SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE QUARTER ENDED JULY 4, 1998

                                      OR

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

               Commission file numbers 333-42411 and 333-42411-01
               --------------------------------------------------
                               GLENOIT CORPORATION
             (Exact name of registrant as specified in its charter)

Delaware                                                            13-3862561
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                          Identification Number)

                            GLENOIT ASSET CORPORATION
             (Exact name of registrant as specified in its charter)

Delaware                                                            51-0343206
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                          Identification Number)

                              111 West 40th Street
                            New York, New York 10018
                            Telephone: (212) 391-3915
       (Address, including zip code, and telephone number, including area code,
               of Registrant's principal executive offices)

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 [ ]



None of the voting securities of Glenoit Corporation or Glenoit Asset
Corporation is held by non-affiliates.

As of July 4, 1998, there were 1,000 shares of Glenoit Corporation common stock
outstanding.

                   DOCUMENTS INCORPORATED BY REFERENCE: NONE

                                       1
<PAGE>
PART 1 - FINANCIAL INFORMATION

Item 1.     Financial Statements
<TABLE>
<CAPTION>
                                                GLENOIT CORPORATION AND SUBSIDIARIES
                                       (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
                                                     CONSOLIDATED BALANCE SHEETS

                                                                                  January 3,         July 4,
                                                                                     1998             1998
                                                                                  ------------   ----------------
                            ASSETS                                                                 (Unaudited)

<S>     <C>
Current assets:
     Cash and cash equivalents                                                    $  1,072,280  $         404,728
     Receivables:
          Trade accounts receivable, net of allowace of $543,000 and
               $698,000 as of January 3, 1998 and July 4, 1998, respectively        21,216,104         44,098,860
          Other receivables                                                            174,561            231,934
     Inventories                                                                     6,932,272         11,060,013
     Prepaid expenses and other current assets                                       1,155,761          1,635,145
                                                                                  ------------   ----------------

                    Total current assets                                            30,550,978         57,430,680

Property, plant and equipment, net                                                  35,141,104         43,694,884

Other assets:
     Notes receivable from related party                                               187,500            276,800
     Intangible assets, net of accumulated amortization of $1,251,002
          and $1,388,215 as of January 3, 1998 and July 4, 1998,
          respectively                                                               4,420,319          4,283,106
     Deferred loan costs and other, net of accumulated amortization of
          $523,743 and $842,466 as of January 3, 1998 and July 4, 1998,              4,929,666          4,734,088
          respectively
     Other assets                                                                            -             68,060
                                                                                  ------------   ----------------

                    Total assets                                                  $ 75,229,567  $     110,487,618
                                                                                  ============   ================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL 
STATEMENTS.


                                       2
<PAGE>
<TABLE>
<CAPTION>
                                                GLENOIT CORPORATION AND SUBSIDIARIES
                                       (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
                                                     CONSOLIDATED BALANCE SHEETS



                                                                         January 3,      July 4,
                                                                           1998           1998
                                                                        ----------     ----------
          LIABILITIES AND STOCKHOLDER'S DEFICIT                                       (Unaudited)
<S>     <C>
Current liabilities:
     Accounts payable                                                 $  5,961,475  $   9,451,334 
     Accrued expenses                                                    6,065,182      7,965,459
     Current maturities of capital lease obligations                       697,934        420,202
     Due to Holdings                                                     2,678,587      4,981,432
                                                                        ----------     ----------

                    Total current liabilities                           15,403,178     22,818,427

Long-term debt                                                         102,000,000    124,000,000
Capital lease obligations - less current maturities                         61,685              -
Deferred income taxes                                                    1,930,694      2,256,580
Other long-term liabilities                                                      -         68,060
                                                                        ----------     ----------

                    Total liabilities                                  119,395,557    149,143,067
                                                                        ----------     ----------

Commitments and contingencies

Stockholder's deficit:
     Common stock, $.01 par value, 1,000 shares authorized, issued
         and outstanding as of January 3, 1998 and July 4, 1998                 10             10
     Additional paid-in capital                                          1,361,713      1,461,713
     Accumulated deficit                                              ( 45,295,099)  ( 39,595,807)
     Accumulated other comprehensive income                           (    232,614)  (    521,365)
                                                                        ----------     ----------

                    Total stockholder's deficit                       ( 44,165,990)  ( 38,655,449)
                                                                        ----------     ----------

                    Total liabilities and stockholder's deficit        $75,229,567  $ 110,487,618 
                                                                        ==========     ==========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

                                       3
<PAGE>
                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>

<S>     <C>
                                                          Three Months Ended              Six Months Ended
                                                       -----------------------       -------------------------
                                                         July 5,      July 4,          July 5,      July 4,
                                                         1997         1998             1997         1998
                                                       ----------   ----------       ----------   ----------

Net sales                                          $   40,179,627 $ 49,160,174    $  72,559,216  $87,940,092
Cost of sales                                          26,011,125   31,916,312       48,390,267   59,153,275
                                                       ----------   ----------       ----------   ----------
          Gross profit                                 14,168,502   17,243,862       24,168,949   28,786,817
                                                       ----------   ----------       ----------   ----------
Operating expenses:
     Selling                                            3,106,582    3,843,598        6,077,573    7,263,648
     Administrative                                     1,799,847    2,555,336        3,951,829    4,940,401
     Research and development                             462,433      494,104          958,552      922,081
                                                       ----------   ----------       ----------   ----------
          Total operating expenses                      5,368,862    6,893,038       10,987,954   13,126,130
                                                       ----------   ----------       ----------   ----------
Income from operations                                  8,799,640   10,350,824       13,180,995   15,660,687
                                                       ----------   ----------       ----------   ----------
Other income (expense):
     Interest expense                                 ( 2,969,731 )( 3,312,564 )    ( 5,080,792 ) (6,315,913 )
     Amortization of deferred financing costs         (   120,800 )(   159,977 )    (   294,278 ) (  318,723 )
     Other                                            (    51,260 )(    20,369 )    (   103,184 ) (    3,706 )
                                                       ----------   ----------       ----------   ----------
          Total other expense                         ( 3,141,791 )( 3,492,910 )    ( 5,478,254 ) (6,638,342 )
                                                       ----------   ----------       ----------   ----------
Income before income taxes and
     extraordinary loss                                 5,657,849    6,857,914        7,702,741    9,022,345

Income tax expense                                      2,457,000    2,544,427        3,359,073    3,323,053
                                                       ----------   ----------       ----------   ----------
Income before extraordinary loss                        3,200,849    4,313,487        4,343,668    5,699,292
Extraordinary loss on early extinguishment
     of debt, net of tax benefit of $1,527,000                  -            -        2,856,884            -
                                                       ----------   ----------       ----------   ----------

Net income                                          $   3,200,849  $ 4,313,487     $  1,486,784 $  5,699,292
                                                       ==========   ==========       ==========   ==========
Basic and diluted income per share:
     Income before extraordinary loss               $       3,201  $     4,313     $      4,344 $      5,699
     Extraordinary loss on early
        extinguishment of debt                                                     (     2,857 )
                                                       ----------   ----------       ----------   ----------
     Net income                                     $       3,201        4,313     $      1,487 $      5,699
                                                       ==========   ==========       ==========   ==========
     Weighted average shares outstanding                    1,000        1,000            1,000        1,000
                                                       ==========   ==========       ==========   ==========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       4
<PAGE>
                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
           CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIT (UNAUDITED)
                      FOR THE SIX MONTHS ENDED JULY 4, 1998
<TABLE>
<CAPTION>
<S>     <C>    


                                                               Retained          Accumulated
                       Shares of                Additional     Earnings          Other
                       Common       Common      Paid-in        (Accumulated)     Comprehensive
                       Stock        Stock       Capital        Deficit)          Income             Total
                       -------      ------      --------       ----------        -----------        -----------

Balance as of
   January 3, 1998       1,000     $    10   $ 1,361,713    $( 45,295,099  )   $(    232,614 )    $ (44,165,990 )

Net Income                                                      5,699,292                             5,699,292

Stock compensation                               100,000                                                100,000

Accumulated Other
   Comprehensive
   Income                                                                       (    288,751 )      (   288,751 )
                       -------      ------      --------       ----------        -----------        -----------

Balance as of
   July 4, 1998          1,000     $    10   $ 1,461,713    $( 39,595,807)     $(    521,365 )    $ (38,655,449 )
                       =======      ======      ========       ==========        ===========        ===========

           CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
                     FOR THE SIX MONTHS ENDED JULY 4, 1998


Net Income                                                   $  5,699,292

Other comprehensive income, net of tax:
   Currency translation adjustment                            (   288,751 )
                                                               ----------

Comprehensive income                                         $  5,410,541
                                                               ==========


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>


                                       5
<PAGE>


                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
<S> <C>
                                                                           Six Months Ended
                                                                       --------------------------

                                                                        July 5,        July 4,
                                                                         1997            1998
                                                                       ----------     -----------
Cash flows from operating activities:
     Net income                                                   $    1,486,784    $  5,699,292
     Adjustments to reconcile net income to net cash
        used in operating activities:
          Loss on early extinguishment of debt                         4,383,884
          Depreciation and amortization                                1,663,730       2,752,047
          Stock compensation                                                             100,000
          Loss on sale of property and equipment                         115,460          16,305
          Effect of foreign currency exchange rate                                  (    288,751 )
          Changes in operating assets and liabilities:
             Trade and other receivables                            ( 20,079,937 )  ( 22,940,129 )
             Inventories                                            (  2,135,003 )  (  4,127,741 )
             Prepaid expenses and other                             (  1,891,876 )  (    658,135 )
             Due to Holdings                                        (    550,404 )     2,302,845
             Accounts payable                                          3,812,915       3,489,859
             Accrued expenses and other liabilities                    4,775,412       2,294,223
                                                                       ----------     -----------
               Net cash used in operating activities                (  8,419,035 )  ( 11,360,185 )
                                                                       ----------     -----------

Cash flows from investing activities:
   Purchases of and additions to property, plant and equipment      (  3,928,571 )  ( 10,920,042 )
   Proceeds from sale of property and equipment and refunds of
          deposits                                                        48,303          41,392
                                                                       ----------     -----------
               Net cash used in investing activities                (  3,880,268 )  ( 10,878,650 )
                                                                       ----------     -----------

Cash flows from financing activities:
   Payments on capital lease obligations                            (    263,478 )  (    339,417 )
   Proceeds from line of credit and issuance of debt, net             28,000,000      22,000,000
   Dividends paid                                                   (  1,600,000 )
   Advances on notes receivable - related parties                   (    931,263 )  (     89,300 )
   Payment of note payable to related party                         (  5,743,581 )
   Payments for financing costs                                     (  6,838,950 )
                                                                       ----------     -----------
               Net cash provided by financing activities              12,622,728      21,571,283
                                                                     ----------     -----------

               Net increase (decrease) in cash and cash equivalents      323,425    (    667,552 )

Cash and cash equivalents at beginning of period                          48,817       1,072,280
                                                                       ----------     -----------

Cash and cash equivalents at end of period                        $      372,242 $       404,728
                                                                       ==========     ===========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       6
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    SIGNIFICANT ACCOUNTING POLICIES

      BASIS OF PRESENTATION

      The accompanying unaudited condensed consolidated financial statements of
      Glenoit Corporation and subsidiaries (collectively the "Company") have
      been prepared in accordance with generally accepted accounting principles
      for interim financial information. 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 only normal recurring
      adjustments) considered necessary for a fair presentation have been
      included. Operating results for the six-month period ended July 4, 1998
      are not necessarily indicative of the results that may be expected for the
      fiscal year ending January 2, 1999. The unaudited financial statements
      should be read in conjunction with the audited financial statements and
      footnotes thereto for the fiscal year ended January 3, 1998.

      CONSOLIDATION

      Prior to September 1997, the accompanying  financial  statements included
      the accounts of Glenoit  Corporation  and its  wholly-owned  subsidiaries
      Glenoit Mills, Inc.  ("Mills"),  Tarboro  Properties,  Inc.  ("Tarboro"),
      and Glenoit Asset  Corporation,  Inc. ("Glenoit Asset  Corporation").  In
      September 1997,  Glenoit  Corporation  merged with Mills and Tarboro.  In
      addition,  Glenoit  Corporation's newly formed  wholly-owned  subsidiary,
      Glenoit  Corporation of Canada ("Glenoit  Canada") acquired the assets of
      Collins  & Aikman  Canada  Inc.  (see  Note 7).  Accordingly,  at July 4,
      1998, the  accompanying  financial  statements  include  the  accounts  of
      Glenoit  Corporation and it's  wholly-owned  subsidiaries  Glenoit Canada
      and  Glenoit   Asset   Corporation.   The   Company  is  a   wholly-owned
      subsidiary of Glenoit Universal, Ltd. ("Holdings").

      NET INCOME PER SHARE

      As of January 3, 1998, the Company adopted Statement of Financial
      Accounting Standards No. 128, "Earnings per Share", which requires the
      Company to present both basic and diluted earnings per share. There is no
      difference between the Company's basic and diluted earnings per share as
      the Company does not have any common stock equivalents.


                                       7
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

      The Company adopted Statement of Financial Accounting Standards No. 130
      "Reporting Comprehensive Income" ("SFAS No. 130") for the fiscal year
      ending January 2, 1999. SFAS No. 130 requires the Company to display an
      amount representing the total comprehensive income for the period in a
      financial statement which is displayed with the same prominence as other
      financial statements. The Company did not have any items of other
      comprehensive income for the period ended July 5, 1997 and therefore is
      not required to report comprehensive income.

2.    RELATED PARTY TRANSACTIONS

      On March 5, 1997, the Company declared a dividend and issued a note in the
      amount of approximately $5.8 million (the "Note") to a shareholder of
      Holdings in satisfaction of a contingent earnout obligation of Holdings
      related to the recapitalization discussed in the January 3, 1998 financial
      statements. This note contained a mandatory prepayment provision which
      required the Company to retire the Note and accrued interest as of the
      date of a bond offering of the Company. On April 1, 1997, the date of the
      bond offering described in Note 4, the Company retired the Note from the
      proceeds of the bond offering.

      On June 14, 1997, the Company declared a dividend in the amount of $1.6
      million to enable Holdings to exercise an option to repurchase shares of
      Holdings' common stock and to repay a note due to a shareholder of
      Holdings. This transaction was related to the recapitalization discussed
      in Note 2 of the Company's January 3, 1998 audited financial statements.
      Additionally, as part of the same transaction, the Company made a loan of
      $931,263 to an officer at an interest rate of prime plus .5%. The
      principal and interest were repaid in full on August 12, 1997.

      In March 1998, the Company loaned an officer $100,000 and created an
      unsecured note receivable.

      During June 1998, Holdings sold three officers of the Company a total of
      857.46 shares of Holdings' Class A common stock for approximately
      $158,000. Holdings loaned the officers an amount equal to the sales price
      and created full recourse notes receivable secured by the issued shares.
      In connection with the stock issuance, the Company recorded non-cash
      compensation expense of $100,000.


                                       8
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.    INVENTORIES

      Inventories are summarized as follows:
                                                       January 3,      July 4,
                                                         1998          1998
                                                      ------------  ------------
                                                                    (Unaudited)

      Raw Materials                                    $2,082,516    $2,957,693
      Work-in-process                                   1,516,899     2,673,839
      Finished goods                                    3,332,857     5,428,481
                                                      ------------  ------------
                 Total inventories                     $6,932,272   $11,060,013
                                                      ============  ============
4.    LONG-TERM DEBT

      As of January 3, 1998 and July 4, 1998, long-term debt consisted of the
      following:

                                            January 3,        July 4,
                                              1998             1998
                                            ----------      -----------
                                                            (unaudited)
      Senior credit facility.........      $ 2,000,000       $24,000,000
      11% Senior subordinated notes..      100,000,000       100,000,000
                                           ------------      -----------
         Total long-term debt........      $102,000,000     $124,000,000
                                           ============-    ============


      On April 1, 1997, the Company issued $100,000,000 of senior subordinated
      notes (the "Senior Subordinated Notes") in a private placement bond
      offering. The Senior Subordinated Notes bear interest at a fixed rate of
      11% and mature on April 15, 2007. The Company at its option, can prepay
      these notes at a price of 105.5% of the original principal amount,
      beginning on April 15, 2002. The premium declines by 1.833% thereafter
      each year beginning on April 15 until reduced to the original principal
      amount. Additionally, prior to April 15, 2000, the Company may redeem in
      the aggregate up to 25% of the original aggregate principal amount with
      the proceeds of one or more Public Equity Offerings, as defined in the
      Indenture governing the Senior Subordinated Notes, at a redemption price
      of 110% of the original principal amount. Upon a Change of Control of the
      Company, as defined in the Indenture governing the Senior Subordinated
      Notes, the holder of a Senior Subordinated Note may require the Company to
      redeem the note at a price of 101% of the principal amount. Interest is
      payable semi-annually, and began on October 15, 1997.


                                       9
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.    LONG TERM DEBT (CONTINUED)

      On April 1, 1997, the Company also entered into a $70 million senior
      credit facility (the "Facility") with a financial institution. Of the
      total commitment of $70 million under the Facility, $25 million is
      designated as an Acquisition Commitment and $45 million as a Working
      Capital Commitment, which is a revolving credit facility limited to the
      Borrowing Base as defined in the Facility. The Company may borrow under
      the Acquisition Facility through December 31, 1999. The bank also extended
      up to a total of $5 million in letters of credit to the Company; however,
      the amount is limited to the amount of the unused Working Capital
      Commitment. At July 4, 1998, the Company had $24 million outstanding under
      the Working Capital Commitment, and approximately $18 million available
      under the Working Capital Commitment and up to $25 million available under
      the Acquisition Commitment.

      At the option of the Company, the Company may designate advances under the
      Facility to bear interest at the Base Rate, as defined in the Facility,
      plus 1% for an Acquisition Commitment Advance and .5% for a Working
      Capital Commitment Advance or the Eurodollar Rate plus 2.5% for an
      Acquisition Commitment Advance or 2% for a Working Capital Commitment
      Advance. The Company must pay a commitment fee equal to five eighths of
      one percent per year of the unused Acquisition Commitment and one half of
      one percent per year of the unused Working Capital Commitment.
      Additionally, the Company must pay a letter of credit fee of two percent
      per year of the average available amount under the letters of credit for
      each quarter such letters of credit are outstanding. All interest,
      commitment fees and letter of credit fees under the Facility are payable
      quarterly and began on June 30, 1997. The principal balance of the
      Acquisition Commitment is repayable quarterly commencing on March 31, 2000
      in amounts equal to one-twentieth of the aggregate principal balance then
      outstanding, with the balance due on December 31, 2001. The Working
      Capital commitment is due on December 31, 2001.

      Prior to December 31, 1999, the Company may be required to prepay the
      Acquisition Commitment and Working Capital Commitment in amounts equal to
      the Net Cash Proceeds of the sale of assets, stock, debt securities or any
      other Net Cash Proceeds, as defined by the Facility. The Acquisition and
      Working Capital Commitments would then be permanently reduced by such
      payment.

      The Facility and Senior Subordinated Notes have various covenants that
      require the Company to: maintain key financial ratios, restrict corporate
      borrowings, limit the Company's ability to pay dividends, limit the type
      and amount of certain investments which may be undertaken by the Company,
      limit the Company's disposition of assets, limit the Company's ability to
      enter into operating and capital leases, and restrict the Company's
      ability to issue shares of its stock.


                                       10
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.    LONG TERM DEBT (CONTINUED)

      Substantially all of the Company's assets and operations are pledged as
      collateral for the Facility. Holdings and Glenoit Asset Corporation have
      guaranteed the Company's obligations under the Facility. Holdings and
      Glenoit Asset Corporation have no substantive assets or operations and
      rely on the Company to fund their obligations.

      The Senior Subordinated Notes are fully and unconditionally guaranteed, on
      a joint and several basis, by Glenoit Asset Corporation. Glenoit Asset
      Corporation's operations consist solely of leasing certain trademarks and
      other intangibles to Glenoit Corporation. Accordingly, Glenoit Asset
      Corporation's assets and operations consist primarily of intercompany
      assets and operations with Glenoit Corporation. Glenoit Canada has not
      guaranteed the Senior Subordinated Notes. Prior to the formation of
      Glenoit Canada in June 1997, all of Glenoit Corporation's wholly-owned
      subsidiaries fully and unconditionally guaranteed the Senior Subordinated
      Notes. For periods prior to the formation of Glenoit Canada, the Company
      had no independent operations or assets other than its investment in its
      subsidiaries. The financial information of the subsidiary guarantors for
      these periods has been excluded because management believes that this
      information is not material to investors. Prior to the acquisition
      discussed in Note 7, Glenoit Canada had no operations.

      The following tables present summarized balance sheet information of
      Glenoit Corporation, Glenoit Asset Corporation, and Glenoit Canada as of
      July 4, 1998 and the related summarized operating statement and cash flow
      statement information for the period then ended. The Company believes that
      separate financial statements and other disclosures regarding Glenoit
      Asset Corporation, the sole subsidiary guarantor of the Senior
      Subordinated Notes, are not material to investors. Summarized balance
      sheet information, in thousands, as of July 4, 1998 is as follows
      (unaudited):
<TABLE>
<CAPTION>
<S>     <C>
                                                        Glenoit                 Consolidated
                                           Glenoit        Asset                     Domestic   Glenoit
                                       Corporation   Corporation  Eliminations    Operations   Canada   Eliminations  Consolidated
                                       -----------   -----------  ------------    ----------   ------   ------------  ------------
Cash and cash equivalents .............   $   (284)  $     83                     $   (201)   $    606                  $    405
Accounts and other receivables, net ...     41,611                                  41,611       2,720                    44,331
Inventories ...........................     10,117                                  10,117         943                    11,060
Other current assets ..................      1,578                                   1,578          57                     1,635
                                          --------   --------                     --------    --------                  --------
     Total current assets .............     53,022         83                       53,105       4,326                    57,431
Property,  plant  and equipment, net ..     35,398                                  35,398       8,297                    43,695
Other assets ..........................     53,311     32,222        $ (64,527)     21,006         404    $ (12,048)       9,362
                                         ---------  ---------        ---------   ---------   ---------    ---------    ---------
     Total assets .....................  $ 141,731  $  32,305        $ (64,527)  $ 109,509   $  13,027    $ (12,048)   $ 110,488
                                         =========  =========        =========   =========   =========    =========    =========
                                                                                                                     
Accounts payable ......................  $   8,711                               $   8,711   $     740                 $   9,451  
Other current liabilities .............     12,633  $   2,812        $  (2,812)     12,633         734                    13,367
                                         ---------  ---------        ---------   ---------   ---------    ---------    ---------  
     Total current liabilities ........     21,344      2,812           (2,812)     21,344       1,474                    22,818  
Long-term debt ........................    124,000                                 124,000                               124,000  
Other long-term liabilities ...........     34,521                     (32,222)      2,299          26                     2,325  
Stockholders equity (deficit) .........    (38,134)    29,493          (29,493)    (38,134)     11,527    $ (12,048)     (38,655)
                                         ---------  ---------        ---------   ---------   ---------    ---------    ---------
     Total liabilities and equity .....  $ 141,731  $  32,305        $ (64,527)  $ 109,509   $  13,027    $ (12,048)   $ 110,488
                                         =========  =========        =========   =========   =========    =========    =========
</TABLE>


                                       11

 <PAGE>
                     GLENOIT CORPORATION AND SUBSIDIARIES
            (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


4.    LONG-TERM DEBT (CONTINUED)

      Summarized operating statements information, in thousands, for the six
      months ended July 4, 1998 is as follows (unaudited):

<TABLE>
<CAPTION>
<S> <C>
                                                Glenoit                   Consolidated
                                   Glenoit        Asset                       Domestic   Glenoit
                               Corporation   Corporation   Eliminations     Operations    Canada  Eliminations  Consolidated
                               -----------   -----------   ------------     ----------    ------  ------------  ------------
Net sales .....................   $ 81,145                                  $ 81,145      $6,795                    $87,940
Cost of sales .................     54,025                                    54,025       5,128                     59,153 
                                  --------                                  --------    --------                   -------- 
Gross profit ..................     27,120                                    27,120       1,667                     28,787 
Operating expenses ............     12,389        $    5                      12,394         732                     13,126 
Royalty income (expense) ......     (5,083)        5,083                          --          --                         -- 
                                  --------      --------                    --------    --------                   -------- 
Income from operations ........      9,648         5,078                      14,726         935                     15,661 
Interest expense (income) .....      7,422        (1,099)                      6,323          (7)                     6,316 
Other expense (income) ........     (4,272)                     $ 4,015         (257)        (10)  $     590            323 
Income taxes ..................        799         2,162             --        2,961         362          --          3,323
-------------------------------   --------      --------       --------      --------   --------   ---------       -------- 
     Net income ...............   $  5,699        $4,015        $(4,015)    $  5,699        $590   $   (590)         $5,699
                                  ========        ======        =======     ========        ====   ========          ======
</TABLE>                                                              
      Summarized cashflow statement information, in thousands, for the period
      ended July 4, 1998 is as follows (unaudited):

<TABLE>
<CAPTION>
<S> <C>
                                                       Glenoit                  Consolidated 
                                          Glenoit       Asset                     Domestic     Glenoit
                                        Corporation  Corporation  Eliminations   Operations    Canada   Eliminations   Consolidated
                                        -----------  -----------  ------------   ----------    ------   ------------   ------------
Cashflows from operating activities....  $(17,790)    $ 6,175                    $(11,615)       $255                    $(11,360)
Cashflows used in investing activities.    (8,019)                                 (8,019)     (2,860)                    (10,879)
Cashflows from financing activities....    24,874      (6,168)                     18,706       2,866                      21,572
                                           ------      ------                      ------       -----                      ------
Net increase (decrease) in cash........      (935)          7                        (928)        261                        (667)
Cash at  beginning of period...........       651          76                         727         345                       1,072
                                           ------      ------                      ------       -----                      ------
Cash at end of period..................  $   (284)    $    83                    $   (201)    $   606                    $    405
                                           ======      ======                      ======       =====                      ======
</TABLE>

      On April 1, 1997, the Company utilized the proceeds from the 11% Senior
      Subordinated Notes to retire the Company's existing debt with financial
      institutions, which included the balance of an $80 million senior credit
      facility (the Term A and B Notes and the working capital line of credit)
      (the "Old Facility") and a $15 million 12.5% Senior Subordinated Note
      payable (the $15 Million Senior Subordinated Note"). Additionally, on
      April 1, 1997, the Company retired a note to a shareholder of Holdings in
      the amount of approximately $5.8 million. As a result of the Company's
      payoff of these obligations, the Company charged to earnings $2,884,000 of
      net deferred loan costs and a $1,500,000 prepayment penalty related to the
      $15 million Senior Subordinated Note. During the first quarter of 1997,
      the Company recognized an extraordinary loss from the early extinguishment
      of debt of $2,857,000, which is net of a tax benefit of $1,527,000 related
      to these charges.

                                       12
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.    COMMITMENTS AND CONTINGENCIES

      Holdings is a holding company and as a result does not have any
      substantive assets or operations that generate revenues or cash flows.
      Accordingly, Holdings relies on the Company's distribution of dividends in
      order to fund its operations and meet its obligations, including its
      interest and principal payments.

      Holdings has obligations with a face amount of approximately $27.9
      million, bearing interest at stated rates between 5% to 12.5%, to
      shareholders ("Shareholder Notes") with principal due in 2004 and 2005.
      These obligations are not reflected in the Company's accompanying balance
      sheets or income statements. Subject to existing debt restrictions,
      Shareholder Notes with a face amount of approximately $9.7 million contain
      certain acceleration clauses. At the option of Holdings, subject to the
      Company's existing debt restrictions, the interest may be paid by the
      issuance of additional notes or in cash.

      However, Holdings must pay interest in cash on certain of the Shareholder
      Notes if defined levels of consolidated cash flows of Holdings are
      attained. Annual interest payments during the next five years are
      approximately $2 million in 1998, and approximately $2.6 million per year
      thereafter, excluding interest on notes that may be issued to pay
      interest. Assuming Holdings makes all interest payments related to the
      Shareholder Notes with additional notes, the Company's ultimate
      distribution of dividends in order for Holdings to meet its existing debt
      obligations is expected to be approximately $63 million beginning December
      2004 through December 2005. However, the Company may be required to
      declare dividends in order for Holdings to fund certain of its obligations
      in cash as discussed above. Such amounts could approximate $3 million in
      the aggregate and are due through December 2004, if the defined levels of
      consolidated cash flow of Holdings are met.



6.    INCOME TAXES

      The Company's and Holdings' federal income tax returns for the years ended
      January 1, 1994 and December 31, 1994, have been examined by the Internal
      Revenue Service ("IRS"). The IRS has assessed taxes, penalties and
      interest relating to the deductibility of certain expenses claimed as
      deductions by the Company. The Company is currently in the process of
      responding to the IRS. In the opinion of management, adequate provision
      has been made in the accompanying financial statements for its income tax
      obligations; however, should the Company be responsible for all taxes,
      penalties and interest assessed by the IRS, the Company would be required
      to pay an additional amount of approximately $1.6 million over amounts
      currently accrued. The Company believes that the proposed adjustments by
      the IRS are inappropriate and intends to vigorously contest these
      assessments.

                                       13
<PAGE>

                      GLENOIT CORPORATION AND SUBSIDIARIES
             (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6.    INCOME TAXES (CONTINUED)

      Holdings has an indemnification agreement with a shareholder with respect
      to certain tax obligations. While tax obligations are the expense and
      liability of the Company and Holdings, the indemnification agreement
      provides for an additional contribution of capital to Holdings from this
      shareholder via reductions of long-term obligations due the shareholder
      from Holdings.

      The Company and Holdings, have entered into a Tax Sharing Agreement
      whereby the Company will pay Holdings its respective pro rata share of the
      total consolidated tax liability or receive its respective pro rata share
      of the total consolidated tax refund, as set forth in the tax sharing
      agreement. Under the Tax Sharing Agreement, the Company and Holdings are
      treated as separate tax groups.



7.    ACQUISITION

      Effective August 30, 1997, Glenoit Corporation through Glenoit Canada,
      acquired certain assets and certain liabilities of Collins & Aikman
      Canada, Inc. for cash consideration of approximately $8.2 million. The
      acquisition has been accounted for as a purchase and, accordingly, the
      operating results of the acquired business have been included in the
      results of operations since the acquisition date. The purchase price
      allocation attributed approximately $3.4 million to net working capital
      items, approximately $4.4 million to property, plant and equipment and
      approximately $ .4 million to goodwill. For the first six months of 1997,
      the acquired business had sales of approximately $6.7 million. Net income
      and basic and diluted income per share for the six months ended July 5,
      1997 as presented in the accompanying unaudited consolidated statements of
      income would not differ significantly on a proforma basis adjusted for
      this acquisition.


8.     SUBSEQUENT EVENT

      In July 1998, Holdings settled a dispute regarding additional purchase
      price owed to a shareholder associated with the recapitalization in
      December 1995 discussed in Note 2 to the Consolidated Financial Statements
      as of January 3, 1998. Accordingly, Holdings paid approximately $1.9
      million to the shareholder during July 1998. These funds were paid to
      Holdings by the Company.


                                       14
<PAGE>

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

OVERVIEW

On December 13,1995, Glenoit Universal, Ltd. ("Holdings") formed a wholly owned
subsidiary, Glenoit Corporation (the Company), formerly Glenoit Intermediate,
Inc. and exchanged all of the issued and outstanding stock of Glenoit Mills,
Inc. and subsidiary ("Mills") for all of the issued and outstanding shares of
common stock of Glenoit Corporation. The Company is engaged primarily in the
manufacture of fabric ("Fabric Division") and household rugs ("Consumer Products
Division") with plants in North Carolina, Canada and Tennessee. The Company
offers a wide range of textile products to customers in retail, apparel, and
automotive industries throughout North America.


RESULTS OF OPERATIONS

Net sales for the quarter ended July 4, 1998, increased to $49.2 million or
22.4% compared to $40.2 million during the comparable quarter in the prior year.
Sales in the Fabric Division grew due to increased unit volume in active/outdoor
wear. Sales in the Fabric Division were also positively impacted by the
acquisition of Glenoit Canada in September 1997 which generated sales of $3.5
million during the second quarter of 1998. Net sales in the Consumer Products
Division increased approximately 46.2% during the second quarter of 1998
compared to 1997 as a result of increased unit volume.

Net sales year to date through July 4, 1998 were $87.9 million compared to $72.6
million for the first six months of the prior year. This increase of $15.4 or
21.2% related to the items discussed above. Glenoit Canada reported sales of
$6.8 million for the first six months of 1998.

Gross profit for the quarter ended July 4, 1998, was $17.2 million or 35.1% of
net sales compared to $14.2 million or 35.3% of net sales for the same period
last year. Gross profit year-to-date July 4, 1998 was $28.8 million or 32.7% of
net sales compared to $24.2 million or 33.3% of net sales for the first six
months of the prior year. The increases of $3.1 million and $4.6 million,
respectively, are attributable to increased unit volume in both operating
divisions. These gains were slightly offset by increased levels of depreciation
as a result of the Company's aggressive capital expenditure program as well as
anticipated lower margins in the Canadian operation.

Operating expenses for the quarter ended July 4, 1998, were $6.9 million or
14.0% of net sales compared to $5.4 million or 13.4% of net sales in the second
quarter of the prior year. Operating expenses for the six months ended July 4,
1998 increased to $13.1 million from $11.0 million for the same period in the
prior year. Dollar increases over the prior year were primarily in sales related
categories such as commissions and compensation related costs as well as
expenses incurred by Glenoit Canada.

Operating income was $10.4 million for the quarter ended July 4, 1998 compared
to $8.8 million in the prior year. This represents an increase of $1.6 million
or 17.6% for the quarter and resulted from the factors described above.

                                       15
<PAGE>

Operating income increased 18.8% to $15.7 million for the first six months of
1998 over the same six months of 1997. This increase relates to the unit volume
increases described above offset by the anticipated lower margins of the
Canadian operation.

Interest expense for the quarter ended July 4, 1998, was $3.3 million compared
to $3.0 million for the same period last year. Interest expense year to date
July 4, 1998 was $6.3 compared to $5.1 million for the first six months of 1997.
Interest expense has increased due to higher levels of debt and a higher
effective borrowing rate relating to senior subordinated debt issued at the end
of the first quarter of 1997.

Net income for the quarter ended July 4, 1998, was $4.3 million compared to net
income of $3.2 million the prior year. Net income for the first six months of
1998 was $5.7 compared to $4.3 million for the same period in the prior year
(excluding the effect of an extraordinary loss on early extinguishment of debt
of $2.9 million related to the refinancing of the Company's debt which took
place on April 1, 1997).

LIQUIDITY AND CAPITAL RESOURCES

The Company relies on internally generated cash flow from operations,
supplemented by borrowings under its senior credit facility and vendor financing
to meet its debt service requirements, capital expenditures and working capital
needs. The Company is highly leveraged.

On April 1, 1997, the Company issued $100 million of senior subordinated notes
(the "Notes"). Concurrently with the issuance of the Notes, the Company entered
into a $70 million senior credit facility ("the New Credit Facility") with a
syndicate of lenders led by BNP, pursuant to which the Company obtained
available credit (i) up to $45.0 million for working capital and general
corporate purposes (the "Working Capital Commitment"), subject to a Borrowing
Base, and (ii) up to $25.0 million for acquisitions (the "Acquisition
Commitment"). The Company also prepaid all outstanding indebtedness under the
Old Facility. At July 4, 1998, there were borrowings of $24.0 million under the
Working Capital Commitment and approximately $18.0 million available to borrow
under the Working Capital Commitment and up to $25.0 million under the
Acquisition Commitment. A more detailed description of the senior subordinated
notes and the senior credit agreement may be found in the notes to consolidated
financial statements.

Principal and interest payments in respect of the Notes and the New Credit
Facility will represent significant liquidity requirements for the Company. In
addition, the Company will be permitted (but will not be obligated) to make
certain payments to Holdings, including payments (i) in respect of principal and
interest of the Seller Notes, (ii) to cover certain administrative and operating
expenses of Holdings and (iii) to cover certain tax liabilities allocable to the
Company, subject in each case to certain conditions as described in the Notes
and the New Credit Facility.

The Company believes that cash generated from operations, together with vendor
financing and amounts available under the New Credit Facility, will be adequate
to meet its debt service requirements, capital expenditures and working capital
needs for the foreseeable future, although no assurance can be given in this
regard. The Company's future operating performance and ability to service or
refinance the Notes and to extend or refinance its other indebtedness will be
subject


                                       16
<PAGE>

to future economic conditions and to financial, business and other factors
beyond the Company's control.

Holdings is a holding company and as a result does not have any substantive
assets or operations that generate revenues or cashflows. Accordingly, Holdings
relies on the Company's distribution of dividends to meet its obligations,
including interest and principal payments. As of July 4, 1998, Holdings has
obligations with a face amount of $27.9 million, bearing interest at stated
rates between 5% to 12.5%, to shareholders with principal due in 2004 and 2005.
For further discussion see Note 5 of the Unaudited Consolidated Financial
Statements.

On March 5, 1997, the Company declared a dividend and issued a note in the
amount of approximately $5.8 million to a shareholder of Holdings in
satisfaction of a contingent earnout obligation of Holdings as discussed in Note
2 to the Unaudited Consolidated Financial Statements.

During the six months ended July 4, 1998, net cash used in operating activities
was $11.4 million, which resulted from the Company increasing its working
capital to meet its seasonal requirements. Receivables increased by $22.9
million, inventories and other assets increased by $4.8 million. Accrued
liabilities increased by $2.3 million, due primarily to sales and compensation
related costs. Accounts payable increased by $3.5 million related to increased
raw material purchases and tax related accruals increased $2.3 million.

CAPITAL IMPROVEMENTS

Capital expenditures for the six months ended July 4, 1998 were $10.9 million.
These additions were primarily in the Fabric Division for additions of knitting
and blending equipment as well as updating the manufacturing technology in the
newly acquired Canadian operation. Expenditures were also made for upgrades to
management information systems.

SEASONALITY

The Company's business is seasonal in nature. Generally, there is increased
retail demand for garments and rugs during the fall (back-to-school) and
December holiday selling seasons. Consequently, demand for the Company's
products is generally higher during the Company's second and third fiscal
quarters when such products are produced for these selling seasons.

INFLATION

The Company believes that inflation has not had a material impact on the results
of operations presented.

                                       17
<PAGE>
IMPACT OF YEAR 2000 COMPLIANCE

The Company has performed a review of its computer programs and is in the
process of reviewing the Company's Year 2000 exposure to third parties such as
customers and suppliers. Due to conversions already in progress to improve
operating performance, in which Year 2000 compliance was ancillary, the Company
estimates costs to be incurred will not have a material adverse effect on the
Company. The Company estimates with modifications to existing software and
conversions to new systems that are currently in progress, its exposure to the
Year 2000 issue to be minimal.

There can be no guarantees that these estimates will be achieved and actual
results could differ from those anticipated. Specific factors that might cause
differences include, but are not limited to, the ability of the Company to
complete its conversions in a timely manner, the ability of third parties such
as customers and suppliers to modify or convert their systems to be Year 2000
compliant and similar uncertainties.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition, including in
particular, the likelihood of the Company's success in developing and expanding
its business. These statements are based upon a number of assumptions and
estimates, which are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company, and reflect
future business decisions which are subject to change. Some of these assumptions
inevitably will not materialize, and unanticipated events will occur which will
affect the Company's results. The forward looking statements in this Form 10-Q
are intended to be subject to the safe harbor protection provided by Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 (the
"Safe Harbor Acts").


                                       18
<PAGE>

PART II - OTHER INFORMATION

ITEM 2:     LEGAL PROCEEDINGS

    There have been no material developments in legal proceedings involving the
    Company or its subsidiaries since the Company's Annual Report on Form 10-K
    for the year ended January 3, 1998.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits

    3.1   Certificate of Incorporation of Glenoit Corporation is hereby
          incorporated by reference to Exhibit 3.1 to Glenoit Corporation's
          Registration Statement on Form S-4 (Registration No. 333-42411) filed
          on December 16, 1997.
    3.2   By-Laws of Glenoit Corporation are hereby incorporated by reference to
          Exhibit 3.2 to Glenoit Corporation's Registration Statement on Form
          S-4 (Registration No. 333-42411) filed on December 16, 1997.
    3.3   Certificate of Incorporation of Glenoit Asset Corporation is hereby
          incorporated by reference to Exhibit 3.3 of Amendment No. 1 to Glenoit
          Asset Corporation's Registration Statement of Form S-4 (Registration
          No. 333-42411-01) filed February 4, 1998.
    3.4   By-Laws of Glenoit Asset Corporation are hereby incorporated by
          reference to Exhibit 3.4 of Amendment No. 1 to Glenoit Asset
          Corporation's Registration Statement of Form S-4 (Registration No.
          333-42411-01) filed February 4, 1998.
    4.1   Indenture dated as of April 1, 1997 between Glenoit Corporation, the
          Subsidiary Guarantors (as defined therein) and United States Trust
          Company of New York is hereby incorporated by reference to Exhibit 4.1
          to Glenoit Corporation's Registration Statement on Form S-4
          (Registration No. 333-42411) filed on December 16, 1997.
    4.2   Purchase Agreement dated as of March 26, 1997 among Glenoit
          Corporation, the Subsidiary Guarantors (as defined therein), Salomon
          Brothers Inc. and CIBC Wood Gundy Securities Corp. is hereby
          incorporated by reference to Exhibit 4.2 to Glenoit Corporation's
          Registration Statement on Form S-4 (Registration No.
          333-42411) filed on December 16, 1997.
    4.3   Registration Agreement dated as of March 26, 1997 among Glenoit
          Corporation, the Subsidiary Guarantors (as defined therein), Salomon
          Brothers Inc. and CIBC Wood Gundy Securities Corp. is hereby
          incorporated by reference to Exhibit 4.3 to Glenoit Corporation's
          Registration Statement on Form S-4 (Registration No.
          333-42411) filed on December 16, 1997.

                                       19
<PAGE>

    10.1  Second Amended and Restated Credit Agreement dated as of April 1,
          1997 among Glenoit Corporation, the banks, financial institutions
          and other institutional lenders listed on the signature pages
          thereto as the Restatement Lenders, the Banque Nationale de Paris,
          as Administrative Agent for the Lender Parties (as defined therein)
          is hereby incorporated by reference to Exhibit 10.1 to Glenoit
          Corporation's Registration Statement on Form S-4 (Registration No.
          333-42411) filed on December 16, 1997.
    10.2  Supply Agreement dated February 1, 1997 by and between the Company
          and Sterling Fibers, Inc. is hereby incorporated by reference to
          Exhibit 10.2 of Amendment No. 1 to Glenoit Corporation's
          Registration Statement on Form S-4 (Registration No. 333-42411)
          filed on February 4, 1998.
    10.3  Employment Agreement dated October 28, 1997 by and among the Company,
          Glenoit Universal, Inc. and Thomas J. O'Gorman is hereby incorporated
          to reference to Exhibit 10.3 of Amendment No. 1 to Glenoit
          Corporation's Registration Statement on Form S-4 (Registration No.
          333-42411) filed on February 4, 1998.
    10.4  Employment Agreement dated August 5, 1996 by and between the Company
          and Lester D. Sears is hereby incorporated by reference to Exhibit
          10.4 of Amendment No. 1 to Glenoit Corporation's Registration
          Statement on Form S-4 (Registration No. 333-42411)
          filed on February 4, 1998.
    10.5  Stockholders Agreement dated as of December 14, 1995 by and among
          Glenoit Universal, Inc., Citicorp Venture Capital, John Mowbray
          O'Mara, Banque Nationale de Paris, The Equitable Life Assurance
          Society of the United States, the Seller, Soannes Investment
          Corporation, Thomas J. O'Gorman and certain other parties thereto
          to is hereby incorporated by reference to Exhibit 10.5 of Amendment
          No. 1 to Glenoit Corporation's Registration Statement on Form S-4
          (Registration No. 333-42411) filed on February 4, 1998.
    21.1  Subsidiaries of Glenoit Corporation is hereby incorporated by
          reference to Exhibit 21.1 to Glenoit Corporation's Registration
          Statement on Form S-4 (Registration No. 333-42411) filed on
          December 16, 1997.
    27.1  Financial Data Schedules.


    (b)      Reports on Form 8-K

       None


                                       20
<PAGE>

                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.


Dated:      August 14, 1998
                                        GLENOIT CORPORATION


                                        By    /S/ LESTER D. SEARS
                                          -----------------------
                                          Lester D. Sears
                                          Executive Vice President and
                                          Chief Financial Officer
                                          (On behalf of the  Registrant and as
                                          Principal Financial and Accounting
                                          Officer)




                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.


Dated:      August 14, 1998
                                        GLENOIT ASSET CORPORATION




                                        By    /S/ LESTER D. SEARS
                                          -----------------------
                                          Lester D. Sears
                                          Executive Vice President and
                                          Chief Financial Officer
                                          (On behalf of the Registrant and as
                                          Principal Financial and Accounting
                                          Officer)

                                       21