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

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

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

                                   FORM 10-QSB

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

For the quarterly period ended March 31, 2004
                               --------------

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

            For the transition period from ___________to ___________

Commission File No.  0-50186
                     -------

                           LEVCOR INTERNATIONAL, INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)


              Delaware                                       06-0842701
    ------------------------------                        ----------------
   (State or Other Jurisdiction of                        (I.R.S. Employer
    Incorporation or Organization)                       Identification No.)


                  462 Seventh Avenue, New York, New York 10018
                  --------------------------------------------
                    (Address of Principal Executive Offices)

                                 (212) 354-8500
                           ---------------------------
                           (Issuer's Telephone Number)

Former name, former address and former fiscal year, if changed since last
report:   N/A
          ---

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

As of May 10, 2004, 5,303,541 shares of Common Stock, par value $0.01 per share,
were issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

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

<PAGE>

                           LEVCOR INTERNATIONAL, INC.

                                      INDEX

                                                                            Page
                                                                            ----
PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

           Condensed Consolidated Balance Sheet
           as of March 31, 2004 ..............................................1

           Condensed Consolidated Statements of Income
           for the Three Months Ended March 31, 2004 and 2003.................2

           Condensed Consolidated Statements of Comprehensive Income
           for the Three Months Ended March 31, 2004 and 2003.................2

           Condensed Consolidated Statements of Cash Flows
           for the Three Months Ended March 31, 2004 and 2003.................3

           Notes to Condensed Consolidated Financial Statements -
           March 31, 2004.....................................................4


Item 2.    Management's Discussion and Analysis or Plan of Operation ........10

Item 3.    Controls and Procedures...........................................18

PART II.   OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K..................................19

           Signatures........................................................20

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                   LEVCOR INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS
Current Assets:                                                       March 31, 2004
                                                                      --------------
<S>                                                                   <C>
     Cash                                                             $           60
     Accounts receivable trade, net                                            3,512
     Inventories, net                                                          6,572
     Deferred income taxes                                                       842
     Other current assets                                                        369
                                                                      --------------
         Total current assets                                                 11,355
                                                                      --------------

Property, Plant and Equipment, at cost                                         4,642
Less: Accumulated Depreciation and Amortization                                2,213
                                                                      --------------

         Net property, plant and equipment                                     2,429
                                                                      --------------

Goodwill                                                                       4,843
Deferred income taxes                                                          4,123
Other assets                                                                   1,719
                                                                      --------------
         Total Assets                                                 $       24,469
                                                                      ==============

LIABILITIES
Current Liabilities:
     Accounts payable                                                 $        2,051
     Due to factor                                                             1,380
     Other current liabilities                                                 1,483
     Revolving loan and current maturities of long-term debt                   3,523
                                                                      --------------
         Total current liabilities                                             8,437
                                                                      --------------
Long-term debt, less current maturities                                        4,551
Loan payable to stockholder                                                      792
Other liabilities                                                             10,045
Mandatory Redeemable Preferred Stock, par value $0.01 per share
     8,000,000 shares authorized:
     Shares issued and outstanding:
         Series A - 4,555,007                                                  4,555
                                                                      --------------
                           Total Liabilities                                  28,380
                                                                      --------------

STOCKHOLDERS' DEFICIT
Common Stock, par value $0.01 per share
      15,000,000 shares authorized;
      5,300,393 shares issued and outstanding                                     53
Paid in Capital                                                               33,192
Accumulated Deficit                                                          (34,172)
Accumulated Other Comprehensive Loss                                          (2,892)
Unearned compensation                                                            (92)
                                                                      --------------
Total Common Stockholders' Deficit                                            (3,911)
                                                                      --------------
Total Liabilities and Stockholders' Deficit                           $       24,469
                                                                      ==============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                     Page 1
<PAGE>

                           LEVCOR INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                  (Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
                                                               Three Months Ended March 31,
                                                               ---------------------------
                                                                   2004           2003
                                                               ------------   ------------
<S>                                                            <C>            <C>
Net sales                                                      $      6,613   $      7,231
Cost of sales                                                         4,176          4,416
                                                               ------------   ------------
                                                                      2,437          2,815
Selling, general and administrative expenses                          2,166          2,222
                                                               ------------   ------------
Income before interest, preferred dividends and income taxes            271            593
Interest expense, net                                                   124            129
Dividends on mandatory redeemable preferred stock                        69             --
                                                               ------------   ------------
Income before income taxes                                               78            464
Provision for income taxes                                               56            177
                                                               ------------   ------------
Net income                                                               22            287
Less dividends on mandatory redeemable preferred stock                   --             68
                                                               ------------   ------------
Income applicable to common stock                              $         22   $        219
                                                               ============   ============

Earnings per share:
     Basic                                                     $         --*  $        .04
                                                               ============   ============
     Diluted                                                   $         --*  $        .04
                                                               ============   ============

Weighted average shares outstanding - basic                           5,222          4,970
Potential common stock                                                  101            170
                                                               ------------   ------------
Weighted average shares outstanding - diluted                         5,323          5,140
                                                               ============   ============
</TABLE>

*  Less than $.005

See Notes to Condensed Consolidated Financial Statements.



                           LEVCOR INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                             CONDENSED CONSOLIDATED
                       STATEMENTS OF COMPREHENSIVE INCOME
                                   (UNAUDITED)
                             (Dollars in thousands)

                                                   Three Months Ended March  31,
                                                   ---------------------------
                                                       2004           2003
                                                   ------------   ------------
Net income                                         $         22   $        287
Other comprehensive income:
     Foreign currency translation adjustment                 11             12
                                                   ------------   ------------
Comprehensive income                               $         33   $        299
                                                   ============   ============

See Notes to Condensed Consolidated Financial Statements.

                                     Page 2
<PAGE>

                           LEVCOR INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                             CONDENSED CONSOLIDATED
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                               Three Months Ended March 31,
                                                               ----------------------------
                                                                   2004            2003
                                                               ------------    ------------
<S>                                                            <C>             <C>
Cash Flows From Operating Activities:
Net income                                                     $         22    $        287
Reconciliation of net income to net cash used in operations:
      Depreciation and amortization                                     112             111
      Deferred tax provision                                             48             154
      Stock based compensation expense                                    9              --
      Changes in operating assets and liabilities:
        Accounts receivable trade, net                                 (737)            142
        Inventories                                                       2             339
        Other current assets                                           (138)            (63)
        Other assets                                                      6              (6)
        Accounts payable                                                224            (559)
        Other current liabilities                                      (167)           (747)
        Other liabilities                                              (296)            (97)
                                                               ------------    ------------
             Net cash used in operating activities                     (915)           (439)
                                                               ------------    ------------

Cash Flows From Investing Activities:
Capital expenditures                                                    (59)            (61)
Cash acquired from acquisition                                           --               4
Investment in other assets                                              (17)            (20)
                                                               ------------    ------------
             Net cash used in investing activities                      (76)            (77)
                                                               ------------    ------------

Cash Flows From Financing Activities:
Proceeds from revolving loan and long-term debt                         457             577
Due to factor                                                           535              --
Dividends on preferred stock                                             --             (67)
Proceeds from exercise of stock options                                  15              --
                                                               ------------    ------------
             Net cash provided by financing activities                1,007             510
                                                               ------------    ------------

Effect of exchange rate changes on cash                                  --              (1)
Increase (decrease) in cash                                              16              (7)
Cash at beginning of period                                              44              71
                                                               ------------    ------------
Cash at end of period                                          $         60    $         64
                                                               ============    ============

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
   Interest                                                    $        116    $        129
                                                               ============    ============
   Income taxes                                                $         20    $        300
                                                               ============    ============

Non-cash transactions:
   Stock options exercised                                     $        145    $         --
                                                               ============    ============
   Treasury stock purchased                                    $        145    $         --
                                                               ============    ============
   Retirement of treasury stock                                $        222    $         --
                                                               ============    ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements

                                     Page 3
<PAGE>

                           LEVCOR INTERNATIONAL, INC.
                               NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004


NOTE 1: BASIS OF PRESENTATION
-----------------------------

The Unaudited Condensed Consolidated Balance Sheet as of March 31, 2004 and the
Unaudited Condensed Consolidated Statements of Income for the three months ended
March 31, 2004 and 2003 include the accounts of Levcor International, Inc.
("Levcor" or "the Company") and its subsidiaries.

The accompanying Unaudited Condensed Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for fair presentation have
been included.

Operating results for the three-month period ended March 31, 2004 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2004. For further information, refer to Management's Discussion and
Analysis or Plan of Operation, the consolidated financial statements and
footnotes included in the Company's annual report on Form 10-KSB for the year
ended December 31, 2003.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------

Nature of Operation: The Company (i) operates a textile business that produces
fabrics and garments for sale in the apparel industry and (ii) manufactures,
packages and distributes a line of buttons and other craft products for sale in
the home sewing and craft retail industry. The Company sells its products to
customers primarily in the United States and also has distribution in Canada and
Europe.

Consolidation: The accompanying Unaudited Condensed Consolidated Financial
Statements include the accounts of the Company and all subsidiaries after
elimination of intercompany items and transactions.

Depreciation and Amortization: Depreciation and amortization are computed
principally by the straight-line method for each class of depreciable and
amortizable asset based on their estimated useful lives. Buildings and
improvements, machinery and equipment, and furniture, fixtures and leasehold
improvements are generally depreciated over periods of 20-35, 3-25 and 5-10
years, respectively.

Revenue Recognition:  Revenue is recognized upon shipment of merchandise.

                                     Page 4
<PAGE>

Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Goodwill: The Company adopted Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("SFAS 142") as of January 1, 2002.
Under SFAS 142, goodwill is reviewed for impairment annually, or more frequently
if impairment indicators arise.

Reclassifications: Certain reclassifications have been made to the prior
period's financial statements to conform to the current period presentation.


NOTE 3: MERGER WITH CARLYLE INDUSTRIES, INC.
--------------------------------------------

On January 6, 2003, the Company completed its acquisition of Carlyle, which was
effected as a merger of Carlyle with and into the Company. In the merger, each
five shares of Carlyle common stock were converted into one share of Company
common stock, par value $0.01 per share ("Common Stock"), and each share of
Carlyle Series B preferred stock was converted into one share of Company Series
A preferred stock, par value $0.01 per share ("Series A Preferred Stock" or
"Redeemable Preferred Stock"). In addition, the Company assumed Carlyle stock
options, which became options to purchase approximately 220,000 shares of
Company Common Stock. The purchase price was valued at approximately $6.8
million.

NOTE 4: SEGMENT INFORMATION
---------------------------

The Company operates in two reportable segments: Textile and Craft. Accounting
policies of the two segments are substantially the same as those described in
the summary of significant accounting policies as presented in the financial
statements as of and for the year ended December 31, 2003, which were included
in the Company's most recent Form 10-KSB. All revenues generated in the segments
are external. The following table sets forth information regarding operations
and assets by reportable segment (dollars in thousands):

                                              Three Months Ended March 31,
                                              ----------------------------
                                                  2004            2003
                                              ------------    ------------
         Revenue:
           Textile                            $        901    $      1,472
           Craft                                     5,712           5,759
                                              ------------    ------------
                                              $      6,613    $      7,231
                                              ============    ============
         Operating income (loss):
           Textile                            $       (314)   $       (264)
           Craft                                       850           1,147
                                              ------------    ------------
                                              $        536    $        883
                                              ============    ============

                                     Page 5
<PAGE>

         Corporate general and
           administrative expense             $        265    $        290
         Interest expense, net                         124             129
         Dividends on mandatory
           redeemable preferred stock                   69              --
         Provision for income taxes                     56             177
                                              ------------    ------------
         Net income                           $         22    $        287
                                              ============    ============

         Depreciation and amortization:
           Textile                            $         12    $          7
           Craft                                       100             104
                                              ------------    ------------
                                              $        112    $        111
                                              ============    ============

         Capital expenditures:
           Textile                            $         21    $         35
           Craft                                        38              26
                                              ------------    ------------
                                              $         59    $         61
                                              ============    ============

NOTE 5: EARNINGS PER COMMON SHARE
---------------------------------

Earnings per common share have been computed on the basis of weighted average
common shares outstanding after providing for quarterly preferred dividend
requirements. Diluted earnings per common share includes the effect of stock
options. For the three months ended March 31, 2004 and 2003 there were 101,174
and 169,793, respectively, of stock options outstanding included in the fully
diluted earnings per share calculations.

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per common share computations for the three months
ended March 31, 2004 and 2003 (dollars in thousands, except per share amounts):

<TABLE>
<CAPTION>
Three months ended March 31, 2004:                            Income          Shares        Per Share
                                                            ----------      ----------      ----------
<S>                                                         <C>              <C>            <C>
     Basic income attributable to common stockholders       $       22       5,222,048      $       --*
     Effect of dilutive options                                     --         101,174              --
                                                            ----------      ----------      ----------
     Diluted income attributable to common stockholders     $       22       5,323,222      $       --*
                                                            ==========      ==========      ==========

*  Less than $.005

Three Months ended March 31, 2003:
     Basic income attributable to common stockholders       $      219       4,970,415      $      .04
     Effect of dilutive options                                     --         169,793              --
                                                            ----------      ----------      ----------
     Diluted income attributable to common stockholders     $      219       5,140,208      $      .04
                                                            ==========      ==========      ==========
</TABLE>

                                     Page 6
<PAGE>

NOTE 6: INVENTORIES
-------------------

The components of inventories, net of reserves, are as follows (dollars in
thousands):

                                       March 31, 2004      December 31, 2003
                                     -----------------     -----------------
         Raw materials               $           2,658     $           2,715
         Work in progress                          116                    69
         Finished goods                          3,798                 3,779
                                     -----------------     -----------------
                                     $           6,572     $           6,563
                                     =================     =================

At March 31, 2004 inventories were valued on an average cost method basis.
Inventories are stated at the lower of cost or market.

NOTE 7: SHORT TERM AND LONG TERM DEBT
-------------------------------------

The Company has a credit facility with the CIT Group, Inc. ("CIT") and a
promissory note payable to JPMorgan Chase Bank ("JPMorgan"). In addition, the
Company has borrowings and advances outstanding from Robert A. Levinson, a
stockholder, officer and director of the Company.

The Company's credit facility with CIT (the "CIT Facility") provides for maximum
aggregate borrowings of up to $7.5 million in the form of revolving credit,
letters of credit and term loans. The CIT Facility is comprised of separate
financing agreements with each of the Company and its wholly-owned subsidiaries,
Blumenthal Lansing Company, LLC ("Blumenthal") and Westwater Industries, LLC
("Westwater").

The CIT Facility provides for (i) a term loan to the Company (the "Term Loan")
in the initial amount of $2.0 million, $1.7 million of which was outstanding at
March 31, 2004, (ii) revolving credit advances to the Company in an amount up to
$500,000 and (iii) revolving credit advances to Blumenthal and Westwater based
upon eligible accounts receivable and inventory, and a Letter of Credit facility
with a limit of $500,000. The Term Loan amortizes $12,000 per month followed by
a final installment payment of $1.4 million due on January 1, 2006. The
revolving credit advances are also due on January 1, 2006. All amounts
outstanding under the CIT Facility bear interest at the Chase Bank N.A. prime
rate plus 0.5% with a minimum rate of 5.0%.

In connection with the CIT Facility, the Company and its subsidiaries have made
cross corporate guarantees and have issued first priority liens covering
substantially all of the assets of the Company and its subsidiaries. In
addition, Mr. Robert A. Levinson, a stockholder, officer and director of the
Company, provided certain collateral against advances provided under the CIT
Facility.

The CIT Facility contains representations and warranties and events of default
customary for agreements of this nature such as restrictions on incurring more
debt, acquisitions and the use of proceeds from the sales of assets, and the
prohibition of preferred stock redemptions, dividend payments in excess of
$300,000 per year, and a change in voting control of the Company. The CIT
Facility also contains a subjective acceleration clause which states that,
except for the Term Loan, all obligations shall, at CIT's option, be immediately
due and payable without notice or demand upon the occurrence of any change in

                                     Page 7
<PAGE>

the Company's condition or affairs (financial or otherwise) that, in CIT's sole
discretion exercised by CIT in accordance with CIT's business judgment,
materially impairs the collateral or increases CIT's risk. In the case of the
Term Loan, CIT may accelerate the maturity in the event of a default by the
Company after thirteen months notice of such acceleration. Management of the
Company believes that the likelihood of CIT accelerating the payment of any of
the obligations under the CIT Facility in 2004 is remote.

Pursuant to a factoring agreement between CIT and the Company, CIT purchases the
Textile segment's eligible trade accounts receivable without recourse and
assumes substantially all credit risk with respect to such accounts. The amounts
due to the Company from CIT under the factoring agreement earn no interest. The
factoring agreement allows the Company to obtain advances that bear interest at
0.5% above CIT's prime rate (4.0% at March 31, 2004). The Company pledged its
Textile segment's accounts receivable and property and equipment as collateral
under the factoring agreement. There is no set limit on borrowings. The amount
available for borrowing is based on a formula consisting of 90% of eligible
accounts receivable increased by side collateral and reduced by both the current
loan balance and outstanding letters of credit.

The promissory note payable to JPMorgan in the amount of $3.0 million is dated
May 2, 2002 and has a maturity date of August 16, 2005, as amended. The note
bears interest at a fixed rate per annum equal to the Adjusted LIBO Rate
applicable to such note plus 0.75% (a "Eurodollar Loan"). The interest rate on
the note at March 31, 2004 was 1.9375%. In addition, Robert A. Levinson, a
stockholder, officer and director of the Company, has provided certain
additional collateral guaranteeing the note.

Robert A. Levinson has made long-term loans totaling $500,000 to the Company at
an interest rate of 6% per annum. Mr. Levinson has agreed not to require payment
of these loans and $292,000 of related accrued interest at March 31, 2004 prior
to January 1, 2006. Approximately $30,000 of accrued interest payable to Mr.
Levinson has also been classified as a current liability as the Company expects
to pay such amount within the next twelve months.

Mr. Levinson has agreed to personally support the Company's cash requirements to
enable it to fulfill its obligations through January 1, 2006, to the extent
necessary, up to a maximum amount of $3.0 million. The Company believes its
reliance on such commitment is reasonable and that Mr. Levinson has sufficient
liquidity and net worth to honor such commitment. The Company believes that Mr.
Levinson's written commitment provides the Company with the legal right to
request and receive such advances. In the event that Mr. Levinson did not honor
such commitment, the Company would have the right to sue Mr. Levinson for breach
of his agreement. Mr. Levinson reaffirmed this undertaking in writing on March
12, 2004. In connection with this agreement, Mr. Levinson advanced $895,000 to
the Company at an interest rate of 6% per annum during April 2004, and all such
advances are expected to be repaid by the Company to Mr. Levinson during the
third and fourth quarters of 2004.

During the period ended March 31, 2004, the Company was in compliance with all
debt covenants.

                                     Page 8
<PAGE>

NOTE 8: MANDATORY REDEEMABLE PREFERRED STOCK
--------------------------------------------

Dividends on the Series A Preferred Stock accrue at an annual rate of 6% and are
payable quarterly. The availability of resources to make dividend payments to
the holders of Series A Preferred Stock in the future will depend on the
Company's future cash flow. Under the terms of the CIT Facility, preferred stock
redemption payments are prohibited and preferred stock dividend payments are
limited to $300,000 per year.

Effective July 1, 2003, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equities" ("SFAS 150").
Accordingly, the redeemable preferred stock has been classified as a liability
in the balance sheet at redemption value as of March 31, 2004. The Statements of
Operations for quarter ended March 31, 2004 include $69,000 of preferred stock
dividends paid during the first quarter of 2004 which have been included in the
determination of operating income. For periods prior to July 1, 2003, such
redeemable preferred stock dividend payments are reported as an adjustment to
net income to arrive at net income available to common stock. In accordance with
SFAS 150, dividend payments made in the first and second quarters of 2003 are
not permitted to be reclassified to the current accounting treatment and as a
result they continue to be presented on a separate line.

NOTE 9: COMMON STOCK AND STOCK OPTIONS
--------------------------------------

Between January 1, 2004 and March 31, 2004, the Company issued an aggregate of
2,378 shares of common stock to Directors and recorded such issuance as stock
based compensation expense.

During the three months ended March 31, 2004, in connection with a stock option
exercise by Robert A. Levinson, a stockholder, officer and director of the
Company, the Company issued 170,000 shares of common stock and accepted 45,274
shares of common stock previously held by the optionee as payment of the option
exercise price. The common shares tendered were recorded as treasury stock. The
Company also issued 16,000 shares of common stock in connection with the
exercise of employee stock options during the first quarter of 2004.

NOTE 10: RELATED PARTY TRANSACTIONS
-----------------------------------

Robert A. Levinson has provided long-term loans of $500,000 to the Company, has
made short term advances of $895,000 in April 2004 and has pledged collateral in
support of certain Company obligations. See Note 7 for a description of these
transactions. During the first quarter of 2004, Mr. Levinson exercised stock
options and tendered previously held shares in payment of the option price. See
Note 9 for a description of this transaction.

In addition to being a director of the Company, Edward H. Cohen serves as
counsel to Katten Muchin Zavis Rosenman, New York, New York, legal counsel to
the Company. During the three months ended March 31, 2004, fees for services
provided to the Company by Katten Muchin Zavis Rosenman totaled $17,579. Mr.
Cohen does not share in the fees that the Company pays to such law firm and his
compensation is not based on such fees.

                                     Page 9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Critical Accounting Policies and Estimates

The following is a brief discussion of the critical accounting policies used in
the preparation of the Company's financial statements, including those
accounting policies and methods used by the Company which require subjective
judgments and are considered very important to the understanding of the
Company's financial condition.

Receivables

Because the Textile segment factors substantially all of its accounts
receivable, the accounts receivable amount shown on the Consolidated Balance
Sheet is primarily related to the Company's Craft segment.

The Company extends credit to Craft segment customers that satisfy established
credit criteria. The Craft segment has a significant concentration of credit
risk due to the large volume of business with major retail customers. Most of
these retail customers are public companies and as such, the Company monitors
their financial reports on a regular basis and obtains accounts receivable
insurance in certain circumstances.

Accounts receivable, trade, is reported net of reserves for bad debts, returns
and allowances. A reserve for bad debts is determined through analysis of the
aging of accounts receivable at the date of the financial statements and
assessments of collectability based on historical trends. The reserve for bad
debts includes 100% of all invoices that management deems doubtful of
collection. The Company also estimates reserves for sales returns and allowances
based on historical experience.

Inventories

Inventories are stated at the lower of cost (principally average cost) or
market. Inventories consist of loose buttons, unpackaged craft products, yarn
and greige goods (collectively considered raw materials), packaged craft and
button products, finished fabric and garments (collectively considered finished
goods). The Company estimates markdowns required for inventories based upon
future marketability as well as general economic conditions. The Company
regularly reviews inventory quantities on hand, by item, and records a provision
for excess inventory based primarily upon the Company's historical experience
and estimated forecast of product demand using historical and recent ordering
data relative to the quantity on hand for each item. A significant decrease in
demand for the Company's products could result in an increase in the amount of
excess inventory quantities on hand; however, the Company manages inventory and
monitors product purchasing to minimize this risk.

                                    Page 10
<PAGE>

Intangible Assets

Goodwill and other intangible assets such as trademarks are evaluated for
impairment at least annually and, if necessary, impairment is recorded. Goodwill
and other intangible assets are not amortized.

Pension Liabilities

The Company used an estimated rate of return of 8.00% and a discount rate of
6.25% in computing its pension liabilities.

Revenue Recognition

The Company recognizes revenue when goods are shipped to customers. Shipment is
made by UPS or common carrier. Deliveries generally take place within three days
of shipment. Standard terms for shipments are F.O.B. shipping point, at which
time the Company has completed all performance obligations to consummate the
sale. In some circumstances, shipments are made F.O.B. destination, in which
case the Company insures the sales value of most shipments. Revenue is reported
net of a reserve for sales returns and allowances. Sales returns and allowances
are estimated based upon specific agreements and historical patterns with major
accounts and are accrued in the period in which a customer becomes entitled to
an allowance or return of product.

Shipping and Handling Costs

Shipping and handling costs are included in the cost of sales.

Results of Operations

Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003

Net sales for the three months ended March 31, 2004 totaled $6.6 million as
compared to $7.2 million during the first quarter of 2003.

Net sales of the Craft segment totaled $5.7 million in the first quarter of 2004
as compared to $5.8 million during the first quarter of 2003. The decline in
craft segment sales was the result of a somewhat lower volume of seasonal
programs in 2004 as compared to 2003.

Net sales of the Textile segment totaled $901,000 in the first quarter of 2004
as compared to $1.5 million during the first quarter of 2003. The decline in
revenues in the textile segment was attributable to the segment's now completed
transition (initiated in 2003) from domestic textile converting to offshore
contract garment manufacturing. Sales in the first quarter of 2003 exclusively
consisted of domestic textile converting, and sales in the first quarter of 2004
exclusively consisted of offshore contract garment manufacturing. The contract
garment manufacturing business is very seasonal and based on our current
customer base, sales are heavily weighted to the third and fourth quarters. The
Company is working to secure additional contract garment manufacturing business
in order to increase volume and to balance out seasonal activity.

                                    Page 11
<PAGE>

Gross margin during the first quarter of 2004 totaled $2.4 million as compared
to $2.8 million in the first quarter of 2003.

Gross margin for the Craft segment totaled $2.3 million during the three months
ended March 31, 2004 as compared to $2.5 million during the first quarter of
2003. The lower gross margin in the Craft segment was attributable to the lower
sales volume as described above and higher relative cost of goods sold due to a
change in product mix between the first quarter of 2003 and the first quarter of
2004.

Gross margin for the Textile segment totaled $186,000 during the first quarter
of 2004 as compared to $ 288,000 during the first quarter of 2003. The lower
gross margin in the Textile segment was attributable to the lower sales volume
as described above.

Selling, general and administrative expenses during the first quarter of 2004
and 2003 totaled $2.2 million.

Income before interest, preferred dividends and income taxes for the three
months ended March 31, 2004 totaled $271,000 as compared to $593,000 during the
same period last year. The decrease from 2003 to 2004 was attributable to lower
gross profit in both operating segments as described above.

Net interest expense during the first quarter of 2004 totaled $124,000 as
compared to net interest expense of $129,000 during the first quarter of 2003.
The decrease in interest expense as compared to the same period last year was
primarily the result of lower interest rates in the first quarter of 2004 as
compared to the first quarter of 2003.

Income before income taxes for the three months ended March 31, 2004 was reduced
by the accrual of the Series A Redeemable Preferred Stock dividends which
totaled $69,000 for the period, due to the Company's adoption of the provisions
of Statement of Financial Accounting Standards No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equities
("SFAS 150") during the third quarter of 2003. The accrual of preferred stock
dividends totaling $67,000 during the first quarter of 2003 was previously
reported as an adjustment to Net Income to arrive at Net Income Attributable to
Common Stockholders and the provisions of SFAS 150 preclude the restatement of
prior year financial statements.

The provision for income taxes during the first quarter of 2004 was $56,000 as
compared to $177,000 during the first quarter of 2003. The reduction in
provision for income taxes in the first quarter of 2004 as compared to 2003 was
the result of the reduction in pretax income. Because of the Company's net
operating loss carryforward, the Federal income tax provision at 34% reduces the
deferred tax asset and does not require a cash payment.

First quarter results may not be indicative of future quarterly results due to
programs with major apparel and retail customers which may vary as to timing and
amount from quarter to quarter. In addition, consolidation within the Company's
customer base and inventory reduction efforts by major retail customers may
affect the Company's revenue and operating results in subsequent quarters.

                                    Page 12
<PAGE>

Liquidity and Capital Resources

The Company's Textile division provides offshore contract garment manufacturing
services for a major customer. The nature of this business is such that a
significant inventory investment is required in our second and third fiscal
quarters, the early phases of the production cycle. The Company's borrowing
agreement with CIT does not provide funding for this production until the
finished goods are shipped and billed to the customer. As a result, the Company
will rely on temporary advances from Robert A. Levinson, a stockholder, officer
and director of the Company.

At March 31, 2004 the Company's principal sources of liquidity included cash of
$60,000 and trade accounts receivable of $3.5 million.

The Company's principal sources of cash flow are from internally generated
funds, borrowings under revolving credit facilities, advances under the
factoring agreement and advances from Robert A. Levinson, a stockholder, officer
and director.

Cash Flow Summary:
(in thousands)
                                                           March 31,
                                                   ------------------------
                                                      2004          2003
                                                   ----------    ----------
         Net cash provided by (used in):
                  Operating activities             $     (915)   $     (439)
                  Investing activities                    (76)          (77)
                  Financing activities                  1,007           510
                  Effect of exchange rate
                          changes on cash                  --            (1)
                                                   ----------    ----------
         Net change in cash                        $       16    $       (7)
                                                   ==========    ==========


Net cash flow used in operating activities totaled $915,000 during the three
months ended March 31, 2004, as compared to $439,000 cash used in operating
activities during the same period last year. The increase in cash flow used by
operating activities was the result of a $265,000 decrease in net income as
compared to 2003, a $96,000 reduction in non-cash expenses and an increase of
$115,000 in cash used attributable to changes in operating assets and
liabilities in the 2004 period. Increased Craft segment accounts receivable at
the end of the 2004 first quarter was a contributing factor in the increase in
cash used in operating assets and liabilities.

Net cash flow used in investing activities totaled $76,000 during the quarter
ended March 31, 2004, as compared to $77,000 during 2003. The decrease in net
cash flows used in investing activity was not significant.

                                    Page 13
<PAGE>

Net cash provided by financing activities totaled $1,007,000 during the quarter
ended March 31, 2004, as compared to $510,000 of net cash provided by financing
activities during the quarter ended March 31, 2003. Net borrowings under the
Company's credit facilities during the quarter ended March 31, 2004 totaled
$457,000 as compared to borrowings of $577,000 during the same period last year.
Net amount borrowed from factor during the first quarter of 2004 totaled
$535,000 as compared to none in 2003.

Cash used for preferred stock dividend payments during the quarter ended March
31, 2004 totaled none as compared to $67,000 during the quarter ended March 31,
2003. The reduction in cash flows used in preferred stock dividend payments was
due to the effect of the adoption of SFAS 150 in the third quarter of 2003 which
required that the 2004 preferred stock dividend payment of $69,000 be included
in the determination of net income.

Cash provided by the exercise of stock options totaled $15,000 during the three
months ended March 31, 2004 as compared to none in the first quarter of 2003.
Common stock was issued in connection with the exercise of stock options and the
payment of director fees to those directors who have opted to receive shares of
Company stock in lieu of cash in payment of their fees.

The Company has a credit facility with the CIT Group, Inc. ("CIT") and a
promissory note payable to JPMorgan Chase Bank ("JPMorgan"). In addition, the
Company has borrowings and advances outstanding from Robert A. Levinson, a
stockholder, officer and director of the Company.

The Company's credit facility with CIT (the "CIT Facility") provides for maximum
aggregate borrowings of up to $7.5 million in the form of revolving credit,
letters of credit and term loans. The CIT Facility is comprised of separate
financing agreements with each of the Company and its wholly-owned subsidiaries,
Blumenthal Lansing Company, LLC ("Blumenthal") and Westwater Industries, LLC
("Westwater").

The CIT Facility provides for (i) a term loan to the Company (the "Term Loan")
in the initial amount of $2.0 million, $1.7 million of which was outstanding at
March 31, 2004, (ii) revolving credit advances to the Company in an amount up to
$500,000 and (iii) revolving credit advances to Blumenthal and Westwater based
upon eligible accounts receivable and inventory, and a Letter of Credit facility
with a limit of $500,000. The Term Loan amortizes $12,000 per month followed by
a final installment payment of $1.4 million due on January 1, 2006. The
revolving credit advances are also due on January 1, 2006. All amounts
outstanding under the CIT Facility bear interest at the Chase Bank N.A. prime
rate plus 0.5% with a minimum rate of 5.0%.

In connection with the CIT Facility, the Company and its subsidiaries have made
cross corporate guarantees and have issued first priority liens covering
substantially all of the assets of the Company and its subsidiaries. In
addition, Mr. Robert A. Levinson, a stockholder, officer and director of the
Company, provided certain collateral against advances provided under the CIT
Facility.

The CIT Facility contains representations and warranties and events of default
customary for agreements of this nature such as restrictions on incurring more
debt, acquisitions and the use of proceeds from the sales of assets, and the
prohibition of preferred stock redemptions, dividend payments in excess of
$300,000 per year, and a change in voting control of the Company. The CIT
Facility also contains a subjective acceleration clause which states that,
except for the Term Loan, all obligations shall, at CIT's option, be immediately

                                    Page 14
<PAGE>

due and payable without notice or demand upon the occurrence of any change in
the Company's condition or affairs (financial or otherwise) that, in CIT's sole
discretion exercised by CIT in accordance with CIT's business judgment,
materially impairs the collateral or increases CIT's risk. In the case of the
Term Loan, CIT may accelerate the maturity in the event of a default by the
Company after thirteen months notice of such acceleration. Management of the
Company believes that the likelihood of CIT accelerating the payment of any of
the obligations under the CIT Facility in 2004 is remote.

Pursuant to a factoring agreement between CIT and the Company, CIT purchases the
Textile segment's eligible trade accounts receivable without recourse and
assumes substantially all credit risk with respect to such accounts. The amounts
due to the Company from CIT under the factoring agreement earn no interest. The
factoring agreement allows the Company to obtain advances that bear interest at
0.5% above CIT's prime rate (4.0% at March 31, 2004). The Company pledged its
Textile segment's accounts receivable and property and equipment as collateral
under the factoring agreement. There is no set limit on borrowings. The amount
available for borrowing is based on a formula consisting of 90% of eligible
accounts receivable increased by side collateral and reduced by both the current
loan balance and outstanding letters of credit.

The promissory note payable to JPMorgan in the amount of $3.0 million is dated
May 2, 2002 and has a maturity date of August 16, 2005, as amended. The note
bears interest at a fixed rate per annum equal to the Adjusted LIBO Rate
applicable to such note plus 0.75% (a "Eurodollar Loan"). The interest rate on
the note at March 31, 2004 was 1.9375%. In addition, Robert A. Levinson, a
stockholder, officer and director of the Company, has provided certain
additional collateral guaranteeing the note.

Robert A. Levinson has made long-term loans totaling $500,000 to the Company at
an interest rate of 6% per annum. Mr. Levinson has agreed not to require payment
of these loans and $292,000 of related accrued interest at March 31, 2004 prior
to January 1, 2006. Approximately $30,000 of accrued interest payable to Mr.
Levinson has also been classified as a current liability as the Company expects
to pay such amount within the next twelve months.

Mr. Levinson has agreed to personally support the Company's cash requirements to
enable it to fulfill its obligations through January 1, 2006, to the extent
necessary, up to a maximum amount of $3.0 million. The Company believes its
reliance on such commitment is reasonable and that Mr. Levinson has sufficient
liquidity and net worth to honor such commitment. The Company believes that Mr.
Levinson's written commitment provides the Company with the legal right to
request and receive such advances. In the event that Mr. Levinson did not honor
such commitment, the Company would have the right to sue Mr. Levinson for breach
of his agreement. Mr. Levinson reaffirmed this undertaking in writing on March
12, 2004. In connection with this agreement, Mr. Levinson advanced $895,000 to
the Company during April 2004 at an interest rate of 6% per annum, and all such
advances and interest are expected to be repaid by the Company to Mr. Levinson
during the third and fourth quarters of 2004.

During the period ended March 31, 2004, the Company was in compliance with all
debt covenants.

                                    Page 15
<PAGE>

The Series A Preferred Stock is subject to mandatory redemption, to the extent
the Company may lawfully do so, in three equal annual installments on June 15,
2007, June 15, 2008 and June 15, 2009, in each case, from funds legally
available therefore, at a price per share of Series A Preferred Stock equal to
$1 per share, together with an amount representing accrued and unpaid dividends,
whether or not declared, to the date of redemption. Dividends on the Series A
Preferred Stock accrue at a rate of $0.06 per annum per share when, as and if
declared by the Company and are payable quarterly on March 15, June 15,
September 15 and December 15. Quarterly dividends which are not paid in full in
cash on any dividend payment date will accumulate without interest. Under the
terms of the CIT Facilities, preferred stock redemption payments are prohibited
and preferred stock dividend payments are limited to $300,000 per year.

Summary of Contractual Obligations
----------------------------------
A summary of the Company's March 31, 2004 contractual obligations and
commitments is as follows:
<TABLE>
<CAPTION>
                                                       Less than                           More than
                                             Total      1 year     1-3 years   4-5 years    5 years
                                           ---------   ---------   ---------   ---------   ---------
<S>                                        <C>         <C>         <C>         <C>         <C>
     Due to Factor                         $   1,380   $   1,380   $      --   $      --   $      --
     CIT asset based loan                      3,523       3,523          --          --          --
     Term loans                                4,551          --       4,551          --          --
     Long term loan - stockholder                792          --         792          --          --
     Pension liabilities                       5,698         129         187         153       5,229
     Post retirement medical liabilities       2,347         150         165         182       1,851
     Environmental liabilities                 1,238          --         200         200         838
     Other liabilities                           542          27         108          72         335
     Preferred stock                           4,555          --       1,518       3,037          --
     Operating lease obligations               1,009         305         398         274          32
                                           ---------   ---------   ---------   ---------   ---------
                                           $  25,635   $   5,514   $   7,919   $   4,211   $   8,285
                                           =========   =========   =========   =========   =========
</TABLE>

Seasonality and New Programs

The Company's Textile business is seasonal and as such the Company generally
realizes significantly higher revenues and operating income in the third and
fourth quarters. Such seasonality takes into account the standard lead-time
required by the fashion industry to manufacture apparel, which corresponds to
the respective retail selling seasons. Standard lead-time is the period of time
commencing when the Company receives an order from a customer and ending when
the Company ships the order to the customer. In response to this seasonality,
the Company generally increases its inventory levels, and thereby has higher
working capital needs during the second and third quarters of its fiscal year.
The Company and the U.S. apparel industry in general are sensitive to the
business cycle of the national economy. Moreover, the popularity, supply and
demand for particular apparel products can change significantly from year to
year based on prevailing fashion trends and other factors. Reflecting the
cyclical nature of the apparel industry, many apparel producers tend to increase
capacity during years in which sales are strong. These increases in capacity
tend to accelerate a general economic downturn in the apparel markets when
demand weakens. These factors have contributed historically to fluctuations in
the Company's results of operations and they are expected to continue to occur
in the future.

                                    Page 16
<PAGE>

The Company's Craft business is largely based on its ability to fulfill reorders
of existing programs and to place new programs with its retail customers. The
business is fundamentally influenced by the buying habits of consumers. Home
sewing and craft activities take place on a year-round basis; however, they are
generally indoor activities and as a result they experience an increased
participation level during the fall, winter and early spring months.
Anticipating this pattern, the Company's retail customers place somewhat larger
reorders during the July through March period.

Sales are influenced by the introduction of new programs and the discontinuance
of existing programs. A successful new program requires the retail customer to
add the program and experience an acceptable level of sell-through. The Company
develops and introduces new program ideas on a regular basis. However, there is
no assurance that its retail customers will buy the new programs and if they do,
there is no assurance the consumer will purchase the new product at an
acceptable level.

The sale of the Company's products can be subject to substantial cyclical
fluctuation. Sales may decline in periods of recession or uncertainty regarding
future economic prospects that affect consumer spending, particularly on
discretionary items. This cyclicality and any related fluctuation in consumer
demand could have a material adverse effect on the Company's results of
operations and financial condition.


Impact of Inflation

The Company's results are affected by the impact of inflation on operating
costs. Historically, the Company has used selling price adjustments, cost
containment programs and improved operating efficiencies to offset the otherwise
negative impact of inflation on its operations.

                                    Page 17
<PAGE>

Forward-Looking Statements

This Quarterly Report on Form 10-QSB contains statements which constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Those
statements include statements regarding the intent and belief or current
expectations of the Company and its management team. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements. Such
risks and uncertainties include, among other things, future revenue
opportunities, the future growth of the Company's customer base and strategic
and distribution relationships, future capital needs, marketing and sales force,
the possible acquisition of complementary products and businesses and other
risks and uncertainties that may be detailed herein, and from time-to-time, in
the Company's other reports filed with the Securities and Exchange Commission.
The Company undertakes no obligation to publicly update any forward-looking
statements for any reason, even if new information becomes available or other
events occur in the future.

ITEM 3.  CONTROLS AND PROCEDURES

The Company's senior management is responsible for establishing and maintaining
a system of disclosure controls and procedures (as defined in Rule 13a-15 and
15d-15 under the Securities Exchange Act of 1934 (the "Exchange Act")) designed
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. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by an issuer in the reports that it files
or submits under the Act is accumulated and communicated to the issuer's
management, including its principal executive officer or officers and principal
financial officer or officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, the Company carried out
an evaluation, with the participation of the Chief Executive Officer and Chief
Financial Officer of the effectiveness of the Company's disclosure controls and
procedures as of the end of the period covered by this report. Based on that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective,
as of the end of the period covered by this report, to provide reasonable
assurance that information required to be disclosed in the Company's reports
filed or submitted 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.

In designing and evaluating the Company's disclosure and procedures (as defined
in Rules 13a-15(e) or 15d-15(e) of the Exchange Act), management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurances of achieving the desired control objectives,
as ours are designed to do, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures. We believe that our disclosure controls and procedures provide such
reasonable assurance.

                                    Page 18
<PAGE>

No change occurred in the Company's internal controls concerning financial
reporting during the first quarter of the fiscal year ended March 31, 2004 that
has materially affected, or is reasonably likely to materially affect, the
Company's internal controls over financial reporting.




                           PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

 31.1         Chief Executive Officer's Certificate, pursuant to Section 302 of
              the Sarbanes-Oxley Act of 2002.

 31.2         Chief Financial Officer's Certificate, pursuant to Section 302 of
              the Sarbanes-Oxley Act of 2002.

 32.1         Chief Executive Officer's Certificate, pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

 32.2         Chief Financial Officer's Certificate, pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

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


(b)  Reports on Form 8-K

         The Company filed one Current Report on Form 8-K during the quarter
ended March 31, 2004. Information regarding the items reported on is as follows:

                                  Item
    Date Filed or Furnished      Numbers                  Description
    -----------------------      -------      ----------------------------------

        March 17, 2004           5 and 7      Announced charge to fiscal 2003
                                              earnings to reflect the impairment
                                              of goodwill associated with the
                                              Company's Textile division.

                                    Page 19
<PAGE>

                                   SIGNATURES
                                   ----------

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


                           LEVCOR INTERNATIONAL, INC.



Date: May 14, 2004                /s/ ROBERT A. LEVINSON
      ------------                ----------------------------------------------
                                  Robert A. Levinson
                                  Chairman of the Board, President and Chief
                                  Executive Officer


Date: May 14, 2004                /s/ EDWARD F. COOKE
      ------------                ----------------------------------------------
                                  Edward F. Cooke
                                  Chief Financial Officer, Vice President,
                                  Secretary and Treasurer

                                    Page 20
<PAGE>

                                  Exhibit Index
                                  -------------

 31.1             Chief Executive Officer's Certificate, pursuant to Section 302
                  of the Sarbanes-Oxley Act of 2002.

 31.2             Chief Financial Officer's Certificate, pursuant to Section 302
                  of the Sarbanes-Oxley Act of 2002.

 32.1             Chief Executive Officer's Certificate, pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

 32.2             Chief Financial Officer's Certificate, pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

                                    Page 21