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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549
                               ___________________


                                   FORM 10-Q/A


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

             For the quarterly period ended July 30, 2005

                                      OR

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

             For the transition period from __________ to __________


Commission File No.  1-10892





                              HAROLD'S STORES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



            Oklahoma                                             73-1308796
--------------------------------------------------------------------------------
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)



            5919 Maple Avenue                            (214) 366-0600
--------------------------------------------------------------------------------
           Dallas, Texas 75235                   (Registrant's telephone number,
(Address of principal executive offices)              including area code)
              (Zip 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 an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)                   Yes [_]    No [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.

As of August 31, 2005, the registrant had 6,223,508 shares of Common Stock
outstanding.

================================================================================
<PAGE>
                      Harold's Stores, Inc. & Subsidiaries
                                    Index to
                         Quarterly Report on Form 10-Q/A
                       For the Period Ended July 30, 2005




Part I - FINANCIAL INFORMATION                                              Page
------------------------------                                              ----

Item 1.     Financial Statements

            Consolidated Balance Sheets - July 30, 2005 (unaudited)
            and January 29, 2005...........................................    3

            Consolidated Statements of Operations -
                 Thirteen and Twenty-Six Weeks ended July 30, 2005
                 (unaudited) and July 31, 2004 (Restated), (unaudited).....    5

            Consolidated Statements of Cash Flows -
                 Twenty-Six Weeks ended July 30, 2005 (unaudited) and
                 July 31, 2004 (Restated), (unaudited).....................    6

            Notes to Interim Consolidated Financial Statements.............    7

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

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

Item 4.     Controls and Procedures........................................   20




Part II - OTHER INFORMATION
---------------------------

Item 1.     Legal Proceedings..............................................   21

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds....   21

Item 3.     Defaults Upon Senior Securities................................   21

Item 4.     Submission of Matters to a Vote of Security Holders............   22

Item 5.     Other Information..............................................   22

Item 6.     Exhibits.......................................................   23


            Signatures.....................................................   23



                                        2
<PAGE>
                                     PART I
                                     ------

ITEM 1.     FINANCIAL STATEMENTS

THE FINANCIAL INFORMATION INCLUDED IN THIS FORM 10-Q/A HAS NOT BEEN SUBJECTED TO
A TIMELY QUARTERLY REVIEW AS REQUIRED BY RULE 10-01(D) OF REGULATION S-X.


                     HAROLD'S STORES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                                 (In Thousands)


<TABLE><CAPTION>
                                                                 July 30,       January 29,
                                                                   2005            2005
                                                               ------------    ------------
                                                                (Unaudited)
<S>                                                            <C>             <C>
Current assets:

  Cash and cash equivalents                                    $      1,324    $        674
  Trade accounts receivable, less allowance for doubtful
     accounts of $200 as of July 30 and January 29                    6,718           7,343
  Note and other receivables                                             78             125
  Merchandise inventories                                            19,970          20,123
  Prepaid expenses                                                    1,017           1,254
                                                               ------------    ------------

  Total current assets                                               29,107          29,519
                                                               ------------    ------------

Property and equipment, at cost                                      44,578          44,211
Less accumulated depreciation and amortization                      (32,646)        (30,665)
                                                               ------------    ------------

  Net property and equipment                                         11,932          13,546
                                                               ------------    ------------

  Total assets                                                 $     41,039    $     43,065
                                                               ============    ============
</TABLE>


      See accompanying notes to interim consolidated financial statements.

                                        3
<PAGE>
                     HAROLD'S STORES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                        (In Thousands Except Share Data)

<TABLE><CAPTION>
                                                                 July 30,       January 29,
                                                                   2005            2005
                                                               ------------    ------------
                                                                (Unaudited)
<S>                                                            <C>             <C>
Current liabilities:

  Accounts payable                                             $      6,369    $      7,116
  Redeemable gift certificates                                          765           1,130
  Accrued payroll expenses and bonuses                                  707             613
  Accrued rent expense                                                1,235           1,141
  Current maturities of long-term debt (See Note 6)                  20,952          19,958
                                                               ------------    ------------

  Total current liabilities                                          30,028          29,958
                                                               ------------    ------------

 Accrued rent expense, net of current maturities                      4,988           5,630
 Long-term debt, net of current maturities                            1,762             580
                                                               ------------    ------------

  Total liabilities                                                  36,778          36,168
                                                               ------------    ------------

Commitments and contingencies (See Note 8)

Convertible preferred stock of $.01 par value
       Amended Series 2001-A, authorized 600,000
          shares, issued and outstanding 338,681 as
          of July 30 and 336,231 as of January 29                     6,774           6,725
       Series 2002-A, authorized 300,000 shares,
          issued and outstanding  222,418 as of
          July 30 and 217,732 as of January 29                        4,448           4,340
       Series 2003-A, authorized 100,000 shares,
          issued and outstanding 55,077 as of
          July 30 and 54,514 as of January 29                         5,495           5,426
    2001-A and 2002-A entitled to $20.00 per share,
    and 2003-A entitled to $100.00 per share, in
    each case plus accrued but unpaid dividends in
    liquidation
                                                               ------------    ------------

                                                                     16,717          16,491
 Stockholders' deficit:

  Common stock of $.01 par value
   Authorized 25,000,000 shares; issued and
       outstanding 6,223,508 as of July 30 and
       6,222,308 as of January 29                                        62              62
  Additional paid-in capital                                         34,469          34,468
  Accumulated deficit                                               (46,985)        (44,122)
                                                               ------------    ------------
                                                                    (12,454)         (9,592)
  Less:   Treasury stock of 205 shares as of July
          30 and January 29 recorded at cost                             (2)             (2)
                                                               ------------    ------------
       Total stockholders' deficit                                  (12,456)         (9,594)
                                                               ------------    ------------
       Total liabilities and stockholders' deficit             $     41,039    $     43,065
                                                               ============    ============
</TABLE>

      See accompanying notes to interim consolidated financial statements.

                                        4
<PAGE>
                     HAROLD'S STORES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In Thousands Except Per Share Data)
                                   (Unaudited)



<TABLE><CAPTION>
                                                             13 Weeks Ended                  26 Weeks Ended
                                                      ----------------------------    ----------------------------
                                                        July 30,        July 31,        July 30,        July 31,
                                                          2005            2004            2005            2004
                                                      ------------    ------------    ------------    ------------
                                                                       (Restated)                      (Restated)
<S>                                                   <C>             <C>             <C>             <C>
Sales                                                 $     20,298    $     19,290    $     44,262    $     43,458

Costs and expenses:
  Costs of goods sold (including occupancy and
   central buying expenses, exclusive of items
   shown separately below)                                  15,558          12,869          30,026          27,741

  Selling, general and administrative expenses               6,307           6,412          13,708          13,669

  Depreciation and amortization                                969           1,020           1,943           2,052

  Interest expense                                             357             203             696             418
                                                      ------------    ------------    ------------    ------------

       Total costs and expenses                             23,191          20,504          46,373          43,880
                                                      ------------    ------------    ------------    ------------

  Loss before income taxes                                  (2,893)         (1,214)         (2,111)           (422)

  Benefit for income taxes                                      --              --              --              --
                                                      ------------    ------------    ------------    ------------
  Net loss                                            $     (2,893)   $     (1,214)   $     (2,111)   $       (422)
                                                      ============    ============    ============    ============


NET LOSS APPLICABLE TO COMMON STOCKHOLDERS:

  Net loss                                            $     (2,893)   $     (1,214)   $     (2,111)   $       (422)

  Less:  Preferred stock dividends and accretion of
  preferred stock issuance costs                               375             205             752             746
                                                      ------------    ------------    ------------    ------------
  Net loss applicable to common stockholders          $     (3,268)   $     (1,419)   $     (2,863)   $     (1,168)
                                                      ============    ============    ============    ============

  Net loss per common share:
    Basic                                             $      (0.53)   $      (0.23)   $      (0.46)   $      (0.19)
                                                      ============    ============    ============    ============
    Diluted                                           $      (0.53)   $      (0.23)   $      (0.46)   $      (0.19)
                                                      ============    ============    ============    ============
</TABLE>


      See accompanying notes to interim consolidated financial statements.

                                        5
<PAGE>
                     HAROLD'S STORES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)



<TABLE><CAPTION>
                                                                          26 Weeks Ended
                                                                  -------------------------------
                                                                    July 30,           July 31,
                                                                      2005               2004
                                                                  ------------       ------------
                                                                                       (Restated)
<S>                                                               <C>                <C>
Cash flows from operating activities:
  Net loss                                                        $     (2,111)      $       (422)
  Adjustments to reconcile net loss to net cash used
  in operating activities:
     Depreciation and amortization                                       1,943              2,052
     Gain on sale of assets                                                (20)               (45)
     Changes in assets and liabilities:
       Decrease in trade and other accounts receivable                     617                860
       Decrease (increase) in merchandise inventories                      153               (983)
       Decrease in prepaid expenses                                        237                 11
       Decrease in accounts payable                                       (747)            (1,125)
       Decrease in accrued expenses                                       (819)              (607)
                                                                  ------------       ------------

Net cash used in operating activities                                     (747)              (259)
                                                                  ------------       ------------

  Cash flows from investing activities:
     Acquisition of property and equipment                                (329)            (1,142)
     Proceeds from disposal of property and equipment                       20                 45
     Issuance of note receivable                                             6                 (2)
     Payments received for notes receivable                                 49                  9
                                                                  ------------       ------------

  Net cash used in investing activities                                   (254)            (1,090)
                                                                  ------------       ------------

  Cash flows from financing activities:
     Borrowings on long-term debt                                        1,300                 --
     Payments on long-term debt                                           (721)              (135)
     Advances on revolving line of credit                               50,099             49,963
     Payments on revolving line of credit                              (48,502)           (48,316)
     Proceeds from exercise of common stock options                          1                 14
     Preferred stock dividends                                            (526)              (528)
                                                                  ------------       ------------

Net cash provided by financing activities                                1,651                998
                                                                  ------------       ------------

Increase (decrease) in cash                                                650               (351)
Cash and cash equivalents at beginning of period                           674              1,118
                                                                  ------------       ------------
Cash and cash equivalents at end of period                        $      1,324       $        767
                                                                  ============       ============

Non-cash investing and financing activities:
     Issuance of preferred stock in lieu of rent                            --                142
     Preferred stock dividends paid in shares of
     preferred stock                                                       199                184
</TABLE>


      See accompanying notes to interim consolidated financial statements.

                                        6
<PAGE>
                     HAROLD'S STORES, INC. AND SUBSIDIARIES
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                         July 30, 2005 and July 31, 2004
                                   (Unaudited)


1.       Unaudited Interim Periods
         -------------------------

         In the opinion of the Company's management, all adjustments (all of
which are normal and recurring) have been made which are necessary to fairly
state the financial position of the Company as of July 30, 2005 and the results
of its operations and cash flows for the twenty-six week periods ended July 30,
2005 and July 31, 2004. The results of operations for the thirteen and
twenty-six week periods ended July 30, 2005 and July 31, 2004 are not
necessarily indicative of the results of operations that may be achieved for the
entire year. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended January 29, 2005.

         The financial information included in this Form 10-Q/A has not been
subjected to a timely quarterly review as required by Rule 10-01(d) of
Regulation S-X.


2.       Definition of Fiscal Year
         -------------------------

         The Company has a 52-53 week year which ends on the Saturday closest to
January 31. The period from January 30, 2005 through January 28, 2006, has been
designated as 2005.

3.       Basis of Presentation
         ---------------------

         The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly owned. All significant
intercompany accounts and transactions have been eliminated.

4.       Impact of New Accounting Pronouncements
         ---------------------------------------

         On December 16, 2004, the FASB issued FASB Statement No. 123 (revised
2004) ("SFAS 123(R)"), "Share-Based Payment", which must be adopted by the
Company no later than January 29, 2006. SFAS 123(R) requires an entity to
recognize compensation expense in an amount equal to the fair value of
share-based payments granted to employees. The Company will adopt SFAS 123(R) in
the required period and apply the standard using the modified prospective
method, which requires compensation expense to be recorded for new and modified
awards. For any unvested portion of previously issued and outstanding awards,
compensation expense is required to be recorded based on the previously
disclosed SFAS 123 methodology, and amounts. Prior periods presented are not
required to be restated. The Company is still assessing the impact on its
results of operations and financial position upon the adoption of SFAS 123(R),
but it is expected to be similar to the pro forma information set forth in Note
10 below.

5.       Restatement of Financial Statements
         -----------------------------------

         In light of an SEC clarification on lease accounting issued in February
2005, the Company re-evaluated its lease accounting practices in the first
quarter of 2005 and has corrected the way it accounts for its leases,
specifically the accounting for operating leases with scheduled rent increases
and tenant allowances.

         Under the requirements of FASB Technical Bulletin 85-3, "Accounting for
Operating Leases with Scheduled Rent Increases," rent expense should be
amortized on a straight-line basis over the term of the lease. In prior periods,
the Company had determined that the term of the lease begins on the commencement
date of the lease, which generally coincides with the store opening date,

                                        7
<PAGE>
instead of at the time the Company takes physical possession of the property to
start construction on leasehold improvements. This had the effect of excluding
the construction period of the stores from the calculation of the period over
which rent is expensed. The Company has restated its previously reported
Consolidated Financial Statements to correct its accounting for scheduled rent
increases by including the construction period.

         In addition, under FASB Technical Bulletin 88-1, "Issues Relating to
Accounting for Leases," lease incentives such as tenant allowances received from
the landlord to cover construction costs incurred by the Company should be
reflected as a deferred liability, amortized over the term of the lease and
reflected as a reduction to rent expense. The Company had previously classified
tenant allowances as a reduction to store build out costs (leasehold
improvements). As a result, it reflected the amortization as a reduction to
depreciation expense instead of as a reduction to rent expense. The Company has
restated its previously reported Consolidated Financial Statements to properly
account for tenant allowances.

         As a result of these restatements, the Company's financial results for
the thirteen and twenty-six weeks ended July 31, 2004 have been adjusted as
follows (in thousands, except per share data):
<TABLE><CAPTION>
                                                 As Previously                        As
                                                   Reported                        Restated
                                                 ------------    ------------    ------------
                                                             Thirteen Weeks Ended
                                                 --------------------------------------------
                                                   July 31,                        July 31,
                                                     2004         Adjustments        2004
                                                 ------------    ------------    ------------
<S>                                              <C>             <C>             <C>
Sales                                            $     19,290              --    $     19,290

Costs and expenses:
  Cost of goods sold                                   13,134            (265)         12,869
  Selling, general and administrative expenses          6,412              --           6,412
  Depreciation and amortization                           770             250           1,020
  Interest expense                                        203              --             203
                                                 ------------    ------------    ------------
                                                       20,519             (15)         20,504
                                                 ------------    ------------    ------------
Loss before income taxes                               (1,229)             15          (1,214)
Benefit for income taxes                                   --              --              --
                                                 ------------    ------------    ------------
  Net loss                                       $     (1,229)             15    $     (1,214)
                                                 ============    ============    ============


NET LOSS APPLICABLE TO COMMON STOCKHOLDERS:

  Net loss                                       $     (1,229)             15    $     (1,214)

  Less:  Preferred stock dividends and accretion
         of preferred stock issuance costs                205              --             205
                                                 ------------    ------------    ------------
  Net loss applicable to common stockholders     $     (1,434)             15    $     (1,419)
                                                 ============    ============    ============
Net loss per common share:
  Basic                                          $      (0.23)           0.00    $      (0.23)
                                                 ============    ============    ============
  Diluted                                        $      (0.23)           0.00    $      (0.23)
                                                 ============    ============    ============
</TABLE>

                                        8
<PAGE>
<TABLE><CAPTION>
                                                            Twenty-Six Weeks Ended
                                                 --------------------------------------------
                                                   July 31,                        July 31,
                                                     2004         Adjustments        2004
                                                 ------------    ------------    ------------
<S>                                              <C>             <C>             <C>
Sales                                            $     43,458              --    $     43,458

Costs and expenses:
  Cost of goods sold                                   28,271            (530)         27,741
  Selling, general and administrative expenses         13,669              --          13,669
  Depreciation and amortization                         1,551             501           2,052
  Interest expense                                        418              --             418
                                                 ------------    ------------    ------------
                                                       43,909             (29)         43,880
                                                 ------------    ------------    ------------
Loss before income taxes                                 (451)             29            (422)
Benefit for income taxes                                   --              --              --
                                                 ------------    ------------    ------------
  Net loss                                       $       (451)             29    $       (422)
                                                 ============    ============    ============


NET LOSS APPLICABLE TO COMMON STOCKHOLDERS:

  Net loss                                       $       (451)             29    $       (422)

  Less:  Preferred stock dividends and accretion
         of preferred stock issuance costs                746              --             746

                                                 ------------    ------------    ------------
  Net loss applicable to common stockholders     $     (1,197)             29    $     (1,168)
                                                 ============    ============    ============
Net loss per common share:
  Basic                                          $      (0.19)           0.00    $      (0.19)
                                                 ============    ============    ============
  Diluted                                        $      (0.19)           0.00    $      (0.19)
                                                 ============    ============    ============
</TABLE>

6.       Long-term Debt
         --------------

         The Company's original three-year credit facility with Wells Fargo
Retail Finance II, LLC, ("WFRF") was entered into on February 5, 2003 and
provided the Company with a maximum available credit limit of $22 million. This
agreement was scheduled to expire in February 2006. As discussed below, on April
29, 2004, the maximum available credit line was increased to the lesser of $25
million or $22 million plus outstanding participant advances, and the expiration
date was extended to February 5, 2007. The credit facility is secured by
substantially all assets of the Company and its subsidiaries and is subject to a
borrowing base calculation based primarily on inventory and accounts receivable.
The facility has two financial covenants, a minimum excess availability covenant
of $1.35 million and a maximum capital expenditure covenant, established at
$2.75 million for 2005. Interest rates under the facility are at prime plus 0.5%
or LIBOR plus 2.50%, with the ability to reduce the rate if the Company achieves
certain financial criteria. The balance outstanding on the Company's line of
credit at July 30, 2005 was $20,775,000 which includes the $4 million
outstanding under the bridge facility discussed below. At July 30, 2005 the
Company's availability under the WFRF line of credit was approximately $2.9
million above the minimum availability requirement of $1.35 million and the
average interest rate on the credit line was 5.74%.

         Subsequent to securing the initial credit facility, the Company
negotiated an increase of $2 million in its total borrowing availability under
its existing credit facility with WFRF. The Company obtained this increase in
order to provide for additional working capital. The full $2 million was
available for borrowing on July 15, 2003 and has been extended to the Company by
Wells Fargo based upon a loan participation agreement between Wells Fargo and
RonHow, LLC, an entity established in July 2003 which is owned and controlled
directly or indirectly by Ronald de Waal and W. Howard Lester. Mr. de Waal and
Mr. Lester are both major beneficial owners of the Company's common stock, and
Mr. Lester is also a director of the Company.

                                        9
<PAGE>
         In order to achieve additional liquidity, on April 29, 2004, the
Company completed an amendment to the credit facility with WFRF which increased
the Company's borrowing availability under the facility. The amendment increased
the Company's maximum inventory advance rate cap from 75% to 80% during non-peak
times and from 80% to 85% during peak times. Peak times were amended to include
the eight weeks prior to Easter and the eight weeks prior to October 1.
Additionally, the amendment extended the term of the credit facility by one
year, with a new expiration of February 5, 2007. The amendment also increased
the maximum revolver amount from $22 million to the lesser of $25 million or $22
million plus outstanding participant advances. Finally, the amendment provided
for an additional increase of $2 million in the Company's borrowing availability
under the facility based upon an increase in the existing loan participation
agreement between WFRF and RonHow, LLC. WFRF will continue to serve as the
lending agent for the Company under the credit facility, and the principal
covenants and conditions imposed upon the Company pursuant to the WFRF credit
facility agreement have not materially changed. RonHow, LLC's right to repayment
of any advances under the credit facility that are attributable to its total $4
million participation is generally subordinate to the repayment rights of the
other credit facility lenders. However, the Company may repay these advances
provided it meets certain conditions, including the maintenance of an average
daily excess availability under the credit facility of at least $2.5 million for
the 30 days prior to and 30 days projected immediately following the repayment.
The average excess availability requirement is higher than the excess
availability otherwise required of the Company under the credit facility. If the
Company does not repay the new $2 million loan participation of RonHow during
the 18 months subsequent to April 29, 2004, RonHow will have an option at that
time to convert any of the incremental $2 million not repaid into shares of
authorized but unissued 2003-A Preferred Stock, which will be convertible into
shares of common stock at a price of $2.524 per share, which was the 20-day
average closing price of the Company's common stock for the period ending
immediately before closing of the loan amendment. Additionally, if the Company
has not repaid the initial $2 million of loan participation by February 2006,
the Company will pay an additional 4% fee per annum on the outstanding
participation amount up to $2 million. This transaction was approved by the
independent directors.

         The Company was in compliance with its debt covenants for the quarter
ended July 30, 2005. Although the Company's line of credit with WFRF does not
expire until February 2007, the Company has classified its borrowings under its
line of credit as current in its consolidated balance sheets due to the terms of
its agreement with the lender. Under the bank agreement, there is an
acceleration clause which potentially allows the bank to demand immediate
payment of all outstanding borrowings upon the occurrence of a material adverse
change in the Company's operations or financial position. Determination of what
constitutes a material adverse change is at the discretion of the bank, however,
it is subject to reasonableness standards. In addition, the Company is required
to maintain a lock-box agreement with the bank whereby all cash received is
applied against current borrowings. As a result of these items, the Company is
required to classify its line of credit borrowings as current as proscribed by
EITF 95-22, "Balance Sheet Classification of Borrowings Outstanding under
Revolving Credit Agreements that include both a Subjective Acceleration Clause
and a Lock-Box Arrangement."


7.       Income Taxes
         ------------

         The Company's federal net operating losses of approximately $21.6
million will begin to expire in 2021. The Company also has state net operating
losses of approximately $30.7 million which begin to expire in 2005. The Company
provides a valuation allowance for all deferred tax assets because the Company's
recent history of operating losses made the realization of these assets more
unlikely than likely.

         The ability of the Company to utilize net operating loss carryforwards
to reduce future federal taxable income and federal income tax of the Company is
subject to various limitations under the Internal Revenue Code of 1986 ("the
Code"), as amended. The utilization of such carryforwards may be limited upon
the occurrence of certain ownership changes, including the issuance or exercise
of

                                       10
<PAGE>

rights to acquire stock, the purchase or sale of stock by 5% stockholders, as
defined in the Treasury regulations, and the offering of stock by the Company
during any three-year period resulting in an aggregate change of more than 50%
in the beneficial ownership of the Company.

         In the event of an ownership change (as defined for income tax
purposes), Section 382 of the Code imposes an annual limitation on the amount of
a corporation's taxable income that can be offset by these carryforwards. The
limitation is generally equal to the product of (i) the fair market value of the
equity of the Company multiplied by (ii) a percentage approximately equivalent
to the yield on long-term tax exempt bonds during the month in which an
ownership change occurs. The Company's management, in consultation with its tax
advisors, has been assessing the impact its preferred stock issuances had on the
change in the beneficial ownership of the Company, and whether or not such a
change would impact the Company's ability to utilize its net operating loss
carryforwards ("NOLs"). After thorough review, it was determined that a change
in ownership had occurred on October 1, 2002, and that this change resulted in a
limitation on the Company's ability to utilize its NOLs under Section 382 of the
Code. As a result of the limitation, the Company may only utilize $1.0 million
per year of its total October 1, 2002 pre-change NOL of $12.5 million. Any
portion of the $1.0 million annual limitation not utilized in a particular year
may be carried over to the next year and added to that year's limitation. Based
on the Company's 2004 projected taxable loss, the cumulative excess annual
limitation carryover to 2005 is approximately $2.4 million. In 2005 the
Company's total NOL available for use is $12.6 million.

8.       Commitments and Contingencies
         -----------------------------

         The Company is occasionally involved in various claims, administrative
agency proceedings and litigation arising out of the normal conduct of its
business. At July 30, 2005, there existed only one minor litigation matter.
Although the ultimate outcome of such litigation cannot be predicted, the
management of the Company, after discussions with counsel, believes that the
resulting liability, if any, will not have a material effect upon the Company's
financial position or results of operations.

         Effective August 23, 2005 the Company entered into an agreement with
H.D. Investments, LLC to sell its Norman, Oklahoma office location at a sales
price of $1.25 million. The closing of this transaction is contingent upon the
Company and the buyer finalizing an agreement for the Company to lease the first
floor of the building from H.D. Investments, LLC and the buyer obtaining and
approving the final plans for the remodel of the first floor. The contract is
subject to a due diligence feasibility period that expires September 22, 2005.
If the sale of the building were to close, the Company expects to record a gain
on the sale of approximately $875,000.

9.       Preferred Stock
         ---------------

         On February 28, 2001, the Company executed a definitive agreement to
allow an investor to purchase from the Company 300,000 shares of convertible
preferred stock for a total purchase price of $6 million. Under this preferred
stock agreement, each of the 300,000 initially issued shares of preferred stock
is convertible into common stock of the Company at a fixed rate of $1.275 per
share. The preferred shares have voting rights equal to the number of common
shares into which they may be converted. Until converted, the preferred stock is
entitled to receive quarterly dividends that cumulate annually at a rate of 10%
per annum, which are reduced to 8% per annum if the Company's operating income
for any fiscal year ending after February 28, 2001 exceeds $4,735,000. Dividends
were payable 50% in cash and 50% in additional shares of preferred stock until
February 28, 2003 and thereafter are paid in additional shares of preferred
stock or cash as the holder of the preferred stock may elect. Shares of
preferred stock issued in respect of dividends are convertible into common stock
based upon an average market price of the common stock as of the respective
dividend dates. These preferred shares are presently redeemable at the option of
the Company at a price equal to the initial purchase price plus cumulated and
accrued but unpaid dividends.

                                       11
<PAGE>
         On August 2, 2002, the Company executed a definitive agreement to allow
a group of investors to purchase from the Company 200,000 shares of Series
2002-A convertible preferred stock for a total purchase price of $4 million.
Under this preferred stock agreement, each of the 200,000 initially issued
shares of preferred stock is convertible into common stock of the Company at a
fixed rate of $2.72 per share. The preferred shares have voting rights equal to
the number of common shares into which they may be converted. Until converted,
the preferred stock is entitled to receive quarterly dividends that cumulate
annually at a rate of 8% per annum, which is reduced to 6% per annum if certain
profitability targets are met by the Company. Dividends were payable 50% in cash
and 50% in additional shares of preferred stock until July 1, 2003 and
thereafter are paid in additional shares of preferred stock or cash as the
holder of the preferred stock may elect. Following the third anniversary of the
original issuance date, the Series 2002-A Preferred Stock is redeemable at the
option of the Company at a price equal to the initial purchase price plus
cumulated and accrued but unpaid dividends.

         On February 5, 2003, the Company closed on a $5 million private equity
investment by Inter-Him, N.V., of which Ronald de Waal is a Managing Director,
and W. Howard Lester, a director of the Company (the "Investors"). The Investors
purchased an aggregate of 50,000 shares of a new series of preferred stock,
designated Series 2003-A Preferred Stock, at a purchase price of $100.00 per
share. Each of the 50,000 shares of Series 2003-A Preferred Stock initially
issued is convertible into common stock at a fixed rate of $1.15 per share, and
otherwise provides rights and preferences substantially similar to the Company's
existing Series 2002-A Preferred Stock. The percentage ownership of common stock
on an as-converted basis by Inter-Him and Mr. de Waal is approximately 51.1%
(assuming conversion of all of the Company's outstanding preferred stock).
Dividends were payable 50% in cash and 50% in additional shares of preferred
stock until January 1, 2004, and thereafter are paid in additional shares of
preferred stock or cash as the holder of the preferred stock may elect.
Following the third anniversary of the original issuance date, the Series 2003-A
Preferred Stock is redeemable at the option of the Company at a price equal to
the initial purchase price plus cumulated and accrued but unpaid dividends.

         None of the Company's outstanding preferred shares are included in the
stockholders' equity section of the balance sheet because the preferred
shareholders have special voting rights that empower them to elect a majority of
the board of directors and maintain effective control over the Company.


10.      Stock Options
         -------------

         The Company follows the intrinsic value method of accounting for common
stock options to employees, in accordance with the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
related interpretations.

Had the Company elected to recognize compensation expense based on the fair
value of the stock options granted as of their grant date per the standards of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", the Company's 2005 and 2004 pro forma net income and pro forma
net income per share would have differed from the amounts actually reported as
shown in the table below. The pro forma amounts shown reflect only options
granted in 1995 through 2005. Therefore, the full impact of calculating
compensation cost for stock options based on their fair value is not reflected
in the pro forma net income amounts presented because compensation cost is
reflected over the options' vesting period of up to ten years and compensation
cost for options granted prior to January 29, 1995 is not considered.









                                       12
<PAGE>
<TABLE><CAPTION>
                                                                 13 Weeks Ended                  26 Weeks Ended
                                                          ----------------------------    ----------------------------
                                                            July 30,        July 31,        July 30,        July 31,
                                                              2005            2004            2005            2004
                                                          ------------    ------------    ------------    ------------
                                                                           (Restated)                      (Restated)
                                                                     (In thousands, except per share data)
<S>                                                       <C>             <C>             <C>             <C>
Net loss applicable to common stockholders, as reported   $     (3,268)   $     (1,419)   $     (2,863)   $     (1,168)

Add:
Stock-based employee compensation expense included in
  reported net loss                                                 --              --              --              --

Deduct:
Stock-based employee compensation expense determined
  under fair value method for all awards                            74             205             156             420
                                                          ------------    ------------    ------------    ------------
Pro forma net loss applicable to common stockholders      $     (3,342)   $     (1,624)   $     (3,019)   $     (1,588)
                                                          ============    ============    ============    ============

Net loss per average common share:
  Basic, as reported                                      $      (0.53)   $      (0.23)   $      (0.46)   $      (0.19)
  Basic, pro forma                                        $      (0.54)   $      (0.26)   $      (0.49)   $      (0.26)

  Diluted, as reported                                    $      (0.53)   $      (0.23)   $      (0.46)   $      (0.19)
  Diluted, pro forma                                      $      (0.54)   $      (0.26)   $      (0.49)   $      (0.26)
</TABLE>





11.      Revenue Recognition
         -------------------

         Sales from store locations represented 96% of the Company's total sales
for the twenty-six weeks ended July 30, 2005. These sales are recognized at the
time of the customer's purchase. During the third quarter of 2003, the Company
returned to the direct channel business by offering direct response catalogs.
During the third quarter of 2004, the Company returned to the internet commerce
business by offering purchase options through its web site. The sales related to
these direct response catalogs and internet transactions were approximately four
percent of total sales for the twenty-six weeks ended July 30, 2005, and a
return reserve was established for this revenue stream beginning August 2003.
Direct channel and internet sales are recognized at the time the order is
shipped to the customer. All sales are net of returns and exclude sales tax.
Gift card sales are recognized as revenue when the gift card is redeemed, not
when it is sold.




                                       13
<PAGE>
12.      Earnings per Share
         ------------------

         Outstanding shares for purposes of basic and diluted earnings per share
were calculated as follows:
<TABLE><CAPTION>
                                                                 13 Weeks Ended                  26 Weeks Ended
                                                          ----------------------------    ----------------------------
                                                            July 30,        July 31,        July 30,        July 31,
                                                              2005            2004            2005            2004
                                                          ------------    ------------    ------------    ------------
                                                                           (Restated)                      (Restated)
                                                                                 (in thousands)
<S>                                                       <C>             <C>             <C>             <C>
Net loss applicable to common shareholders -
basic and diluted                                         $     (3,268)   $     (1,419)   $     (2,863)   $     (1,168)
                                                          ============    ============    ============    ============

Average common shares outstanding                                6,223           6,215           6,223           6,213

Effect of dilutive securities:
  Employee stock options                                            --              --              --              --

  Convertible preferred stock                                       --              --              --              --
                                                          ------------    ------------    ------------    ------------
  Diluted average common shares outstanding                      6,223           6,215           6,223           6,213
                                                          ============    ============    ============    ============
</TABLE>



         Approximately 1,848,630 shares and 907,842 shares for the twenty-six
weeks ended July 30, 2005 and July 31, 2004, respectively, related to
outstanding employee stock options, were not included in the calculation of
diluted earnings per average common share because the effect of including those
shares is anti-dilutive as the exercise price of the stock options exceeded the
average common stock market price during the respective period. Approximately
616,176 and 600,980 preferred shares convertible into 11,501,556 and 11,299,851
common shares, for the twenty-six weeks ended July 30, 2005 and July 31, 2004,
respectively, were not included in the calculation of diluted earnings per
average common share because the effect of including those shares is
anti-dilutive.


13.      Reclassifications
         -----------------

         Certain reclassifications have been made to the January 29, 2005
balances to conform to the July 30, 2005 presentation.









                                       14
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         From time to time, the Company may publish forward-looking statements
relating to certain matters including anticipated financial performance,
business prospects, the future opening or closing of stores, inventory levels,
anticipated capital expenditures, and other matters. All statements other than
statements of historical fact contained in this Form 10-Q/A or in any other
report of the Company are forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of that safe harbor, the Company
notes that a variety of factors, individually or in the aggregate, could cause
the Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements including, without limitation, the following: the
ability of the Company to generate cash flow from operations in amounts
sufficient to meet debt obligations and provide working capital and funds for
growth, ability to fund operating losses, consumer spending trends and habits;
competition in the retail clothing segment; the customary risks of purchasing
merchandise abroad, including longer lead times, higher initial purchase
commitments and foreign currency fluctuations; the Company's ability to attract
and retain qualified personnel; weather conditions in the Company's operating
regions; laws and government regulations; general business and economic
conditions; availability of capital; the existence or absence of operating
initiatives, publicity, advertising and promotional efforts; changes in
accounting policies; and the ability of new management to improve the Company's
financial condition and performance. In addition, the Company disclaims any
intent or obligation to update those forward-looking statements.

OVERVIEW

         Harold's is a multi-channel specialty retailer of ladies' and men's
apparel, including accessories and footwear. Harold's markets its merchandise
through retail stores, catalogs and its website at www.harolds.com.

RESULTS OF OPERATIONS

         The following table sets forth for the periods indicated, the
percentage of net sales represented by items in the Company's statements of
operations.

                                       13 Weeks Ended         26 Weeks Ended
                                     -------------------    -------------------
                                     July 30,   July 31,    July 30,   July 31,
                                       2005       2004        2005       2004
                                     --------   --------    --------   --------
                                               (Restated)             (Restated)

Sales                                 100.0%     100.0%      100.0%     100.0%

Costs of goods sold                   (76.6)     (66.7)      (67.8)     (63.8)

Selling, general and administrative
  expenses                            (31.1)     (33.2)      (31.0)     (31.4)

Depreciation and amortization          (4.8)      (5.3)       (4.4)      (4.7)

Interest expense                       (1.8)      (1.1)       (1.6)      (1.0)
                                     --------   --------    --------   --------

Loss before income taxes              (14.3)      (6.3)       (4.8)      (0.9)

Benefit for income taxes                 --         --          --         --
                                     --------   --------    --------   --------
Net loss                              (14.3)%     (6.3)%      (4.8)%     (0.9)%
                                     ========   ========    ========   ========



                                       15
<PAGE>

         The following table reflects the sources of the changes in Company
sales for the periods indicated, with percentage changes compared to the
comparable period of the prior year.

                                       13 Weeks Ended         26 Weeks Ended
                                     -------------------    -------------------
                                     July 30,   July 31,    July 30,   July 31,
                                       2005       2004        2005       2004
                                     --------   --------    --------   --------

Sales (000's)                          20,298     19,290      44,262     43,458
                                     ========   ========    ========   ========

Total sales increase (decrease)          5.2%      (1.4)%       1.9%      (1.8)%
Change in comparable store sales
(52 week basis) (1)                      0.0%       2.3%        0.0%       5.7%
Store locations:
Existing stores                           41         41          41         42
Stores closed                             --         --          --         (1)
New stores opened                         --         --          --         --
                                     --------   --------    --------   --------
  Total stores at end of period           41         41          41         41
                                     ========   ========    ========   ========

    (1)  The Company considers a store comparable if it has been open for 12
         full months and has not changed its square footage by more than 20%.
         Closed and relocated stores are excluded from the comparable
         calculation beginning in the month in which the store is closed or
         relocated. Renovated stores are considered comparable as long as the
         store square footage does not change by more than 20%.

         The Company opened no new stores during the twenty-six weeks ended July
30, 2005 and July 31, 2004 and closed no stores for the twenty-six weeks ended
July 30, 2005 compared to the twenty-six weeks ended July 31, 2004 in which one
store was closed. The Company currently has no plans to close additional stores.
However, it does have plans to potentially relocate stores. The flat comparable
store sales for the thirteen and twenty-six weeks ended July 30, 2005 are
primarily due to mixed customer reactions to the Company's merchandise
assortments leading to sales below Company plans. The Company's direct sales
(internet and catalog) were $670,000 during the quarter, five times last year's
sales of $134,000. Additionally, the Company conducted a warehouse sale in July
that was not held last year, resulting in $475,000 of additional sales.

         Gross margin represents net sales less cost of products and
merchandising. Cost of products and merchandising consists primarily of product
and operating costs (e.g., product development, sourcing, inbound freight,
merchandising, inventory control, inspection, warehousing, internal transfer,
purchasing and receiving costs, inventory markdowns and occupancy costs for the
Company's retail stores). The Company's gross margin was 23.4% for the second
quarter of 2005, as compared to 33.3% in the same period of last year. The gross
margin for the twenty-six week period ended July 30, 2005 declined to 32.2% from
36.2% during the same period of the prior year. All of the decrease in gross
margin is attributable to incremental markdowns incurred on excess spring and
summer merchandise. Based on prior season successes, the Company increased
purchases of ladies' apparel for the spring season, but sales did not meet
expectations. As a result, management marked down the merchandise and has been
aggressive in its clearance activities.

         Selling, general and administrative expenses consist primarily of
retail store selling costs, costs to produce, print and distribute direct
response catalogs, as well as corporate administrative costs. Selling, general
and administrative expenses (including advertising and catalog production costs)
decreased to 31.1% of sales for the second quarter of 2005 compared to 33.2% for
the second quarter of 2004 and decreased to 31.0% of sales for the twenty-six
weeks ended July 30, 2005 compared to 31.4% for the same period of the prior
year. The decrease is principally due to continued expense controls and further
leveraging of fixed expenses due to the total sales increase.


                                       16
<PAGE>

         Depreciation and amortization expense decreased to 4.8% of sales for
the second quarter of 2005 compared to 5.3% for the second quarter of 2004 and
decreased to 4.4% of sales for the twenty-six weeks ended July 30, 2005 compared
to 4.7% for the same period of the prior year. These decreases are partially due
to the total sales increase and partially due to an increase in the Company's
fully depreciated assets.

         The Company reported a net loss of $2,893,000 or $0.53 per basic and
diluted share during the second quarter of 2005 as compared to a net loss of
$1,214,000 or $0.23 per basic and diluted share for the second quarter of last
year. For the twenty-six week period ended July 30, 2005, the Company reported a
net loss of $2,111,000 or $0.46 per basic and diluted share compared to a net
loss of $422,000 or $0.19 per basic and diluted share for the same period of the
prior year. These losses are primarily the result of declines in gross margin as
described above.

         The average balance of total outstanding debt was $22,992,000 for the
twenty-six weeks ended July 30, 2005 compared to $19,195,000 for the same period
of 2004. This increase in average balances resulted principally from increased
merchandise purchases. that were not offset by increased sales. Interest expense
increased slightly due to a combination of the Company's higher average debt
balance and increasing interest rates. The average interest rate on the
Company's line of credit was 5.74% at the end of the second quarter 2005
compared to 3.94% at the end of the second quarter 2004.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's working capital needs arise primarily from the need to
support costs incurred in advance of revenue generation, such as inventory
acquisition and direct response catalog development, production and mailing
costs. Other liquidity needs relate to the revolving customer charge accounts on
the Company's proprietary credit card, the need to cover operating cash flow
deficits and to invest in remodeling, fixtures and equipment. The Company
recognizes two selling seasons that correspond to the fashion seasons. The
spring season begins in January and ends in July. The fall season begins in July
and ends in January. The Company has relied on its bank credit facility to meet
these needs as well as proceeds from preferred stock investments of $6 million
in February 2001, $4 million in August 2002 and $5 million in February 2003. The
Company experienced deficit operating cash flows of $747,000 for the twenty-six
weeks ended July 30, 2005 compared to deficit operating cash flows of $259,000
for the twenty-six weeks ended July 31, 2004. This decrease in cash flows is
principally related to the increase of the Company's net loss (as described
above) and partially offset by the Company's decrease in merchandise inventories
and decrease in prepaid expenses compared to the same period of 2004. The
Company's decrease in merchandise inventories is attributable to two factors.
First, much of the 2005 spring merchandise was received prior to year end 2004
compared to a lesser amount of 2004 spring merchandise received prior to year
end 2003. Second, much of the 2005 fall merchandise was received prior to the
end of the second quarter 2005 compared to a lesser amount of 2004 fall
merchandise received prior to the end of the second quarter of 2004. Although
merchandise inventories have decrease since the beginning of the 2005 year,
inventories increased $1,274,000 from second quarter 2004 to second quarter
2005. Both of these factors caused the change in merchandise inventory from year
end to the end of the second quarter to be smaller in 2005 compared to the same
change for 2004.

         The Company's ability to achieve positive cash flows from operating
activities depends on its ability to improve sales and gross margin which should
allow the Company to sustain a return to profitability. Additionally, the
Company may experience needs for additional capital. While the Company has been
successful in covering cash flow deficits through line of credit borrowings and
private equity investments from its principal shareholders, there can be no
assurances that these, or any other financing resources will be available for
future needs.

         The Company's original three-year credit facility with Wells Fargo
Retail Finance II, LLC, ("WFRF") was entered into on February 5, 2003 and
provided the Company with a maximum available

                                       17
<PAGE>

credit limit of $22 million. This agreement was scheduled to expire in February
2006. As discussed below, on April 29, 2004, the maximum available credit line
was increased to the lesser of $25 million or $22 million plus outstanding
participant advances, and the expiration date was extended to February 5, 2007.
The credit facility is secured by substantially all assets of the Company and
its subsidiaries and is subject to a borrowing base calculation based primarily
on inventory and accounts receivable. The facility has two financial covenants,
a minimum excess availability covenant of $1.35 million and a maximum capital
expenditure covenant, established at $2.75 million for 2005. Interest rates
under the facility are at prime plus 0.5% or LIBOR plus 2.50%, with the ability
to reduce the rate if the Company achieves certain financial criteria. The
balance outstanding on the Company's line of credit at July 30, 2005 was
$20,775,000 which includes the $4 million outstanding under the bridge facility
discussed below. At July 30, 2005 the Company's availability under the WFRF line
of credit was approximately $2.9 million above the minimum availability
requirement of $1.35 million and the average interest rate on the credit line
was 5.74%.

         Subsequent to securing the initial credit facility, the Company
negotiated an increase of $2 million in its total borrowing availability under
its existing credit facility with WFRF. The Company obtained this increase in
order to provide for additional working capital. The full $2 million was
available for borrowing on July 15, 2003 and has been extended to the Company by
Wells Fargo based upon a loan participation agreement between Wells Fargo and
RonHow, LLC, an entity established in July 2003 which is owned and controlled
directly or indirectly by Ronald de Waal and W. Howard Lester. Mr. de Waal and
Mr. Lester are both major beneficial owners of the Company's common stock, and
Mr. Lester is also a director of the Company.

         In order to achieve additional liquidity, on April 29, 2004, the
Company completed an amendment to the credit facility with WFRF which increased
the Company's borrowing availability under the facility. The amendment increased
the Company's maximum inventory advance rate cap from 75% to 80% during non-peak
times and from 80% to 85% during peak times. Peak times were amended to include
the eight weeks prior to Easter and the eight weeks prior to October 1.
Additionally, the amendment extended the term of the credit facility by one
year, with a new expiration of February 5, 2007. The amendment also increased
the maximum revolver amount from $22 million to the lesser of $25 million or $22
million plus outstanding participant advances. Finally, the amendment provided
for an additional increase of $2 million in the Company's borrowing availability
under the facility based upon an increase in the existing loan participation
agreement between WFRF and RonHow, LLC. WFRF will continue to serve as the
lending agent for the Company under the credit facility, and the principal
covenants and conditions imposed upon the Company pursuant to the WFRF credit
facility agreement have not materially changed. RonHow, LLC's right to repayment
of any advances under the credit facility that are attributable to its total $4
million participation is generally subordinate to the repayment rights of the
other credit facility lenders. However, the Company may repay these advances
provided it meets certain conditions, including the maintenance of an average
daily excess availability under the credit facility of at least $2.5 million for
the 30 days prior to and 30 days projected immediately following the repayment.
The average excess availability requirement is higher than the excess
availability otherwise required of the Company under the credit facility. If the
Company does not repay the new $2 million loan participation of RonHow during
the 18 months subsequent to April 29, 2004, RonHow will have an option at that
time to convert any of the incremental $2 million not repaid into shares of
authorized but unissued 2003-A Preferred Stock, which will be convertible into
shares of common stock at a price of $2.524 per share, which was the 20-day
average closing price of the Company's common stock for the period ending
immediately before closing of the loan amendment. Additionally, if the Company
has not repaid the initial $2 million of loan participation by February 2006,
the Company will pay an additional 4% fee per annum on the outstanding
participation amount up to $2 million. This transaction was approved by the
independent directors.

         The Company was in compliance with its debt covenants for the quarter
ended July 30, 2005. Although the Company's line of credit with WFRF does not
expire until February 2007, the Company has classified its borrowings under its
line of credit as current in its consolidated balance sheets due to

                                       18
<PAGE>

the terms of its agreement with the lender. Under the bank agreement, there is
an acceleration clause which potentially allows the bank to demand immediate
payment of all outstanding borrowings upon the occurrence of a material adverse
change in the Company's operations or financial position. Determination of what
constitutes a material adverse change is at the discretion of the bank, however,
it is subject to reasonableness standards. In addition, the Company is required
to maintain a lock-box agreement with the bank whereby all cash received is
applied against current borrowings. As a result of these items, the Company is
required to classify its line of credit borrowings as current as proscribed by
EITF 95-22, "Balance Sheet Classification of Borrowings Outstanding under
Revolving Credit Agreements that include both a Subjective Acceleration Clause
and a Lock-Box Arrangement."

         At July 30, 2005 the Company's availability under the WFRF line of
credit was approximately $2,878,000 million above the minimum availability
requirement of $1.35 million and the average interest rate on the credit line
was 5.74%. The Company's credit line had an average balance of $21,092,000 and
$17,663,000 for the twenty-six weeks ended July 30, 2005 and July 31, 2004,
respectively. During the twenty-six weeks ended July 30, 2005, the WFRF line of
credit had a high balance of $22,839,000. The balance outstanding on July 30,
2005 was $20,775,000.

The Company considers the following as measures of liquidity and capital
resources as of the dates indicated:

                                                July 30,   January 29, July 31,
                                                  2005        2005       2004
                                                --------    --------   --------
                                                                      (Restated)

Working capital (000's)                           $(921)      $(439)     $(442)
Current ratio                                      .97:1       .99:1      .98:1
Ratio of working capital to total assets         (.02):1     (.01):1    (.01):1
Ratio of total debt to stockholders' deficit    (1.82):1    (2.14):1   (2.11):1

SEASONALITY

         The Company's business is subject to seasonal influences, with the
major portion of sales realized during the fall season (third and fourth
quarters) of each year, which includes the back-to-school and holiday selling
seasons. In light of this pattern, selling, general and administrative expenses
are typically higher as a percentage of sales during the spring season (first
and second quarters) of each year.

INFLATION

         Inflation affects the costs incurred by the Company in its purchase of
merchandise and in certain components of its selling, general and administrative
expenses. The Company attempts to offset the effects of inflation through price
increases and control of expenses, although the Company's ability to increase
prices is limited by competitive factors in its markets. Inflation has had no
meaningful effect on the Company's operations.

CRITICAL ACCOUNTING ESTIMATES AND COMMITMENTS

         There have been no material changes in the Company's critical
accounting estimates or in its commitments from those disclosed in the company's
Annual Report on Form 10-K for the year ended January 29, 2005.

                                       19
<PAGE>

THIRD QUARTER SALES EXPECTATIONS

         During the last week of August 2005, the United States experienced one
of the worst natural disasters in history with hurricane Katrina. This event
directly impacted two of the Company's full-price retail stores located in Baton
Rouge, Louisiana and Jackson, Mississippi and indirectly affected many other
stores throughout the southeast region. The total impact to the Company cannot
be fully quantified at this time, but sales since that date have not met the
Company's plan. The impact of the hurricane on the Company was partially offset
by August sales which exceeded Company expectations due to accelerated selling
on spring and summer clearance items.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The primary objective of this disclosure is to provide forward-looking
quantitative and qualitative information about the Company's potential exposure
to market risks. The term "market risk" for the Company refers to the risk of
loss arising from adverse changes in interest rates and various foreign
currencies. The disclosures are not meant to be precise indicators of expected
future losses, but rather indicators of reasonably possible losses. There have
been no significant changes to this forward-looking information during the
second quarter of 2005 that would materially alter the Company's market risk
exposures.


ITEM 4.  CONTROLS AND PROCEDURES

         The Company's Principal Executive Officer and Principal Financial
Officer have reviewed and evaluated the effectiveness of the Company's
disclosure controls and procedures (as defined in Exchange Act Rule
240.13a-15(e) and 15d-15(e)) as of the end of the period covered by this report.
In particular and without limiting the foregoing, the Company's Principal
Executive Officer and Principal Financial Officer have reviewed and evaluated
the effectiveness of the Company's disclosure controls and procedures taking
into account the lack of a quarterly review of the Company's financial
statements by an independent registered public accounting firm. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in
reports that it files or submits under the Exchange Act is accumulated and
communicated to the issuer's management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to make timely decisions regarding required disclosures. Based on
that evaluation, the Principal Executive Officer and the Principal Financial
Officer have concluded that the Company's current disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms.

         No change in the Company's internal control over financial reporting
occurred during the second quarter of 2005 that materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

                                       20
<PAGE>
                                     PART II


ITEM 1.  LEGAL PROCEEDINGS

         None.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         On May 1, 2005, 1,220 shares of the Company's Amended Series 2001-A
Preferred Stock ("2001 Preferred") were issued as a dividend to one of the
existing holders of 2001 Preferred at his election pursuant to the original
terms of the 2001 Preferred. Each share of 2001 Preferred issued in this
dividend is convertible into approximately 18.69 shares of Company common stock.

         On July 1, 2005, 2,379 shares of the Company's Series 2002-A Preferred
Stock ("2002 Preferred") were issued as a dividend to two of the existing
holders of 2002 Preferred at their election pursuant to the original terms of
the 2002 Preferred. Each share of 2002 Preferred issued in this dividend is
convertible into approximately 12.58 shares of Company common stock.

         Also, on July 1, 2005, 286 shares of the Company's Series 2003-A
Preferred Stock ("2003 Preferred") were issued as a dividend to one of the
existing holders of the 2003 Preferred in accordance with the original terms of
the 2003 Preferred. Each share of 2003 Preferred issued in this dividend is
convertible into approximately 62.89 shares of Company common stock.

         Because the shares of 2001 Preferred, 2002 Preferred and 2003 Preferred
described above were all issued as preferred stock dividends in accordance with
the original terms of each series, the Company believes that no sale of
securities has occurred which would require the registration of such shares
under the Securities Act. However, even if the issuance of such shares is deemed
to be a sale for purposes of the Securities Act, the Company believes the
issuance of such shares was, in each case, exempt from registration under the
Securities Act pursuant to Section 4(2) thereof. These shares were issued
without any public solicitation to a limited group of investors, all of whom are
either directors of the Company or beneficially own in excess of 10% of the
Company's outstanding common stock and all of whom acquired such shares for
investment.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.


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<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The 2005 Annual Meeting of Shareholders of the Company was held on June
23, 2005. The following matters were submitted to a vote of the Company's
shareholders:

1.   The election of seven directors (constituting the entire board of
     directors) for the ensuing year and until their successors are duly elected
     and qualified. The results of the election for each director were as
     follows:

                 Director                 Votes For           Votes Withheld
         ---------------------          ------------         ----------------

         Hubert W. Mullins               16,822,455               51,018

         Clark J. Hinkley                16,834,792               38,681

         Rebecca Powell Casey            16,820,997               52,476

         William E. Haslam                6,724,872 *                 --

         James D. Abrams                  4,705,965                   --

         Robert L. Anderson               6,724,872 *                 --

         Margaret A. Gilliam              4,705,965                   --

         W. Howard Lester                 6,724,872 *                 --

         Leonard M. Snyder               16,845,611               27,862

   * The Company has three series of preferred stock as follows: Amended Series
     2001-A, Series 2002-A and Series 2003-A ("Preferred Stock"). The holders of
     Preferred Stock are entitled to vote together with all the other holders of
     the Company's Common Stock on all matters presented to the shareholders
     (including with respect to the election of directors), and each share of
     Preferred Stock is entitled to cast a number of votes equal to the number
     of shares of Common Stock into which such share of Preferred Stock could be
     converted at the conversion rates described in the preferred stock
     agreements. The holders of the Preferred Stock are entitled voting as a
     separate class to elect a specified number of directors. With respect to
     these three directors, the votes represent shares of Preferred Stock (on an
     as-converted basis) voted in favor of their election.

Subsequent to the election of directors, on July 25, Hubert W. Mullins resigned
as a director and Chief Executive officer of the Company.


ITEM 5.  OTHER INFORMATION

         Effective April 25, 2005 the Company entered into an agreement with
Gerald Kucera to sell the Austin, Texas outlet store location at a sales price
of $2.5 million. The agreement was amended on May 26, 2005 to extend the
feasibility period allowed the prospective buyer for due diligence. The
feasibility period was scheduled to end on June 27, 2005 and was extended by the
buyer for an additional 15 days. After the additional 15-day extension, the
buyer cancelled the contract forfeiting $20,000 of escrow funds.

         Effective August 23, 2005 the Company entered into an agreement with
H.D. Investments, LLC to sell its Norman, Oklahoma office location at a sales
price of $1.25 million. The closing of this transaction is contingent upon the
Company and the buyer finalizing an agreement for the Company to lease the first
floor of the building from H.D. Investments, LLC and the buyer obtaining and


                                       22
<PAGE>
approving the final plans for the remodel of the first floor. The contract is
subject to a due diligence feasibility period that expires September 22, 2005.
If the sale of the building were to close, the Company expects to record a gain
on the sale of approximately $875,000.


ITEM 6.  EXHIBITS

         See the Exhibit Index accompanying this report.





                                   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, hereunto duly authorized.



                                     HAROLD'S STORES, INC.



                                     By: /s/ Leonard Snyder
                                         -----------------------
                                         Leonard Snyder
                                         Interim Chief Executive Officer



                                     By: /s/ Jodi L. Taylor
                                         -----------------------
                                         Jodi L. Taylor
                                         Chief Financial Officer


Date:    September 30, 2005







                                       23
<PAGE>

                                INDEX TO EXHIBITS

No.       Description
---       -----------

3.1       Certificate of Incorporation of the Company, as amended (Incorporated
          by reference to Exhibit 3.1 to Form 10-K for the year ended February
          3, 2001).

3.2       By-laws of the Company (Incorporated by reference to Exhibit 3.2 to
          Form 8-B Registration Statement, Registration No. 1-10892).

4.1       Specimen Certificate for Common Stock (Incorporated by reference to
          Exhibit 4.1 to Form S-1 Registration Statement, Registration No.
          33-15753).

4.2       Certificate of Elimination of Designations of the Series 2001-A
          Preferred Stock (Incorporated by reference to Exhibit 4.1 to Form 8-K
          dated August 2, 2002).

4.3       Certificate of Designations of the Amended Series 2001-A Preferred
          Stock (Incorporated by reference to Exhibit 4.2 to Form 8-K dated
          August 2, 2002).

4.4       Certificate of Designations of the Series 2002-A Preferred Stock
          (Incorporated by reference to Exhibit 4.3 to Form 8-K dated August 2,
          2002).

4.5       Amendment to the Certificate of Designation of the Amended Series
          2001-A Preferred Stock ($0.01 Par Value) of Harold's Stores, Inc.,
          dated February 4, 2003 (Incorporated by reference to Exhibit 4.1 to
          Form 8-K dated February 4, 2003).

4.6       Certificate of Designations of the Series 2003-A Preferred Stock
          (Incorporated by reference to Exhibit 4.2 to Form 8-K dated February
          4, 2003).

10.1      Lease Agreement effective May 1, 1996 between Company and Carousel
          Properties, Inc. (Campus Corner Store, Norman, Oklahoma) (Incorporated
          by reference to Exhibit 10.7 to Form S-2 Registration Statement,
          Registration No. 333-04117) and amendment to Lease Agreement dated
          April 4, 2002. (Incorporated by reference to Exhibit 10.1 to Form 10-Q
          for the quarter ended May 4, 2002).

10.2      Amended and Restated Lease Agreement dated as of June 3, 1996 between
          Company and 329 Partners II Limited Partnership (East Lindsey
          Warehouse Facility, Norman, Oklahoma) (Incorporated by reference to
          Exhibit 10.13 to Amendment No. 1 to Form S-2 Registration Statement,
          Registration No. 333-04117).

10.3      Amended and Restated Lease Agreement dated as of June 20, 2001 between
          Company and 329 Partners II Limited Partnership (Outlet Store, Norman,
          Oklahoma) (Incorporated by reference to Exhibit 10.6 to Form 10-K for
          the year ended February 2, 2002).

10.4*     2002 Performance and Equity Incentive Plan of Company. (Incorporated
          by reference to Definitive Proxy Statement dated May 17, 2002, for
          annual meeting of shareholders held on June 20, 2002).

10.5*     Employment Agreement dated February 9, 2004 between Company and Hubert
          W. Mullins (Incorporated by reference to Exhibit 10.5 to Form 10-K for
          the year ended January 31, 2004).


                                       24
<PAGE>

10.6*     Employment Agreement dated February 9, 2004 between Company and Clark
          Hinkley (Incorporated by reference to Exhibit 10.6 to Form 10-K for
          the year ended January 31, 2004).

10.7*     Stock Option Agreement dated February 23, 2001 between Company and
          Clark Hinkley (Incorporated by reference to Exhibit 10.12 to Form 10-K
          for the year ended February 3, 2001).

10.8*     First Amendment to Stock Option Agreement dated February 9, 2004
          between Company and Clark Hinkley (Incorporated by reference to
          Exhibit 10.8 to Form 10-K for the year ended January 31, 2004).

10.9*     Employment and Deferred Compensation Agreement dated February 1, 1998
          between Company and Harold G. Powell (Incorporated by reference to
          Exhibit 10.25 to Form 10-Q for quarter ended May 2, 1998).

10.10*    First Amendment dated February 28, 2001 to Employment and Deferred
          Compensation Agreement between Company and Harold G. Powell
          (Incorporated by reference to Exhibit 10.17 to Form 10-K for the year
          ended February 3, 2001).

10.11     Series 2001-A Preferred Stock Purchase Agreement dated February 23,
          2001 between Company and Inter-Him N.V. (Incorporated by reference to
          Exhibit 10.1 to Form 8-K dated February 28, 2001).

10.12     Investor Rights Agreement dated February 28, 2001 between Company and
          Inter-Him N.V. (Incorporated by reference to Exhibit 10.2 to Form 8-K
          dated February 28, 2001).

10.13     Voting Agreement dated February 28, 2001 among Company, Inter-Him N.V.
          and the other stockholders named therein (Incorporated by reference to
          Exhibit 10.3 to Form 8-K dated February 28, 2001).

10.14     Right of First Refusal Agreement dated February 28, 2001 among
          Company, Inter-Him N.V. and the other stockholders named therein
          (Incorporated by reference to Exhibit 10.4 to Form 8-K dated February
          28, 2001).

10.15     First Amended and Restated Stockholders Agreement dated June 15, 1998
          among certain stockholders of Company (Incorporated by reference to
          Exhibit 10.2 to Form 10-Q for quarter ended August 1, 1998).

10.16     First Amendment dated February 28, 2001 to First Amended and Restated
          Stockholders Agreement among certain stockholders of Company
          (Incorporated by reference to Exhibit 10.6 to Form 8-K dated February
          28, 2001).

10.17     Series 2002-A Preferred Stock Purchase Agreement dated as of June 26,
          2002, by and among Harold's Stores, Inc., Inter-Him, N.V., W. Howard
          Lester, William E. Haslam, Clark J. Hinkley and Margaret A. Gilliam
          (Incorporated by reference to Exhibit 10.1 to Form 8-K dated August 2,
          2002).

10.18     First Amendment to Investor Rights Agreement dated as of August 2,
          2002, by and among Harold's Stores, Inc., Inter-Him, N.V., W. Howard
          Lester, William E. Haslam, Clark J. Hinkley and Margaret A. Gilliam
          (Incorporated by reference to Exhibit 10.2 to Form 8-K dated August 2,
          2002).

                                       25
<PAGE>

10.19     First Amendment to Right of First Refusal Agreement dated as of August
          2, 2002, by and among Harold's Stores, Inc., Inter-Him, N.V., W.
          Howard Lester, Harold G. Powell, Anna M. Powell, Rebecca Powell Casey,
          H. Rainey Powell, Lisa Powell Hunt, Clay M. Hunt and Arvest Trust
          Company, N.A. (Incorporated by reference to Exhibit 10.3 to Form 8-K
          dated August 2, 2002).

10.20     First Amendment to Voting Agreement dated as of August 2, 2002, by and
          among Harold's Stores, Inc., Inter-Him, N.V., W. Howard Lester,
          William E. Haslam, Clark J. Hinkley, Margaret A. Gilliam, Harold G.
          Powell, Anna M. Powell, Rebecca Powell Casey, H. Rainey Powell, Lisa
          Powell Hunt, Clay M. Hunt and Arvest Trust Company, N.A. (Incorporated
          by reference to Exhibit 10.4 to Form 8-K dated August 2, 2002).

10.21     Series 2003-A Preferred Stock Purchase Agreement dated as of February
          5, 2003, by and among Harold's Stores, Inc., Inter-Him N.V. and W.
          Howard Lester (Incorporated by reference to Exhibit 10.1 to Form 8-K
          dated February 4, 2003).

10.22     Second Amendment to Investor Rights Agreement dated as of February 5,
          2003, by and among Harold's Stores, Inc., Inter-Him N.V. and W. Howard
          Lester (Incorporated by reference to Exhibit 10.2 to Form 8-K dated
          February 4, 2003).

10.23     Loan and Security Agreement dated as of February 5, 2003, by and among
          Wells Fargo Retail Finance, LLC, Harold's Stores, Inc., Harold's
          Financial Corporation, Harold's Direct, Inc., Harold's Stores of
          Texas, L.P., Harold's Stores of Georgia, L.P., and Harold's of
          Jackson, Inc. (Incorporated by reference to Exhibit 10.3 to Form 8-K
          dated February 4, 2003).

10.24     Series 2003-A Preferred Stock Investment Agreement dated as of
          February 4, 2003, by and between Harold's Stores, Inc. and 329
          Partners-II Limited Partnership (Incorporated by reference to Exhibit
          10.6 to Form 8-K dated February 4, 2003).

10.25     Form of Indemnification Agreement between Company and members of its
          Board of Directors (Incorporated by reference to Exhibit 10.36 to Form
          10-K for the year ended February 1, 2003).

10.26     Form of Waiver of Claims and Covenant Not to Sue Directors between
          principal shareholders of the Company and members of the Company's
          Board of Directors (Incorporated by reference to Exhibit 10.37 to Form
          10-K for the year ended February 1, 2003).

10.27     Participation Agreement dated as of July 10, 2003, by and between
          Wells Fargo Retail Finance II, LLC and RonHow, LLC (Incorporated by
          reference to Exhibit 10.3 to Form 8-K dated July 10, 2003).

10.28     Amended and Restated Participation Agreement dated as of April 29,
          2004, by and between Wells Fargo Retail Finance II, LLC and RonHow,
          LLC (Incorporated by reference to Exhibit 10.28 to Form 10-K for the
          year ended January 31, 2004).

10.29     Assignment and Assumption of Lease Agreement and Third Amendment to
          Lease Agreement dated October 1, 2003 by and between Company and 329
          Partners-II Limited Partnership (Dallas Buying Office, Dallas, Texas)
          (Incorporated by reference to Exhibit 10.1 to Form 10-Q dated November
          1, 2003).

10.30     Option Agreement between Company and RONHOW LLC dated April 30, 2004
          (Incorporated by reference to Exhibit 10.30 to Form 10-K for the year
          ended January 31, 2004).

                                       26
<PAGE>

10.31     First Amendment to Loan and Security Agreement dated as of February 5,
          2003, by and among Wells Fargo Retail Finance, LLC, Harold's Stores,
          Inc., Harold's Financial Corporation, Harold's Direct, Inc., Harold's
          Stores of Texas, L.P., Harold's Stores of Georgia, L.P., and Harold's
          of Jackson, Inc. (Incorporated by reference to Exhibit 10.31 to Form
          10-K for the year ended January 31, 2004).

10.32     Second Amendment to Loan and Security Agreement dated as of April 29,
          2004, by and among Wells Fargo Retail Finance, LLC, Harold's Stores,
          Inc., Harold's Financial Corporation, Harold's Direct, Inc., Harold's
          Stores of Texas, L.P., Harold's Stores of Georgia, L.P., and Harold's
          of Jackson, Inc. (Incorporated by reference to Exhibit 10.32 to Form
          10-K for the year ended January 31, 2004).

10.33     Agreement for Purchase and Sale of Norman, Oklahoma office building by
          and between Harold's Stores, Inc., Corner Properties, Inc. and H.D.
          Investments, LLC. (Incorporated by reference to Exhibit 10.33 to Form
          10-Q for the quarterly period ended July 30, 2005).

22.1      Subsidiaries of Company (Incorporated by Reference to Exhibit 22.1 to
          Form 8-B Registration Statement, Registration No. 1-10892).

31.1      Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
          under the Securities Exchange Act of 1934.

31.2      Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
          under the Securities Exchange Act of 1934.

32.1      Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
          1350.

32.2      Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
          1350

-------------------
* Constitutes a management contract or compensatory plan or arrangement required
to be filed as an exhibit to this report.




                                       27