UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    Form 10-Q

                             -----------------------
(Mark One)
[X]   Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

      For the quarterly period ending December 31, 2007

                                       OR

[ ]   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 1-5354

                                  Jaclyn, Inc.
             (Exact name of registrant as specified in its charter)

            Delaware                                     22-1432053
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)

197 West Spring Valley Avenue, Maywood, New Jersey         07607
   (Address of principal executive offices)              (Zip code)

                                 (201) 909-6000
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
   (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,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes [X] No [ ]

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.  (Check
one):

 Large Accelerated Filer [ ]   Accelerated Filer [ ]   Non-Accelerated Filer [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the latest practicable date:

         Title of Class                  Shares Outstanding on February 1, 2008
         --------------                  --------------------------------------
  Common Stock, $1.00 par value                        2,468,614

<PAGE>

Item 1. Financial Statements.
-----------------------------

                          JACLYN, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

                                                   December 31,      June 30,
                                                      2007             2007
                                                    (Unaudited)     (See below)

ASSETS
CURRENT ASSETS:

Cash and cash equivalents                          $      1,495    $     1,349
Accounts receivable, net                                 18,606         17,787
Inventory                                                 7,832          9,243
Prepaid expenses and other current assets                 2,946          1,788
                                                   ------------    -----------
TOTAL CURRENT ASSETS                                     30,879         30,167
                                                   ------------    -----------
PROPERTY PLANT AND EQUIPMENT, NET                         3,839          3,921
ASSETS HELD FOR SALE                                        357            357
GOODWILL                                                  3,338          3,338
OTHER ASSETS                                                335            294
                                                   ------------    -----------
TOTAL ASSETS                                       $     38,748    $    38,077
                                                   ============    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:

Notes payable - bank                               $      2,905    $     4,515
Accounts payable                                          7,061          4,411
Other current liabilities                                 5,546          6,717
                                                   ------------    -----------
TOTAL CURRENT LIABILITIES                                15,512         15,643
                                                   ------------    -----------
MORTGAGE PAYABLE                                          2,294          2,387

OTHER LIABILITIES                                           571            448

DEFERRED INCOME TAXES                                       325            325
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:

Common stock                                              3,369          3,369
Additional paid-in capital                                9,518          9,518
Retained earnings                                        13,776         13,004
                                                   ------------    -----------
                                                         26,663         25,891
Less: Common shares in treasury at cost                   6,617          6,617
                                                   ------------    -----------
TOTAL STOCKHOLDERS' EQUITY                               20,046         19,274
                                                   ------------    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $     38,748    $    38,077
                                                   ------------    -----------

The June 30, 2007 Balance Sheet is derived from audited financial statements.
See notes to condensed consolidated financial statements.

                                       2

<PAGE>

                          JACLYN, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                  (Unaudited)
                  (In Thousands, Except Share and Per Share Amounts)

<TABLE>
<CAPTION>
                                                                Three Months ended             Six Months ended
                                                                    December 31,                 December 31,
                                                               2007            2006           2007           2006
                                                               ----            ----           ----           ----
<S>                                                        <C>             <C>            <C>            <C>
Net sales                                                  $      40,193   $     47,584   $     77,646   $     88,208
Cost of goods sold                                                30,555         35,724         59,755         67,845
                                                           -------------   ------------   ------------   ------------
Gross profit                                                       9,638         11,860         17,891         20,363
                                                           -------------   ------------   ------------   ------------

Shipping, selling and administrative expenses                      8,426          8,649         16,038         16,039
Interest expense                                                     214            369            360            716
                                                           -------------   ------------   ------------   ------------
                                                                   8,640          9,018         16,398         16,755
                                                           -------------   ------------   ------------   ------------
Earnings before income taxes                                         998          2,842          1,493          3,608
Provision for income taxes                                           397          1,126            592          1,429
                                                           -------------   ------------   ------------   ------------
Net earnings                                               $         601   $      1,716   $        901   $      2,179
                                                           =============   ============   ============   ============
Net earnings per common share - basic                      $         .24   $        .69   $        .36   $        .88
                                                           =============   ============   ============   ============
Weighted average number of shares outstanding - basic          2,469,000      2,478,000      2,469,000      2,481,000
                                                           =============   ============   ============   ============
Net earnings per common share - diluted                    $         .24   $        .68   $        .36   $        .86
                                                           =============   ============   ============   ============
Weighted average number of shares outstanding - diluted        2,537,000      2,541,000      2,521,000      2,544,000
                                                           =============   ============   ============   ============
</TABLE>

       See notes to condensed consolidated unaudited financial statements.

                                       3

<PAGE>

                          JACLYN, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In Thousands)

                                                             Six Months Ended
                                                               December 31,

                                                             2007        2006
                                                             ----        ----
   Cash Flows From Operating Activities:
   Net Earnings                                           $     901   $   2,179
   Adjustments to reconcile net earnings to net cash
      provided by operating activities:

   Gain on forfeited real estate contract                      (150)          -
   Depreciation and amortization                                199         214
   Changes in assets and liabilities:
      Increase in accounts receivable, net                     (819)       (694)
      Decrease (increase) in inventory                        1,411      (2,966)
      (Increase) decrease in prepaid expense and other
         assets                                              (1,204)        169
      Increase in accounts payable and other current
         liabilities                                          1,648       3,986

                                                          ---------   ---------
    Net cash provided by operating activities                 1,986       2,888
                                                          ---------   ---------

    Cash Flows From Investing Activities:
      Purchase of property and equipment                       (112)        (85)

      Investment in leased building                             (31)     (2,421)
                                                          ---------   ---------
    Net cash used in investing activities                      (143)     (2,506)
                                                          ---------   ---------

    Cash Flows From Financing Activities:
      Net decrease in loans payable - bank                   (1,610)       (805)

      Payment of long-term debt                                 (87)        (81)
      Repurchase of common stock                                  -         (55)
      Exercise of stock options                                   -          10
                                                          ---------   ---------
Net cash used in financing activities                        (1,697)       (931)
                                                          ---------   ---------
Net increase (decrease) in Cash and Cash Equivalents            146        (549)
Cash and Cash Equivalents, beginning of period                1,349         932
                                                          ---------   ---------
Cash and Cash Equivalents, end of period                  $   1,495   $     383
                                                          ---------   ---------
Supplemental Information:
    Interest paid                                         $     348   $     687
                                                          ---------   ---------
    Taxes paid                                            $   1,226   $     642
                                                          ---------   ---------

See notes to condensed consolidated financial statements.

                                       4

<PAGE>

                          JACLYN, INC. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED
                         UNAUDITED FINANCIAL STATEMENTS

1.    Basis of Presentation:
      ---------------------

      The  accompanying  unaudited  condensed  consolidated  balance sheet as of
December 31, 2007,  the condensed  consolidated  statements of earnings and cash
flows for the three and  six-month  periods  ended  December  31, 2007 and 2006,
respectively,  have been  prepared  in  accordance  with  accounting  principles
generally  accepted  in the  United  States of  America  for  interim  financial
information.  Accordingly,  they  do not  include  all of  the  information  and
footnotes  required by accounting  principles  generally  accepted in the United
States  of  America  for  complete  financial  statements.  In  the  opinion  of
management, all adjustments (consisting of normal recurring accruals) considered
necessary  for  a  fair  presentation   have  been  included.   These  condensed
consolidated financial statements should be read in conjunction with the audited
financial  statements  and notes thereto  included in the Company's  2007 Annual
Report  to  Stockholders  for the year  ended  June 30,  2007.  The  results  of
operations for the period ended December 31, 2007 are not necessarily indicative
of operating results for the full fiscal year.

      Consolidation  of  Variable  Interest  Entity - On August  22,  2006,  the
Company entered into a lease agreement for a new corporate office building,  and
relocated  the  Company's  executive  offices from West New York,  New Jersey to
Maywood, New Jersey during fiscal 2007. The lease has a 10-year term, and grants
to the Company an option to purchase the building at any time during the term of
the lease at a purchase price not to exceed $3,075,000,  plus increases based on
a multiple of the consumer price index.

      The lessor, 195 Spring Valley Associates,  LLC, (the "Lessor"),  purchased
the corporate office building at a closing which also took place in August 2006.
The Company provided the Lessor with $2,200,000 in mortgage  financing,  secured
by a first  priority  mortgage  in  favor of the  Company  on the  land,  office
building,  and other  customary  rights of the  mortgagor.  The Company placed a
deposit with the Lessor in the amount of $200,000 in connection  with the option
to purchase the property.

      For  accounting  purposes,  the  Company  determined  that the Lessor is a
variable  interest entity and the Company is its primary  beneficiary as defined
by FASB Interpretation No. 46(R),  "Consolidation of Variable Interest Entities"
("FIN  46(R)").  Accordingly,  the financial  statements of the Lessor have been
consolidated with those of the Company.

      The effect of the Company's  consolidation of the Lessor is that the lease
transaction is treated as a financing, and the lease obligation,  mortgage notes
and deposits have been  eliminated in  consolidation.  The cost of the building,
approximately  $2,900,000,  and the $500,000  unamortized  capital of the equity
owners of the Lessor (minority  interest),  of which the unamortized  balance of
approximately   $417,000  is  reflected  in  the  December  31,  2007  Condensed
Consolidated Balance Sheet. There was no significant impact to net earnings.

                                        5

<PAGE>

Recently Issued Accounting Standards:

      In June 2006,  the FASB  issued FIN 48,  "Accounting  for  Uncertainty  in
Income Taxes - an  interpretation  of FASB Statement  109," which  clarifies the
accounting  for  uncertainty  in  income  taxes  recognized  in an  enterprise's
financial statements in accordance with SFAS 109, "Accounting for Income Taxes."
FIN 48 prescribes a  recognition  threshold  and  measurement  attribute for the
financial  statement  recognition  and  measurement  of a tax position  taken or
expected to be taken in a tax return.  FIN 48 was  effective for the fiscal year
beginning July 1, 2007. The Company  determined  that the impact of adopting FIN
48  on  the  Company's   consolidated  financial  statements  was  approximately
$129,000.

      In September  2006, the FASB issued SFAS 157,  "Fair Value  Measurements."
SFAS 157 defines fair value, establishes a framework for measuring fair value in
generally  accepted  accounting  principles and expands  disclosures  about fair
value measurements. This statement is effective for the fiscal year beginning on
July 1, 2007.  The  Company  does not expect the  adoption of SFAS 157 to have a
material impact on the Company's consolidated financial statements.

      In February  2007,  the FASB issued SFAS 159,  "The Fair Value  Option for
Financial  Assets and  Financial  Liabilities  -- Including an amendment of FASB
Statement  No.  115."  SFAS 159  permits  entities  to  choose to  measure  many
financial  instruments and certain other items at fair value.  This statement is
effective for the Company's  fiscal year  beginning July 1, 2008. The Company is
currently  evaluating  the  impact  of SFAS  159 on the  Company's  consolidated
financial statements.

2.    Stock-Based Compensation:
      ------------------------

      The  Company  recognizes  stock-based   compensation  in  accordance  with
Statement of Financial Accounting Standards No. 123(R),  "Share-Based Payment, a
revision  of  SFAS  No.  123,  Accounting  for  Stock-Based  Compensation",   as
interpreted by SEC Staff  Accounting  Bulletin No. 107. Stock options granted by
the Company generally vest upon grant.

      The Company maintains two stockholder-approved  Stock Option Plans for key
employees and  consultants  of the Company.  The Company  terminated,  effective
November 29, 2005, its 1996  Non-Employee  Director Stock Option Plan (the "1996
Plan").  While no further  options  are being  granted  under the 1996 Plan,  it
remains in effect for options outstanding.

      The 1990 Stock Option Plan of the Company,  as amended (the "1990  Plan"),
provided  for the grant of an  aggregate  of  500,000  shares  of common  stock.
Options may no longer be granted under the 1990 Plan,  although at September 30,
2007 the 1990 Plan also remains in effect for options outstanding.

      The  Company's  2000 Stock  Option  Plan,  as amended  (the "2000  Plan"),
initially  provided for the grant of options to purchase up to 300,000 shares of
common stock. It was amended during fiscal 2004 to increase the number of shares
of common  stock for which  options  may be  granted  by an  additional  250,000
shares,  to a total of  550,000  shares.  The 2000 Plan  permitted  the grant of
incentive  and  non-statutory  stock  options  to key  executives,  consultants,
directors and other key employees.

                                       6

<PAGE>

      Stock  options  could not be granted at less than the fair market value at
the date of grant or 110% of the fair market  value for  individuals  who own or
are deemed to own more than 10% of the  combined  voting power of all classes of
stock of the Company.  Stock options generally vested  immediately and generally
are granted for a ten-year term.

      During the first quarter of fiscal 2008, the Board of Directors approved a
new stock-based  plan, the Jaclyn,  Inc. 2007 Stock Incentive Plan, which became
effective  upon  approval  by  stockholders  of the  Company at the 2007  Annual
Meeting of Stockholders of the Company. The 2007 Stock Incentive Plan allows the
Company to make  grants of stock  options,  stock  appreciation  rights  (SARs),
restricted stock, restricted stock units, and stock awards to employees, as well
as stock options,  SARs,  restricted  stock,  and restricted  stock units to our
non-employee  directors.  The total number of shares of common stock that may be
issued  pursuant  to awards  granted  under  the 2007  Stock  Incentive  Plan is
185,000.  Effective  with  approval  of the  2007  Stock  Incentive  Plan by the
Company's stockholders, the Company will make no further grants of options under
the 2000 Plan, although outstanding options will not be affected and will remain
outstanding in accordance with their respective terms.

      The  Company  did not grant any stock  options  during  the six  months of
fiscal 2008 or fiscal 2007.  As of December  31,  2007,  there were 95,500 stock
options  outstanding.  Options to purchase  2,000 shares of common stock expired
during the second quarter of fiscal 2008.

3.    Earnings Per Share:
      ------------------

      The  Company's  calculation  of Basic and Diluted Net  Earnings Per Common
      Share follows (in thousands, except share amounts):

                                       7

<PAGE>

<TABLE>
<CAPTION>
                                                        Three Months Ended           Six Months Ended
                                                           December 31,                December 31,

                                                        2007          2006          2007          2006
                                                        ----          ----          ----          ----
<S>                                                 <C>           <C>           <C>           <C>
   Basic Net Earnings Per Common Share:

   Net Earnings                                     $        601  $      1,716  $        901  $      2,179
                                                    -------------------------------------------------------
   Basic Weighted Average Shares Outstanding           2,469,000     2,478,000     2,469,000     2,481,000
                                                    -------------------------------------------------------
   Basic Net Earnings Per Common Share              $        .24  $        .69  $        .36  $        .88
                                                    -------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                        Three Months Ended           Six Months Ended
                                                           December 31,                December 31,

                                                        2007          2006          2007          2006
                                                        ----          ----          ----          ----
<S>                                                 <C>           <C>           <C>           <C>
   Diluted Net Earnings Per Common Share:

   Net Earnings                                     $        601  $      1,716  $        901  $      2,179
                                                    -------------------------------------------------------
   Basic Weighted Average Shares Outstanding           2,469,000     2,478,000     2,469,000     2,481,000
   Add: Dilutive Options                                  68,000        63,000        52,000        63,000
                                                    -------------------------------------------------------
   Diluted Weighted Average Shares Outstanding         2,537,000     2,541,000     2,521,000     2,544,000
                                                    -------------------------------------------------------
   Diluted Net Earnings Per Common Share            $        .24  $        .68  $        .36  $        .86
                                                    -------------------------------------------------------
</TABLE>

      Options to purchase 46,000 shares of the Company's common stock at
December 31, 2007 were outstanding, but were not included in the computation of
diluted earnings per share because the exercise price of the options exceeded
the average market price and would have been anti-dilutive. There were no
options to purchase shares of the Company's common stock as of December 31, 2006
that were anti-dilutive. At December 31, 2007, there were 95,500 remaining
options which can be exercised.

4.    Inventories:

      Inventories consist of the following components (in thousands):

                                               December 31, 2007   June 30, 2007
                                               -----------------   -------------

   Raw materials                               $              30   $          42

   Finished Goods                                          7,802           9,201
                                               -----------------   -------------
                                               $           7,832   $       9,243
                                               -----------------   -------------

                                        8

<PAGE>

5.    Repurchase of Common Stock:

      The Company  previously  announced that the Board of Directors  authorized
the  repurchase by the Company of up to 350,000  shares of the Company's  Common
Stock.  On September  27, 2006 the Board of Directors  authorized an increase in
the Company's Common Stock repurchase  program of an additional  125,000 shares.
Purchases may be made from time to time in the open market and through privately
negotiated  transactions,  subject to general market and other  conditions.  The
Company generally  finances these repurchases from its own funds from operations
and/or from its bank credit facility.  For the three and six-month periods ended
December 31,  2007,  the Company did not purchase any shares of its common stock
in connection with this repurchase program. As of December 31, 2007, the Company
has  purchased  a total  of  343,726  shares  of its  Common  Stock at a cost of
approximately $1,966,000 in connection with the repurchase program.

6.    Financing Agreements:
      --------------------

      The  Company  is a party to a bank  credit  facility,  as  amended,  which
expires on December 1, 2008 and provides for  short-term  loans and the issuance
of letters of credit in an aggregate amount not to exceed $50,000,000.  Based on
a borrowing  formula,  the Company may borrow up to  $30,000,000  in  short-term
loans and up to $50,000,000  including letters of credit.  The borrowing formula
allows for an additional amount of borrowing during the Company's peak borrowing
season  from June to  October.  Substantially  all of the  Company's  assets are
pledged  to the bank as  collateral  (except  for the West New York,  New Jersey
facility,  which has been  separately  mortgaged  as noted  below).  The line of
credit  requires  that the Company  maintain a minimum  tangible  net worth,  as
defined, and imposes certain debt to equity ratio requirements.  The Company was
in compliance with all applicable  financial  covenants as of December 31, 2007.
As of  December  31,  2007,  borrowing  on the  short-term  line of  credit  was
$2,905,000,  and  at  that  date  the  Company  had  $12,250,000  of  additional
availability  (based on the borrowing  formula)  under the credit  facility.  At
December  31, 2007 the Company was  contingently  obligated  on open  letters of
credit with an aggregate  face amount of  approximately  $16,394,000.  Borrowing
during the quarter was at the bank's  prime rate or below,  at the option of the
Company. The bank's prime rate at December 31, 2007 was 7.25%.

      In August 2002, the Company consummated a mortgage loan with a bank lender
in the amount of  $3,250,000.  The  financing  is  secured by a mortgage  of the
Company's West New York, New Jersey  headquarters  and warehouse  facility.  The
loan  bears  interest  at a fixed  rate of 7% per  annum.  The  financing  has a
fifteen-year  term, but is callable by the bank lender at any time after January
2, 2009 and may be prepaid by the  Company,  along with a prepayment  fee,  from
time to time during the term of the financing. The balance of the mortgage as of
December 31, 2007 is approximately  $2,476,000,  of which the current portion of
approximately  $182,000 is included in other current  liabilities as of December
31, 2007.

7.    Contractual Obligations and Commercial Commitments:
      --------------------------------------------------

      The Company leases office facilities under non-cancelable operating leases
that expire in various years through the year ended June 30, 2016.

                                       9

<PAGE>

      Future minimum payments under non-cancelable operating leases with initial
or remaining terms of one year or more are as follows:

                                      Year Ended         Office and Showroom
                                       June 30,               Facilities
                                       --------               ----------

                                         2008                 $  757,000

                                         2009                  1,219,000

                                         2010                    662,000

                                         2011                    514,000

                                         2012                    522,000

                                      Thereafter               1,225,000

      The Company is obligated,  in certain instances,  to pay minimum royalties
over the term of the licensing  agreements  that expire in various years through
2008. Aggregate minimum royalty commitments by fiscal year are as follows:

                                      Year Ended               Minimum
                                       June 30,          Royalty Commitments
                                       --------          -------------------

                                         2008                  $183,000

      From time to time, the Company and its  subsidiaries may become a party to
legal proceedings, which arise in the normal course of business. At December 31,
2007, there were no material pending legal  proceedings to which the Company was
a party.

      The Company has not provided any  financial  guarantees as of December 31,
2007.

8.    Retirement Plan:
      ---------------

      The Company's pension plan was terminated effective January 31, 2006 and a
final distribution to its participants was made prior to the end of fiscal 2007.

      Pension  expense  was  $44,500  and  $89,000  for the three and  six-month
periods ended December 31, 2006, respectively.

                                       10

<PAGE>

9.    Income Taxes:
      ------------

      Effective July 1, 2007, the Company adopted FASB Interpretation No. 48
(FIN No. 48), Accounting for Uncertainty in Income Taxes, which clarifies the
accounting and disclosure for uncertainty in income taxes. As a result of the
adoption, the Company recorded a decrease to beginning retained earnings of
approximately $129,000 and increased net liabilities for uncertain tax positions
and related interest and penalties by a corresponding amount. Net uncertain tax
positions of $129,000 as of the adoption date would favorably impact the
effective tax rate if these net liabilities were reversed.

      The Company files income tax returns in the U.S. federal  jurisdiction and
in various states and a foreign  location.  The U.S.  federal  filings and state
purposes for the fiscal  years ended 2004 through 2007 and foreign  filing (Hong
Kong) for fiscal years ended 2001 through  2007 remain open for  examination  by
the taxing authorities.  The Company believes that its tax positions comply with
applicable tax laws and that it has adequately  provided for these matters.  The
Company does not believe it is  reasonably  possible that its  unrecognized  tax
benefits will significantly change within the next twelve months.

      The Company recognizes interest and, if applicable, penalties, which could
be assessed, related to uncertain tax positions in income tax expense. As of the
adoption date, the total amount of accrued interest and penalties was $14,000.
The Company recorded approximately $33,000 in interest and penalties for the
first half of fiscal 2008.

10.   Proposed Stock Splits:
      ---------------------

      On December 5, 2007, the Company announced that a special committee of
independent directors recommended to the Board of Directors, and the Board of
Directors approved, amendments to the Company's certificate of incorporation
which would result in a 1-for-250 reverse stock split of the Company's common
stock, to be immediately followed by a 250-for-1 forward stock split (the "Stock
Split Proposals"). Each of the Stock Split Proposals is subject to the approval
of the Company's stockholders. The Company has filed with the Securities and
Exchange Commission a preliminary Schedule 13E-3 Transaction Statement with
respect to the Stock Split Proposals and a preliminary proxy statement with
regard to a proposed stockholder vote on each of the Stock Split Proposals. The
Stock Split Proposals are intended to reduce the number of stockholders of
record to fewer than 300. If that is the case, the Company presently plans to
cease the registration of its common stock under federal securities laws and to
withdraw its shares of common stock from listing on the American Stock Exchange.
The Company announced that it was taking these steps to avoid the substantial
and increasing cost and expense of being an SEC reporting company and of
regulatory compliance under the Sarbanes-Oxley Act of 2002. The special
committee and the Board of Directors have retained the right to change the ratio
of the Stock Split Proposals, or to abandon the Stock Split Proposals, if either
the special committee or the Board of Directors believes that the Stock Split
Proposals are no longer in the best interests of stockholders.

                                       11

<PAGE>

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

Overview

      The Company and its subsidiaries  are engaged in the design,  manufacture,
distribution  and sale of women's and children's  apparel,  and fabric handbags,
sport bags,  backpacks,  cosmetic bags, and related products.  Our apparel lines
include women's loungewear,  sleepwear, dresses and sportswear, and lingerie, as
well as infants' and children's  clothing.  Our products are, for the most part,
made to order,  and are  marketed  and sold to a range of  retailers;  primarily
national mass merchandisers.

      Our  business  is  subject to  substantial  seasonal  variations.  In that
regard,  our net sales and net earnings  generally  have been higher  during the
period from June to November  (which  includes  our first  fiscal  quarter and a
portion of our second and fourth fiscal  quarters)  coinciding with sales to our
customers  for  back-to-school  and  holiday  shopping,  while net sales and net
earnings  for the other  months of our fiscal year are  typically  lower due, in
part, to the  traditional  slowdown by our customers  immediately  following the
winter holiday season.  Accordingly,  any significant decrease in back-to-school
and  winter  holiday  shopping  could  have a  material  adverse  effect  on our
financial  condition  and  results of  operations.  The  Company  believes  this
seasonality is consistent with the general pattern  associated with sales to the
retail  industry.  The  Company's  quarterly  results  of  operations  may  also
fluctuate significantly as a result of a number of other factors,  including the
timing  of  shipments  to  customers  and  economic   conditions.   Accordingly,
comparisons between quarters may not necessarily be meaningful,  and the results
for any one quarter are not necessarily  indicative of future quarterly  results
or of full-year performance.

Critical Accounting Policies and Estimates

      The  preparation  of financial  statements in conformity  with  accounting
principles  generally  accepted in the United  States  requires the  appropriate
application  of certain  accounting  policies,  many of which require us to make
estimates  and  assumptions  about  future  events  and their  impact on amounts
reported  in  our  financial  statements  and  related  notes.  We  believe  the
application of our accounting  policies,  and the estimates  inherently required
therein,   are  reasonable.   These   accounting   policies  and  estimates  are
periodically  evaluated for continued  reasonableness,  and adjustments are made
when facts and circumstances dictate a change.  However, since future events and
their impact cannot be determined with certainty, actual results may differ from
our  estimates,  and such  differences  could be  material  to the  consolidated
financial statements.  Historically, we have found our application of accounting
policies to be appropriate, and actual results have not differed materially from
those  determined  using  necessary  estimates.  A  summary  of our  significant
accounting policies and a description of accounting policies that we believe are
most  critical  may be found in our  Management's  Discussion  and  Analysis  of
Financial  Condition and Results of Operations  included in our Annual Report on
Form 10-K for the year ended June 30, 2007,  which we filed with the  Securities
and Exchange Commission on September 27, 2007.

                                       12

<PAGE>

Liquidity and Capital Resources

      The Company's  cash and cash  equivalents  increased  $146,000  during the
six-month  period ended December 31, 2007 to $1,495,000  from $1,349,000 at June
30, 2007.

      Net cash provided by operating  activities totaled  $1,986,000,  primarily
from an increase in accounts payable and other current liabilities of $1,648,000
due to a greater  proportion of unpaid  inventory-in-transit  as of December 31,
2007 compared to June 30, 2007, a decrease in inventory  totaling  $1,411,000 in
anticipation  of lower third  quarter  shipping  requirements,  and net earnings
totaling  $901,000,  offset by an increase in prepaid  expenses and other assets
totaling  $1,204,000 and an increase in accounts  receivable  totaling $819,000,
due to a greater  amount of sales  during the latter  part of the second  fiscal
quarter of 2008 compared to the comparable fourth quarter of fiscal 2007.

      Funds used in financing activities of $1,697,000 were mostly the result of
a net decrease totaling $1,610,000 in borrowing under the Company's bank line of
credit and the payment of long-term debt totaling $87,000.

      Net cash used in investing  activities of $143,000  primarily reflects the
purchase of property and equipment purchases totaling $112,000.

      The Company is a party to a bank credit facility which expires on December
1, 2008, and provides for short-term loans and the issuance of letters of credit
in an aggregate amount not to exceed $50,000,000.  Based on a borrowing formula,
the  Company  may  borrow  up to  $30,000,000  in  short-term  loans  and  up to
$50,000,000  including  letters of credit.  The borrowing  formula allows for an
additional  amount of borrowing  during the Company's peak borrowing season from
June to October.  Substantially  all of the Company's  assets are pledged to the
bank as collateral (except for the West New York, New Jersey facility, which has
been separately  mortgaged as noted below). The line of credit requires that the
Company maintain a minimum  tangible net worth, as defined,  and imposes certain
debt to equity  ratio  requirements.  The  Company  was in  compliance  with all
applicable financial covenants as of December 31, 2007. As of December 31, 2007,
borrowing on the short-term line of credit was $2,905,000,  and at that date the
Company had  $12,250,000  of  additional  availability  (based on the  borrowing
formula)  under the credit  facility.  At  December  31,  2007 the  Company  was
contingently  obligated on open letters of credit with an aggregate  face amount
of  approximately  $16,394,000.  Borrowing  during the quarter was at the bank's
prime rate or below,  at the  option of the  Company.  The bank's  prime rate at
December 31, 2007 was 7.25%.

      In August 2002, the Company consummated a mortgage loan with a bank lender
in the amount of  $3,250,000.  The  financing  is  secured by a mortgage  of the
Company's West New York, New Jersey  headquarters  and warehouse  facility.  The
loan bears interest at a fixed rate of 7% per annum through August 31, 2007. The
financing  has a  fifteen-year  term,  but is callable by the bank lender at any
time  after  January 2, 2009 and may be  prepaid  by the  Company,  along with a
prepayment fee, from time to time during the term of the financing.  The balance
of the mortgage as of December 31, 2007 is  approximately  $2,476,000,  of which
the current  portion of  approximately  $182,000  is  included in other  current
liabilities as of December 31, 2007.

                                       13

<PAGE>

      In June 2007,  the Company  announced  it had entered  into a purchase and
sale agreement to sell its former executive offices and warehouse  facility,  as
well as two adjacent lots,  located in West New York,  New Jersey.  The proposed
purchaser  had the right under the  purchase  and sale  agreement  to extend the
originally scheduled closing date (October 15, 2007) for two separate four-month
periods and, upon the payment of $150,000,  the proposed  purchaser extended the
closing date for the first extension period.

      The closing under the purchase and sale  agreement  was  contingent on the
proposed  purchaser's  receipt  of  governmental   approvals  required  for  the
construction of residential,  multi-family housing consisting of 150 residential
units, as well as a number of other  contingencies  and conditions.  On December
12, 2007, the Company received a notice  indicating that the proposed  purchaser
would not obtain all  governmental  approvals by the December 15, 2007  deadline
required under the purchase and sale agreement and, accordingly,  was exercising
the proposed purchaser's right to terminate the purchase and sale agreement.

      In light of the  termination  of the purchase,  the Company now intends to
evaluate  all of its  alternatives  with  regard  to its West  New  York  former
headquarters, including the general marketing of the property.

      The Company  believes that funds provided by operations,  existing working
capital,  and the Company's  bank line of credit and mortgage  financing will be
sufficient to meet anticipated working capital needs for the next twelve months.

      There were no material  commitments  for capital  expenditures at December
31, 2007.

      The Company  previously  announced that the Board of Directors  authorized
the  repurchase by the Company of up to 350,000  shares of the Company's  Common
Stock.  On September  27, 2006 the Board of Directors  authorized an increase in
the Company's Common Stock repurchase  program of an additional  125,000 shares.
Purchases may be made from time to time in the open market and through privately
negotiated  transactions,  subject to general market and other  conditions.  The
Company generally  finances these repurchases from its own funds from operations
and/or from its bank credit facility.  For the three and six-month periods ended
December 31,  2007,  the Company did not purchase any shares of its Common Stock
under this repurchase  program. As of December 31, 2007, the Company purchased a
total  of  343,726  shares  of  its  Common  Stock  at a cost  of  approximately
$1,966,000 in connection with the repurchase program.

Contractual Obligations and Commercial Commitments

      To  facilitate  an  understanding  of  our  contractual   obligations  and
commercial commitments, the following data is provided as of December 31, 2007:

                                       14

<PAGE>

<TABLE>
<CAPTION>
                                               * * * * Payments Due by Period * * * *

                                                Less than                                 More than
Contractual Obligations             Total        1 Year       1-3 Years     3-5 Years      5 Years
-----------------------             -----        ------       ---------     ---------      -------
<S>                              <C>           <C>           <C>           <C>           <C>
Notes Payable                    $ 2,905,000   $ 2,905,000   $         -   $         -   $         -

                                   2,476,000        90,000       392,000       452,000     1,542,000(1)
Mortgage Payable

                                     183,000       183,000             -             -             -
Royalties

Operating Leases                   4,899,000       757,000     1,881,000     1,036,000     1,225,000

                                 -------------------------------------------------------------------
Total Contractual
   Obligations                   $10,463,000   $ 3,935,000   $ 2,273,000   $ 1,488,000   $ 2,767,000

                                 -------------------------------------------------------------------
</TABLE>

      (1)The Mortgage is callable on January 2, 2009, but is presented through
      maturity.

      (2)Effective at the beginning of the first quarter of 2007, we adopted FIN
      No. 48 as described in Note 9 to the Notes to Unaudited Condensed
      Consolidated Financial Statements. Our total liabilities for unrecognized
      tax benefits were approximately $160,000 at December 31, 2007. We cannot
      make a reasonable estimate of the period or amount, if any, of related
      future payments. Therefore these liabilities were not included in the
      above table.

<TABLE>
<CAPTION>
                                    Total      Less than                                  More than
Other Commercial Commitments     Commitments    1 Year        1-3 Years     3-5 Years      5 Years
<S>                              <C>           <C>            <C>           <C>           <C>
Letters of Credit                $16,394,000   $16,394,000             -             -             -
                                 -----------   -----------

Total Commercial Commitments     $16,394,000   $16,394,000             -             -             -
                                 -----------   -----------
</TABLE>

      Off-Balance Sheet Arrangements

            Except as described below, the Company has not created, and is not a
      party to,  any  special-purpose  or  off-balance  sheet  entities  for the
      purpose of raising  capital,  incurring  debt or operating  the  Company's
      business. The Company does not have any arrangements or relationships with
      entities that are not consolidated into the financial  statements that are
      reasonably  likely to  materially  affect the  Company's  liquidity or the
      availability of capital resources.

                                       15

<PAGE>

      On August 22, 2006, the Company  entered into a lease  agreement for a new
corporate office building,  and relocated the Company's  executive  offices from
West New York, NJ to Maywood,  New Jersey  during  fiscal 2007.  The lease has a
10-year  term,  and grants to the Company an option to purchase  the building at
any  time  during  the term of the  lease  at a  purchase  price  not to  exceed
$3,075,000,  plus increases based on a multiple of the consumer price index. The
lessor,  195 Spring  Valley  Associates,  LLC,  (the  "Lessor"),  purchased  the
corporate  office  building at a closing,  which also took place in August 2006.
The Company provided the Lessor with $2,200,000 in mortgage  financing,  secured
by a first  priority  mortgage  in  favor of the  Company  on the  land,  office
building,  and other  customary  rights of the  mortgagor.  The Company placed a
deposit with the Lessor in the amount of $200,000 in connection  with the option
to purchase the property.  For accounting purposes,  the Company determined that
the  Lessor  is a  variable  interest  entity  and the  Company  is its  primary
beneficiary  as defined by FASB  Interpretation  No.  46(R),  "Consolidation  of
Variable Interest Entities" ("FIN 46(R)"). Accordingly, the financial statements
of the Lessor were consolidated with those of the Company.

Results Of Operations

      Net sales were $40,193,000 and $77,646,000  during the three and six-month
periods ended December 31, 2007,  compared to $47,584,000 and $88,208,000 in the
comparable  three and six-month  periods during fiscal 2007. For the three-month
period ended  December 31, 2007,  the Handbag  category net sales were  slightly
higher  (2.4%)  while the  six-month  period  was 8.5%  lower.  Net sales in the
Apparel  category  dropped  22.8 % and 13.8 %,  respectively,  compared  to last
year's three and six-month period net sales.

      Sales by category were as follows:

      Net sales for the Apparel  category were  $26,125,000  for the three-month
period  ended  December  31,  2007,  or  $7,723,000  lower  than the  comparable
three-month  period during fiscal 2007. This 22.8% decrease was primarily due to
a 38.5% decrease in our children's  apparel  division due to the loss of a major
fall program from one of its  significant  customers,  slightly offset by a 4.5%
increase in net sales in the women's sleepwear division.

      For the  six-month  period  ended  December  31,  2007,  net sales for the
Apparel category were $49,658,000,  or 13.8 % lower than the prior fiscal year's
same period mostly due to decreases in our children's apparel business and, to a
lesser extent, lower net sales for our women's sleepwear business.

      Net sales  totaling  $14,068,000  for the Handbags  category in the second
quarter of fiscal 2008  represented a 2.4% increase  compared to  $13,736,000 in
net sales for the same quarter in fiscal 2007.  The increase in net sales in the
second  quarter  primarily  reflected  higher  sales  in the  premium  incentive
business (an increase of 21.2%) due to shipments to a significant  customer that
occurred in the current year's second quarter instead of the first quarter.

                                       16

<PAGE>

      This  increase was not fully offset by lower handbag  business  during the
quarter resulting from fewer orders from a considerable customer.

      For the  six-month  period  ended  December  31,  2007,  net sales for the
Handbags category were $27,988,000, a decline of $2,599,000, or 8.5% compared to
the  prior  comparable  six-month  period,  all  attributable  to lower  handbag
business in the first half of this fiscal period, for the same reason as above.

      Gross  margins  were  24.0% and  23.0% in the  three-month  and  six-month
periods ended  December 31, 2007,  compared to 24.9% and 23.1% in the comparable
periods ended December 31, 2006. Gross margins by category were as follows:

      Gross  margin  for  the  Apparel  category   decreased  to  24.7%  in  the
three-month  period ended  December 31, 2007 from 27.4% in the second quarter of
fiscal 2007. The 2.7 percentage point decrease was primarily the result of lower
margins in the children's apparel division  attributable to customer  incentives
given  to  one  of  the  division's   significant   customers  for  slow  moving
merchandise, lower women's sleepwear division margins due mostly to increases in
product costs.  For the six-month  period ended December 31, 2007, gross margins
for the Apparel category  declined 2.3 percentage points to 24.6% from the prior
comparable period primarily for the same reasons.

      Gross  margin for the  Handbags  category in the second  quarter of fiscal
2008  improved to 22.6 % from 18.7% in the second  quarter of fiscal  2007.  The
improvement was attributable to higher margins in our premium incentive business
as a result of a settlement from one of the Company's foreign suppliers relating
to quality  issues and due to favorable  product mix. For the  six-month  period
ended December 31, 2007,  gross margins for the Handbags  category  increased to
20.3% (from 15.9% in the prior year's comparable  period)  attributable to a 5.2
percentage  point  increase  in  the  premium  incentive  business  margins  due
primarily  to product mix, as well as slightly  higher  handbag  business  gross
margins.

      As a  percentage  of  net  sales,  shipping,  selling  and  administrative
expenses  increased to 21.0% for the three-month  period ended December 31, 2007
from  18.2%  for the  three-month  period  ended  December  31,  2006.  However,
shipping,  selling  and  administrative  expenses  decreased  by $223,000 in the
second  quarter of fiscal  2008  compared to the prior year  comparable  period,
mainly  due to lower  sales  commission  costs  totaling  $308,000  relating  to
decreased  sales  volume in this year's  second  fiscal  quarter,  income from a
forfeited  option premium relating to the terminated sale of our former West New
York headquarters facility totaling $150,000, and lower royalty expense totaling
$99,000 related mostly to certain minimum royalty commitments which were not met
last  year  and  had to be  expensed  in  last  year's  second  fiscal  quarter.
Offsetting these reduced  expenses were higher selling costs totaling  $143,000,
as well as higher product  development  costs of $93,000 for both the children's
apparel and premium business relating to potential additional future business, a
$106,000  increase  in general and  administrative  expense  principally  due to
higher  compensation  costs, as well as higher shipping and warehousing  expense
totaling  $82,000  relating  mostly to the mix of sales  contributing  to higher
outside warehouse expense.

                                       17

<PAGE>

      Shipping,  selling and  administrative  expenses for the six-month  period
ended  December 31, 2007 also  increased as a percentage  of net sales (20.7% of
net sales  compared  with 18.2% of net sales in the same period in fiscal 2007).
However, total shipping,  selling and administrative dollars in each period were
almost identical at $16,038,000 for the six-month period ended December 31, 2007
versus  $16,039,000  for  the  prior  fiscal  comparable  period.   Lower  sales
commissions  totaling $371,000 relating to the lower sales volume and a decrease
in royalty  expense  totaling  $344,000  attributable to certain minimum royalty
commitments  which were not met and had to be  expensed in fiscal  2007's  first
six-month  period,  were offset by higher product  development costs of $345,000
relating  to  potential  future  business,  a $275,000  increase  in general and
administrative  costs for higher  compensation  related expenses,  and increased
shipping and warehouse  costs  totaling  $63,000  related to the higher  outside
warehousing  expense in this year's first six month  period  ended  December 31,
2007 compared to the same six months last year.

      Interest expense of $214,000 in the second quarter of fiscal 2008 compares
to $369,000 in the prior year's  comparable  quarter.  For the six-month  period
ended December 31, 2007, interest expense totaled $360,000 versus $716,000. Both
decreases are primarily the result in the current  fiscal  quarter and six-month
period ended December 31, 2007 of a lower level of average  borrowing due to the
timing of shipments to customers,  in addition to improved cash collections from
a greater  proportion  of direct ship business  which has shorter  payment terms
compared to last year's same fiscal periods.

      The decrease in earnings  before income taxes of $1,844,000 and $2,115,000
for the three and  six-month  periods  ended  December 31,  2007,  respectively,
compared to last fiscal year's second quarter and six-month  comparable  periods
was primarily due to lower net sales and lower gross profit  dollars,  not fully
offset by lower interest expense, as discussed above.

      For the six-month period ended December 31, 2007, the Company's  effective
tax rate of 39.7 % compared to 39.6 % in the first six-month period of the prior
year.

      Net  earnings  decreased  $1,115,000  and  $1,278,000  for the  three  and
six-month periods ended December 31, 2007,  respectively,  compared to the prior
comparable periods.

Recently Issued Accounting Standards

      In June 2006,  the FASB  issued FIN 48,  "Accounting  for  Uncertainty  in
Income Taxes - an  interpretation  of FASB Statement  109," which  clarifies the
accounting  for  uncertainty  in  income  taxes  recognized  in an  enterprise's
financial statements in accordance with SFAS 109, "Accounting for Income Taxes."
FIN 48 prescribes a  recognition  threshold  and  measurement  attribute for the
financial  statement  recognition  and  measurement  of a tax position  taken or
expected to be taken in a tax return.  FIN 48 was  effective for the fiscal year
beginning July 1, 2007. The Company  determined that the impact of adoopting FIN
48 on the Company's consolidated financial statements is approximately $129,000.

                                       18

<PAGE>

      In September  2006, the FASB issued SFAS 157,  "Fair Value  Measurements."
SFAS 157 defines fair value, establishes a framework for measuring fair value in
generally  accepted  accounting  principles and expands  disclosures  about fair
value measurements. This statement is effective for the fiscal year beginning on
July 1, 2007.  The  Company  does not expect the  adoption of SFAS 157 to have a
material impact on the Company's consolidated financial statements.

      In February  2007,  the FASB issued SFAS 159,  "The Fair Value  Option for
Financial  Assets and  Financial  Liabilities  -- Including an amendment of FASB
Statement  No.  115."  SFAS 159  permits  entities  to  choose to  measure  many
financial  instruments and certain other items at fair value.  This statement is
effective for the Company's  fiscal year  beginning July 1, 2008. The Company is
currently  evaluating  the  impact  of SFAS  159 on the  Company's  consolidated
financial statements.

Seasonality

      The Company's business is subject to substantial seasonal  variations.  In
that regard,  our net sales and net earnings  generally  have been higher during
the period from June to November  (which includes our first fiscal quarter and a
portion of our second and fourth fiscal  quarters)  coinciding with sales to our
customers  for  back-to-school  and  holiday  shopping,  while net sales and net
earnings  for the other  months of our fiscal year are  typically  lower due, in
part, to the  traditional  slowdown by our customers  immediately  following the
winter holiday season.  Accordingly,  any significant decrease in back-to-school
and  winter  holiday  shopping  could  have a  material  adverse  effect  on our
financial  condition and results of operations.  The Company's quarterly results
of operations may also fluctuate significantly as a result of a variety of other
factors, including, among other things, the timing of shipments to customers and
economic conditions. The Company believes this is the general pattern associated
with its sales to the retail  industry and expects this pattern will continue in
the future.  Consequently,  comparisons  between  quarters  are not  necessarily
meaningful  and the results for any quarter are not  necessarily  indicative  of
future results.

Forward-Looking Statements

      In order to keep  stockholders and investors  informed of the future plans
of the Company,  this Form 10-Q contains  and, from time to time,  other reports
and  oral  or  written   statements   issued  by  the   Company   may   contain,
forward-looking statements concerning,  among other things, the Company's future
plans  and  objectives  that  are  or  may  be  deemed  to  be  "forward-looking
statements."  The Company's  ability to do this has been fostered by the Private
Securities  Litigation  Reform Act of 1995 which  provides a "safe  harbor"  for
forward-looking   statements  to  encourage  companies  to  provide  prospective
information so long as those statements are accompanied by meaningful cautionary
statements  identifying  important  factors that could cause  actual  results to
differ  materially  from  those  discussed  in  the  statement.   The  Company's
forward-looking  statements  are subject to a number of known and unknown  risks
and uncertainties  that could cause actual results,  performance or achievements
to differ  materially  from those  described  or implied in the  forward-looking
statements,  including,  but not  limited  to,  general  economic  and  business
conditions,  competition;  potential changes in customer spending; acceptance of
product offerings and designs;  the variability of consumer  spending  resulting
from  changes  in  domestic  economic  activity;  a  highly  promotional  retail
environment;  any significant  variations between actual amounts and the amounts
estimated for those matters identified as critical accounting  estimates as well
as  other  significant  accounting  estimates  made  in the  preparation  of the
Company's financial statements; and the impact of hostilities in the Middle East
and the  possibility of hostilities in other  geographic  areas as well as other
geopolitical  concerns.

                                       19

<PAGE>

      Accordingly,    actual   results   may   differ   materially   from   such
forward-looking statements. You are urged to consider all such factors. In light
of the uncertainty inherent in such forward-looking  statements,  you should not
consider  their  inclusion  to be a  representation  that  such  forward-looking
matters will be achieved.  The Company  assumes no  obligation  for updating any
such   forward-looking   statements  to  reflect  actual  results,   changes  in
assumptions  or  changes  in  other  factors   affecting  such   forward-looking
statements.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk.

      There have been no material changes in the information set forth under the
caption "Item 7A-Quantitative and Qualitative  Disclosures About Market Risk" in
the  Company's  Annual  Report on Form 10-K for the  fiscal  year ended June 30,
2007.

Item 4.     Controls and Procedures.

      At the end of the period covered by this report,  the Company  carried out
an evaluation,  with the  participation of management of the Company,  including
the  Company's  Chief  Executive  Officer and Chief  Financial  Officer,  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures. Based on the Company's evaluation, the Company's Chief Executive
Officer and Chief  Financial  Officer  concluded  that the Company's  disclosure
controls and  procedures  were  effective.  There was no change in the Company's
internal control over financial  reporting during the quarter ended December 31,
2007 that has materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.

                                    PART II.

                                OTHER INFORMATION

Item 1A.    Risk Factors.

There were no material changes from the risk factors previously disclosed in our
Annual Report on Form 10-K for the fiscal year ended June 30, 2007.

Item 4.     Submission of Matters to a Vote of Security Holders.

      (a)   The 2007 Annual Meeting of  Stockholders of the Company (the "Annual
      Meeting") was held on November 28, 2007.

                                       20

<PAGE>

      (b)   See item 4 (c)(i) below.

      (c)   The following matters were voted on at the Annual Meeting:

      (i)   The  election  of nine  directors  to serve  until  the next  annual
            meeting of stockholders and the election and  qualification of their
            respective successors:

      Name of Director     Votes For Election      Authority to Vote Withheld
      ----------------     ------------------      --------------------------

      Abe Ginsburg         1,594,852                         332,146

      Allan Ginsburg       1,594,852                         332,146

      Robert Chestnov      1,601,886                         325,112

      Howard Ginsburg      1,596,352                         330,646

      Martin Brody         1,598,445                         328,553

      Richard Chestnov     1,612,154                         314,844

      Albert Safer         1,795,407                         131,591

      Norman Axelrod       1,798,857                         128,141

      Harold Schechter     1,796,607                         130,391

      (ii)  The  ratification  of the  appointment  of  Deloitte & Touche LLP as
            independent accountants of the Company.

            Votes For: 1,850,414   Votes Against: 79,920   Abstentions: 1,664

      (iii) The approval of the 2007 Jaclyn, Inc. Stock Incentive Plan.

            Votes For: 1,503,155   Votes Against: 84,689   Abstentions: 13,022
            Broker non-votes: 326,132

Item 6.     Exhibits.

Exhibit No.    Description
-----------    -----------

31(a)          Rule 13a-14(a)  Certification of Robert  Chestnov,  President and
               Chief Executive Officer of the Company.

31(b)          Rule  13a-14(a)  Certification  of  Anthony  Christon,  Principal
               Financial Officer of the Company.

32             Certification  Pursuant  to 18 U.S.C.  Section  1850,  as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                       21
<PAGE>

                                   SIGNATURES

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

                                              JACLYN, INC.
                                              ------------
                                              (Registrant)

February 14, 2008                             /s/Allan Ginsburg
                                              -----------------
                                              Allan Ginsburg
                                              Chairman of the Board

February 14, 2008                             /s/ Anthony Christon
                                              --------------------
                                              Anthony Christon
                                              Vice President
                                              Chief Financial Officer

                                       22

<PAGE>

                                  EXHIBIT INDEX
                                  -------------

Exhibit No.    Description
-----------    -----------

31(a)          Rule 13a-14(a)  Certification of Robert  Chestnov,  President and
               Chief Executive Officer of the Company.

31(b)          Rule  13a-14(a)  Certification  of  Anthony  Christon,  Principal
               Financial Officer of the Company.

32             Certification  Pursuant  to 18 U.S.C.  Section  1850,  as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                       23