Sport-Haley, Inc. net sales for the fiscal third quarter were $4.7 million, an increase of 5% from net sales of $4.5 millioni for the same quarter last year.

The company attributed the differences in net sales for the respective periods to a continuing increase in the sales of our Ben Hogan men's fashion apparel combined with the previously reported discontinuance of HALEY RESERVE men's fashion golf apparel, a significant decrease in the sales of SPORT HALEY women's fashion apparel and the initial sales of Top-Flite branded apparel.

Net sales of Ben Hogan apparel approximated $2.4 million for the quarter, an increase of approximately 4% from net sales of approximately $2.3 million last year. Net sales of SPORT HALEY women's fashion apparel totaled approximately $1.6 million for the quarter, decreasing approximately 17% from last year. The shrinking market for women's fashion golf apparel appears to have bottomed out, and the company anticipates that sales of women's apparel will begin to increase slightly in future periods. Sport-Haley's operations are consolidated with the operations of Reserve Apparel Group LLC (“Reserve Apparel”), which began shipping Top-Flite branded men's golf apparel to Wal-Mart Stores, Inc. in March 2006. Net sales of Top-Flite apparel for the quarter totaled $446,000.

Gross margins, as a percentage of sales, were 37% and 36% for the quarter and nine months ended March 31, 2006, respectively. Comparatively, our gross margins, as a percentage of sales, were 37% and 26% for the comparable periods in the prior fiscal year. The company believes the increase in gross margins is primarily attributable to successful efforts to minimize the amount of finished goods inventories remaining on hand at the end of each selling season and to better estimate the recoverable value of excess finished goods inventories.

Selling, general and administrative expenses for the fiscal quarter ended March 31, 2006, decreased by $176,000, or 8%, to $1,959,000 from $2,134,000 for the same quarter in the prior fiscal year. Selling, general and administrative expenses for the nine months ended March 31, 2006, decreased by $2,236,000, or 30%, to $5,121,000 from $7,357,000 for the comparative nine-month period in the prior fiscal year. Selling, general and administrative expenses were approximately 43% and 39% of net sales for the quarter and nine months ended March 31, 2006, as compared with 48% and 49% for the comparable periods in the prior fiscal year. The decreases between comparative quarterly and nine-month periods were primarily due to the accrual in the prior comparable nine-month period for severance and other compensation payable in the amount of $520,000 to former Chief Executive Officer plus $650,000 paid to late Chairman's estate combined the operating expenses of Reserve Apparel and general decreases in other selling, general and administrative expenses. The company believe the general decrease in selling, general and administrative expenses is indicative of cost reductions that have been achieved as a result of implementing cost reduction initiatives in fiscal 2005. Operating expenses with respect to distributing Top-Flite apparel through Reserve Apparel for the quarter and nine months ended March 31, 2006, totaled $138,000, including $20,000 in legal fees incurred by Sport-Haley relating to the formation of Reserve Apparel. The balance of the Reserve Apparel operating expenses generally related to amounts allocated by Explorer Gear for personnel costs incurred in the business operations of Reserve Apparel during quarter ended March 31, 2006.

Net loss for the quarter was ($190,000), a difference of $396,000, or 68%, when compared with a net loss of ($586,000) for the comparable quarter in the prior fiscal year.

Basic and diluted loss per common share were 7 cents for the quarter, up from 23 cents last year.

SPORT-HALEY, INC.
              Consolidated Unaudited Financial Information
                  (In thousands, except per share data)


                             Three Months Ended     Nine Months Ended
                                 March 31,              March 31,
                              2006       2005        2006        2005
                            -------     -------     -------     -------
Statements of Income Data:

Net sales                   $ 4,656      $4,455     $13,096     $15,025

Gross profit                  1,737       1,632       4,679       3,860

Other operating costs         2,162       2,287       5,662       7,860

Loss from operations           (425)       (655)       (983)     (4,000)

Other income (expense), net     237          75         367         138

Net loss                       (190)       (586)       (619)     (3,868)

Basic and diluted loss
 per common share           ($ 0.07)    ($ 0.23)    ($ 0.23)    ($ 1.52)

Basic and diluted
 average weighted shares
 outstanding              2,770,000   2,545,000   2,742,000   2,542,000