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 March 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                        (IRS Employer
  of incorporation or organization)                  Identification Number)


  635 59th Street, West New York, New Jersey                   07093
   (Address of principal executive offices)                 (Zip code)


                                 (201) 868-9400
              (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 May 1, 2007
   -----------------------------           ---------------------------------
   Common Stock, $1.00 par value                       2,451,114

<PAGE>
<TABLE>
<CAPTION>

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

                                                        March 31,        June 30,
                                                          2007            2006
                                                      ------------    ------------
                                                      (Unaudited)      (See below)
<S>                                                   <C>             <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                             $        395    $        932
Accounts receivable, net                                    23,451          25,071
Inventory                                                    6,128           7,180
Prepaid expenses and other current assets                    1,132           3,862
                                                      ------------    ------------
TOTAL CURRENT ASSETS                                        31,106          37,045
                                                      ------------    ------------
PROPERTY PLANT AND EQUIPMENT, NET                            3,377             673
ASSETS HELD FOR SALE                                           357             357
GOODWILL                                                     3,338           3,338
OTHER ASSETS                                                   654             289
                                                      ------------    ------------
TOTAL ASSETS                                          $     38,832     $    41,702
                                                      ============     ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - bank                                  $      6,765    $     10,185
Accounts payable                                             2,805           4,547
Other current liabilities                                    6,649           5,360
                                                      ------------    ------------
TOTAL CURRENT LIABILITIES                                   16,219          20,092
                                                      ------------    ------------
MORTGAGE PAYABLE                                             2,432           2,563

MINORITY INTEREST                                              464              --
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock                                                 3,369           3,369
Additional paid-in capital                                   9,471           9,563
Retained earnings                                           12,987          12,295
                                                      ------------    ------------
                                                            25,827          25,227
Less:  Common shares in treasury at cost                     6,110           6,180
                                                      ------------    ------------
TOTAL STOCKHOLDERS' EQUITY                                  19,717          19,047
                                                      ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $     38,832    $     41,702
                                                      ============    ============
</TABLE>

The June 30, 2006 Balance Sheet is derived from audited financial statements.
See notes to condensed consolidated financial statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>

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

                                                                Three Months ended March 31,   Nine Months ended March 31,
                                                                ---------------------------    ---------------------------
                                                                    2007           2006            2007           2006
                                                                ------------   ------------    ------------   ------------
<S>                                                             <C>            <C>             <C>            <C>
Net sales                                                       $     34,705   $     27,939    $    122,913   $     92,701
Cost of goods sold                                                    25,851         21,386          93,696         70,009
                                                                ------------   ------------    ------------   ------------
Gross profit                                                           8,854          6,553          29,217         22,692
                                                                ------------   ------------    ------------   ------------

Shipping, selling and administrative expenses                          7,595          6,517          23,634         20,318
Pension plan settlement                                                3,089             --           3,089             --
Interest expense                                                         195            126             911            503
                                                                ------------   ------------    ------------   ------------
                                                                      10,879          6,643          27,634         20,821
                                                                ------------   ------------    ------------   ------------
(Loss) earnings before income taxes                                   (2,025)           (90)          1,583          1,871
(Benefit) provision for income taxes                                    (538)           (68)            891            816
                                                                ------------   ------------    ------------   ------------
Net (loss) earnings                                             $     (1,487)  $        (22)   $        692   $      1,055
                                                                ============   ============    ============   ============
Net (loss) earnings per common share - basic                    $       (.60)  $       (.01)   $        .28   $        .42
                                                                ============   ============    ============   ============
Weighted average number of shares outstanding - basic              2,491,000      2,455,000       2,484,000      2,484,000
                                                                ============   ============    ============   ============
Net (loss) earnings per common share - diluted                  $       (.60)  $       (.01)   $        .27   $        .41
                                                                ============   ============    ============   ============
Weighted average number of shares outstanding - diluted            2,491,000      2,455,000       2,541,000      2,557,000
                                                                ============   ============    ============   ============
</TABLE>

See notes to condensed consolidated unaudited financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

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


                                                                                     Nine Months Ended
                                                                                        March 31,
                                                                               ----------------------------
                                                                                   2007            2006
                                                                               ------------    ------------
<S>                                                                            <C>             <C>
  Cash Flows From Operating Activities:
  Net Earnings                                                                 $        692    $      1,055
  Adjustments to reconcile net earnings to net cash provided by
      operating activities:

  Pension plan settlement - non-cash portion                                          2,188              --
  Depreciation and amortization                                                         329             257
  Changes in assets and liabilities:
     Decrease in accounts receivable, net                                             1,620           5,342
     Decrease (increase) in inventory                                                 1,052            (210)
     Decrease in prepaid expense and other assets                                       170             734
     (Decrease) increase in accounts payable and other current liabilities             (463)            206
                                                                               ------------    ------------
  Net cash provided by operating activities                                           5,588           7,384
                                                                               ------------    ------------

  Cash Flows From Investing Activities:
      Purchase of property and equipment                                               (126)            (83)
      Investment in leased building                                                  (2,436)             --
                                                                               ------------    ------------
  Net cash used in investing activities                                              (2,562)            (83)
                                                                               ------------    ------------

  Cash Flows From Financing Activities:
      Net decrease in loans payable - bank                                           (3,420)         (5,760)
      Payment of long-term debt                                                        (122)           (114)
      Excess tax benefit from stock options                                              17              --
      Repurchase of common stock                                                       (132)         (1,113)
      Exercise of stock options                                                          94             128
                                                                               ------------    ------------
Net cash used in financing activities                                                (3,563)         (6,859)
                                                                               ------------    ------------
Net (decrease) increase in Cash and Cash Equivalents                                   (537)            442
Cash and Cash Equivalents, beginning of period                                          932             893
                                                                               ------------    ------------
Cash and Cash Equivalents, end of period                                       $        395    $      1,335
                                                                               ------------    ------------
Supplemental Information:
   Interest paid                                                               $        925    $        515
                                                                               ------------    ------------
   Taxes paid                                                                  $        647    $        282
                                                                               ------------    ------------
   Minority Interest                                                           $        464    $         --
                                                                               ------------    ------------
</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
March 31, 2007, the condensed consolidated statements of operations and cash
flows for the three and nine-month periods ended March 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 2006 Annual
Report to Stockholders for the year ended June 30, 2006. The results of
operations for the period ended March 31, 2007 are not necessarily indicative of
operating results for the full fiscal year.

         Certain items previously reported in specific captions in the
accompanying financial statements have been reclassified to conform to the
current period's classifications. None of the reclassifications were material.

         Consolidation of Variable Interest Entity - On August 22, 2006, the
Company entered into a lease agreement for a new corporate office building, and
plans to relocate 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 Financial Accounting Standards Board ("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

                                       5
<PAGE>

building, approximately $2,900,000, and the unamortized capital of the equity
owners of the Lessor (minority interest), approximately $500,000, are reflected
in the March 31, 2007 Condensed Consolidated Balance Sheet. There was no
significant impact to net earnings.

Recently Issued Accounting Standards:

         In September 2006, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements." SAB No. 108 requires that registrants quantify errors
using both a balance sheet and income statement approach and evaluate whether
either approach results in a misstated amount that, when all relevant
quantitative and qualitative factors are considered, is material. SAB No. 108 is
effective for the Company's fourth quarter of 2007. The Company is currently
evaluating the impact of adopting SAB No. 108, if any, on its consolidated
financial statements.

         In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements", which defines fair value, establishes a framework for measuring
fair value and expands disclosures about fair value measurements. The statement
is effective for fiscal years beginning after November 15, 2007. The Company
does not expect the adoption of SFAS No. 157 to have a material impact on its
consolidated financial statements.

         In September 2006, the FASB issued SFAS No. 158, "Employer's Accounting
for Defined Benefit Pension and Other Postretirement Plans - an amendment of
FASB Statements No. 87, 88, 106 and 132(R)." SFAS No.158 requires an employer to
recognize the over-funded or under-funded status of defined benefit and retiree
medical plans as an asset or liability in its statement of financial position
and to recognize through comprehensive income changes in that funded status in
the year in which they occur. The Company does not expect the adoption of SFAS
No. 158 to have a material impact on its consolidated financial statements.

         In July 2006, FASB issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes," which clarifies the accounting for uncertainty
in income taxes recognized in the financial statements in accordance with FASB
No. 109, Accounting for Income Taxes. FIN 48 provides guidance on the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosures and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company is currently evaluating the impact of this
standard, if any, on its consolidated financial statements.

         In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159
permits entities to measure many financial assets and financial liabilities at
fair value. Unrealized gains and losses on items for which the fair value option
has been elected are reported in earnings. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007. The Company does not expect the
adoption of SFAS No. 159 to have a material impact on its consolidated financial
statements.

                                       6
<PAGE>

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 under the 1990 Plan, although at
March 31, 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 March 31, 2007, 205,000 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.

         The Company did not grant any stock options during the first nine
months of fiscal 2007 or fiscal 2006.

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

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

                                       7
<PAGE>
<TABLE>
<CAPTION>

                                                     Three Months Ended               Nine Months Ended
                                                          March 31,                      March 31,
                                                 ---------------------------   ---------------------------
                                                     2007           2006           2007           2006
                                                 ------------   ------------   ------------   ------------
<S>                                              <C>            <C>            <C>            <C>
Basic Net Earnings Per Common Share:
Net (Loss) Earnings                              $     (1,487)  $        (22)  $        692   $      1,055
                                                 ---------------------------------------------------------
Basic Weighted Average Shares Outstanding           2,491,000      2,455,000      2,484,000      2,484,000
                                                 ---------------------------------------------------------
Basic Net (Loss) Earnings Per Common Share       $       (.60)  $       (.01)  $        .28   $        .42
                                                 ---------------------------------------------------------
<CAPTION>

                                                     Three Months Ended               Nine Months Ended
                                                          March 31,                      March 31,
                                                 ---------------------------   ---------------------------
                                                     2007           2006           2007           2006
                                                 ------------   ------------   ------------   ------------
<S>                                              <C>            <C>            <C>            <C>
Diluted Net Earnings Per Common Share:
Net (Loss) Earnings                              $     (1,487)  $        (22)  $        692   $      1,055
                                                 ---------------------------------------------------------
Basic Weighted Average Shares Outstanding           2,491,000      2,455,000      2,484,000      2,484,000
Add: Dilutive Options                                      --             --         57,000         73,000
                                                 ---------------------------------------------------------
Diluted Weighted Average Shares Outstanding         2,491,000      2,455,000      2,541,000      2,557,000
                                                 ---------------------------------------------------------
Diluted Net (Loss) Earnings Per Common Share     $       (.60)  $       (.01)  $        .27   $        .41
                                                 ---------------------------------------------------------
</TABLE>

         For the three month periods ended March 31, 2007 and March 31, 2006,
all options have been excluded from earnings per share calculations since, in
each period, the Company incurred a loss and inclusion of the options would have
been anti-dilutive. There were no options to purchase shares of the Company's
Common Stock at March 31, 2007 or March 31, 2006 that were anti-dilutive. At
March 31, 2007, there were outstanding options to purchase 125,000 shares of
Common Stock.

3.       Inventories:
         -----------

         Inventories consist of the following components (in thousands):
<TABLE>
<CAPTION>

                                                                 March 31, 2007    June 30, 2006
                                                                ---------------   ---------------
<S>                                                             <C>               <C>
Raw materials                                                   $           252   $           692
Work in process                                                              --                49

Finished Goods                                                            5,876             6,439
                                                                ---------------   ---------------
                                                                $         6,128   $         7,180
                                                                ---------------   ---------------
</TABLE>

                                       8
<PAGE>
4.       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 nine-month periods ended
March 31, 2007, the Company purchased 6,000 and 12,548 shares of its Common
Stock, respectively, in connection with this repurchase program. As of March 31,
2007, the Company has purchased a total of 315,169 shares of its Common Stock at
a cost of approximately $1,594,000 in connection with the repurchase program.

5.       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
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 March 31, 2007. As of March 31, 2007, borrowing on the
short-term line of credit was $6,765,000, and at that date the Company had
$12,935,000 of additional availability (based on the borrowing formula) under
the credit facility. At March 31, 2007 the Company was contingently obligated on
open letters of credit with an aggregate face amount of approximately
$12,642,000. 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 March 31, 2007 was 8.25%.

         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, at
which time the interest rate will be reset, for the period commencing September
1, 2007 through August 31, 2012, to a fixed rate based on the Amortization
Annual Rate of the Federal Home Loan Bank Board of New York plus 250 basis
points. The financing has a fifteen-year term 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 March 31, 2007 is approximately $2,605,000.

                                       9
<PAGE>

6.       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, 2011.

         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

                  2007            $    264,000
                  2008               1,053,000
                  2009                 804,000
                  2010                 332,000
                  2011                 176,000
               Thereafter              421,000

         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 which expire in various
years through 2008. Aggregate minimum royalty commitments by fiscal year are as
follows:

                                      Minimum
               Year Ended             Royalty
                June 30,            Commitments

                  2007            $     81,000

                  2008                 119,000

         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 March 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 March 31,
2007.

7.       Retirement Plan:
         ---------------

         The Company had a trusteed, defined-benefit pension plan, covering
certain of its salaried and hourly employees, which was terminated effective
January 31, 2006. The pension plan had provided for pension benefits that were
based on a fixed amount of compensation per year of service, career average pay

                                       10
<PAGE>

or on the employee's compensation during a specified number of years before
retirement. In December 2006, the Company received a favorable determination
letter that permitted the Company to begin to calculate and to make a final
settlement distribution to the pension plan participants. The final settlement
distribution was made on March 29, 2007. At the time of the settlement
distribution, the Company recorded a charge to earnings before income taxes of
approximately $3,089,000 ($2,008,000 after tax), consisting of the write-off of
the unamortized pension costs of $2,188,000, plus a final cash contribution to
fully fund the pension plan totaling approximately $901,000.

         Pension expenses includes the following components:
<TABLE>
<CAPTION>

                                             Three Month Period Ended          Nine Month Period Ended
                                                      March 31,                        March 31,
                                            ---------------------------      ---------------------------
                                                2007           2006              2007           2006
                                            ------------   ------------      ------------   ------------
<S>                                         <C>            <C>               <C>            <C>
COMPONENTS OF NET
PERIODIC BENEFIT COST:
  Pension Settlement Cost                   $  3,089,000   $         --      $  3,089,000             --
  Service cost                                        --   $     45,214                --   $    313,708
  Interest cost                                   85,778         84,824           257,378        248,103
  Expected return on assets                      (83,135)       (81,824)         (249,405)      (240,230)
  Amortization of prior service cost                  --              4                --             28
  Amortization of actuarial loss                  41,835         48,416           125,505        171,674
                                            ------------------------------------------------------------
  Net periodic cost                         $  3,133,478   $     96,634      $  3,222,478   $    493,283
                                            ============================================================
</TABLE>

8.       Subsequent Event:
         ----------------

On April 16, 2007 the Company announced the termination of the option contract
it previously entered into relating to the sale of the Company's executive
offices and warehouse facility, as well as two adjacent lots, located in West
New York, New Jersey.

The option contract was subject to a number of contingencies and conditions,
including receipt by the optionee of governmental approvals for the use of the
Company's West New York, New Jersey properties as residential housing. The
Company had previously granted to the optionee extensions of the time to obtain
the approvals. However, the optionee had not received, and advised us that he
did not expect to receive, the necessary approvals. Accordingly, at the
optionee's request, the parties have agreed to a termination of the contract.
The option contract was set to expire by its terms on May 2, 2007.

Under the option contract, the Company is entitled to retain approximately
$268,000 in payments made by the optionee during the term of the option
contract, including interest. This amount will be reflected in the Company's
financial results for the fourth quarter of the current fiscal year.

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

                                       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, 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 2007.
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, 2006, which we filed with the
Securities and Exchange Commission on September 28, 2006.

                                       12
<PAGE>

Liquidity and Capital Resources

         The Company's cash and cash equivalents decreased $537,000 during the
nine-month period ended March 31, 2007 to $395,000 from $932,000 at June 30,
2006.

         Net cash provided by operating activities totaled $5,588,000, primarily
from net earnings of $692,000, the write-off of unamortized pension costs
relating the pension settlement ($2,188,000), a decrease in accounts receivable
($1,620,000), and a decrease in inventory ($1,052,000), offset, in part, by an
increase in accounts payable and other current liabilities totaling $463,000.

         Net cash used in financing activities of $3,563,000 were mostly the
result of a net decrease totaling $3,420,000 in borrowing under the Company's
bank line of credit, the payment of long-term debt totaling $122,000, and
approximately $132,000 used to repurchase 12,548 shares of the Company's Common
Stock, offset, in part, by $94,000 in stock option proceeds.

         Net cash used in investing activities of $2,562,000 primarily reflects
the $2,200,000 mortgage receivable and $200,000 option deposit given with
respect to the new executive office building, and other property and equipment
purchases totaling $126,000.

         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 March 31, 2007. As of March 31, 2007, borrowing on the
short-term line of credit was $6,765,000, and at that date the Company had
$12,935,000 of additional availability (based on the borrowing formula) under
the credit facility. At March 31, 2007 the Company was contingently obligated on
open letters of credit with an aggregate face amount of approximately
$12,642,000. 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 March 31, 2007 was 8.25%.

         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, at
which time the interest rate will be reset, for the period commencing September
1, 2007 through August 31, 2012, to a fixed rate based on the Amortization
Annual Rate of the Federal Home Loan Bank Board of New York plus 250 basis
points. The financing has a fifteen-year term 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 March 31, 2007 is approximately $2,605,000.

                                       13
<PAGE>

         As previously announced, the Company entered into an Option Contract of
Sale dated as of September 7, 2005, as amended, relating to the sale of the
Company's executive offices and warehouse facility, as well as two adjacent
lots, located in West New York, New Jersey. The proposed purchase price was
$8,800,000. On April 16, 2007 the Company announced the termination of this
option contract.

         The option contract had been subject to a number of contingencies and
conditions, including receipt by the optionee of governmental approvals for the
use of the Company's West New York, New Jersey properties as residential
housing. We had previously granted to the optionee extensions of the time to
obtain the approvals. However, the optionee did not receive, and advised us that
he did not expect to receive, the necessary approvals. Accordingly, at the
optionee's request, the parties have agreed to a termination of the contract.
The option contract was set to expire by its terms on May 2, 2007.

         Under the option contract, the Company is entitled to retain
approximately $268,000 in payments made by the optionee during the term of the
option contract, including interest. This amount will be reflected in the
Company's financial results for the fourth quarter of the current fiscal year
ending June 30, 2007.

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

         The Company had a trusteed, defined-benefit pension plan, covering
certain of its salaried and hourly employees, which was terminated effective
January 31, 2006. The pension plan had provided for pension benefits that were
based on a fixed amount of compensation per year of service, career average pay
or on the employee's compensation during a specified number of years before
retirement. In December 2006, the Company received a favorable determination
letter that permitted the Company to begin to calculate and to make a final
settlement distribution to the pension plan participants. The final settlement
distribution was made on March 29, 2007. At the time of settlement, the Company
was required to record a charge to earnings before income taxes of approximately
$3,089,000, consisting of a final cash payment of approximately $901,000 to
fully fund the pension plan, and a non-cash charge of approximately $2,188,000
consisting of the write-off of the unamortized pension costs.

         Beginning in fiscal 2007, the Company established a new 401(k) benefit
plan for certain of its salaried and hourly employees which has a lower employee
benefit cost than the terminated pension plan.

         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 March
31, 2007.


                                       14
<PAGE>

         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 nine-month periods ended
March 31, 2007, the Company purchased 6,000 and 12,548 shares of its Common
Stock, respectively, under this repurchase program. As of March 31, 2007, the
Company purchased a total of 315,169 shares of its Common Stock at a cost of
approximately $1,594,000 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 March 31, 2007:


                                       15
<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                          $  6,765,000   $  6,765,000   $         --   $         --   $         --

Mortgage Payable                          2,605,000        173,000        322,000        366,000      1,744,000

Royalties                                   200,000         81,000        119,000             --

Operating Leases                          3,050,000        264,000      2,189,000        176,000        421,000
                                       ------------------------------------------------------------------------
Total Contractual
   Obligations                         $ 12,620,000   $  7,283,000   $  2,630,000   $    542,000   $  2,165,000
                                       ------------------------------------------------------------------------
<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                      $ 12,642,000   $ 12,642,000             --             --             --
                                       ------------   ------------

Total Commercial Commitments           $ 12,642,000   $ 12,642,000             --             --             --
                                       ------------   ------------
</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 plans to relocate 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

                                       16
<PAGE>

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 $34,705,000 and $122,913,000 during the three and
nine-month periods ended March 31, 2007, compared to $27,939,000 and $92,701,000
in the same three and nine-month periods during fiscal 2006. For the three and
nine-month periods ended March 31, 2007, net sales in the Apparel category rose
31.3% and 30.5%, respectively, while the Handbag category net sales were higher
by 9.1% and 37.1%, respectively, in each case compared to last year's three and
nine-month period net sales.

         Sales by category were as follows:

         Net sales for the Apparel category were $24,931,000 for the three-month
period ended March 31, 2007, or $5,950,000 higher than the prior fiscal
comparable three-month period. This 31.3% increase was primarily due to a 52.3%
increase in our children's apparel division, due to expanded programs with one
customer as a result of recent strong performance of our product offerings at
retail, and additional business from our "Messages from the Heart" license, as
well as a 6.4% increase in net sales in the women's sleepwear division.

         For the nine-month period ended March 31, 2007, net sales for the
Apparel category were $82,552,000, or 30.5% higher than the prior fiscal year's
same period due to increases in our children's apparel and women's sleepwear
businesses for the same reasons described above.

         Net sales totaling $9,774,000 for the Handbags category in the third
quarter of fiscal 2007 represented a 9.1% increase compared to $8,958,000 in net
sales for the same quarter in fiscal 2006. The third quarter net sales increase
primarily reflected higher sales in the premium incentive business (up 40.6%)
due to expanded programs for one of its significant customers. Offsetting this
increase was a 30.9% net sales decrease in the handbag business for the third
quarter versus last year's third quarter due the timing of shipments to a
significant customer who is in an overstocked position, which is expected to
continue into the first quarter of fiscal 2008.

         For the nine-month period ended March 31, 2007, net sales for the
Handbags category were $40,361,000, an improvement of $10,921,000, or 37.1% over
the prior comparable nine-month period. Approximately 96% of the Handbag
category net sales dollar increase for the nine-month period relates to
increased premium incentive business, for the reasons given above.

         Gross margins were 25.5% and 23.8% in the three-month and nine-month
periods ended March 31, 2007, compared to 23.5% and 24.5% in the comparable
periods ended March 31, 2006. Gross margins by category were as follows:

                                       17
<PAGE>

         Gross margin for the Apparel category increased to 27.1% in the
three-month period ended March 31, 2007 from 24.3% in the third quarter of
fiscal 2006. The 2.8 percentage point increase was primarily the result of
higher margins in both the women's sleepwear and the children's apparel division
margins attributable to product mix. For the nine-month period ended March 31,
2007, gross margins for the Apparel category decreased slightly to 27.0% (from
27.7%) in the prior comparable period.

         Gross margin for the Handbags category in the third quarter of fiscal
2007 declined to 21.4% from 21.6% in the third quarter of fiscal 2006. This
decrease was mainly due to lower handbag margins due to product mix that were
not fully offset by somewhat higher premium incentive business margins
attributable to several new programs. For the nine-month period ended March 31,
2007, the Handbags category decreased slightly to 17.2% (from 17.6% in the prior
comparable period) attributable to a decrease in handbag business margins due to
product mix, not fully offset by only slightly higher premium incentive business
gross margins.

         As a percentage of net sales, shipping, selling and administrative
expenses decreased to 21.9% for the three-month period ended March 31, 2007 from
23.3% for the three-month period ended March 31, 2006. However, shipping,
selling and administrative expenses increased by $1,078,000 in the third quarter
of fiscal 2007 compared to the prior year comparable period, mainly due to
higher sales commission costs totaling $410,000 relating to increased sales
volume in this year's third fiscal quarter, higher product development costs of
$276,000 for both the children's apparel and premium business relating to
potential additional future business, and a $334,000 increase in general and
administrative costs, principally due to higher compensation costs. In addition,
the Company experienced higher shipping and warehousing expense totaling $41,000
relating the higher sales volume and lower royalty expense totaling $33,000 as a
result of a product mix that included fewer licensed product sales in this
fiscal quarter compared to the same period last year.

         Shipping, selling and administrative expenses for the nine-month period
ended March 31, 2007 decreased as a percentage of net sales (19.2% of net sales
compared with 21.9% of net sales in the same period in fiscal 2006), and were
$23,634,000 for the period, or $3,316,000 higher than the total of $20,318,000
for the comparable nine-month period in the prior fiscal year. The increase was
primarily attributable to higher sales commissions totaling $1,297,000 relating
to the higher sales volume, higher product development costs of $798,000 to
support the increase in sales and costs relating to potential future business, a
$783,000 increase in general and administrative costs for higher compensation
related expenses, increased royalty expense totaling $190,000 for certain
minimum royalty commitments which were not met and had to be expensed, and
increased shipping and warehouse costs totaling $221,000 related to the higher
level of sales volume in the nine month period ended March 31, 2007 compared to
the same nine months last year.

         As a result of the termination and final pension plan distribution to
the plan's participants, the Company incurred a one-time pretax pension plan
settlement charge totaling approximately $3,089,000 for the three and nine-month
periods ended March 31, 2007, consisting of a non-cash portion totaling
$2,188,000 to write off unamortized prepaid pension costs and a final cash
contribution totaling $901,000.

                                       18
<PAGE>

         Interest expense of $195,000 in the third quarter of fiscal 2007
compares to $126,000 in the prior comparable quarter. For the nine-month period
ended March 31, 2007, interest expense totaled $911,000 versus $503,000. Both
increases are primarily the result of a higher level of average borrowing to
finance higher sales volume, as well as about a one percent average borrowing
cost increase in the current periods.

         The decrease in earnings before income taxes of $1,935,000 and $288,000
for the three and nine-month periods ended March 31, 2007, respectively,
compared to fiscal 2006 fiscal third quarter and nine-month periods was
primarily due to the $3,089,000 pretax pension plan settlement, higher shipping,
selling and administrative expenses and higher interest expense, not offset by
higher net sales and gross profit dollars, as discussed above.

         For the nine-month period ended March 31, 2007, the Company's
experienced a 56.3% effective tax rate compared to 43.6% for the first
nine-month periods of fiscal 2006. The Company's effective rate increased
significantly due to the decline in earnings primarily relating to the
$3,089,000 pre-tax pension plan settlement charge to earnings discussed above,
resulting in the Company's inability to utilize certain state net operating loss
carry-forwards and other tax benefits.

         Net earnings decreased $1,465,000 and $363,000 for the three and
nine-month periods ended March 31, 2007, respectively, from the prior comparable
periods, primarily due to the fiscal 2007 third quarter and nine-month impact of
the charge to earnings relating to the pension plan settlement and the resulting
higher effective tax rate, discussed above.

 RECENTLY ISSUED ACCOUNTING STANDARDS

         In September 2006, the SEC issued Staff Accounting Bulletin ("SAB") No.
108, "Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements." SAB No. 108 requires that
registrants quantify errors using both a balance sheet and income statement
approach and evaluate whether either approach results in a misstated amount
that, when all relevant quantitative and qualitative factors are considered, is
material. SAB No. 108 is effective for the Company's fourth quarter of 2007. The
Company is currently evaluating the impact of adopting SAB No. 108, if any, on
its consolidated financial statements.

         In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements", which defines fair value, establishes a framework for measuring
fair value and expands disclosures about fair value measurements. The statement
is effective for fiscal years beginning after November 15, 2007. The Company
does not expect the adoption of SFAS No. 157 to have a material impact on its
consolidated financial statements.

                                       19
<PAGE>

         In September 2006, the FASB issued SFAS No. 158, "Employer's Accounting
for Defined Benefit Pension and Other Postretirement Plans - an amendment of
FASB Statements No. 87, 88, 106 and 132(R)." SFAS No.158 requires an employer to
recognize the over-funded or under-funded status of defined benefit and retiree
medical plans as an asset or liability in its statement of financial position
and to recognize through comprehensive income changes in that funded status in
the year in which they occur. The Company does not expect the adoption of SFAS
No. 158 to have a material impact on its consolidated financial statements.

         In July 2006, FASB issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes," which clarifies the accounting for uncertainty
in income taxes recognized in the financial statements in accordance with FASB
No. 109, Accounting for Income Taxes. FIN 48 provides guidance on the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosures and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company is currently evaluating the impact of this
standard, if any, on its consolidated financial statements.

         In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159
permits entities to measure many financial assets and financial liabilities at
fair value. Unrealized gains and losses on items for which the fair value option
has been elected are reported in earnings. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007. The Company does not expect the
adoption of SFAS No. 159 to have a material impact on its 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.

                                       20
<PAGE>

FORWARD-LOOKING STATEMENTS

         This Form 10-Q may contain forward-looking statements that are being
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The Company's actual performance and results may vary as a
result of a number of risks, uncertainties and other factors, both foreseen and
unforeseen, including general economic and business conditions, competition in
the accessories and apparel markets, continuing favorable sales patterns,
pricing and consumer buying trends. Additional uncertainty exists for the
potential negative impact that Severe Acute Respiratory Syndrome (SARS) may have
on our business, as it relates to our production in the Far East and other
countries in which we operate.


                                       21
<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,
2006.

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
March 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, 2006.



Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

         (a)      During the three-month period ended March 31, 2007, the
Company issued 27,000 shares of its common stock, $1.00 par value per share
("Common Stock"), upon the exercise of stock options previously granted under a
stockholder approval stock option plan of the Company. The Company received
$84,000 in cash from the individuals exercising the options (the "Optionees") in
payment of the exercise price for the issued shares.

         The Company is relying on an exemption from registration contained in
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
in connection with the issuance of the shares of Common Stock. Each Optionee has
represented, warranted and agreed, among other things, that the shares of Common
Stock issued upon the exercise of the applicable options have been acquired for
his own account, for investment only and not with a view to the resale or
distribution thereof; and understands that the shares of Common Stock must be
held indefinitely unless the sale or other transfer thereof is subsequently
registered under the Securities Act or an exemption from such registration is
available at that time. Each Optionee has also represented that he has knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of his investment in the shares of Common Stock;
has adequate means of providing for his current needs and possible future

                                       22
<PAGE>

contingencies; is able to bear the economic risks of his investment in the
shares of Common Stock; is able to hold the shares of Common Stock for an
indefinite period of time and has a sufficient net worth to sustain a loss of
his investment in the shares of Common Stock in the event any loss should occur,
and has had access to and received such documents and information concerning the
Company as he has requested. A Securities Act restrictive legend is placed on
each certificate representing the shares of Common Stock and stop transfer
instructions are placed on such certificates as may be necessary or appropriate
to, among other things, prevent a violation of, or to perfect an exemption from,
the registration requirements of the Securities Act and any applicable state
securities laws.

         (b)      Not Applicable.

         (c)      Issuer Purchases of Equity Securities.

         The following sets forth certain information with respect to purchases
by the Company of shares of Common Stock during the three months ended March 31,
2007:
<TABLE>
<CAPTION>

                                                                      Total Number of Shares      Maximum Number of
                                   Total               Average         Purchased as Part Of      Shares that May Yet
    Period                    Number of Shares       Price Paid      Publicly Announced Plans     Be Purchased Under
                                 Purchased            per Share           Or Programs(1)        the Plans or Programs
                              ---------------------------------------------------------------------------------------
<S>                                 <C>                <C>                   <C>                       <C>
January 1, 2007-                       --              $    --                  --                     165,839
January 31, 2007
February 1, 2007-                      --                   --                  --                     165,839
February 28, 2007
March 1, 2007-                      6,000              $ 12.88               6,000                     159,831
March 31, 2007
                              ---------------------------------------------------------------------------------------
          Total                     6,000              $ 12.88               6,000                     159,831
</TABLE>

(1)  In December 2002, the Company publicly announced that the Board of
     Directors authorized the repurchase of up to 350,000 shares of 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. Reference
     is made to "Management's Discussion and Analysis of Financial Condition and
     Results of Operations" and to Note 4 of the Notes to Consolidated Unaudited
     Financial Statements on page 7 of this Form 10-Q for additional information
     about repurchases of shares of Common Stock.



                                       23
<PAGE>

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.



                                       24
<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)


May 15, 2007                           /s/ ALLAN GINSBURG
                                       -----------------------------------------
                                       Allan Ginsburg
                                       Chairman of the Board


May 15, 2007                           /s/ ANTHONY CHRISTON
                                       -----------------------------------------
                                       Anthony Christon
                                       Vice President
                                       Chief Financial Officer




                                       25
<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.



                                       26