total assets as compared to
June 30, 2000.

Trade accounts receivable decreased by $1.1 million to $11.0 million from June
30, 2000, primarily due to fluctuations in foreign currency exchange rates and
normal seasonality factors. The increase in trade accounts receivable from March
31, 2000 to March 31, 2001 was only $77,000.

The $419,000 increase in inventories to $5.9 million mainly corresponds to an
increase in finished goods at the Company's Bontex Mexico and Bontex Hong Kong
subsidiaries to support higher sales volume.

Other current assets increased $133,000 to $253,000 from June 30, 2000,
primarily due to normal prepaid expenses for insurance. The decrease in other
current assets from March 31, 2000 to March 31, 2001 was only $12,000.

Net property, plant and equipment (PP&E) decreased from $10.7 million to $9.9
million from June 30, 2000, primarily due to normal depreciation and
amortization.

During fiscal year 2000, the Belgian tax authority completed an examination of
the tax returns for Bontex S.A., the Company's Belgian subsidiary, for 1997,
1998 and 1999 and extended the tax examination to 1995 and 1996 based on certain
items. The examination file has not yet been closed, and the Company's best
estimate of the most likely amount payable for the foregoing tax matters is
$239,000, and, accordingly, a provision for this amount had been accrued at June
30, 2000. The Company's actual liability pursuant to the foregoing examination
may exceed $239,000 and such excess liability could adversely affect the
Company's financial condition, liquidity and/or results of operations in any
particular period. For further information concerning this tax examination,
please refer to Item 1. Legal Proceedings in Part II below.


                                        9

<PAGE>




Accounts payable, accrued expenses and short-term borrowings decreased $218,000,
primarily due to a decrease in trade accounts receivable partially offset by an
increase in inventories.

Cash received from customers for the nine months ended March 31, 2001, increased
over the corresponding prior year period due to increased sales activity and
reduction of trade accounts receivable. This higher cash received, however, was
more than offset by the increase in cash paid to suppliers and employees, which
increased for the current period over last year's corresponding period because
of the higher inventory levels, increased costs for raw material, utilities and
other goods and services. The net result of the above items was a negative cash
flow from operations for the current period.

As of March 31, 2001, Bontex USA was not in compliance with an adjusted tangible
net worth covenant of its secured debt agreement, under which certain current
and noncurrent assets were pledged as collateral. As a result, the lender may,
among other things, foreclose on the collateral, accelerate the maturity of the
indebtedness, and/or refuse to make any future loans under the agreement.
Accordingly, Bontex has classified $567,000 of long-term debt as current as of
March 31, 2001. The Company is negotiating with its lender for an amendment to
the secured debt agreement and waiver of the non-compliance with the covenant.
There can be no assurance that the Company will be able to obtain such an
amendment or waiver. If Bontex is unable to obtain such an amendment and/or
waiver or otherwise cannot comply with the covenants of its secured debt
agreement, the Company might have difficulty in obtaining funds to meet
operating and capital requirements, which could cause a material adverse impact
on its financial condition, liquidity, and/or results of operations.


FINANCIAL INSTRUMENTS

The Company uses various financial instruments in the normal course of business.
By their nature, all such instruments involve risk, and the Company's maximum
potential loss may exceed amounts recorded in the balance sheet. As is customary
for these types of instruments, the Company does not require collateral or other
security from other parties to these instruments. However, because the Company
manages exposure to credit risk through credit approvals, credit limits and
monitoring procedures, the Company believes that reserves for losses are
adequate.

The Company has periodically used derivative instruments for the purpose of
hedging commodity and interest rate exposures. As a policy, the Company does not
engage in speculative transactions, nor does the Company hold or issue financial
instruments for trading purposes.


REFOCUSING

Bontex continues to focus on developing several new innovative products for
footwear and non-footwear applications. The Company has a strategy to locate new
technologies and bring them to the marketplace, but it is not possible to
predict with a high level of assurance their level of sales potential or
profitability at this time. No material sales have been generated yet for these
new technologies and products.


RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," was effective for periods
beginning after June 15, 2000. This statement requires that the Company
recognize all derivatives as either assets or liabilities in the balance sheet,
and measure those instruments at fair value. At March 31, 2001, the Company did
not have any derivative or hedging instruments. Because the



                                       10

<PAGE>




Company has used in the past and may continue in the future the use of
derivative instruments and hedging activities this statement could have an
impact on the Company's future financial statements.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to certain risks related to interest rates, currency and
commodity positions. Market risk is defined as the risk of loss arising from
adverse changes in market rates and prices. The following disclosures provide
certain forward-looking data concerning potential exposures to market risk. When
deemed appropriate, the Company's general policy is to fix rates and prices at
levels considered favorable.

There is no expected material foreign exchange risk for the Company's debt, as
these amounts are denominated in the local operating currencies of the
respective operations.

The table below provides information about the Company's financial instruments
that are sensitive to changes in interest rates. For debt obligations, the table
presents principal cash flows and related weighted average interest rates by
expected maturity dates.

Financial Instruments held for other than trading purposes at March 31, 2001
(dollars in thousands):

<TABLE>
<CAPTION>

EXPECTED MATURITY DATE
----------------------



                                                                                       There-                Estimated
                               2001      2002        2003       2004         2005      after      Total      Fair Value
<S>     <C>    <C>    <C>    <C>    <C>    <C>
LIABILITIES
Long-term debt
    Fixed Rate                 $ 116      $ 440      $ 440       $ 426        $ 214       -     $ 1,636       $ 1,423
    Average interest rate       4.97%      4.97%      4.97%       4.97%        5.27%      -        5.02%
    Rate

    Variable Rate               $ 50      $ 200      $ 200       $ 200        $ 117       -     $   767      $    767
    Average Interest Rate       10.5%      10.5%      10.5%       10.5%        10.5%      -        10.5%

</TABLE>


Approximately $9.3 million of variable rate debt is not covered by interest rate
swaps and is subject to the risk of interest rate changes. The market risk
sensitivity analysis above does not fully reflect the potential net market risk
exposure, because other market risk exposures may exist in other transactions.


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<PAGE>


                           PART II. OTHER INFORMATION

                                  BONTEX, INC.
                                    FORM 10-Q
                    FOR THE NINE MONTHS ENDED MARCH 31, 2001

ITEM 1.        LEGAL PROCEEDINGS

During fiscal year 2000, the Ministere Des Finances, the Belgian tax authority,
completed an examination of Bontex S.A.'s, the Company's Belgian subsidiary, tax
returns for 1997, 1998 and 1999 and extended the tax examination to 1995 and
1996 based on certain items. Bontex S.A. has received notices of proposed tax
adjustments to these tax returns. The proposed tax adjustments arise from items
which are considered disallowed expenses by tax authorities, including
commissions paid to certain distributors and clients, certain travel expenses
and various smaller items including allowances for doubtful receivables and
certain insurance premiums. The proposed tax adjustments by the Belgian
authorities approximate $820,000, plus accrued interest. The Company believes,
based in part on written opinion of external counsel, it has meritorious legal
defenses to many of the claims and the Company intends to defend such claims.
The Company has responded to the Belgian tax authority with a Memorandum. The
Belgian tax authority has acknowledged receipt of this Memorandum and has stated
that it will reply to same within six months of its receipt. The Belgian tax
authority also stated that the Company would have an additional three months to
respond to this reply by the Belgian tax authority. The Company's best estimate
of the most likely amount payable for the foregoing tax matters is $239,000, and
accordingly, a provision for this amount was accrued at June 30, 2000. The
Company's actual liability pursuant to the foregoing examination may exceed
$239,000, and such excess liability could adversely affect the Company's
financial condition, liquidity and/or results of operations in any particular
period.


ITEM 5.        OTHER INFORMATION

Bontex USA received a renewal of its 5-year wastewater discharge permit on April
2, 2001. The new permit allows for an averaging of discharge limits that were
previously point limits. In addition, the zinc limit was removed from the permit
by the regulatory authorities as zinc was deemed not to be a component
significantly contributing to wastewater impact. The new permit will require the
Company to expand its wastewater treatment facility to increase the capacity of
its equalization tank. The Company expects to start the expansion this Summer
and complete it by the end of the calendar year. Prior to receiving the new
permit, the Company had received a Notice of Violation from the Virginia
Department of Environmental Quality (DEQ) dated March 14, 2001 regarding its
discharge of wastewater. In general, DEQ stated in the Notice of Violation that
it had reason to believe that the Company's plant in Buena Vista, Virginia, may
be out of compliance with wastewater discharge limitations. The Company expects
that this Notice of Violation will result in a consent agreement with DEQ but
will not result in monetary damages that would have a material adverse effect on
the Company's financial condition, liquidity or results of operations.


ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

               (a)      Exhibits:

                        None

               (b)      Reports on Form 8-K:

                        None



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<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.



                                  BONTEX, INC.
                                  (Registrant)

    May 15, 2001                  /s/James C. Kostelni
--------------------------        -----------------------------------------
         (Date)                      James C. Kostelni
                                     Chairman of the Board
                                     and President

     May 15, 2001                 /s/Charles W. J. Kostelni
--------------------------        ---------------------------------------
         (Date)                      Charles W. J. Kostelni
                                     Corporate Controller
                                     and Secretary



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