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 APRIL 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 April 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

                     GLENOIT CORPORATION AND SUBSIDIARIES
              (A WHOLLY-OWNED SUBSIDIARY OF GLENOIT UNIVERSAL, LTD.)
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>


                                                                                              January 3,        April 4,
                                                                                                 1998             1998
                                                                                             --------------   --------------
                                        ASSETS                                                                 (Unaudited)
<S>                                                                                        <C>              <C>
Current assets:
     Cash and cash equivalents                                                             $     1,072,280  $       115,077
     Receivables:
          Trade Accounts receivable, net of allowace of $543,000 and
               $602,000 as of January 3, 1998 and April 4, 1998, respectively                   21,216,104       34,996,012
          Other receivables                                                                        174,561          199,080
     Inventories                                                                                 6,932,272        9,793,975
     Prepaid expenses and other current assets                                                   1,155,761        1,703,025
                                                                                             --------------   --------------

                    Total current assets                                                        30,550,978       46,807,169

Property, plant and equipment, net                                                              35,141,104       40,296,842

Other assets:
     Notes receivable from related party                                                           187,500          281,825
     Intangible assets, net of accumulated amortization of $1,251,002
          and $1,312,053 as of January 3, 1998 and April 4, 1998,
          respectively                                                                           4,420,319        4,359,268
     Deferred loan costs and other, net of accumulated amortization of
          $523,743 and $682,489 as of January 3, 1998 and April 4, 1998,
          respectively                                                                           4,929,666        4,820,998
                                                                                             --------------   --------------

                    Total assets                                                           $    75,229,567  $    96,566,102
                                                                                             ==============   ==============
</TABLE>


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


                                       2
<PAGE>


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


                                                                                  January 3,              April 4,
                                                                                     1998                   1998
                                                                                ----------------       ---------------
                  LIABILITIES AND STOCKHOLDER'S DEFICIT                                                 (Unaudited)
<S>                                                                        <C>                    <C>
Current liabilities:
     Accounts payable                                                      $          5,961,475   $         9,282,776
     Accrued expenses                                                                 6,065,182             9,287,494
     Current maturities of capital lease obligations                                    697,934               592,233
     Due to Holdings                                                                  2,678,587             3,068,587
                                                                                ----------------       ---------------

                    Total current liabilities                                        15,403,178            22,231,090

Long-term debt                                                                      102,000,000           115,000,000
Capital lease obligations - less current maturities                                      61,685                     0
Deferred income taxes                                                                 1,930,694             2,080,694
                                                                                ----------------       ---------------

                    Total liabilities                                               119,395,557           139,311,784
                                                                                ----------------       ---------------

Commitments and contingencies

Stockholder's deficit:
     Common stock, $.01 par value, 1,000 shares authorized, issued
         and outstanding as of January 3, 1998 and April 4, 1998                             10                    10
     Additional paid-in capital                                                       1,361,713             1,361,713
     Accumulated deficit                                                      (      45,295,099 )    (     43,909,294 )
     Accumulated other comprehensive income                                   (         232,614 )    (        198,111 )
                                                                                ----------------       ---------------

                    Total stockholder's deficit                               (      44,165,990 )    (     42,745,682 )
                                                                                ----------------       ---------------

                    Total liabilities and stockholder's deficit            $         75,229,567   $        96,566,102
                                                                                ================       ===============
</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>

                                                                                  Three Months Ended
                                                                         ----------------------------------------
                                                                             April 5,               April 4,
                                                                               1997                   1998
                                                                         -----------------      -----------------
<S>                                                                <C>                    <C>
              Net sales                                            $           32,379,589 $           38,779,918

              Cost of sales                                                    22,379,142             27,236,963
                                                                         -----------------      -----------------

                        Gross profit                                           10,000,447             11,542,955
                                                                         -----------------      -----------------

              Operating expenses:
                   Selling                                                      2,970,991              3,420,050
                   Administrative                                               2,151,982              2,385,065
                   Research and development                                       496,119                427,977
                                                                         -----------------      -----------------
                        Total operating expenses                                5,619,092              6,233,092
                                                                         -----------------      -----------------

              Income from operations                                            4,381,355              5,309,863
                                                                         -----------------      -----------------

              Other income (expense):
                   Interest expense                                   (         2,111,061 )  (         3,003,349 )
                   Amortization of deferred financing costs           (           173,478 )  (           158,746 )
                   Other                                              (            51,924 )               16,663
                                                                         -----------------      -----------------
                        Total other expense                           (         2,336,463 )  (         3,145,432 )
                                                                         -----------------      -----------------
              Income before income taxes and
                   extraordinary loss                                           2,044,892              2,164,431

              Income tax expense                                                  902,073                778,626
                                                                         -----------------      -----------------

              Income before extraordinary loss                                  1,142,819              1,385,805

              Extraordinary loss on early extinguishment
                   of debt, net of tax benefit of $1,527,000                    2,856,884
                                                                         -----------------      -----------------

              Net income (loss)                                    $  (         1,714,065 )  $         1,385,805
                                                                         =================      =================

              Basic and diluted income per share:
                   Income before extraordinary loss                $                1,143 $                1,386

                   Extraordinary loss on early extinguishment
                      of debt                                         (             2,857 )
                                                                         -----------------      -----------------

                   Net income (loss)                               $  (             1,714 )                1,386
                                                                         =================      =================

                   Weighted average shares outstanding                              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 THREE MONTHS ENDED APRIL 4, 1998
<TABLE>
<CAPTION>

                                                                          Retained             Accumulated
                        Shares of                     Additional          Earnings                Other
                         Common        Common          Paid-in          (Accumulated          Comprehensive
                         Stock          Stock          Capital            Deficit)               Income                 Total
                      -------------  ------------   --------------      -------------         --------------        --------------
<S>                          <C>   <C>           <C>              <C>                   <C>                    <C>
Balance as of
   January 3, 1998           1,000 $          10 $      1,361,713 $  (    45,295,099 )  $  (        232,614 )  $ (     44,165,990 )

Net Income                                                                 1,385,805                                    1,385,805

Accumulated Other
   Comprehensive
   Income                                                                                            34,503                34,503
                      -------------  ------------   --------------      -------------         --------------        --------------

Balance as of
   April 4, 1998             1,000 $          10 $      1,361,713 $  (    43,909,294 )  $  (        198,111 )  $ (     42,745,682 )
                      =============  ============   ==============      =============         ==============        ==============
</TABLE>



           CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
                    FOR THE THREE MONTHS ENDED APRIL 4, 1998
<TABLE>
<CAPTION>
<S>                                                               <C>
Net Income                                           $        1,385,805

Other comprehensive income, net of tax:
     Currency translation adjustment                             34,503
                                                           -------------

Comprehensive income                                 $        1,420,308
                                                           =============

</TABLE>



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


                                      5
<PAGE>

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

                                                                                            Three Months Ended
                                                                                  --------------------------------------

                                                                                     April 5,               April 4,
                                                                                       1997                   1998
                                                                                  ----------------       ---------------
<S>                                                                        <C>                       <C>
Cash flows from operating activities:
     Net income (loss)                                                     $   (        1,714,065 )  $        1,385,805
     Adjustments to reconcile net income (loss) to net cash
        used in operating activities:
          Loss on early extinguishment of debt                                          4,383,884
          Depreciation and amortization                                                   954,502             1,289,538
          (Gain) loss on sale of property and equipment                                    38,080    (            4,778 )
          Effect of foreign currency exchange rate                                                               34,503
          Changes in operating assets and liabilities:
             Trade and other receivables                                       (        8,365,895 )  (       13,804,427 )
             Inventories                                                       (        2,169,252 )  (        2,861,703 )
             Prepaid expenses and other                                        (          791,513 )  (          593,091 )
             Due to Holdings                                                   (          550,404 )             390,000
             Accounts payable                                                           3,902,087             3,321,301
             Accrued expenses and other liabilities                            (          629,509 )           3,372,312
                                                                                  ----------------       ---------------
               Net cash used in operating activities                           (        4,942,085 )  (        7,470,540 )
                                                                                  ----------------       ---------------

Cash flows from investing activities:
   Purchases of and additions to property, plant and equipment                 (          533,000 )  (        6,230,777 )
   Proceeds from sale of property and equipment and refunds of
          deposits                                                                          3,600                11,500
                                                                                  ----------------       ---------------
               Net cash used in investing activities                           (          529,400 )  (        6,219,277 )
                                                                                  ----------------       ---------------

Cash flows from financing activities:
   Payments on capital lease obligations                                       (           99,834 )  (          167,386 )
   Proceeds from line of credit and issuance of debt, net                              12,256,419            13,000,000
   Advances on notes receivable - related parties                                                    (          100,000 )
   Payments for financing costs                                                (        6,642,846 )
                                                                                  ----------------       ---------------
               Net cash provided by financing activities                                5,513,739            12,732,614
                                                                                  ----------------       ---------------

               Net increase (decrease) in cash and cash equivalents                        42,254    (          957,203 )

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

Cash and cash equivalents at end of period                                 $               91,071 $             115,077
                                                                                  ================       ===============
</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 three-month period ended
         April 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 April 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 April 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.

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



3.       INVENTORIES

         Inventories are summarized as follows:
<TABLE>
<CAPTION>

                                                            January 3,            April 4,          
                                                               1998                 1998            
                                                         -----------------    -----------------     
                                                                                   (Unaudited)      
<S>                                                            <C>                  <C>             
                                                                                                    
          Raw Materials                                        $2,082,516           $3,477,582      
          Work-in-process                                       1,516,899            2,131,130      
          Finished goods                                        3,332,857            4,185,263      
                                                         -----------------    -----------------     
                                                                                                    
                    Total inventories                          $6,932,272           $9,793,975      
                                                         =================    ================= 
</TABLE>
    
                                                                      

                                       8
<PAGE>



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



4.        LONG-TERM DEBT

         As of January 3, 1998 and April 4, 1998 long-term debt consisted of the
         following:
<TABLE>
<CAPTION>

                                                                January 3,           April 4,
                                                                  1998                1998
                                                                                   (unaudited)
         <S>                                                     <C>                   <C>
         Senior credit facility...........................       $  2,000,000          $ 15,000,000
         Senior subordinated notes at 11%.................        100,000,000           100,000,000
                                                                  ------------          -----------
              Total long-term debt........................       $102,000,000          $115,000,000
                                                                 ============-         ============
</TABLE>

         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.

         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 April 4, 1998, the Company had $15
         million outstanding under the Working Capital Commitment, and
         approximately $16.4 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 .5% for an Acquisition


                                       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)

         Commitment Advance and 1% for a Working Capital Commitment Advance or
         the Eurodollar Rate plus 2% for an Acquisition Commitment Advance or
         2.5% 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.

         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


                                       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)

         guarantors for these periods has been excluded because management
         believes that this information is not material to investors.

         The following tables present summarized balance sheet information of
         Glenoit Corporation, Glenoit Asset Corporation, and Glenoit Canada as
         of April 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 April 4, 1998
         is as follows (unaudited):

<TABLE>
<CAPTION>


                                                 Glenoit              Consolidated
                                    Glenoit        Asset                  Domestic
                                 Corporation Corporation  Eliminations  Operations  Canada  Eliminations Consolidated
<S>                                 <C>           <C>         <C>          <C>      <C>          <C>          <C>   
Cash and cash equivalents.............(286)           74                   (  212)     327                        115
Accounts and other receivables, net..32,722                                 32,722   2,473                     35,195
Inventories...........................8,971                                  8,971     823                      9,794
Other current assets..................1,646                                  1,646      57                      1,703
                                    -------                                -------      --                      -----
     Total current assets........... 43,053           74                    43,127   3,680                     46,807
Property,  plant and equipment, net..33,871                                 33,871   6,426                     40,297
Other assets.........................46,744       28,511      (57,096)      18,159     423       (9,120)        9,462
                                   --------       ------      --------       ------    ---       -------        -----
     Total assets...................123,668       28,585      (57,096)      95,157  10,529       (9,120)       96,566
                                    =======       ======      ========      ======  ======       =======       ======

Accounts payable..................... 8,192                                  8,192   1,091                      9,283
Other current liabilities..........  12,432        1,510       (1,510)      12,432     516                     12,948
                                   --------        -----       -------    --------     ---                     ------
     Total current liabilities.......20,624        1,510       (1,510)      20,624   1,607                     22,231
Long-term debt......................115,000                                115,000                            115,000
Other long-term liabilities........  30,592                   (28,511)       2,081                              2,081

Stockholders equity (deficit).....  (42,548)      27,075       (27,075)    (42,548)   8,922       (9,120)     (42,746)
                                    --------      ------      --------     --------   -----       -------     --------

     Total liabilities and equity
        (deficit)................... 123,668      28,585      (57,096)      95,157   10,529       (9,120)       96,566
                                     =======      ======      ========      =======  ======       =======       ======
</TABLE>



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

<TABLE>
<CAPTION>
                                                                         Consolidated
                                     Glenoit Glenoit Asset                   Domestic   Glenoit
                                 Corporation   Corporation   Eliminations  Operations    Canada   Eliminations Consolidated
<S>                                  <C>             <C>          <C>          <C>        <C>            <C>         <C>

Net sales.............................35,531                                   35,531     3,249                      38,780
Cost of sales.........................24,792                                   24,792     2,445                      27,237
                                      ------                                   ------     -----                      ------
Gross profit..........................10,739                                   10,739       804                      11,543
Operating expenses.....................5,959             3                      5,962       271                       6,233
Royalty income (expense)..............(1,935)        1,935                          -         -                           -
                                     -------         -----                     ------  --------                      ------
Income from operations................ 2,845         1,932                      4,777       533                       5,310
Interest expense (income)............. 3,534         (525)                      3,009     (  6)                       3,003
Other expense (income)...............(1,797)                       1,597       ( 200)     (  7)            349          142
Income taxes.......................... (278)           860              -         582       197              -          779
                                       -----           ---        -------         ---       ---          -----          ---
     Net income....................... 1,386         1,597        (1,597)       1,386       349          (349)        1,386
                                       =====         =====        =======       =====       ===          =====        =====
</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 cashflow statement information, in thousands, for the period
         ended April 4, 1998 is as follows (unaudited):
<TABLE>
<CAPTION>

                                                                            Consolidated
                                        Glenoit  Glenoit Asset                  Domestic   Glenoit
                                    Corporation    Corporation   Eliminations Operations    Canada   Eliminations Consolidated

<S>                                    <C>              <C>                     <C>          <C>                       <C>    
Cashflows from operating activities... (10,617)          2,455                   (8,162)       691                     (7,471)
Cashflows used in investing
     activities....................... ( 5,344)                                  (5,344)     (875)                     (6,219)
Cashflows from financing activities...   15,024         (2,457)                   12,567       166                      12,733
                                       --------         -------                  -------     -----                     -------
Net decrease in cash.................. (   937)         (    2)                 (   939)     ( 18)                     (  957)
Cash at beginning of period...........      651              76                      727       345                       1,072
                                       --------         -------                 --------     -----                     -------
Cash at end of period................. (   286)              74                 (   212)       327                         115
                                       ========              ==                 ========       ===                         ===
</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.



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 $26.9
         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.


                                       12
<PAGE>


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


5.       COMMITMENTS AND CONTINGENCIES (CONTINUED)

         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.

         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.


                                       13
<PAGE>

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



7.       ACQUISITIONS

         Effective August 30, 1997, Glenoit Corporation through Glenoit Canada,
         acquired certain assets and certain liabilities of Collins & Aikman
         Canada, Inc. for cash consideration of approxiomately $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 quarter of 1997,
         the acquired business had sales of approximately $2.8 million. Net
         income and basic and diluted income per share for the three months
         ended April 5, 1997 as presented in the accompanying unaudited
         consolidated statements of income would not differ significantly on a
         proforma basis adjusted for this acquisition.


                                       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 April 4, 1998, increased to $38.8 million or
19.8% compared to $32.4 million during the comparable quarter in the prior year.
Sales in the Fabric Division grew due to increased unit volume in active/outdoor
wear and home furnishings. Sales in the Fabric Division were also positively
impacted by the acquisition of Glenoit Canada in September 1997 which generated
sales of $3.2 million during the first quarter of 1998. Net sales in the
Consumer Products Division increased as a result of increased unit volume.

Gross profit for the quarter ended April 4, 1998, was $11.5 million or 29.8% of
net sales compared to $10.0 million or 30.9% of net sales for the same period
last year. This increase of $1.5 million or 15.4% is 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 April 4, 1998, were $6.2 million or
16.1% of net sales compared to $5.6 million or 17.4% of net sales in the first
quarter of the prior year. Dollar increases over the prior year were primarily
in sales related categories such as commissions as well as expenses incurred by
Glenoit Canada.

Operating income was $5.3 million for the quarter ended April 4, 1998 compared
to $4.4 million in the prior year. This increase, resulting from the factors
described above, represents an increase of $.9 million or 21.1% for the quarter.

Interest expense for the quarter ended April 4, 1998, was $3.0 million compared
to $2.1 million for the same period last year. 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 April 4, 1998, was $1.4 million compared to net
income of $1.1 million the prior year (excluding the effect of an extraordinary
loss on early extinguishment of debt of $2.9 million related to the refinancing


                                       15
<PAGE>

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 April 4, 1998, there were borrowings of $15.0 million under the
Working Capital Commitment and approximately $16.4 million available to borrow
under the Working Capital Commitment and up to $25 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 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 April 4, 1998, Holdings has
obligations with a face amount of $26.9 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.


                                       16
<PAGE>

During the quarter ended April 4, 1998, net cash used in operating activities
was $7.5 million which resulted from the Company increasing its working capital
to meet its seasonal requirements. Receivables increased by $13.8 million,
inventories and other current assets increased by $3.5 million. Accrued
liabilities increased by $3.4 million, due primarily to accrued interest on
senior subordinated notes. Accounts payable increased by $3.3 million related to
increased raw material purchases and tax related accruals increased $.4 million.


CAPITAL IMPROVEMENTS

Capital expenditures for the quarter ended April 4, 1998 were $6.2 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.

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").


                                       17
<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.


                                       18
<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 of Glenoit Asset Corporation.

      27.2    Financial Data Schedule of Glenoit Corporation.

     (b)   Reports on Form 8-K

          None



                                       19
<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:   May 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:   May 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)            
                                

                                       20