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 September 30, 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
incorporation or organization)                          Identification Number)

197 West Spring Valley Ave., 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 November 1, 2007
-----------------------------      --------------------------------------
Common Stock, $1.00 par value                   2,468,614

<PAGE>

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

<TABLE>
<CAPTION>
                                                                    September 30,    June 30,
                                                                        2007           2007
                                                                     (Unaudited)    (See below)
<S>                                                                 <C>             <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                           $         769   $     1,349
Accounts receivable, net                                                   25,286        17,787
Inventory                                                                  11,517         9,243
Prepaid expenses and other current assets                                   2,674         1,788
                                                                    -------------   -----------
TOTAL CURRENT ASSETS                                                       40,246        30,167
                                                                    -------------   -----------
PROPERTY PLANT AND EQUIPMENT, NET                                           3,880         3,921
ASSETS HELD FOR SALE                                                          357           357
GOODWILL                                                                    3,338         3,338
OTHER ASSETS                                                                  307           294
                                                                    -------------   -----------
TOTAL ASSETS                                                        $      48,128   $    38,077
                                                                    =============   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - bank                                                $      13,130   $     4,515
Accounts payable                                                            8,186         4,411
Other current liabilities                                                   4,139         6,717
                                                                    -------------   -----------
TOTAL CURRENT LIABILITIES                                                  25,455        15,643
                                                                    -------------   -----------
MORTGAGE PAYABLE                                                            2,341         2,387
OTHER LIABILITIES                                                             562           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                                                          13,175        13,004
                                                                    -------------   -----------
                                                                           26,062        25,891
Less: Common shares in treasury at cost                                     6,617         6,617
                                                                    -------------   -----------
TOTAL STOCKHOLDERS' EQUITY                                                 19,445        19,274
                                                                    -------------   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $      48,128   $    38,077
                                                                    -------------   -----------
</TABLE>

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 Amounts)

<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                           September 30,

                                                                        2007           2006
                                                                    -------------   -----------
<S>                                                                 <C>             <C>
Net sales                                                           $      37,453   $    40,624
Cost of goods sold                                                         29,200        32,121
                                                                    -------------   -----------
Gross profit                                                                8,253         8,503
                                                                    -------------   -----------

Shipping, selling and administrative expenses                               7,612         7,390

Interest expense                                                              146           347
                                                                    -------------   -----------
                                                                            7,758         7,737
                                                                    -------------   -----------
Earnings before provision for income taxes                                    495           766
Provision for income taxes                                                    195           303
                                                                    -------------   -----------
Net earnings                                                        $         300   $       463
                                                                    =============   ===========
Net earnings per common share - basic                               $         .12   $       .19
                                                                    =============   ===========
Weighted average number of shares outstanding - basic                   2,468,000     2,483,000
                                                                    =============   ===========
Net earnings per common share - diluted                             $         .12   $       .18
                                                                    =============   ===========
Weighted average number of shares outstanding - diluted                 2,506,000     2,529,000
                                                                    =============   ===========
</TABLE>

See notes to condensed consolidated financial statements.

                                        3

<PAGE>

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

<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                           September 30,

                                                                        2007           2006
                                                                    -------------   -----------
<S>                                                                 <C>             <C>
Cash Flows From Operating Activities:
Net Earnings                                                        $         300   $       463
Adjustments to reconcile net earnings to net cash used in
   operating activities:
Depreciation and amortization                                                 100            99
Changes in assets and liabilities:
   Increase in accounts receivable, net                                    (7,499)       (1,314)
   Increase in inventory                                                   (2,274)       (2,751)
   Increase in prepaid expenses and other assets                             (902)         (244)
   Increase (decrease) in accounts payable and other
     current liabilities                                                    1,194          (732)

                                                                    -------------   -----------
Net cash used in operating activities                                      (9,081)       (4,479)
                                                                    -------------   -----------

Cash Flows From Investing Activities:
   Purchase of property and equipment                                         (56)          (55)
   Investment in leased building                                              (15)       (2,400)
                                                                    -------------   -----------
Net cash used in investing activities                                         (71)       (2,455)
                                                                    -------------   -----------

Cash Flows From Financing Activities:
   Net increase in notes payable - bank                                     8,615         6,820
   Payment of long-term debt                                                  (43)          (45)
                                                                    -------------   -----------
Net cash provided by financing activities                                   8,572         6,775
                                                                    -------------   -----------
Net decrease in Cash and Cash Equivalents                                    (580)         (159)
Cash and Cash Equivalents, beginning of period                              1,349           932
                                                                    -------------   -----------
Cash and Cash Equivalents, end of period                            $         769   $       773
                                                                    -------------   -----------
Supplemental Information:
   Interest paid                                                    $         104   $       266
                                                                    -------------   -----------
   Taxes paid                                                       $       1,058   $       411
                                                                    -------------   -----------
</TABLE>

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
September 30, 2007, the condensed  consolidated  statements of earnings, and the
condensed  consolidated  statements  of cash flows for the three  month  periods
ended  September  30,  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 on Form 10-K for the year ended June 30, 2007. The results of
operations  for  the  period  ended  September  30,  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,  in
connection with the relocation of 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.  Further,  the Company
placed a deposit  with the Lessor in the amount of $200,000 in  connection  with
its 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.

      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 unamortized  capital of the equity owners of
the Lessor (minority interest), approximately

                                        5

<PAGE>

$500,000,  are reflected in the  September 30, 2007 and June 30, 2007  Condensed
Consolidated Balance Sheets. There was no significant impact to net earnings.

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 is  effective  for the fiscal year
beginning July 1, 2007. The Company has determined  that the impact of FIN 48 on
the Company's consolidated financial statements is 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, and has 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

                                        6

<PAGE>

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. At September 30, 2007, 185,000 shares were
available  for future  grants  under the 2000 Plan,  under which  incentive  and
non-statutory  stock  options  may be  granted to key  executives,  consultants,
directors and other key employees. Stock options may 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  vest
immediately and generally are granted for a ten-year term.

      During the  quarter,  the Board of  Directors  approved a new  stock-based
plan, the Jaclyn,  Inc. 2007 Stock  Incentive  Plan,  subject to approval at the
2007 Annual Meeting of Stockholders of the Company, at which time it will become
effective. If approved by stockholders,  the 2007 Plan will allow 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.  If  stockholders  approve the 2007 Plan,  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 first  quarter of
fiscal 2008 or fiscal 2007.  There were no  forfeitures  of stock options during
the first 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):

                                                          Three Months Ended
                                                            September 30,
                                                      -------------------------
                                                          2007          2006
                                                      -----------   -----------
   Basic Net Earnings Per Common Share:
   Net Earnings                                       $       300   $       463
                                                      -----------   -----------
   Basic Weighted Average Shares Outstanding            2,468,000     2,483,000
                                                      -----------   -----------
   Basic Net Earnings Per Common Share                $       .12   $       .19
                                                      -----------   -----------

                                        7

<PAGE>

                                                          Three Months Ended
                                                            September 30,
                                                      -------------------------
                                                          2007          2006
                                                      -----------   -----------
   Diluted Net Earnings Per Common Share:
   Net Earnings                                       $       300   $       463
                                                      -----------   -----------

   Basic Weighted Average Shares Outstanding            2,468,000     2,483,000
   Add: Dilutive Options                                   38,000        46,000
                                                      -----------   -----------

   Diluted Weighted Average Shares Outstanding          2,506,000     2,529,000
                                                      -----------   -----------

   Diluted Net Earnings Per Common Share              $       .12   $       .18
                                                      -----------   -----------

      Options to  purchase  57,500  shares of the  Company's  common  stock were
outstanding as of September 30, 2006,  but were not included in the  computation
of diluted  earnings per share for the quarter then ended  because these options
were  anti-dilutive.  There were no options to purchase  shares of the Company's
common stock at September 30, 2007 that were antidilutive.

4.    Inventories:
      -----------

      Inventories consist of the following components (in thousands):

                                              September 30, 2007   June 30, 2007
                                              ------------------   -------------
   Raw materials                              $               14   $          42
   Finished Goods                                         11,503           9,201
                                              ------------------   -------------
                                              $           11,517   $       9,243
                                              ------------------   -------------

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-month period ended September
30,  2007,  the  Company  did not  purchase  any shares of its  common  stock in
connection with this repurchase  program.  As of September 30, 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:
      --------------------

      In September 2006, the Company amended its existing bank credit  facility.
The amended  facility,  which expires December 1, 2008,  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

                                        8

<PAGE>

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 September 30, 2007.  As of September 30, 2007,  borrowing on the
short-term  line of credit was  $13,130,000,  and at that date the  Company  had
$22,315,000 of additional  availability  (based on the borrowing  formula) under
the  credit  facility.  At  September  30,  2007 the  Company  was  contingently
obligated  on  open  letters  of  credit  with  an  aggregate   face  amount  of
approximately $13,233,000. Borrowing during the quarter ended September 30, 2007
was at the bank's prime rate or below, at the option of the Company.  The bank's
prime rate at September 30, 2007 was 7.75%.

      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
September 30, 2007 is approximately $2,520,000, of which the current portion of
approximately $179,000 is included in other current liabilities as of September
30, 2007.

      In June 2007,  the Company  entered into an agreement  for the sale of the
Company's  former  executive  office  and  warehouse  facility,  as  well as two
adjacent lots, located in West New York, New Jersey. The proposed purchase price
is  $8,000,000,  the  substantial  portion of which is payable at  closing.  The
closing of the sale is scheduled  for  February 15, 2008,  although the proposed
purchaser  has the right to extend the closing date for one  additional  4-month
period  upon  payment of an  extension  fee.  The closing is  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,  including the
receipt of acquisition and construction  loan  commitments.  However,  since the
proposed  transaction  is subject to a number of conditions  and  contingencies,
including the receipt of required governmental approvals,  there is no assurance
that a sale of the property will be concluded.

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,  2014.

                                        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      $         1,096,000

                                                 2009                1,166,000

                                                 2010                  578,000

                                                 2011                  427,000

                                                 2012                  407,000

                                              Thereafter             1,435,000

      The  Company  has  entered  into  licensing   arrangements   with  several
companies.  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 commitments by fiscal year are as follows:

                              Year Ended     Minimum
                               June 30,    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 September
30, 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 September 30,
2007.

8.    Retirement Plans:
      ----------------

      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 for the fiscal quarter ended  September 30, 2009 includes
the following components:

                                       10

<PAGE>

Fiscal Quarter Ended September 30,                                     2006

Components of Net Periodic Benefit Cost:

   Service cost                                                     $       -

   Interest cost                                                       85,800

   Expected return on assets                                          (83,135)

   Amortization of prior service cost                                       -

   Amortization of actuarial loss                                      41,835
                                                                    ---------

   Net periodic cost                                                $  44,500
                                                                    ---------

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 $10,000.
The Company recorded approximately $3,000 in interest and penalties for the
first quarter of 2008.

                                       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.  We expect that trend to continue  during  fiscal 2008.
However,  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 that 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.  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.
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.  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  decreased  $580,000  during the
three-month  period ended September 30, 2007 to $769,000 from $1,349,000 at June
30, 2007.

      Net cash used in operating  activities totaled $9,081,000,  primarily from
an increase in accounts  receivable  totaling  $7,499,000  resulting from higher
levels of  shipping  in this year's  first  quarter  compared to the last fiscal
quarter of 2007, and an increase in inventory levels totaling $2,274,000 to meet
anticipated second quarter shipping requirements, which were not fully offset by
a net increase of $1,194,000 in accounts payable and other current  liabilities.
The net increase in accounts  payable and other  current  liabilities  consisted
mostly of  inventory  accruals,  which were not fully  offset by a  decrease  in
commissions and incentive payments due to the timing of such payments.

      Funds  provided by financing  activities of $8,572,000  were the result of
$8,615,000 in borrowing  under the Company's bank line of credit used to finance
our seasonal business activity, slightly offset by the payment of long-term debt
totaling $43,000.

      Net cash used in investing  activities  totaling $71,000 was primarily for
property and equipment purchases totaling $56,000.

      In September 2006, the Company amended its existing bank credit  facility.
The amended  facility,  which expires December 1, 2008,  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 September 30, 2007.  As of September 30, 2007,  borrowing on the
short-term  line of credit was  $13,130,000,  and at that date the  Company  had
$22,315,000 of additional  availability  (based on the borrowing  formula) under
the  credit  facility.  At  September  30,  2007 the  Company  was  contingently
obligated  on  open  letters  of  credit  with  an  aggregate   face  amount  of
approximately $13,233,000. Borrowing during the quarter ended September 30, 2007
was at the bank's prime rate or below, at the option of the Company.  The bank's
prime rate at September 30, 2007 was 7.75%.

      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, 2008. 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 September 30, 2007 is approximately $2,520,000.

                                       13

<PAGE>

      In June 2007,  the Company  entered into an agreement  for the sale of the
Company's  former  executive  office  and  warehouse  facility,  as  well as two
adjacent lots, located in West New York, New Jersey. The proposed purchase price
is  $8,000,000,  the  substantial  portion of which is payable at  closing.  The
closing of the sale is scheduled  for  February 15, 2008,  although the proposed
purchaser  has the right to extend the closing date for one  additional  4-month
period  upon  payment of an  extension  fee.  The closing is  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,  including the
receipt of acquisition and construction  loan  commitments.  However,  since the
proposed  transaction  is subject to a number of conditions  and  contingencies,
including the receipt of required governmental approvals,  there is no assurance
that a sale of the property will be concluded.

      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 September
30, 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 intends to finance these  repurchases from its own funds from operations
and/or from its bank credit facility. For the three-month period ended September
30, 2007, the Company did not purchase any shares of its common stock under this
repurchase  program. As of September 30, 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.

Contractual Obligations and Commercial Commitments

      To  facilitate  an  understanding  of  our  contractual   obligations  and
commercial commitments, the following data is provided as of September 30, 2007:

                                       14

<PAGE>

                     * * * * Payments Due by Period * * * *

<TABLE>
<CAPTION>
                                                       Less than 1                                More than
Contractual Obligations                    Total          Year        1-3 Years     3-5 Years      5 Years
<S>                                    <C>            <C>            <C>           <C>           <C>
Notes Payable                          $ 13,130,000   $ 13,130,000   $         -   $         -   $         -

Mortgage Payable                          2,520,000        179,000       323,000       366,000     1,652,000

Royalties                                   183,000        183,000             -             -             -

Operating Leases                          5,109,000      1,096,000     1,744,000       834,000     1,435,000
                                       ----------------------------------------------------------------------
Total Contractual Obligations          $ 20,942,000   $ 14,588,000   $ 2,067,000   $ 1,200,000   $ 3,087,000
                                       ----------------------------------------------------------------------

<CAPTION>
                                           Total        Less than        1-3                      More than
Other Commercial Commitments            Commitments      1 Year         Years       3-5 Years      5 Years
<S>                                    <C>            <C>                      <C>           <C>           <C>
Letters of Credit                      $ 13,233,000   $ 13,233,000             -             -             -
                                       ------------   ------------

Total Commercial Commitments           $ 13,233,000   $ 13,233,000             -             -             -
                                       ------------   ------------
</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.

      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.

                                       15

<PAGE>

Results of Operations

      Net sales were $37,453,000  during the three-month  period ended September
30, 2007,  compared to  $40,624,000 in the prior fiscal  three-month  comparable
period. Sales by category were as follows:

      Net sales for the Apparel  category were  $23,533,000,  or $240,000  lower
than the prior fiscal year. We  experienced  an 8.8% increase in our  children's
apparel  division due to the timing of shipping  programs  which were delayed by
one customer  from the fourth  quarter of fiscal 2007 until the first quarter of
fiscal  2008.  However,  this sales  increase  was offset,  in part,  by a 20.7%
reduction in net sales in the women's sleepwear  division also the result of the
timing of shipments,  but in this instance, from the first quarter to the second
quarter of fiscal 2008.  In addition,  last year's  first  quarter  included net
sales of our former catalogue division, which we phased out during that quarter.

      Net sales  totaling  $13,920,000  for the  Handbags  category in the first
quarter of fiscal 2008  represents a 17.4%  decrease  compared to $16,851,000 in
net sales for the same quarter of the prior fiscal year.  Approximately $800,000
of the sales  decrease,  or 4.8% of the 17.4%  overall  decrease,  relates  to a
customer  sales  allowance  for a product which was  manufactured  by a foreign,
third-party  supplier and did not meet our quality  standards.  The remainder of
the  sales  decrease  primarily  reflected  15.0%  lower  sales  in the  premium
incentive  business  due to the timing of  shipments  to one of its  significant
customers to the second quarter of fiscal 2008 from the first fiscal quarter. In
addition,  net sales  were 30.5%  lower in the  handbag  business  for the first
quarter versus last year's first quarter  primarily due to fewer orders received
from a significant customer.

      Gross  margins were 22.0% in the first  quarter of fiscal 2008 compared to
20.9% in the first quarter of 2007. Gross margins by category were as follows:

      Gross  margin for the  Apparel  category  decreased  to 24.4% in the first
three months of fiscal 2007 from 26.2% in the first quarter of fiscal 2007.  The
1.8  percentage  point decrease was primarily the result of lower margins in the
women's  sleepwear  division due to the mix of items sold in the current  fiscal
quarter compared to last year's first fiscal quarter.

      Gross margin for the Handbags category in the first quarter of fiscal 2008
improved to 18.1 % from 13.6% in the first quarter of fiscal 2007. This increase
was mainly due to improved premium  incentive  business margins  attributable to
product  mix.  Higher  margins in the handbag  business  were also the result of
product mix.

      Shipping,  selling and  administrative  expenses  increased by $222,000 to
$7,612,000,  or 18.2% of net  sales,  from  $7,390,000,  or 21.2% of net  sales,
mainly due to higher  product  development  costs of  $252,000  for the  women's
apparel,   the  children's  apparel  and  the  premium  businesses  relating  to
developing  potential  additional  future  business.  In  addition,  the Company
experienced an increase of approximately  $183,000 in general and administrative
costs, mostly the result of higher outside  professional and consulting fees, as
well as higher  selling costs  totaling  $69,000 due primarily to higher selling
office rent expense in the first  quarter of fiscal

                                       16

<PAGE>

2008 compared to last year's first fiscal quarter.  Offsetting  these increases,
in part,  were lower  royalty  expense of  $245,000.  Last year's  corresponding
quarter included royalty expenses relating to net sales of licensed products, as
well as minimum royalty  commitments  which were not met and had to be expensed,
in each case which did not recur  during  the first  quarter  this  year.  Lower
commission  expense totaling $62,000 and lower shipping and warehousing  expense
totaling  $19,000  were the  result of lower  sales  volume in the first  fiscal
quarter of 2008 compared to the same quarter last year.

      Interest  expense  in the  first  quarter  of  fiscal  2008  decreased  to
$146,000, or $201,000 below the last year's first quarter of $347,000, primarily
the result of a lower level of average  borrowing.  The lower level of borrowing
was due  primarily  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 in the current fiscal  quarter ended  September
30, 2007 compared to last year's same fiscal quarter.

      The  decrease of $271,000 in earnings  before  income  taxes for the three
month period ended  September 30, 2007 to $495,000  from earnings  before income
taxes of $766,000 in the prior fiscal  comparable  period was  primarily  due to
lower net sales and gross profit dollars,  as well as higher  shipping,  selling
and  administrative  expenses,  not fully offset by lower interest  expense,  as
discussed  above.  For the  three-month  period ended  September  30, 2007,  the
Company  had an  effective  tax rate of 39.4 %  compared  to 39.6 % in the first
three-month  period  of the prior  year.  Net  earnings  decreased  $163,000  to
$300,000 for the  three-month  period ended September 30, 2007 from $ 463,000 in
the prior comparable period.

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 is  effective  for the fiscal year
beginning July 1, 2007. The Company has determined  that the impact of FIN 48 on
the Company's consolidated financial statements is 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.

                                       17

<PAGE>

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.  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.

                                       18

<PAGE>

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 September 30,
2007 that has materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.

Item 4T. Controls and Procedures.

      Not applicable.

                                    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 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.

                                       19

<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)

November 14, 2007                                 /s/ Allan Ginsburg
                                                  ----------------------------
                                                  Allan Ginsburg
                                                  Chairman of the Board

November 14, 2007                                 /s/ Anthony Christon
                                                  ----------------------------
                                                  Anthony Christon
                                                  Vice President
                                                  Chief Financial Officer

                                       20

<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.

                                       21