UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM 10-Q

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

                 For the quarterly period ended June 30, 1998

                                     OR

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

                 For the transition period from _______ to _______

                       Commission File Number 0-24860

                            PIERCING PAGODA, INC.

            (Exact Name of Registrant as Specified in its Charter)

                Delaware                            23-1894725
          (State or Other Jurisdiction            (I.R.S. Employer
          Incorporation or Organization)         Identification Number)


                 3910 Adler Place
                 Bethlehem, PA                            18017
     (Address of Principal Executive Offices)           (Zip Code)


      Registrant's Telephone Number, Including Area Code: (610) 691-0437

                                     N/A
       (Former Name, Former Address and Former Fiscal Year, if Changed Since
                                Last Report.)


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

The  number  of  shares  outstanding  of  the  registrant's  common  stock  is
9,107,256 (as of August 13, 1998)


<PAGE>


                            PIERCING PAGODA, INC.


                                    INDEX
                                                                        PAGE
                        PART I - FINANCIAL INFORMATION               NUMBER

  Item 1.    Financial Statements

             Consolidated balance sheets as of
             June 30, 1998 (unaudited) and March 31, 1998               3

             Consolidated statements of operations for the three
             months                                                     4
             ended June 30, 1998 and 1997(unaudited)

             Consolidated statements of cash flows for the  three
             months ended June 30, 1998 and 1997(unaudited)             5

             Notes to consolidated financial statements                 7

  Item 2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                        9

                         PART II - OTHER INFORMATION

  Item 1.    Legal Proceedings                                         14

  Item 2.    Changes in Securities and Use of Proceeds                 14

  Item 3.    Defaults Upon Senior Securities                           14

  Item 4.    Submission of Matters to a Vote of Security Holders       14

  Item 5.    Other Information                                         14

  Item 6.    Exhibits and Reports on Form 8-K                          14

             Signatures                                                15



<PAGE>



PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    PIERCING PAGODA, INC. AND SUBSIDIARY
                         CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share data)
<TABLE>
<CAPTION>

                                                       June 30,       March 31,
                                                         1998           1998
                                                      ------------   -----------
   Assets                                             (Unaudited)

Current assets
<S>                                                   <C>            <C>    
   Cash                                                 $ 1,876       $ 2,699
   Accounts receivable                                    1,244         1,454
   Inventory                                             58,085        53,149
   Deposits for inventory purchases                         962           546
   Prepaid expenses and other current assets              1,139         1,058
   Prepaid income taxes                                     459           215
   Deferred tax assets                                    2,055         1,972

                                                      ------------   -----------
Total current assets                                     65,820        61,093

Property, fixtures and equipment, net                    29,604        27,215
Other assets                                              7,918         7,791

                                                      ============   ===========
                                                      $ 103,342      $ 96,099
                                                      ============   ===========
   Liabilities and Stockholders' Equity

Current liabilities
   Accounts payable                                       5,194         3,232
   Current installments of long-term debt                   375           247
   Income taxes payable                                     532           889
   Accrued expenses and other current liabilities        11,431        12,423

                                                      ------------   -----------
Total current liabilities                                17,532        16,791

Long-term debt, less current installments                15,870         9,742
Deferred tax liabilities                                  2,663         2,535
Other liabilities                                           657           703

                                                      ------------   -----------
Total liabilities                                        36,722        29,771

Commitments and contingencies
Stockholders' equity
   Preferred stock, par value $.01 per share,
      authorized 3,000,000 shares. None issued.               -             -
   Common stock, par value $.01 per share,
   authorized
      15,000,000 shares. Issued 9,103,305 shares and         91            91
   9,087,616
      at June 30, 1998 and March 31, 1998,
   respectively.
   Additional paid-in capital                            40,577        40,387
   Retained earnings                                     25,952        25,850

                                                      ------------   -----------
Total stockholders' equity                               66,620        66,328
                                                      ------------   -----------
                                                      $ 103,342      $ 96,099
                                                      ============   ===========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>




                    PIERCING PAGODA, INC. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share data)
                                 (Unaudited)
<TABLE>
<CAPTION>

                                                             Three months ended
                                                                    June 30,
                                                             -------------------
                                                              1998       1997
                                                             --------  ---------

<S>                                                         <C>       <C>     
Net sales                                                   $48,018   $ 42,873
                                                             
Cost of goods sold and occupancy expenses
 (excluding depreciation on kiosks)                          26,633     24,766

                                                             --------  ---------
Gross profit                                                 21,385     18,107

Selling, general and administrative
expenses,                                                    20,755     17,854
    (including depreciation on
kiosks)
                                                             --------  ---------
Income from operations                                          630        253

Interest and other income                                        96        103
Interest expense                                                563        843
                                                             --------  ---------
Earnings (loss) before income taxes                             163       (487)

Income tax expense (benefit)                                     61       (190)
                                                             ========  =========
Net (loss) income                                             $ 102     $ (297)
                                                             ========  =========

Basic earnings (loss) per share                               $ 0.01    $ (0.04)
                                                             ========  =========
Diluted earnings (loss) per share                             $ 0.01    $(0.04)
                                                             ========  =========
</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>



                    PIERCING PAGODA, INC. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In thousands)
                                 (Unaudited)
<TABLE>
<CAPTION>

                                                          Three months ended
                                                               June 30,
                                                       -------------------------
                                                          1998          1997
                                                       ------------  -----------

Cash flows from operating activities:
<S>                                                       <C>           <C>    
  Net income (loss)                                        $ 102        $ (297)
  Adjustments to reconcile net income (loss)  to net
   cash provide by (used in) operating activities:
     Depreciation and amortization                         1,483         1,221
     Gain on disposal of property, fixtures and
       equipment                                               -           (10)
     Other changes in other assets                            15           (32)
     Deferred income taxes                                    45           318
     Change in operating assets and liabilities
        net of effects of acquisitions:
      Accounts receivable                                    210           822
      Inventory                                           (4,936)       (3,393)
      Deposits for inventory purchases                      (416)          466
      Prepaid expenses and other current assets              (81)         (106)
      Prepaid income taxes                                  (244)         (552)
      Accounts payable                                     1,962         2,841
      Accrued expenses and other current liabilities        (992)         (255)
      Income taxes payable                                  (296)            -
      Other liabilities                                      (46)         (115)

                                                       ------------  -----------
Net cash provided by (used in) operating activities       (3,194)          908

Cash flows from investing activities:
  Additions to property, fixtures and equipment           (3,693)       (2,284)
  Payments for purchase of businesses                       (135)       (7,904)
  Proceeds from disposal of property, fixtures and
    equipment                                                  -            38
  Noncurrent deposits, net                                   (88)          (17)

                                                       ------------  -----------
Net cash used in investing activities                     (3,916)      (10,167)

Cash flows from financing activities:
  Repayments of long-term debt                                (9)           (9)
  Revolving line of credit, net                            3,700        (7,200)
  Loan fees paid                                             (98)            -
  Proceeds from issuance of long-term debt                 2,565             -
  Net proceeds from issuance of common stock under
    employee share plans                                     129           128
  Proceeds from issuance of common stock, net                  -        14,902

                                                       ------------  -----------
Net cash provided by financing activities                  6,287         7,821

                                                       ------------  -----------
Net decrease in cash                                        (823)       (1,438)

Cash at beginning of period                                2,699         4,119

                                                       ============  ===========
Cash at end of period                                     $1,876        $2,681
                                                       ============  ===========
</TABLE>



<PAGE>




                    PIERCING PAGODA, INC. AND SUBSIDIARY
              CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                               (In thousands)
                                 (Unaudited)
<TABLE>
<CAPTION>

                                                          Three months ended
                                                               June 30,
                                                       -------------------------
                                                          1998          1997
                                                       ------------  -----------
Supplemental disclosures of cash flow information:  
 Cash paid during the period for:
<S>                                                        <C>           <C>  
   Interest                                                $ 505         $ 677
                                                       ============  ===========
   Income taxes, net                                       $ 617          $ 80
                                                       ============  ===========
</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1            Summary of significant accounting policies

     The accompanying  consolidated financial statements of Piercing Pagoda,
     Inc. and subsidiary  (the  "Company")  have been prepared in accordance
     with  the  instructions  to Form  10-Q  and do not  include  all of the
     information  and footnotes  required by generally  accepted  accounting
     principles  for  complete  financial  statements.   These  consolidated
     financial  statements  include the results of  operations  for Piercing
     Pagoda,   Inc.  and  a  wholly  owned   subsidiary.   All  intercompany
     transactions have been eliminated in consolidation.  These consolidated
     financial  statements  should be read in conjunction with the Company's
     consolidated  financial statements and notes thereto for the year ended
     March 31, 1998. The financial information included herein is unaudited;
     however, the information reflects all adjustments (consisting solely of
     normal recurring  adjustments)  that are, in the opinion of management,
     necessary for a fair presentation of the financial position, results of
     operations and cash flows for the interim periods.

     In  June  1998,   the  Company's   Board  of  Directors   authorized  a
     three-for-two  stock  split  effected  in the form of a stock  dividend
     payable to shareholders  of record on July 31, 1998,  payable on August
     13, 1998.  Stockholders'  equity has been restated to give  retroactive
     recognition   to  the  stock  split  for  all  periods   presented   by
     reclassifying  from additional  paid-in capital to common stock the par
     value of the additional shares arising from the split. In addition, all
     share and per share  amounts  have been  restated  to reflect the stock
     split.

     Operating  results for the  three-month  period ended June 30, 1998 are
     not necessarily  indicative of the results that may be expected for the
     entire fiscal year.

Note 2            Earnings Per Share

     The following  weighted  average  number of shares of common stock were
     used in the  calculations  for earnings  (loss) per share.  The diluted
     weighted average number of shares includes the net shares that would be
     issued  upon the  exercise  of  outstanding  stock  options,  using the
     treasury stock method.

                                                1998              1997
         Basic                               9,088,398         7,981,585
         Dilutive effect of
          outstanding stock options,
          using the treasury stok method       367,098           256,769

         Diluted                             9,455,496         8,238,354



<PAGE>


     Basic  earnings  (loss)  per  share  is  computed  by  dividing  income
     available  to common  stockholders  by the weighted  average  number of
     common shares  outstanding  during the period.  Diluted earnings (loss)
     per  share  is  computed  by  dividing   income   available  to  common
     stockholders   by  the  weighted   average   number  of  common  shares
     outstanding  during  the  period  increased  to  include  the number of
     additional  common  shares  that  would  have been  outstanding  if the
     dilutive potential common shares had been issued.

Note 3            Property, Fixtures and Equipment

      A summary of major classes of property, fixtures and equipment follows
     (in thousands):
<TABLE>
<CAPTION>

                                                 June 30,      March 31,
                                                   1998           1998
                                              --------------  -----------
<S>                                            <C>            <C>  
       Land                                       $ 688          $ 688
       Furniture and fixtures                     4,162          3,881
       Kiosks                                    25,259         24,043
       Buildings and improvements                 6,728          5,413
       Computer  equipment, software and other
        equipment                                10,181          9,326
                                              --------------  -----------
                                                 47,018         43,351
       Less accumulated depreciation and
        amortization                             17,414         16,136
                                              ==============  ===========
                                               $ 29,604       $ 27,215
                                              ==============  ===========
</TABLE>



Note 4            Accrued Expenses and Other Current Liabilities

     Accrued  expenses  and other  current  liabilities  are  summarized  as
     follows (in thousands):
<TABLE>
<CAPTION>

                                                 June 30,      March 31,
                                                   1998           1998
                                               --------------  -----------
       <S>                                     <C>             <C>                                              
       Accrued  payroll, vacation and related
  
        taxes                                   $ 3,854         $ 5,230
       Sales tax payable                            842             794
       Accrued rents payable                        865             938
       Liability under jewelry club program       1,109           1,109
       Liability under lifetime guarantee
        program                                   1,411           1,411
       Other accrued expenses                     3,350           2,941
                                              ==============  ===========
                                               $ 11,431        $ 12,423
                                              ==============  ===========

</TABLE>





<PAGE>


ITEM 2.

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

Background

     The Company's  consolidated net sales are comprised  primarily of sales
     generated  by  the  Company's  stores  and,  to a much  lesser  extent,
     wholesale sales  primarily to an independent  store operator in Florida
     to which the  Company  licenses  the use of its store name and  concept
     (the "Florida  Licensee").  Cost of goods sold and  occupancy  expenses
     include the cost of  merchandise,  rent and occupancy,  and the cost of
     preparing  merchandise for sale.  Selling,  general and  administrative
     expenses include store and supervisory payroll,  corporate overhead and
     non-occupancy store expenses including depreciation of kiosks.

Results of operations

Three months ended June 30, 1998 and 1997

     Consolidated  net  sales  increased  $5.1  million,  or 12% from  $42.9
     million for the three months  ended June 30, 1997 to $48.0  million for
     the three months ended June 30, 1998.  This  increase was due primarily
     to net sales  generated by new stores opened or acquired by the Company
     and a $1.3  million,  or 3%,  increase in  comparable  store net sales.
     There were a total of 812 stores open at June 30, 1998  compared to 749
     at June 30,  1997,  an increase of 8%.  Wholesale  sales to the Florida
     licensee decreased to $571,000 for the three months ended June 30, 1998
     from  $878,000 in the three  months  ended June 30,  1997.  This change
     reflects  the  impact in the  quarter  ended  June 30,  1997 of initial
     inventory  sales made for locations  purchased by the Florida  Licensee
     from the Company during that period.

     The average jewelry units sold per store decreased 17% to 2,400 for the
     three  months  ended June 30, 1998  compared to 2,900 at June 30, 1997.
     The average  price per jewelry  unit sold  increased  to $24.78 for the
     three  months  ended  June 30,  1998  compared  to $23.96 for the three
     months ended June 30, 1997. The decrease in average  jewelry units sold
     primarily  reflects  the impact of lower unit sales at newly opened and
     acquired  stores.  These  stores  generally  have lower unit and dollar
     sales volume than the Company's more mature stores. The increase in the
     average  price per jewelry unit sold  reflects  higher  selling  prices
     across all store types.



<PAGE>


     Gross profit increased $3.3 million, or 18%, from $18.1 million for the
     three months ended June 30, 1997 to $21.4  million for the three months
     ended June 30, 1998.  The Company's  gross profit margin  improved from
     42.2% for the three  months  ended June 30, 1997 to 44.5% for the three
     months ended June 30, 1998. This  improvement is primarily due to lower
     merchandise  costs  and  promotional  activity,   partially  offset  by
     increased rent and occupancy costs as a percentage of net sales as well
     as lower  wholesale sales to the Florida  Licensee.  Wholesale sales to
     the Florida  Licensee  produce a lower gross margin than the  Company's
     own retail net sales.

     Selling, general and administrative expenses increased $2.9 million, or
     16%,  from $17.9  million for the three  months  ended June 30, 1997 to
     $20.8 million for the three months ended June 30, 1998. As a percentage
     of net sales,  selling,  general and administrative  expenses increased
     from 41.6% for the three  months  ended June 30,  1997 to 43.2% for the
     three months ended June 30, 1998. The increase in selling,  general and
     administrative  expenses as a percentage of net sales  reflects  higher
     expenses associated with new stores opened and acquired by the Company,
     primarily store payroll.  This was partially  offset by improvements in
     corporate  overhead as a percentage of net sales,  reflecting  leverage
     over  a  larger  sales  base.  Depreciation  and  amortization  expense
     increased  25% to $1.5  million in the three months ended June 30, 1998
     from $1.2 million in the three months ended June 30, 1997 due primarily
     to capital  expenditures  for new stores and the upgrading of kiosks in
     existing locations.

     Interest  expense  decreased  $280,000,  or 33%,  from $843,000 for the
     three months ended June 30, 1997 to $563,000 for the three months ended
     June 30, 1998, and as a percentage of net sales decreased from 2.0% for
     the three months ended June 30, 1997 to 1.2% for the three months ended
     June 30, 1998. The decrease in interest  expense reflects lower average
     balances on the Company's  revolving line of credit agreement partially
     offset by an  increase  in the  number of  ounces  consigned  under the
     Company's gold consignment arrangements.

     As a result of the foregoing, the Company's net income increased from a
     loss of $297,000 for the three months ended June 30, 1997 to net income
     of $102,000 for the three months ended June 30, 1998.



<PAGE>


Liquidity and capital resources

     The Company's primary ongoing short-term capital requirements have been
     to fund an increase in inventory and to fund capital  expenditures  and
     working capital  (mostly  inventory) for new and acquired  stores.  The
     Company's  long-term  liquidity  requirements relate principally to the
     maturity  of its  long-term  debt  in  July of  2000,  operating  lease
     commitments  and store  expansion.  The  Company's  primary  sources of
     liquidity have been funds provided from operations,  a gold consignment
     program,  bank  borrowings  and,  in  June  1997,  an  offering  of the
     Company's  common stock.  The Company's  working  capital  increased to
     $48.4  million at June 30, 1998 from $41.9 million at June 30, 1997. At
     June 30, 1998, the Company had outstanding  borrowings of $11.2 million
     under its revolving  line of credit and $5.0 million of long-term  debt
     outstanding,  including $250,000 classified as a current liability.  In
     addition,  the Company had consigned  133,919  ounces of gold under its
     gold consignment program valued at approximately $39.7 million.

     Net cash used in  operating  activities  was $3.2 million for the three
     months ended June 30, 1998  compared to net cash  provided by operating
     activities of $908,000 for the same period in the prior year.  Net cash
     used in operating  activities primarily reflects increases in inventory
     to stock newly acquired and opened stores as well as to provide initial
     inventory for the  anticipated  opening of 104 locations  acquired from
     Sedgwick  Sales,  Inc.  ("Sedgwick").  The  acquisition of the Sedgwick
     locations was completed in July, 1998.

     Net cash used in investing activities was $3.9 million during the three
     months ended June 30, 1998 compared to $10.2  million  during the three
     months  ended  June 30,  1997.  Net cash used in  investing  activities
     primarily reflects the addition of property,  fixtures and equipment in
     connection  with the opening of new stores,  the renovation of existing
     stores and the construction of an additional warehouse and distribution
     center on land adjacent to the Company's current facility.

     Net cash  provided by  financing  activities  was $6.3  million for the
     three months  ended June 30, 1998 versus $7.8 million  during the three
     months ended June 30, 1997.  Net cash provided by financing  activities
     during the three months ended June 30, 1998 primarily reflect increased
     borrowings under the Company's existing line of credit and the proceeds
     of $2.6 million in Industrial Development Authority financing.

     The Company's revolving credit facility provides for maximum borrowings
     of $80.0 million  through a combination of cash advances (which may not
     exceed $50  million)  and  letters of credit  (which may not exceed $55
     million) to support the Company's gold consignment  financing  program.
     At June 30,  1998,  the  Company  had  $25.4  million  available  to be
     borrowed under its revolving credit facility and was in compliance with
     covenants  contained  in the  agreement.  In May of 1998,  the  Company
     amended its  existing  gold  consignment  agreements  to  increase  the
     maximum amount of gold available to be consigned under these agreements
     to a total of $58.0 million or the maximum amount  permitted  under the
     Company's  existing line of credit  agreement,  whichever is lower. The
     Company believes that the expected cash flows from

<PAGE>


     operations,  its gold  consignment  program and bank borrowings will be
     sufficient  to fund the  Company's  currently  anticipated  capital and
     liquidity needs.

Year 2000 compliance

     The Company is aware of "Year 2000" issues  existing in the programming
     code of some  existing  computer  systems.  The  Company  is  currently
     working to  identify,  correct or  reprogram,  and test its systems for
     Year 2000  compliance.  The Company expects its Year 2000 project to be
     completed on a timely basis.  However,  there can be no assurance  that
     the systems of other companies on which the Company's systems also rely
     will be timely converted or that any such failure to convert by another
     company would not have an adverse effect on the Company's systems.

Seasonality

     The  Company's  business is highly  seasonal.  Due to the impact of the
     year-end holiday shopping season, the Company experiences a substantial
     portion of its annual net sales and  profitability  in its third fiscal
     quarter (ending December 31st).  The Company has generally  experienced
     lower net sales in each of the first,  second and fourth  quarters  and
     lower net income or net losses in each of those quarters.

     The Company's  results of operations may fluctuate  significantly  from
     quarter  to  quarter  as a result of a variety  of  factors,  including
     fluctuations   in  the  price  of  gold,   the  amount  and  timing  of
     acquisitions  and new  store  openings,  the  integration  of  recently
     acquired and newly opened  stores into the  operations  of the Company,
     the timing of promotions, and changes in national and regional economic
     conditions.

Recent accounting pronouncements

     In June 1998, the Financial Accounting Standards Board issued Statement
     of  Financial  Accounting  Standards  (SFAS) No.  133,  Accounting  for
     Derivative   Instruments   and  Hedging   Activities.   This  statement
     establishes   accounting   and  reporting   standards  for   derivative
     instruments, including certain derivative instruments embedded in other
     contracts  (collectively  referred to as derivatives),  and for hedging
     activities.  This  statement  is effective  for all fiscal  quarters of
     fiscal years  beginning  after June 15, 1999.  Management  believes the
     effect on the Company of the adoption of this  standard will be limited
     to  changes  in  financial  statement  disclosure  and  will not have a
     material impact on financial condition or results of operations.

     In March  1998,  the AICPA  Accounting  Standards  Executive  Committee
     issued  Statement of Position  (SOP) 98-1,  Accounting for the Costs of
     Computer  Software  Developed or Obtained  for  Internal  Use. SOP 98-1
     requires that certain costs related to the  development  or purchase of
     internal-use  software be capitalized  and amortized over the estimated
     useful life of the  software.  The SOP also requires that costs related
     to the preliminary stage and the  post-implementation/operations  stage
     of an internal-use computer software development project be expensed as
     incurred.  This statement is effective for fiscal years beginning after
     December 15, 1998. The Company has adopted this standard effective

<PAGE>


     April 1, 1998. Adoption of this standard did not have a material impact
     on the  Company's  financial  condition or results of operation for the
     first quarter of fiscal 1999.

Forward-looking statements

     The Private  Securities  Litigation  Reform Act of 1995 provides a safe
     harbor for  forward-looking  statements.  A number of the  matters  and
     subject areas  discussed in  "Management's  Discussion  and Analysis of
     Financial  Condition  and  Results of  Operations,"  are not limited to
     historical   or   current   facts  and  deal  with   potential   future
     circumstances  and  developments.  Prospective  investors are cautioned
     that such  forward-looking  statements  are only  predictions  and that
     actual  events or results may differ  materially.  A variety of factors
     could cause the Company's actual results to differ  materially from the
     expected results expressed in the Company's forward-looking statements,
     including, without limitation: the Company's ability to secure suitable
     store sites on a timely basis and on satisfactory  terms; the Company's
     ability to hire, train and retain qualified personnel, the availability
     of adequate  capital  resources and the  successful  integration of new
     stores into the Company's existing operations; the Company's ability to
     successfully  implement  and improve  management  information  systems,
     procedures  and  controls on a timely  basis and in such a manner as is
     necessary to  accommodate  the  increased  number of  transactions  and
     customers  and  the  increased   size  of  the  Company's   operations;
     fluctuations in quarterly net sales, and, in particular,  third quarter
     net  sales;  fluctuations  in  gold  prices;   competitive  conditions;
     economic  conditions  affecting  disposable  consumer  income,  such as
     employment,  business conditions,  interest rates and taxation, as well
     as trends with respect to mall  shopping  generally  and the ability of
     mall anchor tenants and other  attractions to generate customer traffic
     in the vicinity of the Company's  stores;  and the  possibility  of the
     enactment of  legislation,  or the  modification of existing or pending
     legislation, in jurisdictions in which the Company operates, that would
     adversely affect the Company's ear piercing or other activities.


<PAGE>



PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

         There are no material legal proceedings against the Company.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5.     OTHER INFORMATION

         None.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

      a)    Exhibits

            10.50 Eighth  Amendment  and  Agreement to  Consignment  Agreement
                  Dated  May  5,  1998,   Between  the  Registrant  and  Fleet
                  Precious Metals Inc.

            10.51 Fourth  Amendment  To  Amended  And  Restated  Consignment
                  Agreement  Dated May 15, 1998 Between The  Registrant  And
                  Rhode Island Hospital Trust National Bank.

            27    Financial Data Schedule.

      b)    Reports on Form 8-K

            During the quarter  ended June 30, 1998,  no reports on Form 8-K
            were filed.


<PAGE>



SIGNATURES


     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.





                                          PIERCING PAGODA, INC.
                                                (Registrant)



     Date:  August 13, 1998               /s/ John F. Eureyecko
                                          John F. Eureyecko
                                          President,
                                          Chief Operating Officer
                                          (Principal Financial Officer)



     Date:  August 13, 1998               /s/ Brandon R. Lehman
                                          Brandon R. Lehman
                                          Treasurer
                                          (Principal Accounting Officer)



<PAGE>



                              INDEX TO EXHIBITS
                                                                   Sequentially
  Exhibit                                                           Numbered
   Number                                                             Page

   10.50     Eighth Amendment and Agreement to Consignment
             Agreement Dated May 5, 1998, Between the Registrant
             and Fleet Precious Metals Inc.                            17

   10.51     Fourth Amendment To Amended And Restated Consignment
             Agreement Dated May 15, 1998 Between The Registrant
             And Rhode Island Hospital Trust National Bank.            19


     27      Financial Data Schedule                                   22

    27.1     Financial Data Schedule                                   23