United
      States


Securities
      and Exchange Commission


Washington,
      D.C. 20549









**FORM
      10-Q/A**


(Amendment
      No. 1)




x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act
      of 1934





For
      the
      Quarterly Period Ended **June 30, 2007**





OR





o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act
      of 1934





For
      the
      Transition Period From **________** to **________** .








**Commission
      file number** **0-10593**





**ICONIX
      BRAND GROUP, INC.**


(Exact
      name of registrant as specified in its charter)





Delaware
            11-2481903(State
                or other jurisdiction of  incorporation or
                organization)
            (I.R.S.
                Employer Identification No.)1450
                Broadway, New York, NY
            10018(Address
                of principal executive offices)
            (Zip
                Code)





(212)
      730-0030


(Registrant's
      telephone number, including area code)






(Former
      name, former address and former fiscal year, if changed since last
      report)





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 periods 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 o .





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act):




Large
      accelerated filer o Accelerated
      filer x Non-accelerated
      filer o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act)


Yes o No. x





Indicate
      the number of shares outstanding of each of the issuer's classes of Common
      Stock, as of the latest practicable date.





Common
      Stock, $.001 Par Value - 56,771,087 shares as of August 6, 2007.










**EXPLANATORY
      NOTE**





Iconix
      Brand Group, Inc. is filing this Form 10-Q/A (Amendment No. 1) solely to reflect
      the reclassification of $196.4 million from “Cash and cash equivalents” to
“Marketable securities” in its Consolidated Balance Sheet as of June 30, 2007
      and Consolidated Statement of Cash Flows for the six months ended June 30,
      2007.
      The reclassification had no effect on Iconix’s Consolidated Statement of
      Operations. All of these marketable securities were sold by Iconix
      subsequent to June 30, 2007. This Form 10-Q/A does not reflect events occurring
      after the filing of the original Form 10-Q or modify or update information
      not
      affected by the reclassification. The following items have been amended in
      this
      Form 10-Q/A: Part I - Item 1 - Financial Statements, Part I - Item 2 -
      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations and Part II - Item 6 - Exhibits (to include new certifications
      of the Company's Chief Executive Officer and Chief Financial Officer).









**INDEX**





**FORM
      10-Q**





**Iconix
      Brand Group, Inc. and Subsidiaries**




Part
                I.
            Financial
                Information
            
            Page
                No.Item
                1.
            Financial
                StatementsUnaudited
                Condensed Consolidated Balance Sheets - June 30, 2007 and December
                31,
                2006
            
            3Unaudited
                Condensed Consolidated Income Statements - Three and Six Months Ended
                June
                30, 2007 and 2006
            
            4Unaudited
                Condensed Consolidated Statement of Stockholders' Equity - Six Months
                Ended June 30, 2007
            
            5Unaudited
                Condensed Consolidated Statements of Cash Flows - Six Months Ended
                June
                30, 2007 and 2006
            
            6Notes
                to Unaudited Condensed Consolidated Financial Statements
            
            8Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            17Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            
            21Item
                4.
            Controls
                and Procedures
            
            21Part
                II.
            Other
                Information
            
            22Item
                1.
            Legal
                Proceedings
            
            22Item
                1A.
            Risk
                Factors
            
            22Item
                5
            Other
                Information
            
            24Item
                6.
            Exhibits
            
            24Signatures
            
            
            25




2





Part
      I.
 Financial Information


Item
      1.
      FINANCIAL STATEMENTS





**Iconix
      Brand Group, Inc. and Subsidiaries**


Unaudited
      Condensed Consolidated Balance Sheets


(in
      thousands, except par value)




June
                30,
            
            December
                31,2007
            
            2006**Assets**
            
            (unaudited)Current
                Assets:Cash
                and cash equivalents (including restricted cash of $1,029 in 2007
                and
                $4,268 in 2006)
            
            $
            80,881
            
            $
            77,840Marketable
                securities1
            
            
            196,400
            
            
            -Accounts
                receivable, net of reserve for doubtful accounts of $2,581 in 2007
                and
                $1,633 in 2006
            
            
            23,292
            
            
            14,548Due
                from affiliate
            
            
            190
            
            
            297Promissory
                note receivable
            
            
            1,000
            
            
            1,000Deferred
                income tax assets
            
            
            11,545
            
            
            3,440Prepaid
                advertising and other
            
            
            5,479
            
            
            2,704Total
                Current Assets
            
            
            318,787
            
            
            99,829Property
                and equipment:Furniture,
                fixtures and equipment
            
            
            2,809
            
            
            2,769Less:
                Accumulated depreciation and amortization
            
            
            (1,463
            )
            
            (1,385
            )1,346
            
            
            1,384Other
                Assets:Restricted
                cash
            
            
            13,828
            
            
            11,659Goodwill
            
            
            96,511
            
            
            93,593Trademarks
                and other intangibles, net
            
            
            746,908
            
            
            467,688Deferred
                financing costs, net
            
            
            7,847
            
            
            3,355Non-current
                deferred income tax assets
            
            
            27,933
            
            
            17,970Other
            
            
            4,966
            
            
            5,574897,993
            
            
            599,839Total
                Assets
            
            $
            1,218,126
            
            $
            701,052**Liabilities
                and Stockholders' Equity**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            6,957
            
            $
            7,043Accounts
                payable, subject to litigation
            
            
            4,886
            
            
            4,886Deferred
                revenue
            
            
            4,325
            
            
            1,644Current
                portion of long-term debt
            
            
            25,459
            
            
            22,132Total
                current liabilities
            
            
            41,627
            
            
            35,705Deferred
                income taxes
            
            
            65,433
            
            
            59,054Long-term
                debt, less current maturities
            
            
            621,660
            
            
            140,676Long
                term deferred revenue
            
            
            400
            
            
            160Total
                Liabilities
            
            
            729,120
            
            
            235,595Contingencies
                and commitmentsStockholders'
                EquityCommon
                stock, $.001 par value-shares authorized 75,000; shares issued 56,771 and 56,227
                respectively
            
            
            57
            
            
            57Additional
                paid-in capital
            
            
            464,894
            
            
            468,881Retained
                earnings (deficit)
            
            
            24,722
            
            
            (2,814
            )Less:
                Treasury stock - 198 shares at cost
            
            
            (667
            )
            
            (667
            )Total
                stockholders' equity
            
            
            489,006
            
            
            465,457Total
                Liabilities and Stockholders' Equity
            
            $
            1,218,126
            
            $
            701,052





1 Previously classified as cash and cash equivalents





See
      Notes
      to Unaudited Condensed Consolidated Financial Statements.




3


**Iconix
      Brand Group, Inc. and Subsidiaries**





Unaudited
      Condensed Consolidated Income Statements


(in
      thousands, except earnings per share data)





Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,2007
            
            2006
            
            2007
            
            2006Licensing
                and commission revenue
            
            $
            39,071
            
            $
            18,409
            
            $
            69,912
            
            $
            31,678Selling,
                general and administrative expenses
            
            
            9,011
            
            
            6,817
            
            
            16,730
            
            
            11,501Special
                charges
            
            
            331
            
            
            712
            
            
            1,094
            
            
            1,268Operating
                income
            
            
            29,729
            
            
            10,880
            
            
            52,088
            
            
            18,909Other
                expenses:Interest
                expense
            
            
            7,872
            
            
            3,073
            
            
            11,407
            
            
            5,178Interest
                income
            
            
            (959
            )
            
            (191
            )
            
            (1,872
            )
            
            (352
            )Interest
                expense - net
            
            
            6,913
            
            
            2,882
            
            
            9,535
            
            
            4,826Income
                before income taxes
            
            
            22,816
            
            
            7,998
            
            
            42,553
            
            
            14,083Provision
                (benefit) for income taxes
            
            
            8,027
            
            
            (347
            )
            
            15,017
            
            
            (1,619
            )Net
                income
            
            $
            14,789
            
            $
            8,345
            
            $
            27,536
            
            $
            15,702Earnings
                per share:Basic
            
            $
            0.26
            
            $
            0.22
            
            $
            0.49
            
            $
            0.42Diluted
            
            $
            0.24
            
            $
            0.19
            
            $
            0.45
            
            $
            0.37Weighted
                average number of common shares outstanding:Basic
            
            
            56,625
            
            
            38,680
            
            
            56,451
            
            
            37,208Diluted
            
            
            61,364
            
            
            44,712
            
            
            61,241
            
            
            42,872





See
      Notes
      to Unaudited Condensed Consolidated Financial Statements.




4




**Iconix
      Brand Group, Inc. and Subsidiaries**





Unaudited
      Condensed Consolidated Statement of Stockholders' Equity





Six
      Months Ended June 30, 2007


***(in
      thousands)***




Additional
            
            RetainedCommon
                Stock
            
            Paid
                - in
            
            Earnings/
            
            TreasuryShares
            
            Amount
            
            Capital
            
            (Deficit)
            
            Stock
            
            TotalBalance
                at January 1, 2007
            
            
            56,227
            
            $
            57
            
            $
            468,881
            
            $
            (2,814
            )
            $
            (667
            )
            $
            465,457Warrants
                issued to non-employee related to the acquisition of
                Danksin®
            
            
            -
            
            
            -
            
            
            2,260
            
            
            -
            
            
            -
            
            
            2,260Warrants
                issued to non-employee related to the acquisition of
                Rocawear®
            
            
            -
            
            
            -
            
            
            2,671
            
            
            -
            
            
            -
            
            
            2,671Common
                stock issued to non-employee related to the acquisition of
                Danksin®
            
            
            13
            
            
            -
            
            
            241
            
            
            -
            
            
            -
            
            
            241Common
                stock issued to non-employee related to the acquisition of
                Rocawear®
            
            
            12
            
            
            -
            
            
            255
            
            
            -
            
            
            -
            
            
            255Exercise
                of stock options and warrants
            
            
            505
            
            
            -
            
            
            1,130
            
            
            -
            
            
            -
            
            
            1,130Stock
                option compensation
            
            
            -
            
            
            -
            
            
            135
            
            
            -
            
            
            -
            
            
            135Tax
                benefit of stock option exercise
            
            
            -
            
            
            -
            
            
            928
            
            
            -
            
            
            -
            
            
            928Amortization
                in connection with restricted stock
            
            
            14
            
            
            -
            
            
            684
            
            
            -
            
            
            -
            
            
            684Expenses
                related to common stock issuance
            
            
            -
            
            
            -
            
            
            (184
            )
            
            -
            
            
            -
            
            
            (184
            )Net
                cost of hedge on convertible note
            
            
            -
            
            
            -
            
            
            (12,107
            )
            
            -
            
            
            -
            
            
            (12,107
            )Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            27,536
            
            
            -
            
            
            27,536Balance
                at June 30, 2007
            
            
            56,771
            
            $
            57
            
            $
            464,894
            
            $
            24,722
            
            $
            (667
            )
            $
            489,006




See
      Notes
      to Unaudited Condensed Consolidated Financial Statements.


5




**Iconix
      Brand Group, Inc. and Subsidiaries**





Unaudited
      Condensed Consolidated Statements of Cash Flows


(in
        thousands)


Six
                Months Ended June 30,2007
            
            
            2006Cash
                flows from operating activities:Net
                income
            
            $
            27,536
            
            $
            15,702Depreciation
                of property and equipment
            
            
            78
            
            
            101Amortization
                of intangibles
            
            
            2,388
            
            
            816Amortization
                of deferred financing costs
            
            
            497
            
            
            295Loss
                on sale of marketable securities
            
            
            -
            
            
            166Provision
                for doubtful accounts
            
            
            1,137
            
            
            625Stock
                option compensation
            
            
            819
            
            
            89Accrued
                interest on long-term debt
            
            
            95
            
            
            58Deferred
                income tax provision (benefit)
            
            
            15,017
            
            
            (4,147
            )Changes
                in operating assets and liabilities, net of business
                acquisitions:Accounts
                receivable
            
            
            (9,881
            )
            
            (5,339
            )Due
                from affiliate
            
            
            107
            
            
            (26
            )Prepaid
                advertising and other
            
            
            (3,225
            )
            
            (187
            )Other
                assets
            
            
            608
            
            
            232Deferred
                revenue
            
            
            2,921
            
            
            (2,137
            )Accounts
                payable and accrued expenses
            
            
            (1,703
            )
            
            1,558Net
                cash provided by operating activities
            
            
            36,394
            
            
            7,806Cash
                flows from investing activities:Purchases
                of property and equipment
            
            
            (40
            )
            
            (558
            )Acquisition
                of Mudd
            
            
            -
            
            
            (45,785
            )Acquisition
                of Danskin
            
            
            (71,035
            )
            
            -Acquisition
                of Rocawear
            
            
            (205,534
            )
            
            -Purchase
                of trademarks
            
            
            (110
            )
            
            (829
            )Purchase
                of marketable securities
            
            
            (196,400
            )1
            
            (78
            )Net
                cash used in investing activities
            
            
            (473,119
            )
            
            (47,250
            )Cash
                flows from financing activities:Proceeds
                from long-term debt
            
            
            531,022
            
            
            49,000Payment
                for purchase of convertible note hedge
            
            
            (76,303
            )
            
            -Proceeds
                from exercise of stock options and warrants
            
            
            1,130
            
            
            931Payment
                of long-term debt
            
            
            (9,315
            )
            
            (4,528
            )Payment
                of expenses related to common stock issuance
            
            
            (184
            )
            
            -Deferred
                financing costs
            
            
            (4,415
            )
            
            (490
            )Restricted
                cash - Current
            
            
            3,239
            
            
            (4,909
            )Restricted
                cash - Non Current
            
            
            (2,169
            )
            
            (3,564
            )Net
                cash provided by financing activities
            
            
            443,005
            
            
            36,440Net
                increase (decrease) in cash and cash equivalents
            
            
            6,280
            
            
            (3,004
            )Cash
                and cash equivalents, beginning of period
            
            
            73,572
            
            
            7,593Cash
                and cash equivalents, end of period
            
            $
            79,852
            
            $
            4,589Balance
                of restricted cash - Current
            
            
            1,029
            
            
            9,003Total
                cash and cash equivalents including current restricted cash, end
                of
                period
            
            $
            80,881
            
            $
            13,592




1 Previously classified as cash and cash equivalents




6




**Supplemental
      disclosure of cash flow information:**




Six
                Months Ended June 30,2007
            
            2006Cash
                paid during the period:Interest
            
            $
            10,694
            
            $
            4,157Taxes
            
            $
            1,136
            
            $
            -





**Supplemental
      disclosures of non-cash investing and financing
      activities:**





Six
                Months Ended June 30,2007
            
            
            2006Acquisitions:Common
                stock issued
            
            $
            496
            
            $
            47,862Warrants
                issued - acquisition cost
            
            $
            4,931
            
            $
            4,596Issuance
                of promissory note
            
            $
            -
            
            $
            750Net
                cost of hedge on convertible note
            
            $
            12,107
            
            $
            -





See
      Notes
      to Unaudited Condensed Consolidated Financial Statements.


7




**Iconix
      Brand Group, Inc. and Subsidiaries**





Notes
      to
      Unaudited Condensed Consolidated Financial Statements (Unaudited)


June
      30,
      2007





NOTE
      A  BASIS OF
      PRESENTATION




The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles for interim
      financial information and with the instructions to Form 10-Q and Article 10
      of
      Regulation S-X. Accordingly, they do not include all the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management of Iconix Brand Group, Inc.
      ("Company", "we", "us", or "our"), all adjustments (consisting primarily of
      normal recurring accruals) considered necessary for a fair presentation have
      been included. Operating results for the three months (“Current Quarter”) and
      six months (“Current Six Months”) ended June 30, 2007 are not necessarily
      indicative of the results that may be expected for a full fiscal
      year.




Impairment
      losses are recognized for long-lived assets, including certain intangibles,
      used
      in operations when indicators of impairment are present and the undiscounted
      cash flows estimated to be generated by those assets are not sufficient to
      recover the assets' carrying amount. Impairment losses are measured by comparing
      the fair value of the assets to their carrying amount.





Certain
      prior year amounts have been reclassified to conform to the current year's
      presentation. In addition, certain short-term investments have been reclassified
      from cash and cash equivalents to marketable securities. Marketable securities
      represent short-term investments with maturities greater than 90 days. These
      investments are stated at cost or par value, which approximates fair market
      value. Based upon the Company’s re-evaluation, the Company has reclassified
      these short-term investments at June 30, 2007 totaling $196.4 million from
      cash
      and cash equivalents to marketable securities on the unaudited condensed
      consolidated balance sheet as of June 30, 2007. The total amount of $196.4
      million of these marketable securities as of June 30, 2007 were sold at par
      value plus accrued interest subsequent to June 30, 2007. In addition, the
      accompanying unaudited condensed consolidated statement of cash flows reflects
      this reclassification of the purchase of these marketable securities as
      investing activities. This
      reclassification has no effect on the amount of total current assets, total
      assets, total revenue, operating income, interest expense, net income, income
      per share, or cash flow from operations as previously reported.





For
      further information, refer to the consolidated financial statements and
      footnotes thereto included in the Company's Annual Report on Form 10-K for
      the
      year ended December 31, 2006.





NOTE
      B -
      MARKETABLE SECURITIES


In
        accordance with Statement of Financial Accounting Standards No. 115, “Accounting
        for Certain Investments in Debt and Equity Securities,” marketable securities,
        which are accounted for as available-for-sale, are stated at cost or par
        value,
        which approximates fair value and consist of highly liquid short-term
        investments. The total amount of $196.4 million of marketable securities
        as of
        June 30, 2007 were sold at par value plus accrued interest subsequent to
        June
        30, 2007. There were no such investments as of December 31,
        2006.





NOTE
      C  ACQUISITION OF DANSKIN





On
      March
      9, 2007, the Company completed its acquisition of the Danskin brands and certain
      of the assets and rights related to the business of designing, marketing,
      licensing and/or managing the Danskin brands of Danskin, Inc. and Danskin Now,
      Inc.. Danskin is a 125 year-old iconic brand of women's activewear, legwear,
      dancewear, yoga apparel and fitness equipment. The brand is sold through better
      department, specialty and sporting goods stores, and directly by Danskin, Inc.
      through freestanding Danskin boutiques and Danskin.com. In connection with
      the
      acquisition, we also acquired Danskin Now, Inc.'s license of the Danskin Now®
brand of apparel and fitness equipment to Wal-Mart Stores.




The
      purchase price for the acquisition was $70 million in cash and contingent
      additional consideration of up to $15 million based on certain criteria relating
      to the achievement of revenue and performance targets involving the licensing
      of
      the Danskin brand, all or a portion of which contingent consideration, if
      earned, may be paid in shares of the Company's common stock. The cash
      portion of the purchase price was self-funded from the Company's cash reserves.
      Upon the closing, a subsidiary of the Company entered into a license agreement
      with Danskin, Inc. relating to Danskin's continued operation of its wholesale
      business and freestanding retail stores under the Danskin marks acquired by
      the
      Company in the acquisition.





***(000's
                omitted except share information)***Cash
                paid at closing to sellers
            
            
            
            
            $
            70,000Fair
                value of 12,500 shares of $.001 par value common stock, at $19.33
                fair
                market value per share issued as a cost of the
                acquisition
            
            $
            241Fair
                value of 30,000 warrants ($20.18 exercise price) issued as a cost
                of the
                acquisition
            
            
            284Fair
                value of 133,334 warrants ($8.81 exercise price) issued as a cost
                of the
                acquisition
            
            
            1,976Total
                equity consideration
            
            
            
            
            
            2,501Other
                estimated costs of the merger
            
            
            
            
            
            1,782Total
            
            
            
            
            $
            74,283




The
      purchase price was allocated to the estimated fair value of the assets acquired
      as follows:





Trademarks
            
            $
            71,700License
                agreements
            
            
            1,700Goodwill
            
            
            883Total
                allocated purchase price
            
            $
            74,283





The
      Danskin trademark has been determined by management to have an indefinite useful
      life and accordingly, consistent with Statement of Financial Accounting
      Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”),
      no amortization will be recorded in the Company's consolidated income
      statements. The licensing contracts are being amortized on a straight-line
      basis
      over the remaining contractual period of approximately 3 to 5 years. The
      goodwill is subject to a test for impairment on an annual basis. Any adjustments
      resulting from the finalization of the purchase price allocations will affect
      the amount assigned to goodwill.


8




NOTE
      D  ACQUISITION OF ROCAWEAR AND UNAUDITED PROFORMA INFORMATION





On
      March
      30, 2007, the Company completed its acquisition of the Rocawear brand and
      certain of the assets and rights related to the business of designing,
      marketing, licensing and/or managing the Rocawear brand.




The
      purchase price for the acquisition was $204 million in cash and contingent
      additional consideration of up to $35 million based on certain criteria relating
      to the achievement of revenue and performance targets involving the licensing
      of
      the Rocawear assets, all of which contingent consideration, if earned, is to
      be
      paid in shares of the Company's common stock. The cash portion of the purchase
      price was funded from the Company's credit agreement with Lehman Brothers Inc.
      and Lehman Commercial Paper Inc., which consists of a term loan facility in
      an
      aggregate principal amount of $212.5 million. For further details on this credit
      agreement, see Note D. Upon the closing, a subsidiary of the Company entered
      into a license agreement, expiring in March 2012, with Roc Apparel, LLC
      (“Roc Apparel”), an affiliate of Rocawear Licensing LLC (“RLC”), in which it
      granted Roc Apparel the exclusive right to use the Rocawear assets in connection
      with the design, manufacture, market and sale of men's wearing apparel products
      in the United States, its territories and possessions and military installations
      throughout the world. Further, upon closing, the Company committed an amount
      of
      $5.0 million to fund its investment in a limited liability company which will
      operate as a brand management and licensing company to identify brands to be
      acquired across a broad spectrum of consumer product categories. To date, the
      investment has not been funded.





***(000's
                omitted except share information)***Cash
                paid at closing to sellers
            
            
            
            
            $
            204,000Fair
                value of 12,500 shares of $.001 par value common stock, at $20.40
                fair
                market value per share issued as a cost of acquisition
            
            
            255Fair
                value of 55,000 warrants ($20.40 exercise price) issued as a cost
                of the
                acquisition
            
            
            562Fair
                value of 133,334 warrants ($8.81 exercise price) issued as a cost
                of the
                acquisition
            
            
            2,109Total
                equity consideration
            
            
            
            
            
            2,926Other
                estimated costs of the merger
            
            
            
            
            
            3,208Total
            
            
            
            
            $
            210,134





The
      purchase price was allocated to the estimated fair value of the assets acquired
      as follows:





***(000's
                omitted)***Trademarks
            
            $
            200,000License
                agreements
            
            
            5,100Non-compete
                agreement
            
            
            3,000Goodwill
            
            
            2,034Total
                allocated purchase price
            
            $
            210,134





The
      Rocawear trademark has been determined by management to have an indefinite
      useful life and accordingly, consistent with FAS 142, no amortization will
      be
      recorded in the Company's consolidated income statements. The licensing
      contracts are being amortized on a straight-line basis over the remaining
      contractual period of approximately 4 years. The goodwill is subject to a test
      for impairment on an annual basis. Any adjustments resulting from the
      finalization of the purchase price allocations will affect the amount assigned
      to goodwill.




The
      following unaudited pro-forma information presents a summary of the Company's
      consolidated results of operations as if the 2006 acquisitions of Mossimo,
      Inc.
      ("Mossimo") and the Mudd®, and Ocean Pacific® brands and certain related
      assets, and the 2007 acquisitions of the Danskin (see Note C) and
      Rocawear brands and certain related assets and their related financings had
      occurred on January 1, 2006. These pro forma results have been prepared for
      comparative purposes only and do not purport to be indicative of the results
      of
      operations which actually would have resulted had the acquisitions occurred
      on
      January 1, 2006, or which may result in the future.





***(000's
                omitted except share information)***Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,2007
            
            2006
            
            2007
            
            2006Licensing
                revenues
            
            $
            39,071
            
            $
            38,092
            
            $
            82,698
            
            $
            73,808Operating
                income
            
            $
            29,729
            
            $
            18,928
            
            $
            61,177
            
            $
            34,817Net
                income
            
            $
            14,789
            
            $
            7,232
            
            $
            30,850
            
            $
            13,725Basic
                earnings per common share
            
            $
            0.26
            
            $
            0.17
            
            $
            0.55
            
            $
            0.32Diluted
                earnings per common share
            
            $
            0.24
            
            $
            0.15
            
            $
            0.50
            
            $
            0.28




9




NOTE
      E  DEBT
      ARRANGEMENTS





*Asset-Backed
      Notes*





The
      financing for certain of the Company's acquisitions has been accomplished
      through private placements by its subsidiary, IP Holdings LLC ("IP
      Holdings") of Asset-Backed Notes secured by intellectual property assets
      (trade names, trademarks, license agreements and payments and proceeds with
      respect thereto relating to the Candies, Bongo, Joe Boxer, Rampage, Mudd and
      London Fog brands) of IP Holdings. At June 30, 2007, the balance of the
      Asset-Backed Notes was $147.1 million.




Cash
      on
      hand in the bank account of IP Holdings is restricted at any point in time
      up to
      the amount of the next debt principal and interest payment required under the
      Asset-Backed Notes. Accordingly, $1.0 million and $4.3 million as of June 30,
      2007 and December 31, 2006, respectively, have been disclosed as restricted
      cash
      within the Company's current assets. Further, in connection with IP Holdings'
      issuance of Asset Backed Notes, a reserve account has been established and
      the
      funds on deposit in such account will be applied to the last principal payment
      with respect to the Asset Backed Notes. Accordingly, $13.8 million and $11.7
      million as of June 30, 2007 and December 31, 2006, respectively, have been
      disclosed as restricted cash within the other assets on the Company's balance
      sheets.





Interest
      rates and terms on the outstanding principal amount of the Asset-Backed Notes
      as
      of June 30, 2007 are as follows: $51.7 million principal amount bears interest
      at a fixed interest rate of 8.45% with a six year term, $22.9 million principal
      amount bears interest at a fixed rate of 8.12% with a six year term, and $72.4
      million principal amount bears interest at a fixed rate of 8.99% with a six
      and
      a half year term.




Neither
      the Company nor any of its subsidiaries (other than IP Holdings) is obligated
      to
      make any payment with respect to the Asset-Backed Notes, and the assets of
      the
      Company and its subsidiaries (other than IP Holdings) are not available to
      IP
      Holdings' creditors. The assets of IP Holdings are not available to the
      creditors of the Company or its subsidiaries (other than IP
      Holdings).





*The
      Kmart Note*





In
      connection with the acquisition of the Joe Boxer® brand in July 2005, the
      Company assumed a promissory note, dated August 13, 2001 in the amount of $10.8
      million that originated with the execution of the Kmart License by the former
      owners of the Joe Boxer brand.   The note provides for interest at
      5.12% and is payable in three (3) equal annual installments, on a
      self-liquidating basis, on the last day of each year commencing on December
      31,
      2005 and continuing through December 31, 2007.  Payments due under the note
      may be off-set against any royalties owed under the Kmart License.  As of
      June 30, 2007, the outstanding balance of the note was $3.8 million. The note
      may be pre-paid without penalty.





*Term
      Loan Facility*





In
      connection with the acquisition of the Rocawear brand, in March 2007, the
      Company entered into a $212.5 million credit agreement (the “Credit Agreement”
or “Term Loan Facility”) with Lehman Brothers Inc. and Lehman Commercial
      Paper Inc. (“LCPI”). The Company pledged to LCPI 100% of the capital stock owned
      by the Company in OP Holdings and Management Corporation, a Delaware corporation
      (“OPHM”), and Studio Holdings and Management Corporation, a Delaware corporation
      (“SHM”). The Company's obligations under the Credit Agreement are guaranteed by
      each of OPHM and SHM, as well as by two of its other subsidiaries,OP Holdings
      LLC, a Delaware limited liability company (“OP Holdings”), and Studio IP
      Holdings LLC, a Delaware limited liability company ("Studio IP Holdings").
      The
      guarantees are secured by a pledge to LCPI of, among other things, the Ocean
      Pacific, Danskin and Rocawear trademarks and related intellectual property
      assets, license agreements and proceeds therefrom. The loan under the Credit
      Agreement currently bears interest at a variable rate equal to the three-month
      LIBOR plus 2.25% per annum, with principal payable in equal quarterly
      installments in annual aggregate amounts equal to 1.00% of the initial aggregate
      principal amount of the loan, with any remaining unpaid principal balance to
      be
      due on March 30, 2013. The interest rate as of June 30, 2007 was 7.61%. At
      June
      30, 2007, the balance of the Term Loan Facility was $212.0 million. The
      $212.5 million in proceeds from the Credit Agreement was used by us as follows:
      $204.0 million was used to pay the cash portion of the initial consideration
      for
      the acquisition of the Rocawear brand; approximately $0.2 million was used
      to
      pay the costs associated with the acquisition; $2.7 million will be used to
      pay
      additional costs associated with the acquisition; and $3.9 million was used
      to
      pay costs associated with the Term Loan Facility. The costs of $3.9 million
      in
      financing charges relating to the Term Loan Facility have been deferred and
      are
      being amortized over the life of the loan, using the effective interest method.
      The remaining cash will be invested by the Company to fund its
      investment in the limited liability company which will operate as a brand
      management and licensing company to identify brands to be acquired across a
      broad spectrum of consumer product categories. See Note D.





*Convertible
      Senior Subordinated Notes*





On
      June
      20, 2007, the Company completed the sale of $287.5 million principal amount
      of
      the Company's 1.875% convertible senior subordinated notes due 2012 (the
“Convertible Notes”) in a private offering to certain institutional investors.
      The net proceeds received by the Company from the offering were approximately
      $281.0 million.





The
      Convertible Notes bear interest at an annual rate of 1.875%, payable
      semi-annually in arrears on June 30 and December 31 of each year, beginning
      December 31, 2007. The Convertible Notes will be convertible into cash and,
      if
      applicable, shares of the Company's common stock based on a conversion rate
      of
      36.2845 shares of the Company's common stock, subject to customary adjustments,
      per $1,000 principal amount of the Convertible Notes (which is equal to an
      initial conversion price of approximately $27.56 per share) only under the
      following circumstances: (1) during any fiscal quarter beginning after September
      30, 2007 (and only during such fiscal quarter), if the closing price of the
      Company's common stock for at least 20 trading days in the 30 consecutive
      trading days ending on the last trading day of the immediately preceding fiscal
      quarter is more than 130% of the conversion price per share, which is $1,000
      divided by the then applicable conversion rate; (2) during the five business
      day
      period immediately following any five consecutive trading day period in which
      the trading price per $1,000 principal amount of the Convertible Notes for
      each
      day of that period was less than 98% of the product of (a) the closing price
      of
      the Company's common stock for each day in that period and (b) the conversion
      rate per $1,000 principal amount of the Convertible Notes; (3) if specified
      distributions to holders of the Company's common stock are made, as set forth
      in
      the indenture governing the Convertible Notes (“Indenture”); (4) if a “change of
      control” or other “fundamental change,” each as defined in the Indenture,
      occurs; (5) if the Company chooses to redeem the Convertible Notes upon the
      occurrence of a “specified accounting change,” as defined in the Indenture; and
      (6) during the last month prior to maturity of the Convertible Notes. If the
      holders of the Convertible Notes exercise the conversion provisions under the
      circumstances set forth, the Company will need to remit the lower of the
      principal balance of the Convertible Notes or their conversion value to the
      holders in cash. As such, the Company would be required to classify the entire
      amount outstanding of the Convertible Notes as a current liability in the
      following quarter. The evaluation of the classification of amounts outstanding
      associated with the Convertible Notes will occur every quarter.




10




Upon
      conversion, a holder will receive an amount in cash equal to the lesser of
      (a)
      the principal amount of the Convertible Note or (b) the conversion value,
      determined in the manner set forth in the Indenture. If the conversion value
      exceeds the principal amount of the Convertible Note on the conversion date,
      the
      Company will also deliver, at its election, cash or the Company's common stock
      or a combination of cash and the Company's common stock for the conversion
      value
      in excess of $1,000. In the event of a change of control or other fundamental
      change, the holders of the Convertible Notes may require the Company to purchase
      all or a portion of their Convertible Notes at a purchase price equal to 100%
      of
      the principal amount of the Convertible Notes, plus accrued and unpaid interest,
      if any. If a specified accounting change occurs, the Company may, at its option,
      redeem the Convertible Notes in whole for cash, at a price equal to 102% of
      the
      principal amount of the Convertible Notes, plus accrued and unpaid interest,
      if
      any. Holders of the Convertible Notes who convert their Convertible Notes in
      connection with a fundamental change or in connection with a redemption upon
      the
      occurrence of a specified accounting change may be entitled to a make-whole
      premium in the form of an increase in the conversion rate.




Pursuant
      to Emerging Issues Task Force (“EITF”) 90-19, “Convertible Bonds with Issuer
      Option to Settle for Cash upon Conversion” (“EITF 90-19”), EITF 00-19,
“Accounting for Derivative Financial Instruments Indexed to, and Potentially
      Settled in, a Company's Own Stock” (“EITF 00-19”), and EITF 01-6, “The Meaning
      of Indexed to a Company's Own Stock” (“EITF 01-6”), the Convertible Notes are
      accounted for as convertible debt in the accompanying Condensed Consolidated
      Balance Sheet and the embedded conversion option in the Notes has not been
      accounted for as a separate derivative. For a discussion of the effects of
      the
      Convertible Notes and the convertible note hedge and warrants discussed below
      on
      earnings per share, see Note I.




In
      connection with the sale of the Convertible Notes, the Company entered into
      convertible note hedges with respect to its common stock with two entities
      (the
“Counterparties”). Pursuant to the agreements governing these convertible note
      hedges (the “Convertible Note Hedge Agreements”), the Company has purchased call
      options (the “Purchased Call Options”) from the Counterparties covering up to
      approximately 10.4 million shares of the Company's common stock. These
      convertible note hedges are designed to offset the Company's exposure to
      potential dilution upon conversion of the Convertible Notes in the event that
      the market value per share of the Company's common stock at the time of exercise
      is greater than the strike price of the Purchase Call Options (which strike
      price corresponds to the initial conversion price of the Convertible Notes
      and
      is simultaneously subject to certain customary adjustments). On June 20, 2007,
      the Company paid an aggregate amount of approximately $76.3 million of the
      proceeds from the sale of the Convertible Notes for the Purchased Call Options,
      of which $26.7 million is included in the balance of deferred tax
      assets.




The
      Company also entered into separate warrant transactions with the Counterparties
      whereby the Company, pursuant to the agreements governing these warrant
      transactions (the “Warrant Transaction Agreements”), sold to the Counterparties
      warrants (the “Sold Warrants”) to acquire up to 3.6 million shares of the
      Company's common stock, at a strike price of $42.40 per share of the Company's
      common stock. The Sold Warrants will become exercisable on September 28, 2012
      and will expire by the end of 2012. The Company received aggregate proceeds
      of
      approximately $37.5 million from the sale of the Sold Warrants on June 20,
      2007.




The
      convertible note hedge transactions and the warrant transactions are separate
      transactions, entered into by the Company with the Counterparties, and as such
      are not part of the terms of the Convertible Notes and will not affect the
      holders' rights under the Convertible Notes. In addition, holders of the
      Convertible Notes will not have any rights with respect to the Purchased Call
      Options or the Sold Warrants. As a result of these transactions, the Company
      recorded a reduction to additional paid-in-capital of $12.1
      million.




If
      the
      market value per share of the Company's common stock at the time of conversion
      of the Convertible Notes is above the strike price of the Purchased Call
      Options, the Purchased Call Options entitle the Company to receive from the
      Counterparties net shares of the Company's common stock, cash or a combination
      of shares of the Company's common stock and cash, depending on the consideration
      paid on the underlying Convertible Notes, based on the excess of the then
      current market price of the Company's common stock over the strike price of
      the
      Purchased Call Options. Additionally, if the market price of the Company's
      common stock at the time of exercise of the Sold Warrants exceeds the strike
      price of the Sold Warrants, the Company will owe the Counterparties net shares
      of the Company's common stock or cash, not offset by the Purchased Call Options,
      in an amount based on the excess of the then current market price of the
      Company's common stock over the strike price of the Sold Warrants.




These
      transactions will generally have the effect of increasing the conversion price
      of the Convertible Notes to $42.40 per share of Company's common stock,
      representing a 100% percent premium based on the last reported sale price of
      $21.20 per share on June 14, 2007.




*Debt
      Maturities*





(In
      000's)





The
      Company's debt maturities are the following:




Total
            
            2007
            
            2008
            
            2009
            
            2010
            
            2011
            
            thereafterDue
                to Sweet (Note J)
            
            $
            3,230
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            3,230
            
            $
            -Kmart
                Note
            
            
            3,781
            
            
            3,781
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Asset
                backed notes
            
            
            147,072
            
            
            19,553
            
            
            21,300
            
            
            23,202
            
            
            25,275
            
            
            27,533
            
            
            30,209Term
                Loan Facility
            
            
            211,969
            
            
            2,125
            
            
            2,125
            
            
            2,125
            
            
            2,125
            
            
            2,125
            
            
            201,344Convertible
                Notes
            
            
            281,067
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            281,067Total
                Debt
            
            $
            647,119
            
            $
            25,459
            
            $
            23,425
            
            $
            25,327
            
            $
            27,400
            
            $
            32,888
            
            $
            512,620




11




NOTE
      F -
      UNZIPPED APPAREL, LLC (“UNZIPPED”)





*Equity
      Investment*





On
      October 7, 1998, the Company formed Unzipped with its then joint venture partner
      Sweet Sportswear, LLC (“Sweet”), the purpose of which was to market and
      distribute apparel under the Bongo label. The Company and Sweet each had a
      50%
      interest in Unzipped. Pursuant to the terms of the joint venture, the Company
      licensed the Bongo trademark to Unzipped for use in the design, manufacture
      and
      sale of certain designated apparel products.





*Acquisition*





On
      April
      23, 2002, the Company acquired the remaining 50% interest in Unzipped from
      Sweet
      for a purchase price of three million shares of the Company's common stock
      and
      $11 million in debt evidenced by the 8% Senior Subordinated Note due in 2012
      (“Sweet Note”). See Note J. In connection with the acquisition of Unzipped, the
      Company filed a registration statement with the Securities and Exchange
      Commission ("SEC") for the three million shares of the Company's common stock
      issued to Sweet, which was declared effective by the SEC on July 29,
      2003.





*Related
      Party Transactions*





Prior
      to
      August 5, 2004, Unzipped was managed by Sweet pursuant to a management agreement
      (the “Management Agreement”). Unzipped also had a supply agreement with Azteca
      Productions International, Inc. ("Azteca") and a distribution agreement with
      Apparel Distribution Services, LLC ("ADS"). All of these entities are owned
      or
      controlled by Hubert Guez.





On
      August
      5, 2004, Unzipped terminated the Management Agreement with Sweet, the supply
      agreement with Azteca and the distribution agreement with ADS and commenced
      a
      lawsuit against Sweet, Azteca, ADS and Hubert Guez. See Note J.





There
      were no transactions with these related parties during the six months ending
      June 30, 2007.





At
      June
      30, 2007, the Company included in accounts payable subject to litigation
      amounts due to Azteca and ADS of $847,000 and $2,261,000 respectively.
      These amounts, however, were in dispute in the litigation at June 30, 2007.
      See
      Note J.





NOTE
      G -
      SPECIAL CHARGES





Special
      charges consist of professional fees related to the Unzipped litigation (See
      Note J)





NOTE
      H -
      STOCKHOLDERS' EQUITY





*Public
      Offering*





On
      December 13, 2006, the Company completed a public offering of its common stock.
      All 10,784,750 shares of common stock sold by the Company in the offering were
      sold at $18.75 per share. Net proceeds to the Company from the offering amounted
      to approximately $189.5 million.





*Stock
      Options*





The
      Black-Scholes option valuation model was developed for use in estimating the
      fair value of traded options which have no vesting restrictions and are fully
      transferable. In addition, option valuation models require the input of highly
      subjective assumptions including the expected stock price volatility. Because
      the Company's employee stock options have characteristics significantly
      different from those of traded options, and because changes in the subjective
      input assumptions can materially affect the fair value estimate, in management's
      opinion, the existing models do not necessarily provide a reliable single
      measure of the fair value of its employee stock options.




12




The
      fair
      value for these options was estimated at the date of grant using a Black-Scholes
      option-pricing model with the following weighted-average
      assumptions:





Six
                months endedJune
                30,2007Expected
                Volatility
            
            
            .30-.50Expected
                Dividend Yield
            
            
            0%Expected
                Life (Term)
            
            
            3-5
                yearsRisk-Free
                Interest Rate
            
            
            3.00-4.75%





The
      options that were granted under the Company's existing stock option and equity
      incentive plans expire between five and ten years from the date of
      grant.




Summaries
      of the Company's stock option and warrant activity and related information
      for
      the Current Six Months follows:




Weighted-AverageOptions
            
            
            Exercise
                PriceOutstanding
                January 1, 2007
            
            
            5,769,632
            
            $
            4.35Granted
            
            
            -
            
            
            -Canceled
            
            
            -
            
            
            -Exercised
            
            
            (199,750
            )
            
            5.40Expired
            
            
            -
            
            
            -Outstanding
                June 30, 2007
            
            
            5,569,882
            
            $
            4.31Exercisable
                at June 30, 2007
            
            
            5,482,714
            
            $
            4.23




Weighted-AverageWarrants
            
            
            Exercise
                PriceOutstanding
                January 1, 2007
            
            
            799,175
            
            $
            11.02Granted
                in connection with Sold Warrants (see Note E)
            
            
            3,628,450
            
            
            42.40Granted
            
            
            80,000
            
            
            20.32Canceled
            
            
            -
            
            
            -Exercised
            
            
            (655,750
            )
            
            11.52Expired
            
            
            -
            
            
            -Outstanding
                June 30, 2007
            
            
            3,851,875
            
            $
            40.69Exercisable
                at June 30, 2007
            
            
            158,425
            
            $
            14.58





All
      warrants issued in connection with acquisitions are recorded at fair market
      value using the Black Scholes model and are recorded as part of purchase
      accounting. See Notes C and D.





Other
      warrants issued to non-employees are valued at fair market value using the
      Black
      Scholes model and are expensed over the vesting period.





At
      June
      30, 2007, 1,904,345, 1,597,334, 922,250, and 564,721 shares of common stock
      were
      reserved for issuance upon exercise of stock options under the Company's 2006
      Equity Incentive Plan and its 2002, 2001, and 2000 Stock Option Plans,
      respectively.




***Restricted
      stock***




Compensation
      cost for restricted stock is measured as the excess, if any, of the quoted
      market price of our stock at the date the common stock is issued over the amount
      the employee must pay to acquire the stock (which is generally zero). The
      compensation cost, net of projected forfeitures, is recognized over the period
      between the issue date and the date any restrictions lapse, with compensation
      cost for grants with a graded vesting schedule recognized on a straight-line
      basis over the requisite service period for each separately vesting portion
      of
      the award as if the award was, in substance, multiple awards. The restrictions
      do not affect voting and dividend rights.




The
      Company has from time to time awarded restricted shares of common stock to
      certain employees. The awards have restriction periods tied to employment and
      vest over a period of six months to five years. The cost of the restricted
      stock
      awards, which is the fair market value on the date of grant net of estimated
      forfeitures, is expensed ratably over the vesting period. During the Current
      Six
      Months, the Company awarded 68,383 restricted shares with a vesting period
      of
      six months to five years and a fair market value of $1.4 million. As of June
      30,
      2007, 13,684 shares related to restricted stock grants had vested.





13




Unearned
      compensation expense related to restricted stock grants for the Current Quarter
      and Current Six Months was approximately $407,000 and $684,000, respectively.
      An
      additional amount of $1.7 million is expected to be expensed evenly over a
      period of approximately 2-3 years.




NOTE
      I
      - EARNINGS PER SHARE





Basic
      earnings per share includes no dilution and is computed by dividing net income
      available to common shareholders by the weighted average number of common shares
      outstanding for the period. Diluted earnings per share reflect, in periods
      in
      which they have a dilutive effect, the effect of common shares issuable upon
      exercise of stock options and warrants. The difference between reported basic
      and diluted weighted-average common shares results from the assumption that
      all
      dilutive stock options and warrants outstanding were exercised. Diluted loss
      per
      share reflects, in periods in which they have a dilutive effect, the effect
      of
      common shares issuable upon exercise of stock options.





As
      of
      June 30, 2007, of the total potentially dilutive shares related to stock options
      and warrants, approximately 3.6 million warrants to purchase common stock shares
      were anti-dilutive, and no stock options were anti-dilutive.





Certain
      effects on diluted net income per common share may result in future periods
      as a
      result of the Company's issuance of $281.1 million in Convertible Notes and
      the Company's entry into note hedge and warrant agreements during the Current
      Quarter. See Note E for a description of the key terms of these
      transactions. Under EITF 04-8, “The Effect of Contingently Convertible
      Instruments on Diluted Earnings Per Share”, and EITF 90-19, and because of the
      Company's obligation to settle the par value of the Convertible Notes in cash,
      the Company is not required to include any shares underlying the Convertible
      Notes in its weighted average shares outstanding - assuming dilution until
      the
      average stock price per share for the quarter exceeds the $27.56 conversion
      price of the Convertible Notes and only to the extent of the additional shares
      that the Company may be required to issue in the event that the Company's
      conversion obligation exceeds the principal amount of the Convertible Notes
      converted. These conditions had not been met as of June 30, 2007. At any such
      time in the future that these conditions are met, only the number of shares
      that
      would be issuable (under the “treasury” method of accounting for the share
      dilution) will be included, which is based upon the amount by which the average
      stock price exceeds the conversion price. Therefore, no additional shares are
      included in the Company's calculations of earnings per share and diluted
      earnings per share for the Current Quarter and the Current Six Months. The
      condition to include underlying shares related to the warrants had not been
      met
      as of June 30, 2007 and was not met as of August 6, 2007.




NOTE
      J
      - COMMITMENTS AND CONTINGENCIES




**Sweet
      Sportswear/Unzipped litigation**




On
      August
      5, 2004, the Company, along with its subsidiaries, Unzipped, Michael Caruso
      & Co., referred to as Caruso, and IP Holdings, collectively referred to as
      the plaintiffs, commenced a lawsuit in the Superior Court of California, Los
      Angeles County, against Unzipped's former manager, former supplier and former
      distributor, Sweet, Azteca and ADS, respectively, and a principal of these
      entities and former member of the Company's board of directors, Hubert Guez,
      collectively referred to as the Guez defendants. The Company pursued numerous
      causes of action against the Guez defendants, including breach of contact,
      breach of fiduciary duty, trademark infringement and others and sought damages
      in excess of $20 million. On March 10, 2005, Sweet, Azteca and ADS, collectively
      referred to as cross-complainants, filed a cross-complaint against the Company
      claiming damages resulting from a variety of alleged contractual breaches,
      among
      other things.




In
      January 2007, a jury trial was commenced, and on April 10, 2007, the jury
      returned a verdict of approximately $45 million in favor of the Company and
      its
      subsidiaries, finding in favor of the Company and its subsidiaries on every
      claim that they pursued, and against the Guez defendants on every counterclaim
      asserted. Additionally, the jury found that all of the Guez defendants acted
      with malice, fraud or oppression with regard to each of the tort claims asserted
      by the Company and its subsidiaries, and on April 16, 2007, awarded plaintiffs
      $5 million in punitive damages against Mr. Guez personally. The Guez defendants
      have filed post-trial motions seeking, among other things, a new trial. In
      the
      upcoming months the Company and its subsidiaries will request that the Court
      award them, pursuant to various contractual and statutory fee-shifting
      provisions, certain fees, expenses and costs incurred in connection with this
      litigation.




The
      Company and its subsidiaries intend to vigorously pursue collection of the
      judgments against the Guez defendants. Upon the entry of such judgments by
      the
      Court, the Guez defendants have the right to appeal the judgments, but should
      be
      required to post an appropriate bond to secure the judgments and to stay
      execution proceedings.




***Bader/Unzipped
      litigation***




On
      November 5, 2004, Unzipped commenced a lawsuit in the Supreme Court of New
      York,
      New York County, against Unzipped's former president of sales, Gary Bader,
      alleging that Mr. Bader breached certain fiduciary duties owed to Unzipped
      as
      its president of sales, unfairly competed with Unzipped and tortiously
      interfered with Unzipped's contractual relationships with its employees. On
      October 5, 2005, Unzipped amended its complaint to assert identical claims
      against Bader's company, Sportswear Mercenaries, Ltd. On October 14, 2005,
      Bader
      and Sportswear Mercenaries filed an answer containing counterclaims to
      Unzipped's amended complaint, and a third-party complaint, which was dismissed
      in its entirety on June 9, 2006, except with respect to a single claim that
      it
      owes Bader and Sportswear Mercenaries $72,000. The Company intends to vigorously
      pursue its claims against Bader and Sportwear Mercenaries and to vigorously
      defend against the remaining claim asserted against it.


14




***Redwood
      Shoe litigation***




This
      litigation, which was commenced in January 2002, by Redwood Shoe Corporation
      (“Redwood”), one of the Company's former buying agents of footwear, was
      dismissed with prejudice by the court on February 15, 2007, pursuant to an
      agreement in principle by the Company, Redwood, its affiliate, Mark Tucker,
      Inc.
      (“MTI”) and MTI's principal, Mark Tucker, to settle the matter. The proposed
      settlement agreement provides for the Company to pay a total of $1.9 million
      to
      Redwood. The stipulation and order dismissing the action may be reopened should
      the settlement agreement not be finalized and consummated by all of the parties.
      The Company is awaiting receipt of the signed Settlement Agreement from the
      other parties.




***Bongo
      Apparel, Inc. litigation***




On
      or
      about June 12, 2006, Bongo Apparel, Inc. (“BAI”), filed suit in the Supreme
      Court of the State of New York, County of New York, against the Company alleging
      certain breaches of contract and other claims and seeks, among other things,
      damages of at least $25 million. The Company believes that, in addition to
      other
      defenses and counterclaims that it intends to assert, the claims in the lawsuit
      are the subject of a release and settlement agreement that was entered into
      by
      the parties in August 2005, and has moved to dismiss most of the claims. In
      response to the motion to dismiss, BAI made a cross-motion for partial summary
      judgment on some of its claims. On April 25, 2007, the Court entered an order
      refusing to consider, and declining to accept, BAI's summary judgment motion.
      The Company's motion to dismiss remains pending before the Court.




Additionally,
      on or about October 6, 2006, the Company and IP Holdings filed suit in the
      U.S.
      District Court for the Southern District of New York against BAI and its
      guarantor, TKO Apparel, Inc. (“TKO”) In that complaint, the Company asserts
      various contract, tort and trademark claims that arose as a result of the
      failures of BAI with regard to the Bongo men's jeans wear business and its
      wrongful conduct with regard to the Bongo women's jeans wear business. The
      Company and IP Holdings are seeking monetary damages in an amount in excess
      of
      $10 million and a permanent injunction with respect to the use of the Bongo
      mark. On January 4, 2007, the District Court denied the motion of BAI and TKOto
      dismiss the federal court action. Currently, a stay of the District Court
      proceedings is in place.




***Mossimo
      litigation***




In
      April 2005, Mr. Mossimo Giannulli offered to acquire all of the outstanding
      publicly held common stock of Mossimo at a price of $4.00 per share. Following
      the announcement of such offer, six purported class action lawsuits were filed
      in the Court of Chancery of the State of Delaware seeking an injunction
      preventing the proposed acquisition of Mossimo by the Company and asserting
      that
      the Mossimo directors breached their fiduciary duties to the Mossimo
      stockholders. These six cases were consolidated. Although Mr. Giannulli
      subsequently withdrew his acquisition proposal, plaintiffs filed a first
      consolidated amended complaint in March 2006, in which they allege, among other
      things, that Mossimo and its board of directors breached their fiduciary duties
      and engaged in self-dealing in approving the merger agreement with the
      Company.




In
      addition, on April 12, 2006, a purported shareholder class action lawsuit was
      filed in the Superior Court of the State of California for the County of Los
      Angeles asserting similar claims against Mossimo and its directors with respect
      to the merger and seeking, among other relief, to enjoin the merger and rescind
      any agreements entered into in connection with the merger, and to recover costs,
      including attorney's fees.




On
      September 27, 2006, Mr. Giannulli and other defendants entered into a memorandum
      of understanding with the Delaware plaintiffs to settle the Delaware action
      which was approved by the Delaware Chancery Court on February 26, 2007. The
      settlement agreement provides that if the Company sells Mossimo or the Mossimo
      business prior to October 31, 2007 to an unaffiliated third party and if the
      consideration for such sale is greater than 120% of the amount paid to the
      Mossimo stockholders in the merger, 30% of that excess amount will be paid
      into
      a settlement fund to be administered and distributed by the plaintiffs' lawyers
      under the supervision of the Delaware court. This additional amount, if it
      becomes due and distributable, will be paid to all persons who owned Mossimo
      stock, directly or indirectly, between April 12, 2005 and October 31, 2006,
      and
      will not constitute additional merger consideration. Mossimo also negotiated
      in
      good faith with the plaintiffs' lead counsel concerning the amount of attorney
      fees and expenses to be paid by Mossimo or the Company, as its successor, and
      not to oppose such counsel's application to the court of up to $800,000 in
      payment of such fees and expenses. In consideration of these terms, the parties
      agreed that they would fully and finally release and discharge all claims
      against each other. On February 26, 2007, the Court of Chancery of the State
      of
      Delaware entered an order approving the settlement and the action was dismissed
      with prejudice. In connection with the settlement, plaintiffs counsel was
      awarded fees and expenses in the amount of $800,000.




On
      October 27, 2006, Mr. Giannulli and other defendants also entered into a
      settlement letter with the California plaintiffs in the California action.
      Under
      the terms of this settlement, Mr. Giannulli and the other defendants agreed
      to
      pay plaintiffs' counsel between $620,000 and $650,000. On March 1, 2007,
      following the Delaware Chancery Court's approval of the Delaware settlement,
      the
      parties filed a stipulation with the California court requesting the dismissal
      of the action with prejudice and requesting an order awarding Plaintiffs'
      counsel between $620,000 and $650,000. On March 13, 2007, the California court
      entered an order approving the settlement, and the action was dismissed with
      prejudice, and Plaintiff's counsel was awarded $650,000 for fees and
      expenses.




The
      Company received an insurance payment of $700,000 in connection with the above
      mentioned litigations.




**Normal
      course litigation**




From
      time
      to time, the Company is also made a party to litigation incurred in the normal
      course of business. While any litigation has an element of uncertainty, the
      Company believes that the final outcome of any of these routine matters will
      not
      have a material effect on the Company's financial position or future
      liquidity.





***Joint
      Venture with Shawn Carter***





The
      Company has committed an amount of $5.0 million to fund its investment in a
      limited liability company which will operate as a brand management and licensing
      company to identify brands to be acquired across a broad spectrum of consumer
      product categories. To date, the investment has not been funded (see Note
      D).


15




NOTE
      K -
      RELATED PARTY TRANSACTIONS





On
      May 1,
      2003, the Company granted Kenneth Cole Productions, Inc. the exclusive worldwide
      license to design, manufacture, sell, distribute and market footwear under
      its
      Bongo brand. The chief executive officer and chairman of Kenneth Cole
      Productions is Kenneth Cole, who is the brother of Neil Cole, the Company's
      Chief Executive Officer and President. During the Current Quarter and the three
      months ended June 30, 2006 (“Prior Year Quarter”), the Company received $242,000
      and $350,000, respectively, in royalties from Kenneth Cole
      Productions.




The
      Candie's Foundation, a charitable foundation founded by Neil Cole for the
      purpose of raising national awareness about the consequences of teenage
      pregnancy, owed the Company $190,000 and $297,000 at June 30, 2007 and December
      31, 2006, respectively.




NOTE
      L -
      INCOME TAXES





The
      Company accounts for income taxes in accordance with SFAS No. 109, “Accounting
      for Income Taxes” (“SFAS 109”). Under SFAS 109, deferred tax assets and
      liabilities are determined based on differences between the financial reporting
      and tax basis of assets and liabilities and are measured using the enacted
      tax
      rates and laws that will be in effect when the differences are expected to
      reverse. A valuation allowance is established when necessary to reduce deferred
      tax assets to the amount expected to be realized. In determining the need for
      a
      valuation allowance, management reviews both positive and negative evidence
      pursuant to the requirements of SFAS 109, including current and historical
      results of operations, the annual limitation on utilization of net operating
      loss carry forwards pursuant to Internal Revenue Code section 382, future income
      projections and the overall prospects of the Company's business. Based upon
      management's assessment of all available evidence, including the Company's
      completed transition into a licensing business, estimates of future
      profitability based on projected royalty revenues from its licensees, and the
      overall prospects of the Company's business, management is of the opinion that
      the Company will be able to utilize the deferred tax assets in the foreseeable
      future, and as such do not anticipate requiring a further valuation allowance.
      Based on current estimates of pre-tax income for the year ending December 31,
      2007, the management anticipates a net income tax expense for this
      year.





In
      July 2006, the FASB issued FASB Interpretation No. 48 “Accounting for
      Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for
      income taxes by prescribing the minimum recognition threshold a tax position
      is
      required to meet before being recognized in the financial statements. FIN 48
      also provides guidance on derecognition, measurement, classification, interest
      and penalties, and disclosure requirements. FIN 48 is effective for fiscal
      years
      beginning after December 15, 2006. Accordingly, we adopted FIN 48 beginning
      January 1, 2007. The implementation of FIN 48 did not have a significant impact
      on our financial position or results of operations. The total unrecognized
      tax
      benefit was $1,052,000 at the date of adoption. However, the liability is not
      recognized for accounting purposes because the related deferred tax asset has
      been fully reserved in prior years.





The
      Company recognizes interest and penalties related to uncertain tax positions
      in
      income tax expense which were zero for the Current Quarter.




The
      Company is subject to taxation in the US and various state and local
      jurisdictions. The Company remains subject to examination by US Federal and
      state tax authorities for tax years 2003 through 2006.




NOTE
      M  RECENT
      ACCOUNTING STANDARDS





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (“SFAS
      157”) which establishes a framework for measuring fair value in generally
      accepted accounting principles and expands disclosures about fair value
      measurements. SFAS 157 defines fair value as the price that would be received
      to
      sell an asset or paid to transfer a liability in an orderly transaction between
      market participants at the measurement date. SFAS 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007, and
      interim periods within those fiscal years. The adoption of SFAS 157 is not
      expected to have a material impact on our results of operations or our financial
      position.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Asset and Financial Liability: Including an amendment to FASB
      Statement No. 115” (“SFAS 159”). The standard permits all entities to elect to
      measure certain financial instruments and other items at fair value with changes
      in fair value reported in earnings. SFAS 159 is effective as of the beginning
      of
      the first fiscal year that begins after November 15, 2007. The adoption of
      SFAS
      No. 159 is not expected to have a material impact on our results of operations
      or our financial position.


16




**Item
      2.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





*Safe
      Harbor Statement under the Private Securities Litigation Reform Act of
      1995* .
      The
      statements that are not historical facts contained in this report are forward
      looking statements that involve a number of known and unknown risks,
      uncertainties and other factors, all of which are difficult or impossible to
      predict and many of which are beyond the control of the Company, which may
      cause
      the actual results, performance or achievements of the Company to be materially
      different from any future results, performance or achievements expressed or
      implied by such forward looking statements. These risks are detailed in the
      Company's Form 10-K for the fiscal year ended December 31, 2006 and other SEC
      filings. The words "believe", "anticipate," "expect", "confident", "project",
      provide "guidance" and similar expressions identify forward-looking statements.
      Readers are cautioned not to place undue reliance on these forward looking
      statements, which speak only as of the date the statement was made.





*Executive
      Summary.* The
      Company is a brand management company engaged in licensing, marketing and
      providing trend direction for a diversified and growing consumer brand
      portfolio. The Company's brands are sold across every major segment of retail
      distribution, from luxury to mass. As of June 30, 2007, the Company owned 11
      iconic consumer brands: Candie's, Bongo, Badgley Mischka, Joe Boxer, Rampage,
      Mudd, London Fog, Mossimo, Ocean Pacific, Danskin, and Rocawear. The Company
      licenses its brands worldwide through over 150 retail and wholesale licenses
      for
      use in connection with a broad variety of product categories, including women's,
      men's and children's apparel, footwear and accessories, home furnishings and
      beauty and fragrance. The Company's business model allows it to focus on its
      core competencies of marketing and managing brands without some of the risks
      and
      investment requirements associated with a more traditional operating company.
      The Company's licensing agreements with leading retail and wholesale partners
      throughout the world provide the Company with a predictable stream of guaranteed
      minimum royalties.




The
      Company's growth strategy is focused on increasing licensing revenue from its
      existing portfolio of brands through adding new product categories, expanding
      its brands' retail penetration and optimizing the sales of its licensees. The
      Company will also seek to continue the international expansion of its brands
      by
      partnering with leading licensees throughout the world. Finally, the Company
      intends to continue to diversify its brand portfolio by acquiring additional
      iconic consumer brands with applicability to a wide range of merchandise
      categories.





***Results
      of Operations***




*For
      the three months ended June 30, 2007*




*Revenue.* Revenue
      for the Current Quarter increased to $39.1 million, from $18.4 million in the
      Prior Year Quarter. The largest driver of the growth of $20.7 million was
      revenue from the acquisitions of Mossimo and the London Fog, Ocean Pacific,
      Danskin and Rocawear brands and certain related assets during the last 12 months
      and therefore were not included in the Prior Year Quarter's
      revenue.




*Operating
      Expenses.* Selling,
      general and administrative ( **“** SG&A”)
      expenses totaled $9.0 million in the Current Quarter compared to $6.8 million
      in
      the Prior Year Quarter. The increase of $2.2 million was primarily related
      to
      the following: an increase in payroll costs associated with additions to
      employee headcount relating to our recent acquisitions, amortization of
      restricted stock awards, and an increase in the amortization of intangible
      assets as a direct result of the Mossimo, Danskin, Rocawear, and Ocean Pacific
      acquisitions. For the Current Quarter and Prior Year Quarter, the Company's
      special charges included $331,000 and $712,000 respectively, relating to
      litigation involving Unzipped. See Note G of Notes to Unaudited Condensed
      Consolidated Financial Statements.


17




Operating
      Income for the Current Quarter increased to $29.7 million, or approximately
      76%
      of total revenue compared to $10.9 million or approximately 59% of total revenue
      in the Prior Year Quarter.





*Net
      Interest Expense* .
      Net
      Interest expense increased by $4.0 million in the Current Quarter to $6.9
      million, compared to $2.9 million in the Prior Year Quarter. This increase
      was
      due primarily to an increase in the Company's debt through financing
      arrangements in connection with the acquisitions of Mudd, London Fog, and
      Rocawear. See Notes C and D of Notes to Unaudited Condensed Consolidated
      Financial Statements. For the Current Quarter, there was a total of $959,000
      in
      interest income to partially offset the increase in interest expense during
      the
      quarter, compared to the Prior Year Quarter when there was only $191,000 in
      interest income to offset the interest expense in that quarter, as a result
      of
      the increase in cash and cash equivalents during the Current Quarter as compared
      to the Prior Year Quarter.





*Provision
      (Benefit) for Income Taxes.* The
      Company accounts for income taxes in accordance with SFAS No. 109 “Accounting
      for Income Taxes” (“SFAS 109”). Under SFAS 109, deferred tax assets and
      liabilities are determined based on differences between the financial reporting
      and tax basis of assets and liabilities and are measured using the enacted
      tax
      rates and laws that will be in effect when the differences are expected to
      reverse. A valuation allowance is established when necessary to reduce deferred
      tax assets to the amount expected to be realized. In determining the need for
      a
      valuation allowance, management reviews both positive and negative evidence
      pursuant to the requirements of SFAS No. 109, including current and historical
      results of operations, the annual limitation on utilization of net operating
      loss carry forwards pursuant to Internal Revenue Code section 382, future income
      projections and the overall prospects of the Company's business. The effective
      income tax rate for the Current Quarter is approximately 35% resulting in the
      $8.0 million income tax expense as compared to the $347,000 net tax benefit
      for
      the Prior Quarter due primarily from a reduction in the Company's valuation allowance. There was no comparable reduction of the
      Company's valuation allowance in the Current Quarter.





*Net
      income* .
      The
      Company's net income was $14.8 million in the Current Quarter, compared to
      net
      income of $8.3 million in the Prior Year Quarter, as a result of the factors
      discussed above.




*For
      the six months ended June 30, 2007*




*Revenue.* Revenue
      for the Current Six Months increased to $69.9 million, from $31.7 million during
      the six months ended June 30, 2006 (“Prior Year Six Months”). The largest driver
      of the growth of $38.2 million was revenue from the acquisitions of Mossimo
      and
      the London Fog, Ocean Pacific, Danskin and Rocawear brands and certain related
      assets during the last 12 months and therefore were not included in the Prior
      Year Six Months revenue.




*Operating
      Expenses.* SG&A
      expenses totaled $16.7 million in the Current Six Months compared to $11.5
      million in the Prior Year Six Months. The increase of $5.2 million was primarily
      related to the following: an increase in payroll costs associated with additions
      to employee headcount relating to our recent acquisitions, amortization of
      restricted stock awards, and an increase in the amortization of intangible
      assets as a direct result of the Mossimo, Danskin, Rocawear, and Ocean Pacific
      acquisitions. For the Current Six Months and Prior Year Six Months, the
      Company's special charges included $1.1 and $1.3 million respectively, relating
      to litigation involving Unzipped. See Note G of Notes to Unaudited
      Condensed Consolidated Financial Statements.





Operating
      Income for the Current Six Months increased to $52.1 million, or approximately
      75% of total revenue compared to $18.9 million or approximately 60% of total
      revenue in the Prior Year Six Months.





*Net
      Interest Expense* .
      Net
      interest expense increased by $4.7 million in the Current Six Months to $9.5
      million, compared to net interest expense of $4.8 million in the Prior Year
      Six
      Months. This increase was due primarily to an increase in the Company's debt
      through financing arrangements in connection with the acquisitions of Mudd,
      London Fog, and Rocawear. See Notes C and D of Notes to Unaudited Condensed
      Consolidated Financial Statements. For the Current Six Months, there was a
      total
      of $1,872,000 in interest income to partially offset the increase in interest
      expense during the period, compared to the Prior Year Six Months when there
      was
      only $352,000 in interest income to offset the interest expense for that period,
      as a result of the increase in cash and cash equivalents during the Current
      Six
      Months as compared to the Prior Year Six Months.





*Provision
      (Benefit) for Income Taxes.* The
      Company accounts for income taxes in accordance with SFAS 109. Under SFAS No.
      109, deferred tax assets and liabilities are determined based on differences
      between the financial reporting and tax basis of assets and liabilities and
      are
      measured using the enacted tax rates and laws that will be in effect when the
      differences are expected to reverse. A valuation allowance is established when
      necessary to reduce deferred tax assets to the amount expected to be realized.
      In determining the need for a valuation allowance, management reviews both
      positive and negative evidence pursuant to the requirements of SFAS No. 109,
      including current and historical results of operations, the annual limitation
      on
      utilization of net operating loss carry forwards pursuant to Internal Revenue
      Code section 382, future income projections and the overall prospects of the
      Company's business. The effective income tax rate for the Current Six Months
      is
      approximately 35% resulting in the $15.0 million income tax expense as compared
      to the $1.6 million net tax benefit for the Prior Year Six Months due primarily
      from a reduction in the Company's valuation allowance. There was no comparable
      reduction of the Company's valuation allowance in the Current
      Quarter.





*Net
      income* .
      The
      Company's net income was $27.5 million in the Current Six Months, compared
      to
      net income of $15.7 million in the Prior Year Six Months, as a result of the
      factors discussed above.


18




***Liquidity
      and Capital Resources***





*Liquidity*





Our
      principal capital requirements have been to fund acquisitions, working capital
      needs, and to a lesser extent capital expenditures. We have historically relied
      on internally generated funds to finance our operations and our primary source
      of capital needs for acquisition have been the issuance of debt and equity
      securities. At June 30, 2007 and December 31, 2006, our cash plus highly liquid
      marketable securities totaled $277.3 million and $77.8 million, respectively,
      including restricted cash of $1.0 million and $4.3 million,
      respectively.





We
      believe that cash from future operations as well as currently available cash
      and
      highly liquid marketable securities will be sufficient to satisfy our
      anticipated working capital requirements for the foreseeable future. We intend
      to continue financing our brand acquisitions through some combination of cash
      from operations, bank financing and the issuance of additional equity and/or
      debt securities. The Company funded the acquisition of Danskin from its
      cash reserves. The Rocawear acquisition has been funded from the proceeds of
      a
      loan under the Company's $212.5 million Term Loan Facility, entered into with
      Lehman Brothers Inc. and Lehman Commercial Paper Inc. on March 30, 2007 which
      was amended and restated on May 2, 2007. We have limited ability, however,
      to
      secure additional indebtedness with our existing assets due to certain
      provisions of IP Holdings' existing Asset-Backed Notes, in addition to certain
      provisions of the Term Loan Facility. The note issued by the Company under
      the
      Term Loan Facility currently bears interest at a variable rate equal to the
      three-month LIBOR plus 2.25% per annum, with principal payable in equal
      quarterly installments in annual aggregate amounts equal to 1.00% of the initial
      aggregate principal amount of the Term Loan Facility, with any remaining unpaid
      principal balance to be due on March 30, 2013. At June 30, 2007 there was $212.0
      million principal amount outstanding on the Term Loan Facility. See Note E
      of
      Notes to Unaudited Condensed Consolidated Financial Statements.





*Changes
      in Working Capital*





At
      June
      30, 2007 and December 31, 2006 the working capital ratio (current assets to
      current liabilities) was 7.5 to 1 and 2.8 to 1, respectively. This increase
      was
      driven by the increase in cash and cash equivalents and highly liquid marketable
      securities from $77.8 million at December 31, 2006 to $277.3 million at June
      30,
      2007, which was primarily due to our sale of $287.5 million principal amount
      of
      Convertible Notes, the net proceeds of which may be used to invest in or acquire
      new brands, and for general corporate purposes. This increase was offset by
      cash
      paid of $71.0 million for the acquisition of the Danskin brand. In addition,
      the
      increase in working capital can be partially attributed to the following
      factors: an increase in accounts receivable from $14.5 million at December
      31,
      2006, to $23.3 million at June 30, 2007, and the increase in prepaid advertising
      and other from $2.7 million at December 31, 2006, to $5.5 million at June 30,
      2007, both of which were direct results of the new acquisitions; and the
      increase in the current portion of deferred income tax assets from $3.4 million
      at December 31, 2006, to $11.5 million at June 30, 2007.





*Operating
      Activities*





Net
      cash
      provided by operating activities totaled $36.4 million in the Current Six
      Months, as compared to $7.8 million of net cash provided by operating activities
      in the Prior Year Six Months. Cash provided by operating activities in the
      Current Six Months increased primarily due to net income of $27.5 million,
      amortization of intangibles of $2.4 million, an increase of $2.9 million in
      deferred revenues, and an increase of $15.0 million in deferred income tax
      assets related to the provision for income taxes for the Current Six Months,
      offset primarily by increases of $9.9 million in accounts receivable and $3.2
      million in prepaid advertising and other. The Company continues to rely upon
      cash generated from licensing and commission operations to finance its
      operations.


19




*Investing
      Activities*





Net
      cash
      used in investing activities in the Current Six Months totaled $473.1 million,
      as compared to $47.3 million in the Prior Year Six Months. In the Current Six
      Months, the Company purchased highly liquid marketable securities totaling
      $196.4 million, the total amount of which was sold at par value plus accrued
      interest subsequent to June 30, 2007. In addition, the Company paid $71.0
      million in cash for certain assets relating to the Danskin brand and $205.5
      million in cash for certain assets relating to the Rocawear brand. See Notes
      C
      and D of Notes to Unaudited Condensed Consolidated Financial Statements. Capital
      expenditures in the Current Six Months were $40,000, compared to $558,000 in
      capital expenditures in the Prior Year Six Months.





*Financing
      Activities*





Net
      cash
      provided by financing activities was $443.0 million in the Current Six Months,
      compared with $36.4 million in the Prior Year Six Months. Of the $443.0 million
      in net cash provided by financing activities, $212.5 million was provided from
      the net proceeds of the issuance of the Term Loan Facility, $279.7 from the
      net
      proceeds of our sale of the Convertible Notes, $1.1 million from proceeds in
      connection with the exercise of stock options, and $3.2 million placed in the
      current reserve account. This was offset by an aggregate of $37.5 million used
      to purchase the convertible note hedge, $9.3 million used for principal payments
      related to the Asset-Backed Notes and the Term Loan Facility, $2.2 million
      in
      cash placed in a non-current reserve account, and $4.4 million in financing
      costs which have been deferred to be amortized over the remaining life of the
      Term Loan Facility. In the Prior Year Six Months, $49.0 million was raised
      in
      long term debt to purchase certain assets related to the Mudd brand,
      approximately $4.5 million was used for principal payments related to the
      Asset-Backed Notes, $3.6 million in cash placed in a non-current reserve
      account, $4.9 million in cash placed in a current reserve account, and $490,000
      used to pay the costs associated with the issuance of long term
      debt.





***Other
      Matters***





*Summary
      of Critical Accounting Policies.*





The
      unaudited condensed consolidated financial statements include the accounts
      of
      the Company and its wholly-owned subsidiaries. All significant intercompany
      transactions and items have been eliminated in consolidation. The Company
      acquired the Danskin brand on March 9, 2007 and the Rocawear brand on March
      30,
      2007. All acquisitions have been accounted for using purchase price accounting.
      The purchase method of accounting requires that the total purchase price of
      an
      acquisition be allocated to the assets acquired and liabilities assumed based
      on
      their fair values on the date of the business acquisition. Any excess of the
      purchase price over the estimated fair values of the net assets acquired is
      recorded as goodwill. See Notes C and D. of Notes to Unaudited Condensed
      Consolidated Financial Statements.





The
      preparation of the condensed consolidated financial statements in conformity
      with accounting principles generally accepted in the United States requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. The Company reviews all significant
      estimates affecting the financial statements on a recurring basis and records
      the effect of any adjustments when necessary.





In
      June
      2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets”
(“SFAS 142”), which changes the accounting for goodwill and other intangible
      assets without determinable lives from an amortization method to an
      impairment-only approach. The Candie's and Bongo trademarks had previously
      been
      amortized on a straight-line basis over their estimated useful lives of
      approximately 20 years. Effective July 1, 2005 the Company had a change in
      estimate of the useful lives of both the Candie's and Bongo trademarks to
      indefinite life. As of June 30, 2007, the net book value of the Candie's and
      Bongo trademarks totaled $14.3 million. Impairment losses are recognized for
      long-lived assets, including certain intangibles, used in operations when
      indicators of impairment are present and the undiscounted cash flows estimated
      to be generated by those assets are not sufficient to recover the assets'
      carrying amount. Impairment losses are measured by comparing the fair value
      of
      the assets to their carrying amount.





The
      Company has entered into various trade name license agreements that provide
      revenues based on minimum royalties and additional revenues based on a
      percentage of defined sales. Minimum royalty revenue is recognized on a
      straight-line basis over each period, as defined, in each license agreement.
      Royalties exceeding the defined minimum amounts are recognized as income during
      the period corresponding to the licensee's sales. Beginning January 2005, the
      Company changed its business practices with respect to Bright Star Footwear,
      Inc
      (“Bright Star”), a subsidiary of the Company, which resulted in a change in
      revenue recognition from prior years. Bright Star now acts as an agent,
      therefore only net commission revenue is recognized commencing January 1,
      2005.





Effective
      January 1, 2006, the Company adopted SFAS No. 123(R), “Accounting for
      Share-Based Payment” (“SFAS 123(R)”), which requires companies to measure and
      recognize compensation expense for all stock-based payments at fair value.
      Under
      SFAS 123(R), using the modified prospective method, compensation expense is
      recognized for all share-based payments granted prior to, but not yet vested
      as
      of, January 1, 2006. In December 2005, the Company's Board of Directors approved
      the accelerated vesting of all employee service-based stock options previously
      granted under the Company's various non-qualified stock option plans, which
      would have been unvested as of December 31, 2005. As a result, all options
      granted as of December 31, 2005, except certain options based on performance
      became exercisable immediately. The number of shares, exercise prices and other
      terms of the options subject to the acceleration remain unchanged. The
      acceleration of such option vesting resulted in an additional $446,000 of
      compensation expense reflected in pro forma net income for the year ended
      December 31, 2005, an amount that would have otherwise been recorded as
      compensation expense in the years ending December 31, 2006 and 2007, but had
      no
      impact on compensation recognition in 2005 as the options would have otherwise
      vested. Prior to the adoption of SFAS 123(R), the Company accounted for its
      stock-based compensation plans under the recognition and measurement principles
      of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock
      Issued to Employees”, and related interpretations. Accordingly, the compensation
      cost for stock options had been measured as the excess, if any, of the quoted
      market price of the Company's stock at the date of the grant over the amount
      the
      employee must pay to acquire the stock. In accordance with the modified
      prospective transition method, the consolidated financial statements have not
      been restated to reflect the impact of SFAS 123(R). The impact on the Company's
      financial condition and results of operations of adopting SFAS 123(R) will
      depend on the number and terms of stock options granted in future years under
      the modified prospective method, the amount of which can not currently be
      estimated by management.


20





The
      Company accounts for income taxes in accordance with SFAS 109. Under SFAS 109,
      deferred tax assets and liabilities are determined based on differences between
      the financial reporting and tax basis of assets and liabilities and are measured
      using the enacted tax rates and laws that will be in effect when the differences
      are expected to reverse. A valuation allowance is established when necessary
      to
      reduce deferred tax assets to the amount expected to be realized. In determining
      the need for a valuation allowance, management reviews both positive and
      negative evidence pursuant to the requirements of SFAS 109, including current
      and historical results of operations, the annual limitation on utilization
      of
      net operating loss carry forwards pursuant to Internal Revenue Code section
      382,
      future income projections and the overall prospects of the Company's business.
      Based upon management's assessment of all available evidence, including the
      Company's completed transition into a licensing business, estimates of future
      profitability based on projected royalty revenues from its licensees, and the
      overall prospects of the Company's business, management concluded in the Current
      Quarter that it is more likely than not that the net deferred income tax asset
      recorded as of June 30, 2007 will be realized.




*Seasonal
      and Quarterly Fluctuations* .





The
      majority of the products manufactured and sold under the Company's brands and
      licenses are for apparel, accessories and footwear, which sales vary as a result
      of holidays, weather, and the timing of product shipments. Accordingly, a
      portion of the Company's revenue from its licensees, particularly from those
      mature licensees that are performing and actual sales royalties exceed minimum
      royalties, is subject to seasonal fluctuations. The results of operations in
      any
      quarter therefore will not necessarily be indicative of the results that may
      be
      achieved for a full fiscal year or any future quarter.





*Other
      Factors*





We
      continue to seek to expand and diversify the types of licensed products being
      produced under our various brands, as well as diversify the distribution
      channels within which licensed products are sold, in an effort to reduce
      dependence on any particular retailer, consumer or market sector. The success
      of
      our company, however, will still remain largely dependent on our ability to
      build and maintain brand awareness and contract with and retain key licensees
      and on our licensees' ability to accurately predict upcoming fashion trends
      within their respective customer bases and fulfill the product requirements
      of
      their particular retail channels within the global marketplace. Unanticipated
      changes in consumer fashion preferences, slowdowns in the U.S. economy, changes
      in the prices of supplies, consolidation of retail establishments, and other
      factors noted in the Risk Factors section of this report and in our Annual
      Report on Form 10-K for the year ended December 31, 2006, could adversely affect
      our licensees' ability to meet and/or exceed their contractual commitments
      to us
      and thereby adversely affect our future operating results.





*Effects
      of Inflation.* The
      Company does not believe that the relatively moderate rates of inflation
      experienced over the past few years in the United States, where it primarily
      competes, have had a significant effect on its revenues or
      profitability.




**Item
      3.**  **Quantitative
      and Qualitative Disclosures about Market Risk**




The
      market risk inherent in the Company's financial instruments represents the
      potential loss in earnings or cash flows arising from adverse changes in
      interest rates. We manage this exposure through regular operating and financing
      activities when deemed appropriate.




The
      primary interest rate exposures on floating rate financing arrangements are
      with
      respect to short-term interest rates. The Company had approximately $212.0
      million in variable rate credit facilities at June 30, 2007.





**Item
      4.**  **Controls
      and Procedures**





The
      Company maintains “disclosure controls and procedures”, as such term is defined
      under Rule 13a-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”),
      that are designed to ensure that information required to be disclosed in the
      Company's Exchange Act reports is recorded, processed, summarized and reported
      within the time periods specified in the SEC's rules and forms, and that such
      information is accumulated and communicated to its management, including its
      Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
      timely decisions regarding required disclosures. In designing and evaluating
      the
      disclosure controls and procedures, the Company's management recognized that
      any
      controls and procedures, no matter how well designed and operated, can provide
      only reasonable assurance of achieving the desired control objectives and the
      Company's management necessarily was required to apply its judgment in
      evaluating the cost-benefit relationship of possible controls and procedures.
      The Company has carried out an evaluation, as of the end of period covered
      by
      this report, under the supervision and with the participation of the Company's
      management, including its Chief Executive Officer and Chief Financial Officer,
      of the effectiveness of the design and operation of the Company's disclosure
      controls and procedures. Based upon the management's evaluation and subject
      to
      the foregoing, the Chief Executive Officer and Chief Financial Officer concluded
      that the Company's disclosure controls and procedures were effective in ensuring
      that material information relating to the Company that is required to be
      disclosed in the Company's Exchange Act reports is made known to the Chief
      Executive Officer and Chief Financial Officer by others within the Company
      in a
      timely manner.




There
      have been no changes in the Company's internal control over financial reporting
      (as defined in Exchange Act Rule 13a-15(f)) that occurred during the quarter
      ended June 30, 2007 that have materially affected, or are reasonably likely
      to
      materially affect, the Company's internal control over financial
      reporting.


21




**PART
      II. Other Information**




**Item
      1.**  **Legal
      Proceedings**





See
      Note J of Notes to Unaudited Condensed Consolidated Financial
      Statements.




**Item 1A.**  **Risk
      Factors.**





In
      addition to the risk factors disclosed in Part 1, Item 1A, “Risk
      Factors” of our Annual Report on Form 10-K for the year ended December 31,
      2006 (other than the risk relating to the California state court litigation
      which was decided in our favor in April 2007, and the additional risks related
      to an increase in our total consolidated debt and increases in our goodwill
      and
      other intangible assets during the Current Six Months due to our acquisitions
      of
      the Danskin and Rocawear brands, set forth below are certain factors that have
      affected, and in the future could affect, our operations or financial condition.
      We operate in a changing environment that involves numerous known and unknown
      risks and uncertainties that could impact our operations. The risks
      described below and in our Annual Report on Form 10-K for the year
      ended December 31, 2006 are not the only risks we face. Additional risks and
      uncertainties not currently known to us or that we currently deem to be
      immaterial also may materially adversely affect our financial condition
      and/or operating results.




*Our
      existing and future debt obligations could impair our liquidity and financial
      condition, and in the event we are unable to meet our debt obligations we could
      lose title to our trademarks.*




As
      of
      June 30, 2007, we had consolidated debt of approximately $647.1 million,
      including secured debt of $359.1 million ($212.0 million under our Term Loan
      Facility and $147.1 million under IP Holdings' asset-backed notes), primarily
      all of which debt was incurred in connection with our acquisition activities.
      We
      may also assume or incur additional debt, including secured debt, in the future
      in connection with, or to fund, future acquisitions. Our debt
      obligations:




·
            could
                impair our liquidity;




·
            could
                make it more difficult for us to satisfy our other
                obligations;




·
            require
                us to dedicate a substantial portion of our cash flow to payments
                on our
                debt obligations, which reduces the availability of our cash flow
                to fund
                working capital, capital expenditures and other corporate
                requirements;




·
            could
                impede us from obtaining additional financing in the future for working
                capital, capital expenditures, acquisitions and general corporate
                purposes;




·
            impose
                restrictions on us with respect to future
                acquisitions;




·
            make
                us more vulnerable in the event of a downturn in our business prospects
                and could limit our flexibility to plan for, or react to, changes
                in our
                licensing markets; and




·
            place
                us at a competitive disadvantage when compared to our competitors
                who have
                less debt.





While
      we
      believe that by virtue of the guaranteed minimum royalty payments due to us
      under our licenses we will generate sufficient revenues from our licensing
      operations to satisfy our obligations for the foreseeable future, in the event
      that we were to fail in the future to make any required payment under agreements
      governing our indebtedness or fail to comply with the financial and operating
      covenants contained in those agreements, we would be in default regarding that
      indebtedness. A debt default could significantly diminish the market value
      and
      marketability of our common stock and could result in the acceleration of the
      payment obligations under all or a portion of our consolidated indebtedness.
      In
      the case our Term Loan Facility, it would enable the lenders to foreclose on
      the
      assets securing such debt, including Ocean Pacific, Danskin and Rocawear
      trademarks, and, in the case of of IP Holdings' asset-backed notes, it would
      enable the holders of such notes to foreclose on the assets securing such notes,
      including the Candie's, Bongo, Joe Boxer, Rampage, Mudd, and London Fog
      trademarks.





*We
      have a material amount of goodwill and other intangible assets, including our
      trademarks, recorded on our balance sheet. As a result of changes in market
      conditions and declines in the estimated fair value of these assets, we may,
      in
      the future, be required to write down a portion of this goodwill and other
      intangible assets and such write-down would, as applicable, either decrease
      our
      profitability or increase our net loss.*




As
      of
      June 30, 2007, goodwill represented approximately $96.5 million, or 8% of our
      total assets, and trademarks and other intangible assets represented
      approximately $746.9 million, or 61% of our total assets. Under SFAS 142,
      goodwill and indefinite life intangible assets, including some of our
      trademarks, are no longer amortized, but instead are subject to impairment
      evaluation based on related estimated fair values, with such testing to be
      done
      at least annually. While, to date, no impairment write-downs have been
      necessary, any write-down of goodwill or intangible assets resulting from future
      periodic evaluations would, as applicable, either decrease our net income or
      increase our net loss and those decreases or increases could be
      material.


22




*A
      substantial portion of our licensing revenue is concentrated with a limited
      number of retailers such that the loss of any of such licensees could decrease
      our revenue and impair our cash flows.*




Our
      licenses with Target, Kohl's and Kmart Corporation, were our three largest
      licenses during the three months and six months ended June 30, 2007,
      representing approximately 29% and 36%, respectively, of our total revenue
      for
      such periods. Our license agreement with Kohl's grants it the exclusive U.S.
      license with respect to the Candie's trademark for a wide variety of product
      categories for an initial term expiring in December 2010; our license agreement
      with Kmart grants it the exclusive U.S. license with respect to the Joe Boxer
      trademark for a wide variety of product categories for a term expiring in
      December 2010; and our license agreement with Target grants it the exclusive
      U.S. license with respect to the Mossimo trademark for substantially all
      Mossimo-branded products for an initial term expiring in January 2010. Because
      we are dependent on these licensees for a significant portion of our licensing
      revenue, if any of them were to have financial difficulties affecting its
      ability to make guaranteed payments, or if any of these licensees decides not
      to
      renew or extend its existing agreement with us, our revenue and cash flows
      could
      be reduced substantially. In addition, as of September 2006, Kmart had not
      approached the sales levels of Joe Boxer products needed to trigger royalty
      payments in excess of its guaranteed minimums since 2004, and, as a result,
      when
      we entered into the current license agreement with Kmart in September 2006
      expanding its scope to include Sears stores and extending its term from December
      2007 to December 2010, we agreed to reduce its guaranteed annual royalty
      minimums by approximately half, as a result of which our revenues from this
      license, at least for the short term, will likely be substantially
      reduced.





*Changes
      in effective tax rates or adverse outcomes resulting from examination of our
      income or other tax returns could adversely affect our
      results.*





Our
      future effective tax rates could be adversely affected by changes in the
      valuation of our deferred tax assets and liabilities, or by changes in tax
      laws
      or interpretations thereof. In addition, we are subject to the continuous
      examination of our income tax returns by the Internal Revenue Service and other
      tax authorities. We regularly assess the likelihood of recovering the amount
      of
      deferred tax assets recorded on the balance sheet and the likelihood of adverse
      outcomes resulting from examinations by various taxing authorities in order
      to
      determine the adequacy of our provision for income taxes. We cannot guarantee
      that the outcomes of these evaluations and continuous examinations will not
      harm
      our reported operating results and financial conditions.




*We
      may not be able to pay the cash portion of the conversion price upon any
      conversion of the $287 million principal amount of our outstanding Convertible
      Notes, which would constitute an event of default with respect to such notes
      and
      could also constitute a default under the terms of our other
      debt.*




We
      may
      not have sufficient cash to pay, or may not be permitted to pay, the cash
      portion of the required consideration that we may need to pay if our Convertible
      Notes are converted. As described in Item 1. - Note E of Notes to Unaudited
      Condensed Consolidated Financial Statements, upon conversion of a Convertible
      Note, we will be required to pay to the holder of such note a cash payment
      equal
      to the lesser of the principal amount of such note or its conversion value.
      This
      part of the payment must be made in cash, not in shares of our common stock.
      As
      a result, we may be required to pay significant amounts in cash to holders
      of
      the Convertible Notes upon their conversion.




If
      we do
      not have sufficient cash on hand at the time of conversion, we may have to
      raise
      funds through debt or equity financing. Our ability to raise such financing
      will
      depend on prevailing market conditions. Further, we may not be able to raise
      such financing within the period required to satisfy our obligation to make
      timely payment upon any conversion. In addition, the terms of any current or
      future debt, including our outstanding Term Loan Facility, may prohibit us
      from
      making these cash payments or otherwise restrict our ability to make such
      payments and/or may restrict our ability to raise any such financing. In
      particular, the terms of our outstanding Term Loan Facility restrict the amount
      of proceeds from collateral pledged to secure our obligations thereunder that
      may be used by us to make payments in cash under certain circumstances,
      including payments to the Convertible Note holders upon conversion. Although
      the
      terms of our outstanding Term Loan Facility do not restrict our ability to
      make
      payments in cash with assets not pledged as collateral to secure our obligations
      thereunder, such assets may not generate sufficient cash to enable us to satisfy
      our obligations to make timely payment of the Convertible Notes upon conversion.
      A failure to pay the required cash consideration upon conversion would
      constitute an event of default under the indenture governing the Convertible
      Notes, which might constitute a default under the terms of our other
      debt.




*Proposed
      changes in the accounting method for convertible debt securities could, if
      implemented, have an adverse impact on our reported or future financial
      results.*




For
      the
      purposed of calculating diluted earnings per share, a convertible debt security
      providing for net share settlement of the excess of the conversion value over
      the principal amount, if any, and meeting specified requirements under EITF
      Issue No. 90-19, “Convertible Bonds with Issuer Option to Settle for Cash upon
      Conversion,” is accounted for similar to non-convertible debt, with the stated
      coupon constituting interest expense and any shares issuable upon conversion
      of
      the security being accounted for under the treasury stock method. The effect
      of
      the treasury stock method is that the shares potentially issuable upon
      conversion of the notes are not included in the calculation of our diluted
      earnings per share until the conversion price is “in the money,” and we are
      assumed to issue the number of shares of common stock necessary to
      settle.




The
      EITF
      is currently reviewing, among other things, the accounting method for net share
      settled convertible debt securities, and one of its subcommittees is considering
      alternative methods for such accounting. One such proposed method would require
      the debt and equity components of the security to be bifurcated and accounted
      for separately. The effect of such a change in accounting on the issuer of
      the
      security would be that the equity component of the security would be accounted
      for as an original issue discount and included in the paid-in-capital section
      of
      stockholders' equity on the issuer's balance sheet. As a result, net income
      attributable to common stockholders would be lower because accretion of the
      discounted carrying value of the convertible debt securities (the notes) to
      their face amount would be recognized as additional interest expense. The
      diluted earnings per share calculation would continue to be calculated based
      on
      the treasury stock method.




In
      the
      event the proposed method of accounting described above is adopted, we will
      pursuant to the terms of the Indenture have the right for a period of 90 days
      thereafter, at our option, to call the Convertible Notes for redemption.
      However, although we will have such redemption right, we may not have sufficient
      cash to pay, or may not be permitted to pay, the required cash portion of the
      consideration that would be due to holders of the Convertible Notes in the
      event
      we elected to exercise such right or the ability to raise funds through debt
      or
      equity financing within the time period required for us to make such an
      election.




23





**Item
      5. Other Information**





On
      August
      6, 2007 the Board of Directors of the Company's amended the Company's By-laws
      as
      follows:





(i)
      Article I, Section 7 was amended to add a provision to the effect that any
      proposal by a stockholder which has not previously received the approval of
      the
      Company's Board of Directors shall require for its adoption the affirmative
      vote
      of holders of more than fifty percent (50%) of the votes which all stockholders
      are entitled to cast thereon, in addition to any other approval which is
      required by law, the Company's certificate of incorporation, its by-laws or
      otherwise; and (ii) Article II, Section 3 was amended to add procedures for
      a
      stockholder to nominate a person or persons for election as directors of the
      Company at a meeting of stockholders at which directors are elected. The
      procedures include requiring the nominating stockholder to deliver to the
      Company written a notice of the intent to make such nomination(s) personally,
      or
      by mail and the notice must be received by the Secretary of the Company at
      its
      principal executive offices, not less than 50 days nor more than 75 days prior
      to the meeting. However, in the event that less than 65 days' notice or prior
      public disclosure of the date of the meeting is given or made, the stockholder
      notice to be timely must be received not later than the close of business on
      the
      tenth day following the day on which such notice of the date of the meeting
      was
      mailed or public disclosure of the date of the meeting was made. Each such
      notice is required to include : (i) the name and address of nominating
      stockholder and of the person or persons to be nominated; (ii) the class and
      number of shares of stock held of record, owned beneficially and represented
      by
      proxy by such nominating stockholder as of the record date for the meeting
      (if
      such date has been made publicly available) and of the date of such notice;
      (iii) a representation that the stockholder intends to appear in person or
      by
      proxy at the meeting to nominate the person or persons specified in the notice;
      (iv) a description of all arrangements or understandings between the nominating
      stockholder and each nominee and any other person or persons (naming the person
      or persons) pursuant to which the nomination or nominations are to be made
      by
      the stockholder; (v) such other information regarding each nominee proposed
      by
      the stockholder as would be required to be included in a proxy statement filed
      pursuant to the SEC's proxy rules, had each nominee been nominated, or intended
      to be nominated by the Company's Board of Directors; and (vi) the consent of
      each nominee to serve as a director of the Company if so elected.





The
      description of the amendments to the By-laws described in this report does
      not
      purport to be complete and is qualified in its entirety by the language in
      the
      amended By-laws, a copy of which filed as Exhibit 3(ii) to this report and
      is
      incorporated herein by reference to such exhibit.




**Item
      6.**  **Exhibits**




Exhibit
                No.
            
            Description
                of ExhibitExhibit
                3(ii)**
            
            By-laws,
                as amended.Exhibit
                4.1(1)
            
            Indenture,
                dated June 20, 2007, between Iconix Brand Group, Inc. and The Bank
                of New
                York.Exhibit
                4.2(1)
            
            Registration
                Rights Agreement, dated June 20, 2007, among Iconix Brand Group,
                Inc.,
                Merrill Lynch Pierce, Fenner & Smith, Incorporated & Lehman
                Brothers Inc.Exhibit
                10.1(2)*
            
            Amended
                and Restated Credit Agreement dated as of May 2, 2007 by and among
                Iconix
                brand Group, Inc., Lehman Brothers Inc., as Arranger, and Lehman
                Commercial Paper Inc., as Lender, as Syndication Agent and as
                Administrative Agent.Exhibit
                10.2(2)*
            
            Guarantee
                and Collateral Agreement made by Iconix Brand Group, Inc, and certain
                of
                its subsidiaries in favor of Lehman Commercial Paper Inc., as
                Administrative Agent.Exhibit
                10.3(1)
            
            Purchase
                Agreement, dated June  14, 2007, by and among Iconix Brand Group,
                Inc., Merrill Lynch Pierce, Fenner & Smith, Incorporated & Lehman
                Brothers Inc.Exhibit
                10.4(1)
            
            Letter
                Agreement Confirming OTC Convertible Note Hedge, dated June 19, 2007,
                among Iconix Brand Group, Inc., Merrill Lynch International and,
                solely in
                its capacity as agent thereunder, Merrill Lynch, Pierce, Fenner &
                Smith Incorporated.Exhibit
                10.5(1)
            
            Letter
                Agreement, Confirming OTC Convertible Note Hedge, dated June 19,
                2007,
                among Iconix Brand Group, Inc., , Lehman Brothers OTC Derivatives
                Inc.
                and, solely in its capacity as agent thereunder, Lehman
                Brothers.Exhibit
                10.6(1)
            
            Letter
                Agreement, Confirming OTC Warrant Transaction, dated June 19, 2007,
                among
                Iconix Brand Group, Inc., Merrill Lynch International and, solely
                in its
                capacity as agent thereunder, Merrill Lynch, Pierce, Fenner & Smith
                Incorporated.Exhibit
                10.7(1)
            
            Letter
                Agreement, Confirming OTC Warrant Transaction, dated June 19, 2007,
                among
                Iconix Brand Group, Inc., Lehman Brothers OTC Derivatives Inc. and,
                solely
                in its capacity as agent thereunder, Lehman BrothersExhibit 31.1
            
            Certification
              of Chief
              Executive Officer Pursuant To Rule 13a-14 or 15d-14 of The Securities
              Exchange Act of 1934, As Adopted Pursuant To Section 302 Of The
              Sarbanes-Oxley Act of 2002.Exhibit 31.2
            
            Certification
              of Chief
              Financial Officer Pursuant To Rule 13a-14 or 15d-14 of The Securities
              Exchange Act of 1934, As Adopted Pursuant To Section 302 Of The
              Sarbanes-Oxley Act of 2002.Exhibit 32.1
            
            Certification
              of Chief
              Executive Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant
              To Section 906 of The Sarbanes-Oxley Act of 2002.Exhibit 32.2
            
            Certification
              of Chief
              Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant
              To Section 906 of The Sarbanes-Oxley Act of
              2002.




(1)
      Filed
      as an exhibit to the Current Report on Form 8-K of Iconix Brand Group, Inc.
      for
      the event dated June 14, 2007 and incorporated by reference herein.




(2)
      Filed
      as an exhibit to the Current Report on Form 8-K of Iconix Brand Group, Inc.
      for
      the event dated May 1, 2007 and incorporated by reference herein.




*
            Iconix
                Brand Group, Inc. has omitted certain schedules and exhibits pursuant
                to
                Item 601(b)(2) of Regulation S-K and shall furnish supplementally
                to the
                SEC copies of any of the omitted schedules and exhibits upon request
                by
                the SEC.**
            Previously
              filed in
              Form 10-Q on August 8, 2007




24





**Signatures**





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




**Iconix
                Brand Group, Inc.**
              **(Registrant)**Date:
                September 24, 2007
            
            /s/
                Neil ColeNeil
                Cole
              Chairman
                  of the Board, President
                and
                    Chief Executive Officer
                  (on
                      Behalf of the
                      Registrant)




Date:
                  September 24, 2007
            
            /s/
                  Warren
                  ClamenWarren
                  Clamen
                  Chief
                    Financial Officer




25