SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

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

                For the quarterly period ended: February 28, 2003

                         Commission File Number 0-13851

                                  NITCHES, INC.
             (Exact name of registrant as specified in its charter)

                      California                     95-2848021
              (State of Incorporation)            (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:

                                                      Name of each
             Title of each class              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 February 28, 2003 the Registrant had 1,171,169 shares of common stock
outstanding.


                                       1
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                         NITCHES, INC. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets

                              ASSETS

<TABLE>
<CAPTION>
                                                                     February 28,         August 31,
                                                                         2003                2002
                                                                     ------------        -----------
                                                                     (Unaudited)
<S>                                                                   <C>                <C>
Current assets:
  Cash and cash equivalents                                           $   270,000        $   182,000
  Receivables:
    Trade accounts, less allowances                                     3,414,000          4,413,000
    Due from affiliates and employees                                      71,000            110,000
                                                                      -----------        -----------
        Total receivables                                               3,485,000          4,523,000

  Refundable income taxes                                                 139,000            118,000
  Inventories                                                           3,364,000          5,306,000
  Deferred income taxes                                                   252,000            143,000
  Other current assets                                                    114,000            106,000
                                                                      -----------        -----------
        Total current assets                                            7,624,000         10,378,000

Investment in Designer Intimates, Inc.                                    227,000                 --
Furniture, fixtures and equipment, net                                     72,000             85,000
Deferred income taxes                                                      23,000             23,000
Other assets                                                               17,000             17,000
                                                                      -----------        -----------
                                                                      $ 7,963,000        $10,503,000
                                                                      ===========        ===========

              LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                    $ 1,432,000        $ 4,133,000
  Accrued expenses                                                        234,000            144,000
                                                                      -----------        -----------
      Total current liabilities                                         1,666,000          4,277,000

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          1,495,000
  Retained earnings                                                     4,802,000          4,731,000
                                                                      -----------        -----------
      Total shareholders' equity                                        6,297,000          6,226,000
                                                                      -----------        -----------
                                                                      $ 7,963,000        $10,503,000
                                                                      ===========        ===========
</TABLE>

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


                                       2
<PAGE>

                         NITCHES, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended                      Six Months Ended
                                                              February 28,                           February 28,
                                                    -------------------------------         ---------------------------------
                                                       2003                2002                 2003                 2002
                                                    -----------         -----------         ------------         ------------
<S>                                                 <C>                 <C>                 <C>                  <C>
Net sales                                           $ 6,699,000         $ 5,754,000         $ 17,156,000         $ 15,672,000

Cost of goods sold                                    4,958,000           4,407,000           13,485,000           12,218,000
                                                    -----------         -----------         ------------         ------------

Gross profit                                          1,741,000           1,347,000            3,671,000            3,454,000

Selling, general and administrative expenses          1,865,000           1,578,000            3,662,000            3,387,000
                                                    -----------         -----------         ------------         ------------

Income/(loss) from operations                          (124,000)           (231,000)               9,000               67,000

Interest and other income                                 3,000                  --                3,000                   --
Interest expense                                        (33,000)            (28,000)             (62,000)             (65,000)
Income/(loss) from unconsolidated subsidiary            (61,000)                 --              227,000                   --
                                                    -----------         -----------         ------------         ------------

Income/(loss) before income taxes                      (215,000)           (259,000)             177,000                2,000

Provision/(benefit) for income taxes                    (60,000)           (101,000)            (128,000)               1,000
                                                    -----------         -----------         ------------         ------------

Net income/(loss)                                   $  (155,000)        $  (158,000)        $    305,000         $      1,000
                                                    ===========         ===========         ============         ============

Earnings per share                                  $     (0.13)        $     (0.13)        $       0.26         $       0.00
                                                    ===========         ===========         ============         ============

Shares outstanding                                    1,171,169           1,171,169            1,171,169            1,171,169
                                                    ===========         ===========         ============         ============

Dividends per share                                 $      0.15         $      0.14         $       0.20         $       0.27
                                                    ===========         ===========         ============         ============
</TABLE>

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


                                       3
<PAGE>

                         NITCHES, INC. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   Six Months Ended
                                                                     February 28,
                                                            -------------------------------
                                                                2003                2002
                                                            -----------         -----------
<S>                                                         <C>                 <C>
Net income                                                  $   305,000         $     1,000
Cash flows from operating activities:
  Depreciation and amortization                                  17,000              16,000
  (Increase) decrease in accounts receivable                  1,038,000            (173,000)
  Decrease in inventories and other current assets            1,804,000           1,745,000
  Decrease in trade payables and accrued expenses            (2,611,000)         (1,319,000)
  Non-cash income from unconsolidated subsidiary               (227,000)                 --
                                                            -----------         -----------
    Net cash provided by operating activities               $   326,000         $   270,000

Cash flows from investing activities:
   Capital expenditures                                          (4,000)            (48,000)

Cash flows from financing activities:
   Dividends paid                                              (234,000)           (319,000)
                                                            -----------         -----------

Net increase (decrease) in cash and cash equivalents             88,000             (97,000)

Cash and cash equivalents at beginning of period                182,000             192,000
                                                            -----------         -----------
Cash and cash equivalents at end of period                  $   270,000         $    95,000
                                                            ===========         ===========

Supplemental disclosures of cash flow information:
  Cash paid during the period:
  Interest                                                  $    62,000         $    65,000
  Income taxes                                                       --              40,000

Non-cash investing activity:
  Accrued earnings of unconsolidated subsidiary             $   227,000         $        --
</TABLE>

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


                                       4
<PAGE>

                         NITCHES, INC. AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements

1.    Description of Business

      Nitches, Inc. (the "Company") is a wholesale importer and distributor of
clothing manufactured to its specifications and distributed in the United States
under Company brand labels and private retailer labels. In addition to women's
sleepwear and western wear, a line of men's casual wear developed by the Company
has become part of the Company's product mix.

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 in the United States of America. 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 six months ended
February 28, 2003 are not necessarily indicative of the results that may be
expected for the year ending August 31, 2003.

3.    Earnings Per share:

      At February 28, 2003, there were no stock options or similar instruments
outstanding and therefore no dilutive effect to the number of shares
outstanding.

4.    Inventories:

                                          February 28,          August 31,
                                              2003                 2002
                                           ----------           ----------
      Fabric and trim                      $  314,000           $   55,000
      Work in progress                          6,000               27,000
      Finished goods                        3,044,000            5,224,000
                                           ----------           ----------
                                           $3,364,000           $5,306,000
                                           ==========           ==========

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 price at which the accounts are sold is
the invoice amount reduced by the factor commission (.3% of the invoice amount)
and all selling discounts. Trade accounts receivable not sold to the factor
remain in custody and control of the Company, and the company maintains all
credit risk on those accounts as well as accounts which are sold to the factor
with recourse. Conversely, for accounts sold to the factor without recourse, the
factor is responsible for collection, assumes all credit risk, and obtains all
of the rights and remedies against the company's customers. For accounts sold to
the factor, payment is due from the factor upon the earlier of the payment of
the receivable to the factor by the customer, or the maturity of the receivable
(generally 180 days from the date of shipment to the customer).

      The Company may request payment from the factor in advance of the
collection date or maturity. Any such advance payments are assessed an interest
charge through the collection date or maturity at the factor's prime rate less
1.5% (one and one half percent) per annum. The company's obligations with
respect to advances from the factor are limited to the interest charges thereon.
Advance payments are limited to a maximum of 85% (eighty-five percent) of
eligible accounts receivable. The factoring agreement also provides for the
issuance of irrevocable letters of credit for the Company's purchase of
inventory in the normal course of its business. Letters of credit are subject to
a $6 million limit. All assets of the company collateralize the advances and
letters of credit. The Company's Chairman has also provided a personal guaranty
in connection with the factoring arrangement.


                                       5
<PAGE>

                         NITCHES, INC. AND SUBSIDIARIES
         Notes to Condensed Consolidated Financial Statement (continued)

5.    Trade accounts receivable (continued):

      The status of the trade accounts receivable and letters of credit are as
follows:

<TABLE>
<CAPTION>
                                                                      February 28,         August 31,
                                                                          2003                2002
                                                                      -----------         -----------
<S>                                                                   <C>                 <C>
      Receivables assigned to factor:
         Non-recourse                                                 $ 4,012,000         $ 4,115,000
         Recourse                                                          80,000             176,000
         Advance payments from factor                                    (820,000)            (10,000)
                                                                      -----------         -----------
           Due from factor                                              3,272,000           4,281,000
      Non-factored accounts receivable                                    364,000             369,000
      Allowance for customer credits and doubtful accounts               (222,000)           (237,000)
                                                                      -----------         -----------
                                                                      $ 3,414,000         $ 4,413,000
                                                                      ===========         ===========

      Contingent liabilities for irrevocable letters of credit        $ 1,619,000         $ 7,156,000
                                                                      ===========         ===========
</TABLE>

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. Additionally, the Company paid a dividend of $.15 (fifteen
cents) per share on February 14, 2003 for a total of approximately $176,000, to
the shareholders of record as of January 31, 2003. During fiscal 2002 the
Company declared and paid dividends of $.45 per share.

7.    Significant Customers:

      Sales to three separate customers (Kohl's, Mervyn's and Sears) accounted
for 28.1%, 24.1% and 10.4% respectively of the Company's net sales in the three
months ended February 28, 2003. Three customers (Mervyn's, Kohl's and Sears)
accounted for 55.1%, 9.1% and 9.0% of the Company's net sales in the three
months ended February 28, 2002. Three customers (Kohl's, Mervyn's and Sears)
accounted for 34.6%, 25.0% and 20.0% of the Company's net sales for the six
months ended February 28, 2003.

      Two customers (Kohl's & Mervyn's) accounted for 30.1% and 25.0%
respectively of the Company's trade receivable balance as of February 28, 2003.
Two customers (Mervyn's and Sears) accounted for 69.5% and 11.2% respectively of
the Company's trade receivable balance at February 28, 2002.

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 through February, the Company recognized
$227,000 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 $830,000 on sales of $45.5 million.

      Following are the unaudited condensed financial statements of Designer
Intimates, Inc. as of February 28, 2003 for the 3 and 5 month periods then
ended:


                                       6
<PAGE>

                            Designer Intimates, Inc.
                           Consolidated Balance Sheet
                                   (Unaudited)

<TABLE>
<CAPTION>
                             Assets                               February 28, 2003
                                                                  -----------------
<S>                                                                  <C>
Accounts receivable                                                  $ 8,284,000
Inventory                                                              4,722,000
Other current assets                                                     402,000
                                                                     -----------

Total current assets                                                  13,408,000

Fixed assets (net of depreciation & amortization)                        849,000
Other non-current assets                                               2,467,000
                                                                     -----------

Total Assets                                                         $16,724,000
                                                                     ===========

                          Liabilities

Loans payable                                                        $ 6,232,000
Accounts payable                                                       8,452,000
Other current liabilities                                              1,207,000
                                                                     -----------

Total current liabilities                                             15,891,000

Shareholders' equity                                                     833,000
                                                                     -----------

Total liabilities and shareholders' equity                           $16,724,000
                                                                     ===========
</TABLE>

                            Designer Intimates, Inc.
                         Consolidated Income Statements
                                   (Unaudited)

<TABLE>
<CAPTION>
                                           Three Months Ended   Five Months Ended
                                           February 28, 2003    February 28, 2003
                                           -----------------    -----------------
<S>                                           <C>                  <C>
Net Sales                                     $ 18,841,000         $ 45,549,000
Cost of sales                                   15,109,000           36,309,000
                                              ------------         ------------
Gross profit                                     3,732,000            9,240,000

Operating expenses                               4,022,000            6,775,000
Amortization of intangible assets                   47,000              918,000
                                              ------------         ------------
Income from operations                            (337,000)           1,547,000
Interest expenses                                   63,000              167,000
Other (income)                                     (50,000)             (50,000)
                                              ------------         ------------
Income/(loss) before income taxes                 (350,000)           1,430,000
Provision/(benefit) for income taxes              (130,000)             600,000
                                              ------------         ------------
Net income/(loss)                             $   (220,000)        $    830,000
                                              ============         ============
</TABLE>


                                       7
<PAGE>

9. New Accounting Pronouncement:

      In December 2002, The Statement of Financial Accounting Standard No. 148
(SFAS no. 148--Accounting for Stock-Based Compensation) was issued. SFAS no. 148
is effective for fiscal years ending after December 15, 2002 and for interim
reporting periods beginning after December 15, 2002. This Statement amends FASB
Statement No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this
Statement amends the disclosure requirements of Statement 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. Because the Company does not currently have any
stock based compensation arrangements, the Company believes the implementation
of SFAS no. 148 will not have any immediate effect on the financial statements
or disclosures therein.

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

CRITICAL ACCOUNTING POLICIES

      Revenue Recognition. The Company recognizes revenue at the time products
are shipped based on its terms of F.O.B. shipping point, where risk of loss and
title transfer to the buyer at time of shipment. The Company records sales in
accordance with SEC Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements. Under these guidelines, revenue is recognized when all of
the following exist: persuasive evidence of a sale arrangement exists, delivery
of the product has occurred, the price is fixed or determinable and payment is
reasonably assured. Provisions are made currently for estimated product returns
and sales allowances.

      Allowances for Sales Returns, Doubtful Accounts and Other. Sales are
recorded net of estimated future returns, uncollectable accounts receivable and
other customer related allowances. Management analyzes historical returns and
bad debt expense, current economic trends, changes in customer demand and
sell-through of our products when evaluating the adequacy of these allowances.
In addition, the Company may provide warehousing credits and other allowances to
certain customers in accordance with industry practice. These reserves are
determined based on historical experience, budgeted customer allowances and
existing commitments to customers. Although management believes it has
established adequate reserves with respect to these items, actual activity could
vary from management's estimates and such variances could have a material impact
on reported results. At February 28, 2003, trade accounts receivable balance was
$3.4 million, net of allowances of $222,000, as compared to the balance of $4.4
million, net of allowances of $237,000 at August 31, 2002. At February 28, 2002,
the trade accounts receivable balance was $3.3 million, net of allowances for
doubtful accounts of $304,000.

      Inventory. The Company marks down its inventory for estimated obsolescence
or unmarketable inventory equal to the difference between the cost of inventory
and the estimated net realizable value based on assumptions about age of the
inventory, future demand and market conditions. This process provides for a new
basis for the inventory until it is sold. If actual market conditions are less
favorable than those projected by management, additional inventory markdowns may
be required. The Company's inventory balance was $3.4 million, net of inventory
markdowns of $155,000, at February 28, 2003, as compared to an inventory balance
of $5.3 million, net of inventory write-downs of $75,000, at August 31, 2002. At
February 28, 2002, the inventory balance was $3.5 million, net of inventory
write-downs of $130,000.

Results of Operations

Six Months Ended February 28, 2003 Compared to the Six Months Ended February 28,
2002

      Net sales for the six months ended February 28, 2003, increased
approximately $1.5 million (9.5%) as compared to the six months ended February
28, 2002. This increase was attributable to an increase in unit sales across the
Company's product lines.

      Cost of sales as a percent of net sales increased 0.6%, generating a lower
gross profit margin of 21.5% for the six months ended February 28, 2003, as
compared to 22.1% for the year earlier period. The Company realized lower gross
margins due to deflationary pricing pressures (see Impact of Inflation and
Deflation below), as well as increased


                                       8
<PAGE>

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 for the first half of fiscal
2003 increased $275,000 as compared to a year ago, due primarily to an increase
in sales commissions and selling related expenses incurred in the second
quarter, in line with an increase in menswear product sales. Selling, general
and administrative expenses include costs and expenses pertaining to selling,
merchandising, warehousing, and shipping of products. For the six months ended
February 28, 2003, this category included $1,555,000 of selling and
merchandising expenses and $705,000 of shipping and warehousing expenses. This
compares with $1,350,000 of selling and merchandising expenses and $700,000 of
shipping and warehousing expenses incurred for the six months ended February 28,
2002. Expenses decreased as a percent of net sales to 21.5% from 21.7% in the
year earlier period, due to the increase in net sales from the earlier period.

      Interest expense decreased $3,000 for the current period to $62,000 as
compared to $65,000 for the six months ended February 28, 2002. This slight
decline was due to the lower interest rate charged on advances made under the
Company's factoring agreement.

      The Company's income tax provision for the six months of fiscal 2003
reflects the effect of a $19,000 tax benefit accrued at an estimated 39% tax
rate, less the elimination of a deferred tax reserve in the amount of $109,000,
for a net tax benefit of $128,000. The Company utilized an estimated tax rate of
39% for the six months ended February 28, 2002. There were no tax reserve
write-offs or other tax adjustments in the earlier period.

Three Months Ended February 28, 2003 Compared to the Three Months Ended February
28, 2002

      Net sales for the three months ended February 28, 2003, increased
approximately $945,000 (16.4%) as compared to the three months ended February
28, 2002. This increase was attributable to an increase in unit sales in the
Company's menswear product line.

      Cost of sales as a percent of net sales declined 2.7%, generating a higher
gross profit margin of 26.2% for the three months ended February 28, 2003 as
compared to 23.5% for the year earlier period. The increase came as the result
of a shift in sales volume to higher margin menswear product. 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 for the second quarter of
fiscal 2003 rose $287,000 as compared to a year ago, due primarily to an
increase in sales commissions and selling related expenses in line with the
higher sales volume in the Company's menswear product line. Expenses included
$831,000 of selling and merchandising expenses and $315,000 of shipping and
warehousing expenses. This compares with $672,000 of selling and merchandising
expenses and $302,000 of shipping and warehousing expenses incurred during the
quarter ended February 28, 2002. Expenses increased as a percent of net sales to
28.1% from 27.6% in the year earlier period, due to the proportionally larger
increase in expenses from the earlier period.

      Interest expense increased $5,000 in the current quarter to $33,000 as
compared to $28,000 for the three months ended February 28, 2002. The increase
was due to increased advances under the Company's factoring agreement, in line
with the increase in the Company's sales volume for the period.

      The Company's income tax provision for the three months ended February 28,
2003, reflects a $60,000 tax benefit accrued at an estimated 39% tax rate on the
Company's pretax loss for the quarter of $154,000. The Company also utilized an
estimated tax rate of 39% for the three months ended February 28, 2002. There
were no tax reserve write-offs or other tax adjustments in either period.

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


                                       9
<PAGE>

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 through February, the Company
recognized $227,000 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 $830,000 on sales of $45.5 million.

Liquidity and Capital Resources

      Working capital declined to $6.0 million at February 28, 2003 from $6.1
million at August 31, 2002. However, the current ratio increased to 4.6:1 at
February 28, 2003 from 2.4:1 at August 31, 2002. At February 28, 2003, the
Company's trade receivables balance was $3.4 million, a decrease of $1 million
from the receivables balance at August 31, 2002. Because the Company's business
is seasonal, the trade receivables balance may more meaningfully be compared to
the balance of $3.3 million at February 28, 2002, rather than the year-end
balance. The comparison to the second quarter of fiscal 2002 shows an increase
of 2.9% in trade receivables. This increase is below both the percentage and
dollar volume increase in net sales for the quarter.

      Inventories decreased 36.6% to $3.4 million at February 28, 2003, from
$5.3 million at August 31, 2002. Compared to inventories of $3.5 million at
February 28, 2002, inventories ending the current period decreased 4.8%,
primarily due to the decline in sales of the Company's sleepwear line. The
Company believes that its current inventory mix and amounts are appropriate to
respond to anticipated market demand.

      The Company declared a dividend of $.15 (fifteen cents) per share to
shareholders of record as of January 31, 2003 for a total of approximately
$176,000. The Company also declared a dividend of $.05 (five cents) per share on
November 29, 2002 for a total of approximately $59,000.

      The Company sells substantially all of its trade receivables to a factor
(HSBC) 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
February 28, 2003 was approximately $364,000, of which approximately $279,000
had been collected through March 31, 2003.

      Payment for non-recourse factored receivables is made at the time
customers make payment to HSBC or, if a customer is financially unable to make
payment, within approximately 180 days of the invoice due date. Under the
factoring agreement, the Company can request advances in anticipation of
customer collections at HSBC's prime rate (currently 4.75%) less one and
one-half percent (1.5%). The amount of advances available to the Company is
limited to eighty-five percent (85%) of non-recourse factored receivables.

      The Company may also issue letters of credit through HSBC for the purchase
of inventory in the normal course of its operations. Letters of credit are
subjected to a limit of $6 million. At February 28, 2003, the Company had
outstanding letters of credit of approximately $1.6 million for the purchase of
finished goods, which had been opened through HSBC.

      The factoring agreement does not contain any financial covenants to which
the Company must adhere. Advances are collateralized by all of the assets of the
Company as well as a personal guaranty of the Company's Chairman. The factoring
agreement can be terminated by HSBC on 30-days written notice. The company
believes the factoring agreement with HSBC, along with expected cash flow from
operating activities and current levels of working capital, are adequate to
fulfill the Company's liquidity needs for the foreseeable future.


                                       10
<PAGE>

Contractual Obligations and Commercial Commitments

<TABLE>
<CAPTION>
                                                     Payments due/Commitments expiring per period

                                      Total Amounts     Less than                                         Over
                                        Committed         1 year          1-3 years       4-5 years      5 years
                                      --------------------------------------------------------------------------
<S>                                    <C>              <C>                <C>           <C>              <C>
Operating leases                       $   209,000      $   131,000        $ 78,000
Letters of credit                        1,619,000        1,619,000
Guarantees                               3,000,000                                         3,000,000
                                      --------------------------------------------------------------------------
  Total obligations & commitments      $ 4,828,000      $ 1,750,000        $ 78,000      $ 3,000,000      $   --
                                      ==========================================================================
</TABLE>

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 February 28, 2003. 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
$3.4 million at February 28, 2003. The Company has established an inventory
markdown reserve as of February 28, 2003, 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 February 28, 2003 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 $8.4 million at February 28,
2003 compared to $10.1 million at February 28, 2002, with such orders generally
scheduled for delivery by August 2003 and August 2002, respectively. 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 February
28, 2003.

      Reduced orders in the sleepwear product line contributed to the decrease
in backlog of $1.7 million. This reduction is due primarily to the loss of Sears
as a customer. Sears has advised the Company that they will continue to directly
import their sleepwear for the foreseeable future. Because of the Company's
reliance upon a few major accounts, any adverse impact of the current economic
weakness 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.

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


                                       11
<PAGE>

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.

Item 4. Controls and Procedures

      As of February 28, 2003 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.

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 six months ended February 28, 2003.

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

      On February 28, 2003, the Company held its 2002 Annual Shareholders
Meeting. At that meeting, the shareholders elected the following directors to
serve until the next annual meeting of shareholders:

      Arjun C. Waney, Steven P. Wyandt, Eugene B. Price II, William L. Hoese,
Paul M. Wyandt and Allan R. Bailey

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.


                                       12
<PAGE>

                                   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

April 14, 2003                By:      /s/ Steven P. Wyandt
                                  -----------------------------------
                                         Steven P. Wyandt
                               As Principal Financial Officer and on
                                     behalf of the Registrant


                                       13
<PAGE>

                                 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

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.

Date: April 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 six months ended February
28, 2003, 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


                                       14