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 March 31, 1998
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)

                                 (732) 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:

            DATE                    CLASS                    SHARES OUTSTANDING
            ----                    -----                    ------------------

        March 31, 1998           Common Stock                     1,001,319



<PAGE>


                     WILLCOX & GIBBS, INC. AND SUBSIDIARIES

                                      INDEX
                                      -----


<TABLE>
<CAPTION>
PART I - Financial Information                                                          PAGE

               <S>                                                                        <C>
               Consolidated  Balance  Sheets  (Unaudited)  at March 31, 1998 and
                    December 31, 1997                                                     3

               Consolidated  Statements of Operations  (Unaudited) for the Three
                    Months Ended March 31, 1998 and 1997                                  5

               Consolidated  Statements of Cash Flows  (Unaudited) for the Three
                    Months Ended March 31, 1998 and 1997                                  6

               Notes to Unaudited Consolidated Financial Statements                       8

               Management's  Discussion and Analysis of Financial  Condition and
                    Results of Operations                                                15

PART II - Other Information                                                              19

Signature                                                                                20
</TABLE>


<PAGE>

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


<TABLE>
<CAPTION>
             ASSETS                                                 March 31,       December 31,
                                                                      1998              1997
                                                                    --------         --------
                                                                  (Unaudited)
<S>                                                                 <C>              <C>     
Current Assets
   Cash                                                             $    877         $  1,325
   Accounts receivable, less allowance for doubtful
        accounts of $4,939 in 1998 and $4,315 in 1997                 41,603           38,465
   Inventories                                                        46,419           48,735
   Prepaid expenses and other current assets                           4,020            3,496
   Deferred income taxes                                               1,415            1,402
                                                                    --------          --------
        Total current assets                                          94,334           93,423

Property and equipment, net                                            5,456            5,595
Deferred financing costs, less accumulated amortization
   of $813 in 1998 and $650 in 1997                                    3,740            3,903
Intangible assets, less accumulated amortization of
   $1,269 in 1998 and $1,060 in 1997                                  32,177           32,386
Deferred income taxes                                                  1,903            1,313
Other assets                                                           4,036            3,881
                                                                    --------         --------
                                                                    $141,646         $140,501
                                                                    ========         ========

     See accompanying notes to unaudited consolidated financial statements 
</TABLE>



<PAGE>

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

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY                           March 31,    December 31,
                                                                 1998          1997
                                                               --------     ---------
                                                              (Unaudited)
<S>                                                              <C>       <C>      
Current Liabilities:
   Revolving line of credit                                      13,841    $  10,617
   Book overdrafts                                                3,073        3,233
   Current installments of long-term debt                           600          594
   Trade accounts payable                                        19,072       23,254
   Income taxes payable                                              32           24
   Accrued liabilities and other current liabilities             10,155        7,361
                                                               --------    ---------
      Total current liabilities                                  46,773       45,083

Accrued retirement benefits                                       2,431        2,431
Long-term debt, excluding current installments                   84,761       84,742
Other liabilities                                                   159          158
                                                               --------    ---------
    Total liabilities                                           134,124      132,414
                                                               --------    ---------

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 1,015,937 in
          1998 and 1,001,319 in 1997
                                                                  9,159        9,013
       Class B, no par value.  Authorized 250,000
          shares; none issued                                         -            -
       Class C, no par value.  Authorized 250,000
          shares; none issued                                         -            -
    Class A common stock subscriptions receivable                  (219)        (379)
    Accumulated deficit                                          (4,399)      (3,624)
      Cumulative translation adjustments                            (19)          77
        Total stockholders' equity                                4,522        5,087
                                                               --------    ---------

                                                               $141,646    $ 140,501
                                                               ========    =========

     See accompanying notes to unaudited consolidated financial statements.
</TABLE>



<PAGE>


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

<TABLE>
<CAPTION>
                                                             For Three Months Ended
                                                                    March 31,
                                                             ---------------------
                                                                1998         1997
                                                             ---------    --------
                                                                   (Unaudited)


<S>                                                          <C>         <C>     
Net sales                                                    $ 44,913    $ 42,043
Cost of goods sold                                             31,200      29,084
                                                             ---------   ---------
      Gross profit                                             13,713      12,959

Selling, general, and administrative expenses                  12,090      10,974
                                                             ---------   ---------
      Operating income                                          1,623       1,985

Interest expense                                               (3,051)     (2,883)
Other income (expense), net                                       (16)         39
                                                             ---------   ---------
      Loss before income taxes                                 (1,444)       (859)

Income tax benefit                                               (596)       (356)
                                                             ---------   ---------
      Loss before extraordinary item                             (848)       (503)

Extraordinary loss, net of income tax benefit                       -      (1,557)
                                                             ---------   ---------
      Net loss                                               $   (848)   $ (2,060)

Basic and diluted loss per common share and
  common share equivalent:

      Loss before extraordinary item                         $  (0.86)   $  (0.53)

      Extraordinary item, net                                       -       (1.63)
                                                             ---------   ---------
        Net loss per share                                   $  (0.86)   $  (2.16)
                                                             =========   =========

     See accompanying notes to unaudited consolidated financial statements.
</TABLE>



<PAGE>


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

<TABLE>
<CAPTION>
                                                                       For the Three Months Ended
                                                                                 March 31,
                                                                      ------------------------------
                                                                        1998                 1997
                                                                      --------              --------
                                                                               (Unaudited)
<S>                                                                     <C>                  <C>      
Cash flows from operating activities:
      Net loss                                                          $  (848)           $ (2,060)
      Adjustments to reconcile net loss to net cash
        used in operating activities:
           Depreciation and amortization                                    325                 261
           Provision for losses on accounts receivable                      238                 238
           Amortization of intangible assets                                209                 203
           Amortization of deferred financing costs                         163                 153
           Amortization of debt discount                                     53                  52
           Deferred income taxes                                           (602)                 (2)
           Extraordinary loss on debt extinguishment, net                     -               1,557
           Changes in  operating  assets  and  liabilities,  net
             of effect of business acquisitions:
              Trade accounts receivable                                  (3,425)              3,339
              Inventories                                                 2,267               1,196
              Prepaid expenses and other current assets                    (524)               (929)
              Other assets                                                 (155)                 22
              Income taxes payable                                            8                (622)
              Trade accounts payable and other
                liabilities                                              (1,343)             (5,907)
                                                                        --------            -------- 
           Net cash used in operating activities                         (3,634)             (2,499)
                                                                        --------            --------
Cash flows from investing activities:
      Capital expenditures                                                 (239)               (477)
      Proceeds from sale of property and equipment                           25                  58
      Payment for business acquisition, net of cash
          acquired                                                            -             (36,732)
                                                                        --------            --------
          Net cash used in investing activities                           (214)             (37,151)
                                                                        --------            -------- 

     See accompanying notes to unaudited consolidated financial statements.
</TABLE>




<PAGE>


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

<TABLE>
<CAPTION>
                                                                         For the Three Months Ended
                                                                                 March 31,
                                                                        ----------------------------
                                                                          1998              1997
                                                                        --------           ---------
                                                                               (Unaudited)

<S>                                                                     <C>                <C>     
Cash flows from financing activities:
  Net proceeds from revolving line of credit                            $ 3,224            $  4,248
  Decrease in book overdrafts                                              (160)                 (5)
  Principal payments on long-term debt                                      (44)                  -
  Proceeds from debt issued in business acquisitions                          -              83,980
  Extinguishment of debt                                                      -             (41,137)
  Payment of financing costs                                                  -              (3,606)
  Repurchase and retirement of warrants                                       -              (3,026)
  Proceeds from common stock issued to Company
      ESOP                                                                  379                   -
                                                                        --------           ---------
      Net cash provided by financing activities                           3,399              40,454
                                                                        --------           ---------

Effect of exchange rate changes on cash                                       1                 (19)

   Net change in cash                                                      (448)                785
Cash at beginning of period                                               1,325                 882
                                                                        --------           ---------
Cash at end of period                                                   $   877            $  1,667
                                                                        ========           =========
Supplemental  disclosure of cash flow  information:
  Cash paid during the period for:
   Interest                                                             $   294            $    479
                                                                        ========           =========
   Income taxes                                                         $     9            $    262
                                                                        ========           =========

     See accompanying notes to unaudited consolidated financial statements.
</TABLE>


<PAGE>
                     WILLCOX & GIBBS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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  principles 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  quarter  ending  March 31, 1998 are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
1998.

2.   ACQUISITION

     Effective January 3, 1997 the Company acquired all the outstanding  capital
stock of Macpherson Meistergram, Inc. ("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.

3.   REFINANCING

     Effective January 3, 1997, the Company issued $85,000,000  principal amount
of 12.25% 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.   LOSS PER SHARE

     The following  table sets forth the  computation  of basic and diluted loss
per share, before  extraordinary item, for the three months ended March 31, 1998
and 1997:


<PAGE>

<TABLE>
<CAPTION>
                                                                            1998                  1997
                                                                      -------------          -------------

<S>                                                                   <C>                    <C>          
      Numerator for basic and diluted loss per share                  $   (847,989)          $ (2,059,860)
                                                                      =============          =============

      Denominator for basic loss per share-
         weighted-average shares outstanding                               982,371                953,674
      Effect of dilutive securities:
           Employee stock options                                                -                       -
           Warrants                                                              -                       -
                                                                      -------------          -------------

      Denominator for diluted loss per share                               982,371                953,674
                                                                      =============          =============
      Loss per share - basic                                          $      (0.86)          $      (2.16)
                                                                      =============          =============
      Loss per share - diluted                                        $      (0.86)          $      (2.16)
                                                                      =============          =============
</TABLE>

           Employee  stock  options and  warrants  which were  outstanding  were
excluded from the computation of diluted loss per share because the effect would
be antidilutive.

5.   COMPREHENSIVE INCOME

     Effective  January 1, 1998,  the Company  adopted  Statement  of  Financial
Accounting Standards No. 130, "Reporting  Comprehensive  Income". This statement
establishes items that are required to be recognized under accounting  standards
as  components of  comprehensive  income.  Statement  130 requires,  among other
things, that an enterprise report a total for comprehensive  income in financial
statements  of interim  periods  issued to  shareholders.  For the three  months
periods ended March 31, 1998 and 1997, the Company's consolidated  comprehensive
income does not differ materially from the traditionally-determined consolidated
net loss set forth on the accompanying consolidated statements of operations.

6.   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 March 31, 1998, 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

<PAGE>

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>

                               CONDENSED CONSOLIDATING BALANCE SHEETS
                                           MARCH 31, 1998
                                           (IN THOUSANDS)

<TABLE>
<CAPTION>
                                         GUARANTOR                 NON-GUARANTOR
      ASSETS                            SUBSIDIARIES               SUBSIDIARIES               CONSOLIDATED
                                        ------------               -------------              ------------

<S>                                     <C>                         <C>                       <C>      
Cash                                    $      904                  $   (27)                  $     877
Accounts receivable, net                    35,351                     6,252                     41,603
Inventories                                 39,617                     6,802                     46,419
Other current assets                         5,071                       364                      5,435
                                        ------------               -------------              ------------
   Total current assets                     80,943                    13,391                     94,334
Property and equipment, net                  3,824                     1,632                      5,456
Intangible assets, net                      35,917                         -                     35,917
Other assets                                 3,970                     1,969                      5,939
                                        ------------               -------------              ------------
                                         $ 124,654                  $ 16,992                  $ 141,646
                                        ============               =============              ============

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current notes and installments of long-
  term debt                              $ 14,023                     $  418                  $   14,441
Book overdrafts                             3,073                          -                       3,073
Trade accounts payable                     15,306                      3,766                      19,072
Income taxes payable                            -                         32                          32
Accrued liabilities and other current
  liabilities                               8,869                      1,286                      10,155
                                        ------------               -------------              ------------
      Total current liabilities            41,271                      5,502                      46,773

Long-term debt, excluding current
  installments
                                           83,925                        836                      84,761
Other liabilities                           2,590                          -                       2,590
                                        ------------               -------------              ------------
    Total liabilities                     127,786                      6,338                     134,124

Common stock subject to put option          3,000                          -                       3,000

Common stock                                9,159                          -                       9,159
Other equity (deficit)                    (15,292)                    10,655                      (4,637)
                                        ------------               -------------              ------------
   Total stockholders' equity              (6,133)                    10,655                       4,522
                                        ------------               -------------              ------------
                                        $ 124,653                  $  16,993                  $  141,646
                                        ============               =============              ============
</TABLE>




<PAGE>
                               CONDENSED CONSOLIDATING BALANCE SHEETS
                                          DECEMBER 31, 1997
                                           (IN THOUSANDS)

<TABLE>
<CAPTION>
                                         GUARANTOR                 NON-GUARANTOR
      ASSETS                            SUBSIDIARIES               SUBSIDIARIES               CONSOLIDATED
                                        ------------               -------------              ------------

<S>                                     <C>                        <C>                        <C>      
Cash                                    $   1,254                  $       71                 $      1,325
Accounts receivable, net                   33,208                       5,257                       38,465
Inventories                                42,369                       6,366                       48,735
Other current assets                        4,706                         192                        4,898
                                        ------------               -------------              ------------
      Total current assets                 81,537                      11,886                       93,423

Property and equipment, net                 4,037                       1,558                        5,595
Intangible assets, net                     36,289                           -                       36,289
Other assets                                3,307                       1,887                        5,194
                                        ------------               -------------              ------------
                                        $ 125,170                  $   15,331                 $    140,501
                                        ============               =============              ============

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current notes and installments of long-
  term debt                              $ 10,798                  $      413                 $    11,211
Book overdrafts                             3,233                           -                       3,233
Trade accounts payable                     20,699                       2,555                      23,254
Income taxes payable                            -                          24                          24
Accrued liabilities and other current
  liabilities
                                            5,823                       1,538                       7,361
                                        ------------               -------------              ------------
      Total current liabilities            40,553                       4,530                      45,083

Long-term debt, excluding current
  installments                             83,917                         825                      84,742
Other liabilities                           2,228                         361                       2,589
                                        ------------               -------------              ------------
      Total liabilities                   126,698                       5,716                     132,414
                                        ------------               -------------              ------------
Common stock subject to put option          3,000                           -                       3,000

Common stock                                9,013                           -                       9,013
Other equity (deficit)                    (13,541)                      9,615                      (3,926)
                                        ------------               -------------              ------------
      Total stockholders' equity           (4,528)                      9,615                       5,087
                                        ------------               -------------              ------------
                                        $ 125,170                  $   15,331                 $   140,501
                                        ============               =============              ============
</TABLE>



<PAGE>
                          CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                              FOR THE THREE MONTHS ENDED MARCH 31, 1998

<TABLE>
<CAPTION>
                                                GUARANTOR      NON-GUARANTOR
                                               SUBSIDIARIES    SUBSIDIARIES     CONSOLIDATED
                                               ------------    ------------     ------------

<S>                                            <C>             <C>              <C>     
Net sales                                      $  40,687       $    4,226       $ 44,913
Cost of goods sold                                28,517            2,683         31,200
                                               ------------    ------------     ------------
      Gross profit                                12,170            1,543         13,713

Selling, general, and administrative expenses     10,725            1,365         12,090
                                               ------------    ------------     ------------
      Operating income                             1,445              178          1,623

Interest expense                                  (3,013)             (38)        (3,051)
Other, net                                           (47)              31            (16)
                                               ------------    ------------     ------------
      Income (loss) before income taxes and       (1,615)             171         (1,444)
          extraordinary item

Income tax expense (benefit)                        (604)               8           (596)
                                               ------------    ------------     ------------
      Net income (loss)                        $  (1,011)      $      163       $   (848)
                                               ============    ============     ============



                          CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                              FOR THE THREE MONTHS ENDED MARCH 31, 1997

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

Net sales                                      $  36,777       $    5,266       $  42,043
Cost of goods sold                                25,487            3,597          29,084
                                               ------------    ------------     ------------
      Gross profit                                11,290            1,669          12,959
  
Selling, general, and administrative expenses      9,778            1,196         10,974
                                               ------------    ------------     ------------
      Operating income                             1,512              473          1,985
Interest expense                                  (2,709)            (174)        (2,883)
Other, net                                            32                7             39
                                               ------------    ------------     ------------
      Income (loss) before income taxes and
          extraordinary item                      (1,165)            306            (859)

Income tax expense (benefit)                        (478)            122            (356)
                                               ------------    ------------     ------------
      Income (loss) before extraordinary item       (687)            184            (503)

Extraordinary loss, net of income tax benefit     (1,557)              -          (1,557)
                                               ------------    ------------     ------------
      Net income (loss)                        $  (2,244)      $     184        $ (2,060)
                                               ============    ============     ============
</TABLE>



<PAGE>

                          CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                              FOR THE THREE MONTHS ENDED MARCH 31, 1998

<TABLE>
<CAPTION>
                                                GUARANTOR      NON-GUARANTOR
                                               SUBSIDIARIES    SUBSIDIARIES     CONSOLIDATED
                                               ------------    ------------     ------------

<S>                                            <C>             <C>              <C>        
Cash flows from operating activities           $  (3,638)      $      4         $   (3,634)
                                               ------------    ------------     ------------
Cash flows from investing activities                (111)          (103)              (214)
                                               ------------    ------------     ------------
Cash flows from financing activities:
       Proceeds from debt issuance                 3,224              -              3,224
       Principal payment on debt                     (44)             -                (44)
       Other changes                                 219              -                219
                                               ------------    ------------     ------------
                                                   3,399              -              3,399
                                               ------------    ------------     ------------
Effect of exchange rates on cash balances              -              1                  1
                                               ------------    ------------     ------------
Net change in cash                                   350            (98)              (448)

Cash at beginning of period                        1,254             71              1,325
                                               ------------    ------------     ------------
Cash at end of period                          $     904       $    (27)        $      877
                                               ============    ============     ============


                          CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                              FOR THE THREE MONTHS ENDED MARCH 31, 1997

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

Cash flows from operating activities           $ (2,743)       $    244         $   (2,499)
                                               ------------    ------------     ------------
Cash flows from investing activities:
       Payment for business acquisitions        (36,732)              -            (36,732)
       Other changes                               (285)           (134)              (419)
                                               ------------    ------------     ------------
                                                (37,017)           (134)           (37,151)
                                               ------------    ------------     ------------
Cash flows from financing activities:
       Proceeds from debt issuance               88,228               -             88,228
       Extinguishment of debt                   (41,137)              -            (41,137)
       Payment of financing costs                (3,606)              -             (3,606)
       Repurchase and retirement of warrants     (3,026)              -             (3,026)
       Other changes                                 (5)              -                 (5)
                                               ------------    ------------     ------------
                                                 40,454               -             40,454
                                               ------------    ------------     ------------
Effect of exchange rates on cash balances             -             (19)               (19)
                                               ------------    ------------     ------------
Net change in cash                                  694              91                785
Cash at beginning of period                         343             539                882
                                               ------------    ------------     ------------
Cash at end of period                          $  1,037        $    630         $    1,667
                                               ============    ============     ============
</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.

     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) its  Macpherson  Meistergram,  Inc.  ("Macpherson")  subsidiary  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.

<TABLE>
<CAPTION>
                                                           THREE MONTHS
                                                           ENDED MARCH 31,
                                                       ----------------------
                                                        1998            1997
                                                       ------          ------

<S>                                                    <C>             <C>   
Net sales                                              100.0%          100.0%
Gross profit                                            30.5            30.8
Selling, general and administrative expenses            26.9            26.1
Operating income                                         3.6             4.7
Interest expense                                         6.8             6.9
Income taxes                                            (1.3)           (0.7)
Net income                                              (1.9)           (4.9)
                                                       ======          ======
</TABLE>

 THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

     Net sales were $44.9 million in the first three months of 1998, an increase
of $2.9  million,  or 6.8%,  as compared to the first three months of 1997.  Net

<PAGE>

sales increased  primarily as a result of the Company's  Macpherson  subsidiary.
Macpherson's  sales  increased  50.9% over the same period in 1997,  principally
attributable  to  strong  sales of a new line of  embroidery  equipment  and the
correction  in  late  1997  of a  mechanical  deficiency  in  certain  equipment
identified in early 1997. Macpherson's increase in sales was partially offset by
a decline of 31.3% in the sales of the Company's  Clinton  operation.  Clinton's
net sales were negatively affected by a declining screen printing market and the
replacement  of an  existing  product  line  by a new  line  of  equipment.  The
Company's other operations experienced a decline of 2.3% over the same period in
1997,  principally due to the continued decline in apparel  manufacturing in the
United States.

     Gross  profit in the first  three  months  of 1998 was  $13.7  million,  an
increase of $0.8 million,  or 5.8%, as compared with the same period of 1997. As
a  percentage  of net sales,  gross profit in the first three months of 1998 was
30.5%,  as compared with 30.8% in the same period of 1997. The decrease in gross
profit percentage was primarily  attributable to Macpherson.  Macpherson'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 Macpherson's sales are for equipment.

     Selling,  general and administrative  expenses in the first three months of
1998 were $12.1 million,  an increase of $1.1 million,  or 10.2%, as compared to
the first  three  months  of 1997.  As a  percentage  of  sales,  such  expenses
increased to 26.9% for the first three  months of 1998,  from 26.1% for the same
period  of  1997.  The  increase  in  expenses  as a  percentage  of  sales  was
principally  a result of increased  costs as the Company  continues to expand in
Latin America and fixed overhead costs at the Company's  Clinton  operation that
did not decline in proportion to lower sales by Clinton.

     Operating  income in the first  three  months of 1998 was $1.6  million,  a
decrease of $0.4  million,  or 18.2%,  as compared to the first three  months of
1997.  The  decrease in operating  income  resulted  from the factors  discussed
above.  As a  percentage  of net sales,  operating  income was 3.6% in the first
three months of 1998, as compared to 4.7% in the first three months of 1997. The
decrease  was   principally   attributable  to  the  lower  gross  margins  from
Macpherson's and Clinton's sales.

     Interest  expense was $3.1  million in the first three  months of 1998,  an
increase of $0.2  million,  or 5.8%,  as compared with the first three months of
1997. The increase in interest expense was a result of higher borrowings in 1998
over the same period in 1997.

     Income tax benefit for the first three months of 1998 was $0.6 million,  an
increase of $0.2  million,  as compared to the first three  months of 1997.  The
Company's  effective  tax rate was 41.3% in the first three  months of 1998,  as
compared to 36.5% in the first three months of 1997.

     The  Company's  results  for the  first  three  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

<PAGE>


$85.0 million  aggregate  principal  amount of its 12 1/4% Series A Senior Notes
due 2003 (the "Senior Notes") relating thereto.

     Net loss in the first three  months of 1998 was $0.8  million,  compared to
net loss of $2.1  million in the first three  months of 1997.  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 cash provided by operations, borrowings under
its  credit  facilities  and  proceeds  from the  issuance  of debt  and  equity
securities.

     At March 31,  1998,  the  Company  had  outstanding  indebtedness  of $99.2
million and cash of $0.9 million.  In addition,  approximately  $4.2 million was
available for borrowings under the Company's Credit Agreement.

     The Company's  capital  expenditures  during the first three months of 1998
aggregated  approximately  $0.2 million.  Such  expenditures  were primarily for
computer, office and warehouse equipment and improvements.

     Net cash used in the Company's operating activities was $3.6 million during
the first three months of 1998 principally due to working capital  changes.  Net
cash  provided by  financing  activities  during the first three  months of 1998
aggregated $3.4 million.

NEW ACCOUNTING STANDARD

     Statement of Financial  Accounting  Standards No. 131,  "Disclosures  about
Segments of an Enterprise and Related Information" establishes revised standards
for the manner in which public business  enterprises  report  information  about
operating  segments.  The Company  does not  believe  that this  Statement  will
significantly  alter  the  segment  disclosures  it  currently  provides.   This
Statement is effective for fiscal years beginning after December 15, 1997.

YEAR 2000 ISSUE

     The  Company  is in the  process of  assessing  the Year 2000 issue and the
estimated costs necessary for the Company's  remediation plan. The Company plans
to remediate  all Year 2000 issues  during 1998 and does not expect  remediation
costs to have a material impact on results of operations,  liquidity and capital
resources.

FORWARD-LOOKING STATEMENTS

     Statements made in this Form 10-Q for the quarter ended March 31, 1998 that
state the Company's or management's intentions,  hopes, beliefs, expectations or
predictions of the future are  forward-looking  statements within the meaning of
the Private  Securities  Litigation  Reform Act of 1995. It is important to note
that the Company's  actual results could differ  materially from those contained

<PAGE>

in such forward-looking  statements.  Additional  information concerning factors
that  could  cause   actual   results  to  differ   materially   from  those  in
forward-looking  statements is contained  from time to time in the Company's SEC
filings, including under the caption "Certain Factors that May Affect Results of
Operations"  in the  Company's  Form 10-K filed for the year ended  December 31,
1997.


<PAGE>


                     WILLCOX & GIBBS, INC. AND SUBSIDIARIES
                           PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

      (a)    Exhibits

             EXHIBIT NO.              DESCRIPTION
             -----------              -----------

             27.1                     Financial Data Schedule (filed with EDGAR
                                      only)

      (b)    Reports on Form 8-K

             During  the  quarter ended March 31, 1998, 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   May 14, 1998                     By /S/ JOHN K. ZIEGLER, JR.
                                           ----------------------------
                                           John K. Ziegler, Jr.
                                           Vice President
                                           and Chief Financial Officer