|SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549


Form 10-Q


QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934


For the quarterly
period ended: November 30, 2002


Commission File Number
0-13851


NITCHES, INC.


(Exact name of
registrant as specified in its charter)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|California
(State of Incorporation) | 95-2848021
(I.R.S. Employer Identification No.)
|----------------------------------- | -----------------------------------------------

|10280 Camino Santa Fe,
San Diego, California 92121(Address of principal executive offices)


Registrants
telephone number: (858) 625-2633


Securities registered
pursuant to Section 12(b) of the Act:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Title of each class        |  | Name of each
exchange on which registered
|-------------------------- |  | -----------------------------------------
|Common Stock, no par value |  | NASDAQ SmallCap Market                   

|Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|


As of November 30, 2002 the
Registrant had 1,171,169 shares of common stock outstanding.


1
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART I 
FINANCIAL INFORMATION


Item 1. Financial
Statements


NITCHES, INC. AND
SUBSIDIARIESCondensed Consolidated Balance Sheets
|-----------------------------------------------------------------------------------------------------------------------------------

|                                                             | November 30,2002 |  | August 31,2002 |          
|------------------------------------------------------------ | ---------------- |  | -------------- | ---------
|ASSETS                                                       |                  |  |                |          
|                                                             |                  | 
|Current assets:                                              |                  | 
|Cash and cash equivalents                                    |                  |  | $              | 170,000  
|Receivables:                                                 |                  | 
|Trade accounts, less allowances                              |                  |  |                | 3,980,000
|Due from affiliates and employees                            |                  |  |                | 106,000  
|                                                             |                  |  |                |          
|Total receivables                                            |                  |  |                | 4,086,000
|                                                             |                  | 
|Refundable income taxes                                      |                  |  |                | 79,000   
|Inventories                                                  |                  |  |                | 3,334,000
|Deferred income taxes                                        |                  |  |                | 252,000  
|Other current assets                                         |                  |  |                | 110,000  
|                                                             |                  |  |                |          
|Total current assets                                         |                  |  |                | 8,031,000
|                                                             |                  | 
|Investment in Designer Intimates, Inc.                       |                  |  |                | 288,000  
|Furniture, fixtures and equipment, net                       |                  |  |                | 77,000   
|Deferred income taxes                                        |                  |  |                | 23,000   
|Other assets                                                 |                  |  |                | 17,000   
|                                                             |                  |  |                |          
|                                                             |                  |  | $              | 8,436,000
|                                                             |                  |  |                |          
|                                                             |                  | 
|LIABILITIES AND SHAREHOLDERS EQUITY                         |                  | 
|                                                             |                  | 
|Current liabilities:                                         |                  | 
|Accounts payable                                             |                  |  | $              | 1,595,000
|Accrued expenses                                             |                  |  |                | 214,000  
|                                                             |                  |  |                |          
|Total current liabilities                                    |                  |  |                | 1,809,000
|                                                             |                  | 
|Shareholders equity:                                        |                  | 
|Preferred stock, no par value; 25,000,000 shares authorized, |                  | 
|no shares issued or outstanding                              |                  |  |                |         
|Common stock, no par value; 50,000,000 shares authorized;    |                  | 
|1,171,169 shares issued and outstanding                      |                  |  |                | 1,495,000
|Retained earnings                                            |                  |  |                | 5,132,000
|                                                             |                  |  |                |          
|Total shareholders equity                                   |                  |  |                | 6,627,000
|                                                             |                  |  |                |          
|                                                             |                  |  | $              | 8,436,000
|                                                             |                  |  |                |          

|The accompanying notes
are an integral part of these financial statements

2
|----------------------------------------------------------------------------

|NITCHES, INC. AND
SUBSIDIARIESConsolidated Statements of Income(Unaudited)
|--------------------------------------------------------------------------

|                                             | Three months ended November 30, | 
|-------------------------------------------- | ------------------------------- | 
|
|                                             |                                 | 
|Net sales                                    |                                 | 
|                                             |                                 | 
|Cost of goods sold                           |                                 | 
|                                             |                                 | 
|                                             |                                 | 
|Gross profit                                 |                                 | 
|                                             |                                 | 
|Selling, general and administrative expenses |                                 | 
|                                             |                                 | 
|                                             |                                 | 
|Income from operations                       |                                 | 
|                                             |                                 | 
|Interest expense, net                        |                                 | 
|Income from unconsolidated subsidiary        |                                 | 
|                                             |                                 | 
|                                             |                                 | 
|Income before income taxes                   |                                 | 
|                                             |                                 | 
|Provision/(benefit) for income taxes         |                                 | 
|                                             |                                 | 
|                                             |                                 | 
|Net income                                   |                                 | 
|                                             |                                 | 
|                                             |                                 | 
|Earnings per share (basic and diluted)       |                                 | 
|                                             |                                 | 
|                                             |                                 | 
|Shares outstanding (basic and diluted)       |                                 | 
|                                             |                                 | 

|The accompanying notes
are an integral part of these financial statements

3
|----------------------------------------------------------------------------

|NITCHES, INC. AND
SUBSIDIARIESCondensed Consolidated
Statements of Cash Flows(Unaudited)
|----------------------------------------------------------------------------------------

|                                                     | Three months ended November 30, | 
|---------------------------------------------------- | ------------------------------- | 
|
|                                                     |                                 | 
|Net cash provided by operating activities            |                                 | 
|                                                     |                                 | 
|Cash flows from investing activities:                |                                 | 
|Capital expenditures                                 |                                 | 
|                                                     |                                 | 
|Cash flows from financing activities:                |                                 | 
|Dividends paid                                       |                                 | 
|                                                     |                                 | 
|                                                     |                                 | 
|Net increase (decrease) in cash and cash equivalents |                                 | 
|                                                     |                                 | 
|Cash and cash equivalents at beginning of period     |                                 | 
|                                                     |                                 | 
|Cash and cash equivalents at end of period           |                                 | 
|                                                     |                                 | 
|                                                     |                                 | 
|Supplemental disclosures of cash flow information:   |                                 | 
|Cash paid during the period:                         |                                 | 
|Interest                                             |                                 | 
|Income taxes                                         |                                 | 
|                                                     |                                 | 
|Non-cash investing activity:                         |                                 | 
|Accrued earnings of unconsolidated subsidiary        |                                 | 

|The accompanying notes
are an integral part of these financial statements

4
|----------------------------------------------------------------------------

|NITCHES, INC. AND
SUBSIDIARIES


Notes to Condensed
Consolidated Financial Statements
|-------------------------------------------------------------------------------------

|1. | Description
of Business
|-- | -----------------------

|Nitches,
 Inc.  (the  Company) is a wholesale  importer and  distributor  primarily of womens
 clothing  manufactured  to its specifications and distributed in the United States under
Company brand labels and private retailer labels.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Condensed
Financial Statements:
|-- | -------------------------------

|The
accompanying unaudited consolidated financial statements have been prepared in accordance
with the instructions to Form 10-Q. They do not include all information and footnotes
necessary for a fair presentation of financial position and results of operations and cash
flows in conformity with generally accepted accounting principles. These consolidated
financial statements should be read in conjunction with the consolidated financial
statements and related notes contained in the Companys Annual Report on Form 10-K
for the year ended August 31, 2002. In the opinion of Management, all adjustments
considered necessary for a fair presentation have been included in the interim period.
Operating results for the three months ended November 30, 2002 are not necessarily
indicative of the results that may be expected for the year ending August 31, 2003.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Earnings
Per share:
|-- | -------------------

|At
November 30, 2002, there were no stock options or similar instruments outstanding and
therefore no dilutive effect to the weighted average number of shares outstanding.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | November 30,2002 |  | August 31,2002 |          
| | ---------------- |  | -------------- | ---------
| | Fabric and trim  |  | $              | 224,000  
| | Work in progress |  |                |         
| | Finished goods   |  |                | 3,110,000
| |                  |  |                |          
| |                  |  | $              | 3,334,000
| |                  |  |                |          

|5. | Trade
accounts receivable:
|-- | --------------------------

|Pursuant
to the terms of an agreement between Nitches and a factor, Nitches sells a majority of its
trade accounts receivable to the factor on a pre-approved, non-recourse basis. The Company
may request advances in anticipation of customer collections and open letters of credit
through the factor, all of which are collateralized by all of the Companys assets.
Outstanding advances are charged interest at the factors prime rate less one half
percent. Advances and contingent liabilities for irrevocable letters of credit outstanding
are as follows:

5
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NITCHES, INC. AND
SUBSIDIARIES


Notes to Condensed
Consolidated Financial Statement (continued)
|------------------------------------------------------------------------------------------------

|5. | Trade
accounts receivable (continued):
|-- | --------------------------------------

|                                                        | November 30,
2002 |  | August 31,
2002 |           
|------------------------------------------------------- | ----------------- |  | --------------- | ----------
|Receivables assigned to factor:                         |                   |  |                 |           
|Non-recourse                                            |                   |  | $               | 8,956,000 
|Recourse                                                |                   |  |                 | 122,000   
|Advances from factor                                    |                   |  |                 | (4,887,000
|                                                        |                   |  |                 |           
|Due from factor                                         |                   |  |                 | 4,191,000 
|Non-factored accounts receivable                        |                   |  |                 | 311,000   
|Allowance for customer credits and doubtful accounts    |                   |  |                 | (522,000  
|                                                        |                   |  |                 |           
|                                                        |                   |  | $               | 3,980,000 
|                                                        |                   |  |                 |           
|                                                        |                   | 
|Contingent liabilities for irevocable letters of credit |                   |  | $               | 2,002,000 
|                                                        |                   |  |                 |           

|The
factoring agreement allows the Company to borrow up to $15,000,000, limited by certain
percentages of outstanding accounts receivable and finished goods inventory owned by the
Company. The Companys Chairman has provided a $1,000,000 personal guarantee in
connection with the factoring arrangement.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Dividends:
|-- | ----------

|The
Company paid a dividend of $.05 (five cents) per share on December 13, 2002 for a total of
approximately $59,000, to the shareholders of record as of November 29, 2002. During
fiscal 2002 the Company declared and paid dividends of $.45 per share.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Significant
Customers:
|-- | ----------------------

|Sales
to three separate customers (Kohls, Sears and Mervyns) accounted for 31.0%,
24.2% and 26.9%, respectively, of the Companys net sales in the three months ended
November 30, 2002. Two customers (Mervyns and Kohls) accounted for 47.6% and
27.2% of the Companys net sales in the three months ended November 30, 2001.


Three
customers (Kohls, Sears and Mervyns) accounted for 36.0%, 29.2% and 27.4%
respectively, of the Companys trade receivable balance at November 30, 2002. Two
customers (Mervyns and Kohls) accounted for 54.2% and 28.4% of the
Companys trade receivable balance at November 30, 2001.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | Minority
Interest:
|-- | ------------------

|In
October 2002 the Company acquired a 28% interest in Designer Intimates, Inc., which owns
100% of NAP, Inc., a New York-based intimate apparel company. Designer Intimates had
acquired NAP from its founders and obtained a credit line of approximately $12 million
from HSBC, secured by the inventory and accounts receivable of NAP and the guarantees of
shareholders of Designer Intimates. Nitches guaranteed $3 million of this credit line and
this guarantee formed the consideration from Nitches for its 28% ownership interest in
Designer Intimates. Nitches reports any income or loss from the ongoing operation of
Designer Intimates using the equity method of accounting, whereby Nitches 28%
interest in Designer Intimates is reported as a single line item on the Consolidated
Statement of Income. For October and November, the Company recognized $288,000 in income
from the unconsolidated subsidiary. This income is reported net of tax and is not taxable
to the Company. For that same period, Designer Intimates had net income of $1.0 million on
sales of $26.7 million. This compares to net income of $413,000 on sales of $16.6 million
for the year earlier period. Minority interest income is reported net of tax and is not
taxable to the Company.

6
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 2.  Managements Discussion and
Analysis of Financial Condition and Results of Operations.


Results of Operations


Three Months Ended
November 30, 2002 Compared to the Three Months Ended November 30, 2001


Net
sales for the three months ended November 30, 2002 increased approximately $540,000 (5.5%)
as compared to the three months ended November 30, 2001. This increase was attributable to
an increase in unit sales in the Companys sleepwear product line.


Cost
of sales as a percent of net sales increased 2.8%, generating a lower gross profit margin
of 18.5% for the three months ended November 30, 2002 as compared to 21.3% for the year
earlier period. The decrease came as the result of lower realized gross margins due to
deflationary pricing pressures (see Impact of Inflation and Deflation below), as
well as increased transportation and handling costs incurred due the to rerouting of
shipments as a result of the West Coast port lockout in October 2002. Furthermore, the
Companys product mix constantly changes to reflect customer mix, fashion trends and
changing seasons. Consequently, gross margin is likely to vary on a quarter-to-quarter
basis and in comparison to gross margins generated in the same period of prior fiscal
years.


Selling,
general and administrative expenses remained relatively unchanged for the first quarter of
fiscal 2003 as compared to a year ago. Expenses decreased as a percent of net sales from
17.8% in the year earlier period to 17.3% in the current period, due to the increase in
net sales from the earlier period.


The
Companys income tax provision reflects the effect of $41,000 accrued tax expense for
the first quarter of fiscal 2003 less the elimination of a deferred tax reserve in the
amount of $109,000, for a net tax benefit of $68,000.


Investment in
Unconsolidated Subsidiary


In
October 2002 the Company acquired a 28% interest in Designer Intimates, Inc., which owns
100% of NAP, Inc., a New York-based intimate apparel company. Designer Intimates had
acquired NAP from its founders and obtained a credit line of approximately $12 million
from HSBC, secured by the inventory and accounts receivable of NAP and the guarantees of
shareholders of Designer Intimates. Nitches guaranteed $3 million of this credit line and
this guarantee formed the consideration from Nitches for its 28% ownership interest in
Designer Intimates. Nitches reports any income or loss from the ongoing operation of
Designer Intimates using the equity method of accounting, whereby Nitches 28%
interest in Designer Intimates is reported as a single line item on the Consolidated
Statement of Income. For October and November, the Company recognized $288,000 in income
from the unconsolidated subsidiary. This income is reported net of tax and is not taxable
to the Company. For that same period, Designer Intimates had net income of $1.0 million on
sales of $26.7 million. This compares to net income of $413,000 on sales of $16.6 million
for the year earlier period.


Liquidity and Capital
Resources


Working
capital rose slightly to $6.2 million at November 30, 2002 from $6.1 million at August 31,
2002, and the current ratio increased to 4.4:1 at November 30, 2002 from 2.43:1 at August
31, 2002.


The
Company declared a dividend of $.05 (five cents) per share to shareholders of record as of
November 29, 2002, for a total of approximately $59,000. This dividend was paid on
December 13, 2002.


The
Company sells substantially all of its trade receivables to a factor (CIT) on a
pre-approved, non-recourse basis. The Company attempts to make any recourse shipments on a
COD basis or ensure that the customers payments are backed by a commercial or
standby letter of credit issued by the customers bank. The amount of the
Companys receivables that were recourse and were not made on a COD basis or
supported by commercial or standby letters of credit at November 30, 2002 was
approximately $433,000 of which approximately $94,000 had been collected through January
3, 2003.


Payment
for non-recourse factored receivables is made at the time customers make payment to CIT
or, if a customer is financially unable to make payment, within approximately 180 days of
the invoice due date. Under the Discount Factoring Agreement, the Company can request
advances in anticipation of customer collections at CITs prime rate (currently
4.25%) less one-half percent, and open letters of credit through CIT. The amount of
borrowings by the Company, including a portion of outstanding letters of credit, are
limited to certain percentages of outstanding accounts receivable and finished goods
inventory owned by the Company. Borrowings are collateralized by all of the assets of the
Company. At November 30, 2002, the Company had outstanding letters of credit of
approximately $2.0 million for the purchase of finished goods, which had been opened
through CIT. Either party may terminate the Discount Factoring Agreement on 60-days
written notice.

7
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Inventory


In
its ordinary course of operations, the Company generally makes some sales below its normal
selling prices or below cost. Based on prior experience, management believes this will be
true for some inventory held on or acquired after November 30, 2002. The amount of such
sales depends on several factors, including general economic conditions, market conditions
within the apparel industry, the desirability of the styles held in inventory and
competitive pressures from other garment suppliers.


The
Companys inventory decreased from $5.3 million at August 31, 2002 to $3.3 million at
November 30, 2002. The Company has established an inventory markdown reserve as of
November 30, 2002, which management believes will be sufficient for current inventory that
is expected to sell below cost in the future. There can be no assurance that the Company
will realize its expected selling prices, or that the inventory markdown reserve will be
adequate, for items in inventory as of November 30, 2002 for which customer sales orders
have not yet been received. The inventory markdown reserve is calculated based on specific
identification of aged goods and styles that are slow-moving or selling off-price.


Backlog


The
Company had unfilled customer orders of $9.3 million at November 30, 2002 compared to $9.5
million at November 30, 2001, with such orders generally scheduled for delivery by May
2003 and May 2002, respectively. Reduced orders in the sleepwear product line contributed
to the decrease in backlog of $200,000. These amounts include both confirmed and
unconfirmed orders that the Company believes, based on industry practice and past
experience, will be confirmed. While cancellations, rejections and returns have generally
not been material in the past, there can be no assurance that cancellations, rejections
and returns will not reduce the amount of sales realized from the backlog of orders at
November 30, 2002. Because of the Companys reliance upon a few major accounts, any
adverse impact of the current economic downturn on one or more of these customers could
lead to the cancellation of existing orders and/or an inability to secure future orders,
which would have a material adverse financial effect on the Company. Sears has advised the
Company that they are going to directly import their sleepwear for Spring 2003. This has
the potential of reducing sleepwear volume for the Company by approximately $1.1 million.


Impact of Exchange Rates


While
the Company purchases over 90% of its products from foreign manufacturers, all of its
purchases are denominated in United States dollars. Because the Companys products
are sold primarily in the United States, in dollar denominated transactions, the Company
does not engage in hedging or other arbitrage to reduce currency risk. An increase in the
value of the dollar versus foreign currencies could enhance the Companys purchasing
power for new purchase orders and reduce its cost of goods sold. Conversely, a decrease in
the value of the dollar relative to foreign currencies could result in an increase in the
Companys cost of manufacturing for new purchase orders and costs of goods sold.


Impact of Inflation and
Deflation


Management
does not believe that inflation has had any material impact upon the Companys
revenues or income from operations to date. Management believes that the apparel sector in
which the Company operates has been in a period of deflation, contrary to the modest
inflation experienced in the economy in general. The persistence of the consumer to buy
on sale merchandise has put pressure on retail gross margins, which in turn
has led to downward pressure from retailers on wholesale gross margins, in the form of
selling cost adjustments taken as deductions against invoices issued by the Company. In
the apparel industry, these are commonly referred to as markdown allowances or
chargebacks. Without a corresponding decrease in fabric and labor prices, these markdown
allowances have led to a decline in wholesale gross margins. Management believes these
modest deflationary pressures will continue into the foreseeable future.

8
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|<R>

      Item 4.
        Controls and Procedures


As
of December 31, 2002 the Chief Executive and Financial Officer evaluated the effectiveness
of the design and operation of the Companys disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, he concluded that the
disclosure controls and procedures of the Company are effective in timely alerting of the
material information required to be included in the periodic filings with the Securities
and Exchange Commission and that the information required to be disclosed in these filings
is recorded, processed, summarized, and reported within the time periods specified in the
rules and forms of the Commission.


There
have been no significant changes in the Companys internal controls or in other
factors that could significantly affect internal controls subsequent to the date of this
evaluation.</R>


Cautionary Statement
Under the Private Securities Litigation Reform Act of 1995


Statements
in the quarterly report on Form 10-Q under the caption Managements Discussion
and Analysis of Financial Condition and Results of Operations, as well as oral
statements that may be made by the Company or by officers, directors or employees of the
Company acting on the Companys behalf, that are not historical fact constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements involve known and unknown risks and uncertainties that
may cause the Companys actual results in future periods to differ materially from
forecasted results. Those risks include a softening of retailer or consumer acceptance of
the Companys products, pricing pressures and other competitive forces, or
unanticipated loss of a major customer. In addition, the Companys business,
operations and financial condition are subject to reports and statements filed from time
to time with the Securities and Exchange Commission.


PART II. OTHER
INFORMATION


Item 1. Legal Proceedings


There
were no material legal proceedings to which the Company or any of its subsidiaries was a
party in the three months ended November 30, 2002.


Item 6.     Exhibits and
Reports on Form 8-K


The
Company filed a Current Report on Form 8-K on November 1, 2002, announcing its acquisition
of a 28% interest in Designer Intimates, Inc.


SIGNATURES


Pursuant to the requirement of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned there unto duly authorized.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 |     | NITCHES, INC.

Registrant                                                                            
|---------------- | --- | ----------------------------------------------------------------------------------------------------------------------
|                
|January 14, 2003 | By: | /s/ Steven P. Wyandt

Steven P. Wyandt
As Principal Financial Officer and on
behalf of the Registrant

|9
|-

|CERTIFICATIONS


I, Steven P. Wyandt, certify that:


1. I have reviewed this
quarterly report on Form 10-Q of Nitches, Inc.;


2. Based on my knowledge,
this annual report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with
respect to the period covered by this quarterly report; and


3. Based on my knowledge,
the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this quarterly report; and
<R>

4. I am responsible for
establishing and maintaining the disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed such
disclosure controls and procedures to insure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to me
by others within those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated the
effectiveness of the registrants disclosure controls and procedures as of
a date within 90 days prior to the filing date of this quarterly report(the
Evaluation Date); and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented in
this quarterly report my conclusions about the effectiveness of the disclosure
controls and procedures based on my evaluation as of the Evaluation Date;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. I have disclosed, based
on my most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors(or persons performing the
equivalent function):
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all significant
deficiencies in the design or operation of internal controls which could
adversely affect the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weakness in internal controls; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | any fraud,
whether or not material, that involves management or other employees who have a
significant role in the registrants internal controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|6. I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of my most recent evaluation, including any corrective
actions with regards to significant deficiencies and material weaknesses.</R>


      Date: January
        14, 2003





/s/ Steven P. Wyandt

Steven P. Wyandt Chief Executive Officer and Chief Financial Officer


CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002


I,
Steven P. Wyandt, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Nitches, Inc.
on Form 10-Q for the three months ended November 30, 2002 fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that
information contained in such Quarterly Report on Form 10-Q fairly presents in all
material respects the financial condition and results of operations of Nitches, Inc.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | By:    | /s/ Steven P. Wyandt
                   
| | ------ | ---------------------------------------------------
| | Name:  | Steven P. Wyandt                                   
| | Title: | Chief Executive Officer and Chief Financial Officer

|10
|--