FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended September 30, 1997
Commission file number 333-24507

                              WILLCOX & GIBBS, INC.
             (Exact name of registrant as specified in its charter)



                 Delaware                                22-3308457
     (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                  Identification No.)

   900 Milik Street, Carteret, New Jersey                  07008
  (Address of principal executive offices)               (Zip Code)

                                 (908) 541-6255
              (Registrant's telephone number, including area code)

     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 ____


     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

<TABLE>
<CAPTION>

             DATE                    CLASS              SHARES OUTSTANDING
             ----                    -----              ------------------
        <S>                       <C>                        <C>
        September 30, 1997        Common Stock               1,016,177

</TABLE>


<PAGE>


                     WILLCOX & GIBBS, INC. AND SUBSIDIARIES

                                      INDEX
                                      -----


<TABLE>
<CAPTION>

PART I - Financial Information                                                   PAGE
                                                                                 ----
              <S>                                                                 <C>
              Consolidated Balance Sheets (Unaudited) at September 30, 1997
                and December 31, 1996                                              3

              Consolidated Statements of Operations (Unaudited) for the Nine
                Months and Three Months Ended September 30, 1997 and
                1996                                                               5

              Consolidated Statements of Cash Flows (Unaudited) for the Nine
                Months Ended September 30, 1997 and 1996                           6

              Notes to Consolidated Financial Statements (Unaudited)               8

              Management's Discussion and Analysis of Financial Condition
                and Results of Operations                                         13

PART II - Other Information                                                       18

</TABLE>

<PAGE>


                     WILLCOX & GIBBS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                                September 30,       December 31,
                                                                    1997                 1996
                                                                -------------       ------------
                                                                           (Unaudited)
ASSETS
<S>                                                             <C>                 <C>      
Current Assets:
      Cash                                                      $    1,155          $     882
      Accounts receivable, less allowance for doubtful
      accounts of $3,693 in 1997 and $2,419 in 1996                 42,191             22,336
      Inventories                                                   45,947             34,224
      Prepaid expenses and other current assets                      4,556              2,655
      Deferred income taxes                                            881                804
                                                                ----------          ---------
        Total current assets                                        94,730             60,901

Property and equipment, net                                          5,276              4,400
Deferred financing costs, less accumulated
   amortization of $488 in 1997 and $812 in 1996                     4,095              2,323
Intangible assets, less accumulated amortization of
   $856 in 1997 and $229 in 1996                                    32,877             11,060
Other assets                                                         2,824              1,044
                                                                ----------          ---------
                                                                $  139,802          $  79,728
                                                                ==========          =========

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                     WILLCOX & GIBBS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


                                                           September 30,  December 31,
                                                                1997          1996
                                                           -------------  ------------
                                                                   (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY


<S>                                                        <C>            <C>     
Current Liabilities:
      Revolving line of credit                             $  12,554      $ 19,347
      Book overdrafts                                          1,276         1,499
      Current installments of long-term debt                     605         3,195
      Trade accounts payable                                  16,892        12,806
      Income taxes payable                                         -           642
      Accrued liabilities and other current liabilities       10,165         4,758
                                                           ---------      --------
        Total current liabilities                             41,492        42,247

Deferred income taxes                                            573           290
Accrued retirement benefits                                    2,502         2,452
Long-term debt, excluding current installments                84,900        18,893
Other liabilities                                                157           168
                                                           ---------      --------
        Total liabilities                                    129,624        64,050
                                                           ---------      --------
Common stock subject to put option                             3,000         3,000

Stockholders' Equity:
      Common stock:
             Class A, $10 stated value.  Authorized
               1,500,000 shares; issued and outstanding
               1,016,177 in 1997 and 976,277 in 1996           9,162         8,763
             Class B, no par value.  Authorized 250,000
              shares; none issued                                  -             -
             Class C, no par value.  Authorized 250,000 
              shares; none issued                                  -             -
      Additional paid in capital                                   -         1,904
      Subscriptions receivable                                  (603)         (429)
      Retained earnings (accumulated deficit)                 (1,369)        2,202
      Cumulative translation adjustment                          (12)          238
                                                           ---------      --------
        Total stockholders' equity                             7,178        12,678
                                                           ---------      --------
                                                           $ 139,802      $ 79,728
                                                           =========      ========


     See accompanying notes to unaudited consolidated financial statements.

</TABLE>

<PAGE>



<TABLE>
<CAPTION>

                          WILLCOX & GIBBS, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF OPERATIONS
                (DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                  Nine Months Ended           Three Months Ended
                                                    September 30,               September 30,
                                            --------------------------     -------------------------
                                                 1997           1996          1997            1996
                                                     (Unaudited)                 (Unaudited)
<S>                                         <C>            <C>             <C>            <C>        
Net sales                                   $   135,671    $    85,412     $   46,429     $   28,839
Cost of goods sold                               93,991         57,713         32,776         19,313
                                            -----------    -----------     ----------     ----------
    Gross profit                                 41,680         27,699         13,653          9,526

Selling, general, and
 administrative expenses                         34,502         20,801         11,746          6,600
                                            -----------    -----------     ----------     ----------
    Operating income                              7,178          6,898          1,907          2,926

Interest expense                                  9,092          3,591          3,155          1,241
Other income (expense), net                         192            (77)           102            (49)
                                            -----------    -----------     ----------     ----------
    Income (loss) before
     income taxes and
     extraordinary item                          (1,722)         3,230         (1,146)         1,636

Income tax expense (benefit)                       (631)         1,211           (413)           626
                                            -----------    -----------     ----------     ----------
    Income (loss) before
      extraordinary item                         (1,091)         2,019           (733)         1,010

Extraordinary loss, net of
  income tax benefit                             (1,557)             -              -              -
                                            -----------    -----------    -----------     ----------
      Net income (loss)                     $    (2,648)   $     2,019    $      (733)    $    1,010
                                            ===========    ===========    ===========     ==========
Earnings (loss) per common
   share and common share
   equivalent:

      Income (loss) before
        extraordinary item                  $     (1.13)   $      1.91    $     (0.75)   $      0.92

      Extraordinary item, net                     (1.60)             -              -              -
                                            -----------    -----------    -----------    -----------
        Net income (loss) per
        share                                     (2.73)   $      1.91    $     (0.75)   $      0.92
                                            ===========    ===========    ===========    ===========
      Weighted average
        number of common
        shares and common
        share equivalents                       968,577      1,055,998        976,002      1,100,136
                                            ===========    ===========    ===========    ===========

               See accompanying notes to unaudited consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                              WILLCOX & GIBBS, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       (DOLLARS IN THOUSANDS)


                                                                  Nine Months Ended
                                                                     September 30,
                                                                ----------------------
                                                                  1997           1996
                                                                -------        -------
                                                                       (Unaudited)
<S>                                                             <C>            <C>    
Cash flows from operating activities:
      Net income (loss)                                         $ (2,649)      $ 2,019
      Adjustments to reconcile net income (loss) to net
       cash used in operating activities:
      Depreciation and amortization                                  884           506
      Provision for losses on accounts receivable                    830           364
      Amortization of intangible assets                              628           130
      Amortization of deferred financing costs                       458           292
      Amortization of debt discount                                  158           131
      Deferred income taxes                                          205             -
      Extraordinary loss on debt extinguishment, net               1,557             -
      Changes in  operating  assets and  liabilities, net of
       effect of business acquisitions:
             Trade accounts receivable                            (7,090)       (6,091)
             Inventories                                           4,117         1,163
             Prepaid expenses and other current assets               861            16
             Other assets                                         (1,417)          (94)
             Income taxes payable                                 (1,280)          698
             Trade accounts payable and other liabilities         (6,183)         (646)
                                                                --------       -------
       Net cash used in operating activities                      (8,921)       (1,512)
                                                                --------       -------
Cash flows from investing activities:
      Capital expenditures                                        (1,256)         (740)
      Proceeds from sale of property and equipment                    58            10
      Payment for business acquisitions, net of cash
       acquired                                                  (37,690)       (8,501)
                                                                --------       -------
             Net cash used in investing activities               (38,888)       (9,231)
                                                                --------       -------

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                                     September 30,
                                                                ---------------------
                                                                  1997          1996
                                                                -------       -------
                                                                       (Unaudited)
<S>                                                             <C>           <C>
Cash flows from financing activities:
      Net proceeds from revolving line of credit                   12,488       3,608
      Decrease in book overdrafts                                    (224)       (500)
      Principal payments on long-term debt                           (203)     (1,529)
      Proceeds from debt                                           83,980       6,167
      Extinguishment of debt                                      (41,137)          -
      Payment of financing costs                                   (4,196)          -
      Repurchase and retirement of warrants                        (3,026)          -
      Proceeds from common stock issued in private
       placement                                                        -       2,351
      Proceeds from common stock issued to the
       company's ESOP                                                 425         405
                                                                ---------     -------
        Net cash provided by financing activities                  48,107      10,502
                                                                ---------     -------
Effect of exchange rates on cash balances                             (25)          1
        Net increase (decrease) in cash                               273        (240)
Cash at beginning of period                                           882         920
                                                                ---------     -------
Cash at end of period                                           $   1,155     $   680
                                                                =========     =======


Supplemental  disclosure of cash flow  information:
    Cash paid during the period for:
        Interest                                                $   5,792     $ 3,121
                                                                =========     =======
        Income taxes                                            $     275     $   344
                                                                =========     =======

     See accompanying notes to unaudited consolidated financial statements.


</TABLE>

<PAGE>


                     WILLCOX & GIBBS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   ORGANIZATION AND BASIS OF PRESENTATION

     The accompanying  unaudited  consolidated financial statements of Willcox &
Gibbs,  Inc. and  subsidiaries  (the "Company") have been prepared in accordance
with generally accepted accounting  principals for interim financial information
and  with the  instructions  to Form  10-Q and  Article  10 of  Regulation  S-X.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating  results  for the  nine  months  ending  September  30,  1997  are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 1997.

     The operations of Clinton Management Corp. (d/b/a Clinton Machine & Supply)
and Clinton  Machinery  Corp.  (together,  "Clinton")  have been included in the
Company's consolidated operations since their February 1, 1996 acquisition date.
The operations of E.C. Mitchell Co., Inc. ("Mitchell") have been included in the
Company's  consolidated  operations  since their  November 27, 1996  acquisition
date. The operations of Macpherson  Meistergram,  Inc.  ("Macpherson") have been
included in the Company's  consolidated  operations  since their January 3, 1997
acquisition date. The operations of Embroidery  Leasing Corp.  ("ELC") have been
included in the Company's  consolidated  operations  since their January 3, 1997
acquisition date.

2.   ACQUISITIONS

     Effective  February 1, 1996, the Company  acquired  Clinton in exchange for
$4,000,000 in cash,  assumption  of  $4,500,000  in debt and  payables,  100,000
shares of Company Class A common stock and  contingent  payments of up to 38.87%
of operating  income (as defined in the purchase  agreement)  of Clinton  during
each of the five years ending December 31, 2000. Such contingent  payments shall
not exceed $10,500,000. In addition, the former shareholders of Clinton have the
right to require the Company to purchase their shares of Company common stock at
a purchase price of $30 per share upon the occurrence of certain events.

     Effective  November  27,  1996,  the  Company  acquired  certain  assets of
Mitchell for $3,000,000 in cash. The acquired  assets relate to the  manufacture
and sale of abrasive cords and tape used principally in the apparel industry.

     Effective January 3, 1997, the Company acquired all the outstanding capital
stock of Macpherson for $24,000,000 in cash and the assumption of  approximately
$6,100,000  of  indebtedness  and  $6,400,000 of trade  payables.  Macpherson is
primarily  engaged in the  distribution of embroidery  equipment and supplies to
the  apparel  industry.   Pro  forma  financial  information  would  not  differ
significantly for the periods presented.

<PAGE>


3.   REFINANCING

     Effective January 3, 1997, the Company issued $85,000,000  principal amount
of 12 1/4% Series A senior  notes which are due in  December  2003.  The Company
used  the  proceeds,  in  part,  to  repay  approximately   $40,952,000  of  its
indebtedness  ($40,550,000  of which  existed at December 31,  1996),  to redeem
common stock warrants for a total of  $3,026,000,  and to finance the Macpherson
acquisition.

4.   GUARANTOR SUBSIDIARIES

     Set forth below are  condensed  consolidating  financial  statements of the
subsidiaries  of the Company  that have fully and  unconditionally,  jointly and
severally  guaranteed  the  Company's  12  1/4%  Senior  Notes  (the  "Guarantor
Subsidiaries")   and  the   non-guarantor   subsidiaries  of  the  Company  (the
"Non-Guarantor   Subsidiaries").   As  of  September  30,  1997,  the  Guarantor
Subsidiaries were WG Apparel,  Inc., Leadtec Systems, Inc., J&E Sewing Supplies,
Inc., W&G Daon, Inc. W&G Tennessee  Imports,  Inc.,  Clinton  Management  Corp.,
Clinton Machinery  Corporation,  Clinton Leasing Corp., Clinton Equipment Corp.,
Macpherson   Meistergram,   Inc.  and  Paradise  Color  Incorporated,   and  the
Non-Guarantor  Subsidiaries were Willcox & Gibbs,  Ltd.,  Sunbrand S.A. de C.V.,
Sunbrand  Caribe  S.A.,  Allied  Machine  Parts  Ltd.,  M.E.C.  (Sewing  Machine
Limited),  Unity  Sewing  Supply  Company (UK)  Limited,  Allide  Machine  Parts
Limited,  Natyork  Limited,  Forest  Needle  Company  Limited,  Morris  & Ingram
(Textiles) Limited,  Eildon Electronics Limited,  Geoffrey E. Macpherson Canada,
Inc.,  Embroidery Leasing Corporation,  Sunbrand de Colombia,  Unity de Colombia
and  Clinton de  Mexico.  The  Guarantor  Subsidiaries  are wholly  owned by the
Company,  and  there  are no  restrictions  on  the  ability  of  the  Guarantor
Subsidiaries  to make  distributions  to the  Company,  except  those  generally
applicable under relevant  corporation laws.  Separate  financial  statements of
each Guarantor Subsidiary and eliminating entries have not been included because
management has determined that they are not material to investors.


<PAGE>

<TABLE>
<CAPTION>

                                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                              SEPTEMBER 30, 1997
      ASSETS
                                               GUARANTOR      NON-GUARANTOR
                                              SUBSIDIARIES     SUBSIDIARIES   CONSOLIDATED
                                              ------------    -------------   ------------

<S>                                          <C>              <C>             <C>         
Cash                                         $     589,568    $    565,019    $  1,154,587
Accounts receivable, net                        35,894,381       6,296,183      42,190,564
Inventories                                     40,445,751       5,500,942      45,946,693
Other current assets                             5,233,565         204,179       5,437,744
                                             -------------    ------------    ------------
      Total current assets                      82,163,265      12,566,323      94,729,588
Property and equipment, net                      3,648,812       1,627,546       5,276,358
Intangible assets, net                          36,972,050               -      36,972,050
Other assets                                     1,759,320       1,064,623       2,823,943
                                             -------------    ------------    ------------
                                             $ 124,543,447    $ 15,258,492    $139,801,939
                                             =============    ============    ============


      LIABILITIES AND STOCKHOLDERS' EQUITY

Revolving line of credit and current
 installments of long-term debt              $  12,753,950    $    404,600    $ 13,158,550
Book overdrafts                                  1,263,621          12,210       1,275,831
Trade accounts payable                          15,089,062       1,803,019      16,892,081
Accrued liabilities and other current
 liabilities                                     9,112,030       1,052,767      10,164,797
                                             -------------    ------------    ------------
      Total current liabilities                 38,218,663       3,272,596      41,491,259

Long-term debt, excluding current
 installments                                   83,888,922       1,011,500      84,900,422
Other liabilities                                2,869,879         361,850       3,231,729
                                             -------------    ------------    ------------
      Total liabilities                        124,977,464       4,645,946     129,623,410

Common stock subject to put option               3,000,000               -       3,000,000
Common stock                                     9,161,767               -       9,161,767
Other equity (deficit)                         (12,595,784)     10,612,546      (1,983,238)
                                             -------------    ------------    ------------
      Total stockholders' equity                (3,434,017)     10,612,546       7,178,529
                                             -------------    ------------    ------------
                                              $124,543,447    $ 15,258,492    $139,801,939
                                             =============    ============    ============

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

                                                    GUARANTOR          NON-GUARANTOR
                                                   SUBSIDIARIES        SUBSIDIARIES        CONSOLIDATED
                                                 ----------------    ----------------    ----------------

<S>                                              <C>                 <C>                 <C>            
Net sales                                        $   118,829,849     $    16,840,860     $   135,670,709
Cost of goods sold                                    82,375,308          11,615,970          93,991,278
                                                 ---------------     ---------------     ---------------
      Gross profit                                    36,454,541           5,224,890          41,679,431

Selling, general, and administrative expenses         30,551,265           3,950,665          34,501,930
                                                 ---------------     ---------------     ---------------
      Operating income                                 5,903,276           1,274,225           7,177,501

Interest expense                                       8,955,530             136,887           9,092,417
Other, net                                               113,102              79,309             192,411
                                                 ---------------     ---------------     ---------------
      Income (loss) before income taxes and
        extraordinary item                            (2,939,152)          1,216,647          (1,722,505)

Income tax expense (benefit)                            (635,560)              4,078            (631,482)
                                                 ---------------     ---------------     ---------------

      Income (loss) before extraordinary item         (2,303,592)          1,212,569          (1,091,023)

Extraordinary loss, net of income tax benefit         (1,556,898)                  -          (1,556,898)
                                                 ---------------     ---------------     ---------------

      Net income (loss)                          $    (3,860,490)    $     1,212,569     $    (2,647,921)
                                                 ===============     ===============     ===============

</TABLE>


<TABLE>
<CAPTION>
                               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996

                                                    GUARANTOR         NON-GUARANTOR
                                                   SUBSIDIARIES        SUBSIDIARIES        CONSOLIDATED
                                                 ---------------     ---------------     ---------------
<S>                                              <C>                 <C>                 <C>            
Net sales                                        $    77,617,704     $     7,794,515     $    85,412,219
Cost of goods sold                                    52,213,655           5,499,292          57,712,947
                                                 ---------------     ---------------     ---------------
      Gross profit                                    25,404,049           2,295,223          27,699,272

Selling, general, and administrative expenses         18,942,694           1,858,325          20,801,019
                                                 ---------------     ---------------     ---------------
      Operating income                                
                                                       6,461,355             436,898           6,898,253

Interest expense                                       3,591,266                   -           3,591,266
Other, net                                              (149,176)             72,500             (76,676)
                                                 ---------------     ---------------     ---------------
      Income before income taxes                       2,720,913             509,398           3,230,311

Income tax expense                                     1,125,245              86,036           1,211,281
                                                 ---------------     ---------------     ---------------

      Net income                                 $     1,595,668     $       423,362     $     2,019,030
                                                 ===============     ===============     ===============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

                                                    GUARANTOR          NON-GUARANTOR
                                                   SUBSIDIARIES        SUBSIDIARIES        CONSOLIDATED
                                                 ----------------    ----------------    ----------------

<S>                                              <C>                 <C>                 <C>            
Cash flows from investing activities             $    (9,396,917)    $       476,931     $    (8,919,986)
                                                 ---------------     ---------------     --------------- 
Cash flows from investing activities:
       Payment for business acquisitions             (37,690,050)                  -         (37,690,050)
       Other changes                                    (978,284)           (219,752)         (1,198,036)
                                                 ---------------     ---------------     ---------------
                                                     (38,668,334)           (219,752)        (38,888,086)
                                                 ---------------     ---------------     ---------------
Cash flows from financing activities:
       Proceeds from debt issuance                    96,244,951                   -          96,244,951
       Principal payment on debt                     (41,135,398)           (204,950)        (41,340,348)
       Payments for financing costs                   (4,196,126)                  -          (4,196,126)
       Repurchase and retirement of warrants          (3,026,454)                  -          (3,026,454)
       Other changes                                     425,240                   -             425,240
                                                 ---------------     ---------------     ---------------
                                                      48,312,213            (204,950)         48,107,263
                                                 ---------------     ---------------     ---------------
Effect of exchange rates on cash balances                      -             (26,104)            (26,104)
                                                 ---------------     ---------------     ---------------

       Net change in cash                                246,962              26,125             273,087

       Cash at beginning of period                       342,607             538,893             881,500
                                                 ---------------     ---------------     ---------------
       Cash at end of period                     $       589,569     $       565,018     $     1,154,587
                                                 ===============     ===============     ===============

</TABLE>

<TABLE>
<CAPTION>

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996

                                                    GUARANTOR          NON-GUARANTOR
                                                   SUBSIDIARIES        SUBSIDIARIES        CONSOLIDATED
                                                 ----------------    ----------------    ----------------
<S>                                              <C>                 <C>                 <C>            
Cash flows from investing activities             $     (1,751,323)   $       238,988     $    (1,512,335)
                                                 ----------------    ---------------     ---------------
Cash flows from investing activities:
       Payment for business acquisitions               (8,500,581)                 -          (8,500,581)
       Other changes                                     (479,652)          (250,973)           (730,625)
                                                 ----------------    ---------------     ---------------
                                                       (8,980,233)          (250,973)         (9,231,206)
                                                 ----------------    ---------------     ---------------
Cash flows from financing activities:
       Proceeds from debt issuance                      9,275,018                  -           9,275,018
       Principal payment on debt                       (1,528,838)                 -          (1,528,838)
       Proceeds from sale of common stock               2,756,697                  -           2,756,697
       Other changes                                            -                  -                   -
                                                 ----------------    ---------------     ---------------
                                                       10,502,877                  -          10,502,877
                                                 ----------------    ---------------     ---------------
Effect of exchange rates on cash balances                       -                967                 967
                                                 ----------------    ---------------     ---------------
       Net change in cash                                (228,679)           (11,018)           (239,697)

       Cash at beginning of period                        314,821            605,417             920,238
                                                 ----------------    ---------------     ---------------
       Cash at end of period                     $         86,142    $       594,399     $       680,541
                                                 ================    ===============     ===============

</TABLE>

<PAGE>


         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

GENERAL

     Willcox & Gibbs,  Inc. (the  "Company") was organized in 1994 by members of
the Company's  current  management and certain other investors (the  "Management
Buyout") to acquire the sewn products  replacement parts, supply and specialized
equipment   distribution   businesses   of  the   Company's   predecessor   (the
"Distribution Business"), which occurred on July 13, 1994.

     Effective  February 1, 1996, the Company acquired Clinton  Management Corp.
and Clinton  Machinery  Corp.  (together,  "Clinton"),  a distributor  of screen
printing  equipment  for  the  apparel  industry  (the  "Clinton  Acquisition").
Approximately  17.0%  of the  Company's  net  sales  for the nine  months  ended
September 30, 1997 are  attributable to the operations of Clinton.  Accordingly,
the results of the Company for the nine months ended  September 30, 1997 are not
directly  comparable to the results for the nine months ended September 30, 1996
due to the inclusion of the operations of Clinton in the full 1997 period.

     In  addition,   on  January  3,  1997,  the  Company  acquired   Macpherson
Meistergram,  Inc.  and its  subsidiary,  Geoffrey E.  Macpherson  Canada,  Inc.
(collectively, "Macpherson"), a distributor of embroidery equipment and supplies
for the apparel industry (the "Macpherson Acquisition").  Approximately 31.4% of
the  Company's  net sales  for the nine  months  ended  September  30,  1997 are
attributable  to the operations of Macpherson.  Accordingly,  the results of the
Company for the first nine  months of 1997 are not  directly  comparable  to the
results for the same period in 1996 due to the  inclusion of the  operations  of
Macpherson in the 1997 period.

     The Company  currently  operates through six principal  business units: (i)
its Sunbrand division ("Sunbrand"), which is a distributor of replacement parts,
supplies and specialized  equipment to  manufacturers  of apparel and other sewn
products;  (ii) its Unity  Sewing  Supply  Co.  division  ("Unity"),  which is a
wholesale  distributor to dealers of  replacement  parts and supplies for use by
the apparel and other sewn products  industry;  (iii) its Willcox & Gibbs,  Ltd.
("W&G, Ltd.") subsidiary, which is a distributor to manufacturers and dealers in
the United Kingdom and Europe of  replacement  parts and supplies for use by the
apparel and other sewn products industry;  (iv) its Clinton subsidiaries,  which
distribute screen printing equipment and supplies for the apparel industry;  (v)
its Leadtec Systems,  Inc. ("Leadtec")  subsidiary,  which develops and supplies
computer-based production planning and control systems for the apparel industry;
and (vi) Macpherson, which distributes embroidery equipment and supplies used in
the apparel industry.

RESULTS OF OPERATIONS

     The  following  table sets forth the  percentages  that certain  income and
expense items bear to net sales for the periods indicated.

<PAGE>

<TABLE>
<CAPTION>

                                     NINE MONTHS            THREE MONTHS
                                        ENDED                   ENDED
                                    SEPTEMBER 30,           SEPTEMBER 30,
                                --------------------    --------------------
                                  1997        1996        1997        1996
                                --------    --------    --------    --------
<S>                              <C>         <C>         <C>         <C>   
Net sales                        100.0%      100.0%      100.0%      100.0%
Gross profit                      30.7        32.4        29.4        33.0
Selling, general and 
     administrative expenses      25.4        24.4        25.3        22.9
Operating income                   5.3         8.1         4.1        10.1
Interest expense                   6.7         4.2         6.8         4.3
Income taxes                      (0.5)        1.4        (0.9)        2.2
Net income                        (2.0)        2.4        (1.6)        3.5
                                ========    ========    ========    ========

</TABLE>

     Net sales were $135.7 million in the nine months ending September 30, 1997,
an increase of $50.2  million,  or 58.8%,  as compared to the nine months ending
September  30, 1996.  Net sales were $46.4  million in the three  months  ending
September 30, 1997, an increase of $17.6 million,  or 61.0%,  as compared to the
1996 period.  Net sales increased  primarily as a result of the inclusion in the
1997 periods of the results of  Macpherson,  acquired in January 1997,  Clinton,
acquired  in  February  1996,  and  E.C.  Mitchell  Co.,  Inc.  ("Mitchell"),  a
manufacturer   of  abrasive   cords  and  tapes  used   principally  by  apparel
manufacturers,  acquired  in  November  1996,  which  contributed  an  aggregate
additional  $45.6  million and $17.3  million to net sales in the nine and three
months, respectively, ending September 30, 1997 compared with the nine and three
months ending September 30, 1996.

     Net sales of Macpherson and Clinton declined,  while the aggregate sales of
the Company's other principal subsidiaries  increased,  in the first nine months
of 1997 as compared to the 1996  period.  During the third  quarter of 1997,  it
became  apparent  that a new line of  embroidery  machines  produced by Barudan,
Macpherson's principal supplier,  included a defect, which resulted in a halt of
all deliveries of such machines in August 1997 until the defect was corrected in
September  1997.  In  addition,  during  the  1997  period  Barudan  was late in
supplying  certain  new  machines,  and it  imposed  a  limit  on the  available
quantities of other new machines that will continue through the first quarter of
1998. In the case of Clinton,  during the 1997 period the Company  experienced a
decline in demand for apparel screen printing equipment supplied by M&R Printing
Equipment,  Inc.  ("M&R")  and an increase in costs  associated  with  marketing
efforts in the Company's European and Asian sales territories for M&R equipment.
The Company has determined to discontinue its marketing of M&R equipment and has
entered into an exclusive  distribution  agreement  with MHM  Siebdruckmaschinen
Gesmbh.  KG.  ("MHM"),  an Austrian  company,  to distribute  its apparel screen
printing equipment in North and South American (excluding  Brazil).  The initial
term of the contract is for five years with  automatic  renewals for  successive
two year periods  unless  cancelled  by either party six months in advance.  The
agreement  calls for annual  quotas.  Although MHM's share of the apparel screen
printing  market in the U.S. is currently  substantially  less than that of M&R,
the Company believes that it should be able to increase MHM's market penetration

<PAGE>

in the Western  Hemisphere.  However, no assurance can be given as to the future
levels of sales of MHM equipment.

     Gross profit in the nine and three  months  ending  September  30, 1997 was
$41.7 million and $13.7 million,  respectively, an increase of $14.0 million, or
50.5%,  and $4.1 million,  or 43.3%,  as compared with the same periods of 1996.
Gross profit increased primarily due to the inclusion of Macpherson, Clinton and
Mitchell in the 1997 periods.  As a percentage of net sales, gross profit in the
nine and three months ending September 30, 1997 was 30.7% and 29.4%, as compared
with 32.4% and 33.0% in the same  periods of 1996.  The decrease in gross profit
percentage  was  attributable  to  Macpherson  and  Clinton.   Macpherson's  and
Clinton's  gross  profit  margins have  traditionally  been lower than the gross
profit  margin  associated  with the  Company's  parts and  supplies  businesses
because a larger percentage of their sales are for equipment.

     Selling,  general and administrative expenses for the nine and three months
ending September 30, 1997 were $34.5 million and $11.7 million, respectively, an
increase of $13.7 million,  or 65.9%, and $5.1 million, or 78.0%, as compared to
the same periods of 1996.  The increase  consisted  primarily of the addition of
$8.4 million and $3.2 million of operating expenses for Macpherson,  Clinton and
Mitchell in the nine and three months  ending  September  30, 1997. In addition,
Macpherson incurred additional expenses relating to corrections of a defect in a
new line of embroidery  equipment and Clinton incurred higher marketing expenses
in its discontinued  European and Asian markets.  As a percentage of sales, such
expenses  increased  to 25.4% and 25.3%  for the nine and  three  months  ending
September 30, 1997, from 24.4% and 22.9% for the same periods of 1996, primarily
related to the Macpherson acquisition.

     Operating income in the nine and three months ending September 30, 1997 was
$7.2 million and $1.9 million,  respectively,  an increase of $0.3  million,  or
4.1%, and a decrease of $1.0 million,  or 34.8%, as compared to the same periods
of 1996. The increase in operating income resulted from an increase in sales and
the factors discussed above. As a percentage of net sales,  operating income was
5.3% and  4.1%  for the  nine  and  three  months  ending  September  30,  1997,
respectively,  as  compared to 8.1% and 10.1% in the same  periods of 1996.  The
decrease  was   principally   attributable  to  the  lower  gross  margins  from
Macpherson's and Clinton's sales.

     Interest  expense was $9.1  million and $3.2  million in the nine and three
months ending September 30, 1997, respectively,  an increase of $5.5 million, or
153.2%, and $1.9 million,  or 154.2%, as compared with the same periods of 1996.
The increase in interest  expense was a result of the  refinancing as of January
3, 1997, a portion of which was used to finance the acquisition of Macpherson.

     Provision for income taxes for the nine and three months  ending  September
30,  1997 was a  benefit  of $0.6  million  and $0.4  million,  respectively,  a
decrease of $1.8  million and $1.0  million,  respectively,  as compared to same
periods of 1996.  The  Company's  effective  tax rate was 36.6% and 36.0% in the
nine and three months  ending  1997,  as compared to 37.5% and 38.3% in the same
periods of 1996.

<PAGE>

     The  Company's  results  for the  first  nine  months  of 1997  reflect  an
extraordinary  loss from the  extinguishment of debt (net of income tax benefit)
of $1.6  million  owing to the  refinancing  of the  Company's  indebtedness  in
connection  with the Macpherson  Acquisition  and the issuance by the Company of
$85.0 million  aggregate  principal  amount of its 12 1/4% Series A Senior Notes
due 2003 (the "Senior Notes").

     Net loss in the nine and three months  ending  September  30, 1997 was $2.6
million and $0.7 million,  respectively,  compared to net income of $2.0 million
and $1.0 million in the same periods of 1996. The decrease was  attributable  to
the additional cost factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company  has  funded  its  working   capital   requirements,   capital
expenditures and acquisitions  from net cash provided by operations,  borrowings
under its credit  facilities  and proceeds  from the issuance of debt and equity
securities.

     On January 3, 1997,  the Company  issued and sold $85.0  million  aggregate
principal  amount  of  its  Senior  Notes  pursuant  to an  exemption  from  the
registration  requirements  of the Securities  Act of 1933, as amended,  the net
proceeds  of which were $80.5  million.  The  Company  used a portion of the net
proceeds  from the sale of the Senior  Notes to repay  substantially  all of its
existing debt, most of which was incurred to fund the Management  Buyout in July
1994, the Clinton  acquisition  in February  1996,  the Mitchell  acquisition in
November 1996, and to satisfy working capital requirements.  The balance of such
net  proceeds  was  used  to fund  the  $24.0  million  purchase  price  for the
Macpherson  Acquisition,  to repay approximately $6.1 million of indebtedness of
Macpherson  and  to  pay  approximately   $6.4  million  of  trade  payables  of
Macpherson.

     In connection with the sale of the Senior Notes, the Financing and Security
Agreements,  dated February 1, 1996,  between the Company and NationsBank,  N.A.
("NationsBank")  was  terminated,  and the Company entered into an $18.5 million
working capital facility also with NationsBank (the "New Credit Facility") which
became  effective  upon  consummation  of the sale of the Senior Notes.  The New
Credit Facility,  as amended as of April 23, 1997, provides for borrowings of up
to  $18.5  million  in the  aggregate  outstanding  at any  time,  subject  to a
borrowing  base  limitation  equal  to 85% of the  Company's  eligible  accounts
receivable. Borrowings under the New Credit Facility bear interest at a rate per
annum, at the Company's option, equal to (i) NationsBank's prime rate plus 0.25%
or (ii) LIBOR plus 2.50%.  The New Credit  Facility  is secured by all  accounts
receivable  of the Company and  includes  certain  covenants  applicable  to the
Company,  including  requirements that the Company comply with certain financial
ratios.  The New Credit  Facility  expires on July 13,  2001.  As of October 31,
1997,  $2.3 million was  available  to be borrowed by the Company  under the New
Credit Facility.

     In  connection  with  the  Macpherson  Acquisition,  the  Company  acquired
Embroidery  Leasing  Corporation  (the  "Leasing  Company"),  a leasing  company
affiliate of  Macpherson,  for  approximately  $0.5 million,  payable over three
years,  plus interest at 6.0% annum.  The Company intends to utilize the Leasing
Company to offer  flexible  lease  financing  to its  customers  to support  the

<PAGE>

Company's sales of equipment.  The Company intends to fund its investment in the
Leasing  Company  through  borrowings  under  the  New  Credit  Facility,  which
borrowings  are expected to aggregate  approximately  $1.0 million in 1997.  The
Company  plans for the  Leasing  Company to  arrange  additional  borrowings  to
finance its operations and sell a portion of its leases on a nonrecourse basis.

     The  Company's  capital  expenditures  during the first nine months of 1997
aggregated  approximately  $1.3 million.  Such  expenditures  were primarily for
computer,  office and warehouse equipment and improvements.  The Company expects
an  additional  $0.5 million of capital  expenditures  in the fourth  quarter of
1997,  primarily  relating  to the  consolidation  of  certain  of  Macpherson's
operations.

     Net cash used in the Company's operating activities was $8.9 million during
the first nine months of 1997,  principally due to working capital changes.  Net
cash used in the Company's investing  activities during the first nine months of
1997 were $8.9 million,  related principally to the Macpherson acquisition.  Net
cash  provided  by  financing  activities  during the first nine  months of 1997
aggregated  $48.1  million,  reflecting  $84.0  million of  borrowings  from the
refinancing used to extinguish debt of $41.1 million,  $4.2 million in financing
costs and $3.0 million to repurchase and retire warrants.

     The Company believes that the cash generated from operations and borrowings
available under the New Credit Facility will be sufficient to meet the Company's
working capital and liquidity needs for the foreseeable future.

<PAGE>


                     WILLCOX & GIBBS, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

      (a)    Exhibits

<TABLE>
<CAPTION>
             EXHIBIT NO.                      DESCRIPTION
             -----------                      -----------
             <S>                              <C>                                                                
             11.1                             Computation   of  net  income  per
                                              common   and   common   equivalent
                                              shares

             27.1                             Financial  Data  Schedule   (filed
                                              with EDGAR only)

</TABLE>

      (b)    Reports on Form 8-K

             During the quarter ended  September  30, 1997,  the Company did not
             file any reports on Form 8-K.

<PAGE>

                                    SIGNATURE

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

                                        WILLCOX & GIBBS, INC.
                                        (Registrant)


Date     November 13, 1997              By   /S/ JOHN K. ZIEGLER, JR.
                                           -----------------------------
                                           John K. Ziegler, Jr.
                                           Vice President
                                           and Chief Financial Officer