SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                               ___________________

                                    FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
                                  ACT OF 1934

                  For the Quarterly Period Ended June 30, 1998

                                       OR

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

                        For the transition period from to

                         Commission file number 0-1282-3

                             Swiss Army Brands, Inc.
             (Exact name of registrant as specified in its charter)
        

                 Delaware                        13-2797726
          (State of incorporation) (I.R.S. Employer Identification No.)

     One Research Drive, Shelton, Connecticut                06484
     (Address of principal executive offices)             (Zip Code)

        Registrant's telephone number, including area code:  (203) 929-6391

                                 NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since
 last report.)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (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

     The number of shares of Issuer's Common Stock, $.10 par value,  outstanding
on August 5, 1998, was 8,219,110 shares.

<PAGE>

                            SWISS ARMY BRANDS, INC.
                                AND SUBSIDIARIES
                                      INDEX
<TABLE>
<CAPTION>


PART I:      FINANCIAL INFORMATION                                  Page No.
<S>         <C>                                                    <C>

Item 1.      FINANCIAL STATEMENTS

             Consolidated Balance Sheets as of
             June 30, 1998 and December 31, 1997.                    3 - 4

             Consolidated Statements of Operations for the
             Three and Six Months Ended June 30, 1998 and 1997.          5

             Consolidated Statements of Stockholders' Equity
             for the Six Months Ended June 30, 1998 and 1997.            6

             Consolidated Statements of Cash Flows for the
             Six Months Ended June 30, 1998 and 1997.                    7

             Notes to Consolidated Financial Statements             8 - 10

Item 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF
             OPERATIONS                                            11 - 14


Item 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES
             ABOUT MARKET RISK                                          14



Part II:     OTHER INFORMATION

Item 4.      SUBMISSION OF MATTERS TO A VOTE OF 
             SECURITY HOLDERS                                           15


Item 6.      EXHIBITS AND REPORTS ON FORM 8-K                           16

Signatures                                                              17

The Exhibit Index appears on page 16.
</TABLE>

                                       2
<PAGE>

                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                     Assets
<TABLE>
<CAPTION>


                                                    June 30,      December 31,
                                                     1998            1997  
                                                  (unaudited)     

<S>                                                <C>             <C>
          
Current assets:
   Cash and cash equivalents                         $2,151           $1,078

   Accounts receivable, less
    allowance for doubtful accounts
    of $975, respectively                            26,320           28,224

   Inventories                                       30,527           27,438

   Deferred income taxes                              3,571            3,519

   Prepaid and other                                  4,201            3,885
                                                   ----------        ---------    
      Total current assets                           66,770           64,144 
                                                   ----------        --------- 

Deferred income taxes                                 2,329            2,407

Property, plant and equipment, net                    3,661            3,751

Investments in preferred units, at cost               7,199            8,793 

Investments in common stock                           2,177              369 

Foreign distribution rights, net of
   accumulated amortization of $3,526 and $3,193,           
   respectively                                       3,213            3,551 

Other assets, net of accumulated
   amortization of $1,547 and $1,223,
   respectively                                      11,226           11,036 
                                                    --------         ---------

Total Assets                                        $96,575          $94,051  
                                                    ========         ========= 

</TABLE>

 
     The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
                                       3
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                     (in thousands, except for share data)
                      Liabilities and Stockholders' Equity

<TABLE>
<CAPTION>

                                                June 30,          December 31,
                                                 1998                 1997     
                                              (unaudited)

<S>                                            <C>                 <C>
 Current liabilities:
   Accounts payable                            $11,619             $8,478 
                      
   Accrued liabilities                           8,563              9,865  
                                               --------            -------
   Total current liabilities                    20,182             18,343 

Commitments and contingencies

Stockholders' equity
   Preferred stock, par value $.10 per share: 
     shares authorized -2,000,000; no shares
     issued                                        -                  - 

   Common stock, par value $.10 per
      share: shares authorized -
      18,000,000; shares issued - 8,833,218 
      and 8,823,718, respectively                  883               882
  
   Additional paid-in capital                   46,256            46,186

   Foreign currency translation adjustment        (342)             (240)

   Unrealized gain on marketable securities        327                -

   Retained earnings                            34,382            33,993 
                                               --------          -------- 
                                                81,506            80,821 
   Less-cost of common stock in
      treasury; 614,108 shares                  (5,113)           (5,113) 
                                               --------          --------
Total stockholders' equity                      76,393            75,708  
                                               --------          --------
 
 Total Liabilities and Stockholders' Equity    $96,575           $94,051  
                                               ========          ========
</TABLE>

     The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
                                       4
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in thousands, except for share per data)
                                  (unaudited)
<TABLE>
<CAPTION>


                                     Three Months Ended       Six Months Ended
                                          June 30,                June 30,
                                      1998       1997          1998      1997 
<S>                                 <C>        <C>           <C>       <C>

Net sales                            $30,187    $28,862       $54,797   $53,077 

Cost of sales                         18,550     18,554        33,925    33,749
                                    --------    -------       -------   ------- 
Gross profit                          11,637     10,308        20,872    19,328

Selling, general and administrative
expenses                              11,530     12,099        21,835    22,935
                                    --------    -------       -------   -------
Operating income (loss)                  107     (1,791)         (963)   (3,607)

Interest income and other, net            66         57           116       110

Gain on sale of investments               -         110         1,500       110
                                    --------    -------       -------   -------
Total interest and other income, net      66        167         1,616       220
                                    --------    -------       -------   -------
Income (loss) before income taxes        173     (1,624)          653    (3,387)

Income tax provision (benefit)            70       (658)          264    (1,372)
                                    --------    -------       -------   -------
Net income (loss)                       $103      ($966)         $389   ($2,015)
                                    ========    =======       =======   =======

Earnings per share:
   Basic                               $0.01     ($0.12)        $0.05    ($0.25)
   Diluted                             $0.01     ($0.12)        $0.05    ($0.25)

Weighted average number of
  shares outstanding:
   Basic                               8,219      8,196         8,216     8,210
   Diluted                             8,261      8,196         8,241     8,210
</TABLE>

     The accompanying notes to consolidated financial statements are an integral
part of these statements

                                       5
<PAGE>

                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                     (in thousands, except for share data)

<TABLE>
<CAPTION>


                                                        Unrealized       Foreign
                         Common Stock      Additional     Gain on       Currency
                       Par Value  $.10      Paid-In     Marketable    Translation    Retained   Treasury
                       Shares    Amount     Capital     Securities     Adjustment    Earnings     Stock
<S>                  <C>         <C>        <C>          <C>            <C>          <C>          <C>
BALANCE
December 31, 1996     8,822,968   $882       $46,182      $  -          ($113)        $38,018     ($5,113)
Net  loss for six
   months ended
   June 30, 1997            -       -            -           -             -           (2,015)        - 

Stock options
   exercised                750     -              4         -             -               -          - 

Foreign currency
   translation    
   adjustment               -       -            -           -            (30)             -          -
                      ---------    ----      --------     -------        -------      ---------    --------
BALANCE 
June 30, 1997         
(unaudited)           8,823,718   $882       $46,186       $ -          ($143)        $36,003     ($5,113)
                      =========   =====      ========     =======       ========      =========   =========

BALANCE
December 31, 1997     8,823,718   $882       $46,186       $ -          ($240)        $33,993     ($5,113) 

Net income for six
   months ended
   June 30, 1998            -       -            -           -             -              389         - 

Unrealized gain on 
    marketable
    securities              -       -            -          327            -               -          -

Stock options
   exercised              9,500      1            70         -             -               -          -

Foreign currency
   translation    
   adjustment               -       -            -           -           (102)             -          -
                     -----------  -------    --------    ---------    ----------      ---------    --------
BALANCE 
June 30, 1998 
(unaudited)           8,833,218   $883       $46,256       $327         ($342)        $34,382     ($5,113)
                     ===========  =======    ========    =========    ==========      =========    ========

</TABLE>

     The accompanying notes to consolidated financial statements are an integral
part of these statements

                                       6
<PAGE>

                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)
<TABLE>
<CAPTION>


                                                             Six Months Ended
                                                                 June 30,
                                                             1998         1997
<S>                                                        <C>         <C>
Cash flows from operating activities:
   Net income (loss)                                       $389       ($2,015)
   Adjustments to reconcile net income (loss) to cash
   provided from operating activities:
      Depreciation and amortization                       1,426         1,481
      Gain on sale of investments                        (1,500)         (110)
      Deferred income taxes                                  26            -

Changes in other current assets and liabilities:
   Accounts receivable                                    1,837        10,169
   Inventories                                           (3,136)       (4,207)
   Prepaid and other                                       (328)       (2,472)
   Accounts payable                                       3,174           763
   Accrued liabilities                                   (1,277)         (492)
                                                        --------      ---------
         Net cash provided from operating activities        611         3,117
                                                        --------      --------- 
Cash flows from investing activities:
   Capital expenditures                                    (576)         (538)
   Additions to other assets                               (620)       (1,062)
   Distribution from investment in preferred units        1,613            -
   Proceeds from sale of investments                         -            110
                                                        --------      ---------
      Net cash provided from (used for)
          investing activities                              417        (1,490)
                                                        --------      ---------
Cash flows from financing activities:
  Proceeds from exercise of stock options                    71            -
                                                        --------      ---------
      Net cash provided from financing activities            71            -
                                                        --------      --------- 
Effect of exchange rate changes on cash                     (26)          (21)

Net increase in cash                                     
   Cash and cash equivalents, beginning of period         1,073         1,606
   Cash and cash equivalents, end of period               1,078         2,067  
                                                        --------      --------- 
                                                        $ 2,151       $ 3,673 
                                                        ========      ========= 
Cash paid during the period:
   Interest                                             $     5       $     7
                                                        ========      =========
   Income taxes                                         $   811       $   453 
                                                        ========      =========

</TABLE>

     The accompanying notes to consolidated financial statements are an integral
part of these statements

                                       7
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1998 and 1997
                                  (unaudited)

CONSOLIDATED FINANCIAL STATEMENTS
     The consolidated  financial statements included in this Form 10-Q have been
prepared by Swiss Army Brands, Inc. ("Swiss Army", the "Company") without audit.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  condensed  or omitted  pursuant to the rules and  regulations  of the
Securities  and Exchange  Commission.  It is suggested  that these  consolidated
financial  statements be read in conjunction  with the financial  statements and
notes thereto  included in the Company's  report on Form 10-K for the year ended
December  31, 1997.  In the opinion of  management  of the Company,  the interim
financial statements included herein reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
position,  results  of  operations  and  cash  flows  for  the  interim  periods
presented.  The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.  Due to the seasonal nature of the Company's business, the results of
operations for the interim periods  presented are not necessarily  indicative of
the operating results for the full year.

COMPREHENSIVE INCOME
     Effective  January 1, 1998,  the Company  adopted  Statement  of  Financial
Standards ("SFAS") No. 130, "Reporting  Comprehensive  Income" which establishes
standards  for  the  reporting  and  display  of  comprehensive  income  and its
components.

     The components of comprehensive income (loss), net of tax, are as follows:
<TABLE>
<CAPTION>

                                  Three Months Ended           Six Months Ended
                                        June 30,                    June 30, 
                                    1998       1997             1998       1997
       <S>                        <C>         <C>             <C>       <C>

        Net income (loss)          $103       ($966)           $389     ($2,015)

        Other comprehensive income, 
          net of tax:
         Foreign currency translation 
          adjustment                (61)         (4)            (61)        (18)
         Unrealized gain on 
          marketable securities     198           -             195           -
                                  ------      -------         -------    -------
         Other comprehensive income 137          (4)            134         (18)
                                  ------      -------         -------    -------
        Comprehensive income 
         (loss)                   $ 240       ($970)           $523     ($2,033)
                                  ======      =======         =======    =======
</TABLE>
 
INVENTORIES
     Domestic  inventories  are stated at the lower of cost  (determined  by the
last-in,  first-out (LIFO) method) or market.  Foreign inventories are valued at
the  lower  of  cost  or  market  determined  by the  FIFO  method.  Inventories
principally consist of finished goods.

                                       8
<PAGE>

<TABLE>
<CAPTION>

INVESTMENTS
        Investments consist of the following:

                                            June 30,1998      December 31, 1997
                                                   (in thousands)
       <S>                                  <C>                <C>   

        Preferred units of Hudson
           River Capital LLC (A)            $6,313             $7,907
        Preferred units of
           Victory Ventures LLC (B)            886                886
                                            ------             ------ 
        Total investments in preferred 
           units                            $7,199             $8,793
                                            ======             ======
        Common stock of Iron Mountain
           Incorporated (C)                 $1,879             $  -
        Common stock of Chaparral Resources     
           Inc. (D)                            148               219
        Common stock of SWWT, Inc. (E)         150               150
                                            ------             ------ 
        Total investments in common stock   $2,177              $369
                                            ======             ======
</TABLE>

(A)      Hudson River  Capital LLC ("Hudson  River"),  is a private  equity firm
specializing  in middle  market  acquisitions,  re-capitalization  and expansion
capital  investments.  In January 1998,  Hudson River distributed to the Company
$1,613,000 in cash and authorized to distribute  63,018 (effected for a three to
two stock split which  occurred in July 1998) shares of common stock  (valued at
$1,481,000) of Iron Mountain Incorporated. The Company received the common stock
in June  1998.  In the first  quarter of 1998,  the  Company  recognized  a $1.5
million gain on the cash and common stock distribution which is included in gain
on sale of investment in the accompanying financial statements.

(B)      Victory  Ventures LLC is a private  equity firm  specializing  in small
venture capital investments.

(C)       Iron  Mountain  Incorporated  ("Iron  Mountain"),  a  publicly  traded
company,  is a full service provider of records management and related services.
At June 30, 1998,  the Company owns 63,018 shares of Iron Mountain  stock valued
at $29.83.  The Company accounts for this investment at fair value, with changes
between cost and fair value reflected as a component of stockholders' equity.

(D)      Chapparal Resources, Inc. ("Chapparal"),  a publicly traded company, is
an independent oil and gas exploration and production  company. At June 30, 1998
the Company owns 87,634  shares of Chapparal  common stock valued at $1.6875 per
share.  The Company  accounts for this  investment  at fair value,  with changes
between cost and fair value reflected as a component of stockholders'equity.

(E)       SWWT,  Inc  is  a  holding   company   formerly  in  the  business  of
manufacturing and marketing  portable water  purification and filtration systems
to certain  markets.  The Company has recorded this  investment at its estimated
fair value.

                                       9
<PAGE>



SIGNIFICANT CUSTOMER
     Sales  related  to  special  promotional  programs  to  a  single  customer
accounted  for  approximately  16% and 11% of net  sales  for the  three and six
months ended June 30, 1998, respectively.  Sales to this customer were less than
10% of net sales for the three and six months ended June 30, 1998.

EARNINGS PER SHARE
     In the fourth quarter of 1997, the Company adopted SFAS No. 128,  "Earnings
Per Share". This statement replaces the calculation of primary and fully diluted
earnings per share with basic and diluted  earnings per share.  All earnings per
share  amounts for all periods  presented  have been  restated to conform to the
requirements of this statement.

     For the periods ended June 30, 1997, the weighted  average number of shares
of common stock  outstanding do not include the dilutive effect of stock options
as they would have anti-dilutive effect.

INCOME TAXES
     Income taxes are provided at the projected  annual  effective tax rate. The
income tax  provisions  (benefits)  for the interim 1998 and 1997 periods exceed
the federal  statutory  rate of 34% due  primarily to state income taxes (net of
federal benefit).

                                       10
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS
                                  (unaudited)

                           FORWARD LOOKING STATEMENTS

     The following discussion contains, in addition, to historical  information,
forward looking statements.  The forward looking statements were prepared on the
basis of certain assumptions which relate, among other things, to the demand for
and cost of purchasing and marketing the Company's products; the prices at which
such products may be sold; new product development; seasonal selling trends; the
Swiss franc - U.S.  dollar  exchange  rates;  the extent to which the Company is
able to successfully hedge against foreign currency fluctuations;  the impact of
the Year 2000 issue on the Company's financial position or results of operations
and the  Company's  anticipated  credit needs and ability to obtain such credit.
Even if the assumptions  upon which the projections are based prove accurate and
appropriate,  the actual  results of the Company's  operations in the future may
vary widely from financial projections due to increased competition,  changes in
consumer tastes and other factors not yet known or anticipated. Accordingly, the
actual  results of the  Company's  operations in the future may vary widely from
the forward looking statements included herein.

                             RESULTS OF OPERATIONS

Comparison for the Three Months Ended June 30, 1998 and 1997

     Sales for the three months ended June 30, 1998 were $30.2 million  compared
with $28.9 million for the same period in 1997, representing an increase of $1.3
million or 4.6%. Sales comparisons for the three months ended June 30, 1998 were
significantly impacted by sales related to special promotional programs with one
customer which accounted for approximately  9.3% and 15.7% of sales in the three
months  ended  June  30,  1998 and 1997  respectively.  Excluding  sales to this
customer,  sales  increased  by $3.0  million or 12.5% in the three months ended
June 30, 1998, as compared to the comparable  period in 1997. The sales increase
was due to a 11.1% increase in sales of  Victorinox(r)  products,  primarily the
Victorinox(r)  SwissTool(tm)  , a 12.8%  increase  in watch  sales  and an 18.6%
increase in cutlery sales.

     Gross  profit of $11.6  million  for the three  months  ended June 30, 1998
increased  $1.3 million or 12.9% from 1997.  The gross profit margin  percentage
for the second  quarter of 1998 of 38.5% was higher than the gross profit margin
percentage  of 35.7%  reported for the same period in 1997  primarily due to the
increase in the value of the U.S.  dollar  versus the Swiss franc and  favorable
product mix. The Company's gross profit margin is a function of both product mix
and Swiss franc exchange rates.  Since the Company imports  virtually all of its
products  from  Switzerland,  its  costs are  affected  by both the spot rate of
exchange and by its foreign currency  hedging  program.  The Company enters into
foreign  currency  contracts and options to hedge the exposure  associated  with
foreign currency  fluctuations.  Based upon current Swiss franc requirements the
Company believes it is hedged through the third quarter of 1999.  However,  such
hedging activity cannot eliminate the long-term  adverse impact on the Company's
competitive  position  and  results  of  operations  that  would  result  from a
sustained  decrease  in the value of the dollar  versus the Swiss  franc.  These
hedging  transactions,  which are meant to reduce foreign  currency  risk,  also
reduce the beneficial effects to the Company if the dollar increases relative to
the  Swiss  franc.   The  Company   plans  to  continue  to  engage  in  hedging
transactions;  however,  it is uncertain as to what extent to which such hedging
transactions will reduce the effect of adverse currency fluctuations.

                                       11
<PAGE>


     Selling,  general and  administrative  expenses  for the three months ended
June 30, 1998 of $11.5  million  were $0.6 million or 4.7% lower than the amount
for the  comparable  period in 1997. The decrease was primarily due to decreased
advertising and marketing related expenses related to the 1997 introduction of a
new brand of Swiss watches and $0.3 million of restructuring costs in 1997.

     As a percentage  of net sales,  total  selling  general and  administrative
expenses decreased from 41.9% in 1997 to 38.2% in 1998.

     Interest  income and other,  net of $66,000 for the three months ended June
30,  1998  was  $9,000  higher  than  interest  income  and  other,  net for the
comparable  period in 1997  primarily  due to increased  invested  cash balances
during 1998 as compared to 1997.

     Gain on sale of  investments  was  $110,000 in 1997.  In 1997,  the Company
recovered  $110,000 related to an investment in a privately held start-up entity
which the  Company  had  written  off in 1996  There  were no gains in the three
months ended June 30, 1998.

     As a result of these  changes,  income  (loss)  before income taxes for the
three  months  ended  June 30,  1998 was  income  of  $173,000  versus a loss of
$1,624,000 for the same period in 1997, an improvement of $1,797,000.

     Income tax expense  (benefit) was provided at an effective rate of 40.5% in
1998 and 1997.

     As a result, net income (loss) for the three months ended June 30, 1998 was
income  of  $103,000  ($0.01  per share  -basic  and  diluted)  versus a loss of
$966,000  ($0.12 per share - basic and diluted) for the same period in 1997,  an
increase of $1,069,000.


Comparison for the Six Months Ended June 30, 1998 and 1997

     Sales for the six months  ended June 30, 1998 were $54.8  million  compared
with $53.1 million for the same period in 1997, representing an increase of $1.7
million or 3.2%.  Sales  comparisons for the six months ended June 30, 1998 were
significantly impacted by sales related to special promotional programs with one
customer which  accounted for  approximately  5.6% and 11.1% of sales in the six
months  ended  June 30,  1998 and 1997,  respectively.  Excluding  sales to this
customer,  sales increased by $4.6 million in the six months ended June 30, 1998
as compared to the  comparable  period in 1997.  The sales increase was due to a
9.4%  increase  in  sales  of  Victorinox  products,  primarily  the  Victorinox
SwissTool,  an 11.9%  increase  in watch  sales and an 8.9%  increase in cutlery
sales.

                                       12
<PAGE>

     Gross  profit of $20.9  million  for the six  months  ended  June 30,  1998
increased $1.6 million or 8.0% from 1997. The gross profit margin percentage for
the six  months  of 1998 of 38.1%  was  higher  than  the  gross  profit  margin
percentage  of 36.4%  reported for the same period in 1997  primarily due to the
increase in the value of the U.S.  dollar  versus the Swiss franc and  favorable
product mix. The Company's gross profit margin is a function of both product mix
and Swiss franc exchange rates.  Since the Company imports  virtually all of its
products  from  Switzerland,  its  costs are  affected  by both the spot rate of
exchange and by its foreign currency  hedging  program.  The Company enters into
foreign  currency  contracts and options to hedge the exposure  associated  with
foreign currency  fluctuations.  Based upon current Swiss franc requirements the
Company believes it is hedged through the third quarter of 1999.  However,  such
hedging activity cannot eliminate the long-term  adverse impact on the Company's
competitive  position  and  results  of  operations  that  would  result  from a
sustained  decrease  in the value of the dollar  versus the Swiss  franc.  These
hedging  transactions,  which are meant to reduce foreign  currency  risk,  also
reduce the beneficial effects to the Company if the dollar increases relative to
the  Swiss  franc.   The  Company   plans  to  continue  to  engage  in  hedging
transactions;  however,  it is uncertain as to what extent to which such hedging
transactions will reduce the effect of adverse currency fluctuations.

     Selling,  general and administrative expenses for the six months ended June
30, 1998 of $21.8  million  were $1.1  million or 4.8% lower than the amount for
the  comparable  period in 1997.  The  decrease was  primarily  due to decreased
expenses for advertising and marketing  related  activities  related to the 1997
introduction  of a new brand of Swiss watches and $0.3 million of  restructuring
costs in 1997.

     As a percentage  of net sales,  total  selling  general and  administrative
expenses decreased from 43.2% in 1997 to 39.8% in 1998.

     Interest  income and other,  net of $116,000  for the six months ended June
30,  1998  was  $6,000  higher  than  interest  income  (expense),  net  for the
comparable period in 1997.

     Gain on sale of  investments  was $1,500,000 and $110,000 in the six months
ended June 30,1998 and 1997, respectively.  In 1998, the Company recorded a $1.5
million gain due to a cash and stock distribution from the Company's  investment
in Hudson River Capital LLC. In 1997, the Company recovered  $110,000 related to
an investment in a privately held start-up  entity which the Company had written
off in 1996.

     As a result of these changes, income (loss) before income taxes for the six
months  ended June 30, 1998 was income of $653,000  versus a loss of  $3,387,000
for the same  period  in 1997,  a  change  of  $4,040,000.  

     Income tax expense  (benefit) was provided at an effective rate of 40.5% in
1998 and 1997.

     As a result,  net income  (loss) for the six months ended June 30, 1998 was
income  of  $389,000  ($0.05  per share - basic  and  diluted)  versus a loss of
$2,015,000 ($0.25 per share - basic and diluted) for the same period in 1997, an
increase of $2,404,000.

LIQUIDITY AND CAPITAL RESOURCES

     As of June 30,  1998,  the  Company had  working  capital of $46.6  million
compared  with $45.8  million as of  December  31,  1997,  an  increase  of $0.8
million.  Significant  sources of working  capital  included a $1.6 million cash
distribution  from  Hudson  River  Capital LLC and  significant  uses of working
capital   included  a  $0.6  million   increase  in  other  assets  and  capital
expenditures of $0.6 million.  The Company currently has no material commitments
for capital expenditures.

     Cash provided from operating  activities was approximately  $0.6 million in
the six months ended June 30, 1998 compared with $3.1 million in the  comparable
period in 1997.  The change  resulted  primarily  due to a smaller  decrease  in
accounts receivable in 1998 as compared to 1997, offset in part by net income in
1998 as compared  to a loss in 1997 and a smaller  increase in prepaid and other
in 1998 as compared to 1997.

                                       13
<PAGE>

     The Company meets its short-term  liquidity  needs with cash generated from
operations, and, when necessary, bank borrowings under its credit agreements. As
of June 30, 1998,  the Company has a $5.0 million demand line of credit which it
can use for any borrowings and a $5.0 million  revolving  credit agreement which
expires in September  1998.  The Company is  currently  reviewing a proposal for
renewal of the revolving credit agreement. The Company's short-term liquidity is
affected by seasonal changes in inventory levels,  payment terms and seasonality
of sales.  The Company  believes  its  current  liquidity  levels and  financial
resources will be sufficient to meet its operating needs in the near-term.

Year 2000

     The  Company  has been  conducting  a review  of its  computer  systems  to
identify  those  areas that could be  affected  by the "Year 2000" issue and has
developed an implementation plan to minimize  disruption.  The Company presently
believes that, with  modifications to existing  software,  of which some already
have been  implemented and investment in new software,  the Year 2000 problem as
it relates to its own  computer  systems will not pose  significant  operational
concerns and the costs to ensure compliance of its own computer systems will not
have a material impact on the financial position or results of operations in any
given  year.  However,  the Year  2000  readiness  of the  Company's  customers,
suppliers  and lenders may vary,  and no  assurances  can be given that the Year
2000  problem  will not have a material  impact on the  financial  condition  or
results of operations in any given year.

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Foreign Exchange Risk

     The  Company  is exposed to market  risk from  changes in foreign  exchange
rates as the Company  imports  virtually all its products from  Switzerland.  To
minimize the risks associated with  fluctuations in the value of the Swiss franc
versus the U.S. dollar,  the Company enters into foreign currency  contracts and
options.  Pursuant to guidelines approved by its Board of Directors, the Company
is to engage in these  activities  only as a hedging  mechanism  against foreign
exchange  rate  fluctuations   associated  with  specific   inventory   purchase
commitments to protect gross margin and is not to engage in speculative trading.
Gains or losses on these  contracts  and options are deferred and  recognized in
cost of sales when the related  inventory is sold. At June 30, 1998, the Company
has  entered  into   foreign   currency   contracts   and  options  to  purchase
approximately  83,500,000  Swiss  francs in 1998 and 1999 at a weighted  average
rate $1.488 Swiss  franc/dollar.  At June 30, 1998, the unrealized loss on these
contracts and options was  approximately  $1.1 million.  The Company's  ultimate
unrealized gain or loss on these contracts and options will primarily  depend on
the  currency  exchange  rates in effect at the time the  contracts  and options
mature.

                                       14
<PAGE>

PART II. - OTHER INFORMATION

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

     The annual meeting of the  stockholders  of the Company was held on May 14,
1998,  pursuant  to  notice,  at which  the  meeting  shareholders  elected  the
following directors:
<TABLE>
<CAPTION>

                                   NUMBER OF VOTES              NUMBER OF VOTES
                                         FOR                        WITHHELD           
      NAME                      
<S>                                <C>                            <C>
        
A. Clinton Allen                    7,490,335                      23,459           
Clarke H. Bailey                    7,489,939                      23,855   
Thomas A. Barron                    7,490,316                      23,478
Vincent D. Farrell, Jr.             7,490,435                      23,359
Herbert M. Friedman                 7,358,387                     155,407
Peter W. Gilson                     7,490,416                      23,378
Keith R. Lively                     7,490,206                      23,588
Louis Marx, Jr.                     7,490,191                      23,603
Stanley R. Rawn, Jr.                7,490,239                      23,555
Eric M. Reynolds                    7,490,435                      23,359  
John Spencer                        7,490,110                      23,684  
J. Merrick Taggart                  7,490,320                      23,474
John V. Tunney                      7,489,624                      24,170

</TABLE>

                                       15
<PAGE>


Item 6. Exhibits and Reports on Form 8-K

A.)     Exhibits

 (2)    Not Applicable

 (3)    Not Applicable

 (4)    Not Applicable

(10)    Not Applicable

(11)    Statement regarding computation of per share earnings is not required
        because the relevant computation can be clearly determined from the
        material contained in the Financial Statements included herein.

(15)    Not Applicable

(18)    Not Applicable

(19)    Not Applicable

(22)    Not Applicable

(23)    Not Applicable

(24)    Not Applicable

(27)    Financial Data Schedule

(99)    Not Applicable

B.)     There were no reports or exhibits on Form 8-K filed for the three months
        ended June 30, 1998.

                                       16
<PAGE>



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

                                                         SWISS ARMY BRANDS, INC.
                                                        (Registrant)


Date:  August 7, 1998   
                                              By /s/ Thomas M. Lupinski
                                              Name:  Thomas M. Lupinski
                                              Title:  Senior Vice President &
                                              Chief Financial Officer, Secretary
                                              and Treasurer


                                       17
<PAGE>