UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-KSB/A
                                (Amendment No. 1)

                        FOR ANNUAL AND TRANSITION REPORTS
                              PURSUANT TO SECTIONS
                          13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

(Mark One)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

For the fiscal year ended March 31, 1998

                                       OR

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

                        Commission file number 333-31343

                         AMBASSADOR EYEWEAR GROUP, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                         23-2807063
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                        Identification No.)

3600 Marshall Lane, Bensalem, Pennsylvania                    19020
 (Address of principal executive offices)                   (Zip Code)

        Registrant's telephone number, including area code: 800-523-4675

           Securities registered pursuant to Section 12(b) of the Act:

                                                      Name of each exchange
     Title of each class                               on which registered
     -------------------                               -------------------

Common Stock, $.01 par value                          Chicago Stock Exchange

            Securities registered pursuant to Section 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter
<PAGE>

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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in a definite proxy or
information statements incorporated by reference in Part III of this Form
10-KSB/A or any amendment to this Form 10-KSB/A. |X|

The Registrant's revenues for its most recent fiscal year were $24,570,000.

State the aggregate market value of the voting stock held by non-affiliates of
the registrant. (The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock as of a specified date within 60 days prior to the date of filing.)

                          $8,400,000 as of June 2, 1998

Number of shares of common stock outstanding as of June 15, 1998: 4,700,000

Transitional Small Business Disclosure Format: Yes |_| No |X|

PORTIONS OF THE FOLLOWING DOCUMENTS HAVE BEEN INCORPORATED BY REFERENCE INTO
THIS ANNUAL REPORT ON FORM 10-KSB/A: NONE


                                       2
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

      The executive officers of the Company are:

Name                        Title                                  Age
----                        -----                                  ---

Rudy A. Slucker             Chairman of the Board                  48
                            of Directors

Barry Budilov               President, Chief                       42
                            Executive Officer and Director

Kenneth B. Kitnick          Executive Vice President               35

Raymond Green               Treasurer                              35

Jay Rice                    Director                               45

Jeffrey Seiken              Director                               44

      Rudy A. Slucker has served as Chairman of the Board of Directors of the
Company since May 1995. Mr. Slucker also serves on a full time basis as Chairman
of the Board of Directors, President and Chief Executive Officer of the TearDrop
Golf Company, a NASDAQ-listed company, which position he has held since
September 1996 and of the Tommy Armour Golf Company, a wholly-owned subsidiary
of TearDrop Golf Company, since November 1997. Mr. Slucker was the Chief
Executive Officer of the Atlas Group of Companies, Inc. ("Atlas"), which
imported and marketed hardware and consumer products, from 1978 until 1990, when
it was sold. Since 1990, Mr. Slucker has been a venture capital investor. He
currently serves on the board of directors and/or is a principal stockholder of
Major League Fitness, a chain of fitness centers associated with Major League
Baseball through a licensing agreement and Bablyon Enterprises and Beacon
Concessions, which, together, currently own and operate the Beacon Theater in
Manhattan. Mr. Slucker graduated from the University of Cincinnati with a
Bachelors Degree in 1971.

      Barry Budilov has been President and Chief Executive Officer of the
Company and has served as a Director since the Company's inception in 1995. From
1989 to 1995, Mr. Budilov served as the President of Chanuk, the predecessor of
the Company. Prior thereto and since 1987, Mr. Budilov served as Chief Financial
Officer of Eco-Med, Inc., which was sold in 1989 to Avicare, Inc., a
publicly-traded company. Mr. Budilov is a certified public accountant. Mr.
Budilov graduated magna cum laude from George Washington University with a
Bachelor's Degree in accounting in 1977.


                                       3
<PAGE>

      Kenneth B. Kitnick has served as Executive Vice President of the Company
since June 1996. Prior to joining the Company he spent sixteen years in the
optical industry as Vice President and Chief Operating Officer of Windsor, which
the Company acquired in January 1997. Mr. Kitnick graduated from Franklin &
Marshall College with a Bachelor's Degree in mathematics in 1983.

      Raymond Green has served as Treasurer of the Company since the Company's
inception in 1995. From 1992 to 1994 he served as the controller for the Backe
Group, Inc., a holding company in the communications field. Prior thereto and
since 1990, he was the Controller for Water-Jel Technologies, Inc., a
manufacturing company with securities traded on Nasdaq. Prior thereto and since
1987, he was employed as a staff accountant for Abo, Uris & Altenburger, a
certified public accounting firm. Mr. Green graduated from Iona College in 1983
with a Bachelor's Degree in finance.

      Jay Rice has been the managing partner of the law firm of Nagel Rice &
Dreifuss since 1983 and has served as a Director of the Company since June 1997.
He served as a member of the advisory board to Summit Bank from 1989 to 1991.
Since 1990, he has served as a trustee and is now the President of the Jewish
Community Housing Corp. and has been a member of the Board of Trustees of the
United Jewish Federation of Metrowest since 1995. Prior to joining Nagel Rice &
Dreifuss, Mr. Rice served as a law clerk to the Honorable Baruch S. Seidman of
the New Jersey Superior Court, Appellate Division from 1977 to 1978. Mr. Rice
has authored several legal articles and has served as a lecturer. Mr. Rice is a
member of the Essex County Bar Association, the New Jersey Bar Association
(serving as Chairman of the Equity Jurisprudence Committee from 1989 to 1991)
and the American Bar Association. Mr. Rice received his Juris Doctorate from
Rutgers University in 1977.

      Jeffrey Seiken practices law in Philadelphia, Pennsylvania in the law
offices of Jeffrey Seiken and has served as a Director of the Company since June
1997. From 1988 through 1996, Mr. Seiken was a partner with the law firm of Rush
& Seiken. He was one of the initial founders and investors in American Health
Care, a corporation formed in 1988. American Health Care provides nursing home
care to elderly individuals with facilities in New Jersey, Alabama, Indiana and
Oregon. In addition, Mr. Seiken has been involved in real estate development
since 1985. Mr. Seiken has also served as a member of the Whitemarsh Township,
Pennsylvania Sewer Authority and the Whitemarsh Township Planning Commission.

      For a period of 36 months, H.J. Meyers & Co., Inc. and National Securities
Corporation have the right to appoint either a member to the Company's Board of
Directors or an observer to attend all meetings of the Board of Directors. The
observer will have no right to vote on any matters before the Board.

COMMITTEES OF THE BOARD OF DIRECTORS

      The Board of Directors of the Company has appointed an Audit Committee and
a Compensation Committee. The members of both the Audit Committee and
Compensation Committee consist of Jeffrey Seiken and Jay Rice. The Audit
Committee periodically reviews the Company's auditing practices and procedures,
makes recommendations to management or to the Board of Directors as to any
changes to such practices and procedures deemed necessary from time to time to
comply with applicable auditing rules, regulations and practices, and recommends
independent auditors for the Company to be elected by the stockholders. The
Compensation Committee meets periodically to make recommendations to the Board
of Directors concerning the compensation and benefits payable to the Company's
executive officers and other senior executives. The Company reimburses directors
for their out-of-pocket expenses incurred in attending Board and Committee
meetings.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

      The following table sets forth information for the years indicated
concerning the compensation awarded to, earned by or paid to each individual who
served as the Chief Executive Officer of the Company and the two most highly
paid executive officers, other than the Chief Executive Officer, who served as
executive officers of the Company as of March 31, 1998, for services rendered in
all capacities to the Company and its subsidiaries during such periods.


                                       4
<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                        Long Term
                                                                        Compensation
                                                                        Awards
                                     Annual Compensation                Securities  All Other
Name and                    Fiscal   -------------------  Other Annual  Underlying  Compensation
Principal Position          Year     Salary($)  Bonus($)  Compensation  Options(#)      ($)
------------------          ----     ---------  --------  ------------  ----------  ------------
<S>                         <C>      <C>        <C>       <C>           <C>         <C>     
Barry Budilov               1998     $230,580   $0        $32,742(3)    0           8,473(4)
  President and Chief       1997(1)  $250,000   $0        $32,742(3)    0           8,473(4)
  Executive Officer         1996(2)  $169,900   $0        $32,742(3)    54,833      8,473(4)

Rudy A. Slucker             1998     $245,000   $0        $32,742(3)    0           8,473(4)
  Chairman of the Board     1997(1)  $260,000   $0        $32,742(3)    0           8,473(4)
  of Directors              1996(2)  $172,000   $0        $32,742(3)    54,833      8,473(4)

Kenneth B. Kitnick          1998     $105,040   $0        $ 5,591       0             260
  Executive Vice President  1997     $105,040   $0        $ 5,591       0               0
                            1996     $0         $0        $0            151,667         0
</TABLE>

(1)   Messrs. Slucker and Budilov will be compensated at annual rates of
      $100,000 and $200,000, respectively, under agreements that are effective
      as of March 18, 1998.

(2)   Fiscal 1996 consisted of approximately 11 months.

(3)   Include payments for medical insurance, disability insurance and auto
      insurance. Also includes $17,106 for automobile allowance.

(4)   Represents payment for life insurance.

      No options were deemed to be granted to the Chief Executive Officer or
      other named executive officers of the Company during the period from April
      1, 1996 through March 31, 1997.


                                       5
<PAGE>

      The following chart shows the number of stock options exercised during
1998 and the 1998 year-end value of the stock options held by the executive
officers named in the Summary Compensation Table:

                     AGGREGATED OPTION/SAR EXERCISES IN 1998
                       AND YEAR END 1998 OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                        NUMBER OF              VALUE OF UNEXERCISED
                                                  SECURITIES UNDERLYING     IN-THE-MONEY OPTIONS/SAR AT
                                                UNEXERCISED OPTIONS/SAR AT       FISCAL YEAR END(1)
                       SHARES                        FISCAL YEAR END             ------------------
                    ACQUIRED ON     VALUE     ----------------------------         EXERCISABLE/
        NAME        EXERCISE(#)  REALIZED($)   EXERCISABLE/UNEXERCISABLE           UNEXERCISABLE
        ----        -----------  -----------   -------------------------           -------------
<S>                      <C>          <C>                <C>                         <C>       
Barry Budilov            0            0                  54,833/0                    $322,144/0(2)
Rudy A. Slucker          0            0                  54,833/0                    $322,144/0
Kenneth B. Kitnick       0            0                 151,667/0                    $701,460/0
Martin Levine            0            0                    0/0                              0/0
</TABLE>

-------------------------

(1)   Assuming a value of $6.125 per share
(2)   Does not include an option to purchase 500,000 shares of Common Stock for
      $6.00 per share granted personally by Mr. Budilov to Mr. Slucker.

      Amounts shown represent the market value of the underlying shares of
      Common Stock at year-end calculated using the March 31, 1998 closing price
      per Share of Common Stock of $6.125 on the Chicago Stock Exchange. The
      actual value, if any, an executive may realize is dependent upon the
      amount by which the market price of shares of Common Stock exceeds the
      exercise price per share when the stock options are exercised. The actual
      value realized may be greater than the value shown in the table.

STOCK OPTION PLAN

      On November 12, 1997, the Board of Directors and the stockholders of the
Company adopted the 1997 Employee Stock Option Plan ("Plan") and reserved
150,000 shares of Common Stock for issuance thereunder. The Plan provides for
the granting to employees (including employees who are also directors and
officers) of options intended to qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), and for the granting of nonstatutory stock options to employees,
consultants and independent contractors. The Plan is currently administered by
the entire Board of Directors of the Company. The Plan terminates on June 5,
2007 unless terminated earlier by the Company's Board of Directors.

      The exercise price per share of incentive stock options granted under the
Plan must be at least equal to the fair market value of the Common Stock on the
date of grant. In addition, in accordance with the Underwriting Agreement
relating to the Company's initial public offering on March 18, 1998, the Company
has agreed not to grant any options under the Plan with an exercise price per
share less than the initial public offering price of the Common Stock. With
respect to any participant who owns shares representing more than 10% of the
voting power of all classes of the Company's outstanding capital stock, the
exercise price of any incentive or nonstatutory stock option must be equal to at
least 110% of the fair market value on the grant date, and the maximum term of
the option must not exceed five years. The terms of all other options granted
under the Plan may be exceed ten years. Upon a merger of the Company, the
options outstanding under the Plan will terminate unless assumed or substituted
by the successor corporation. To date, no options have been granted under the
Plan.


                                       6
<PAGE>

EMPLOYMENT AND CONSULTING AGREEMENTS

      The Company entered into an employment agreement with Barry Budilov,
effective on March 18, 1998, pursuant to which he will serve on a full-time
basis as President and Chief Executive Office of the Company for a period of
three years. The agreement provides for an annual base salary of $200,000
subject to annual increases of the discretion of the Board of Directors. The
agreement also contains a confidentiality provision and a provision prohibiting
Mr. Budilov from competing with the Company for a period of six months
subsequent to the termination of his employment. The Company has agreed to pay
Mr. Budilov an amount equal to six months salary in the event of a change of
control or in the event his agreement is not renewed. In the event Mr. Budilov
is terminated without cause, the Company breaches the terms of the agreement or
upon the relocation of the Company to a place outside of the Philadelphia
metropolitan area, which leads to Mr. Budilov's resignation, the Company will
pay to Mr. Budilov his base salary unpaid through the greater of the term date
or a period of six months. The agreement also provides for the payment of
additional benefits of approximately $41,000.

      The Company entered into an consulting agreement with Rudy Slucker,
effective on March 18, 1998, pursuant to which he will serve as Chairman of the
Board of the Company for a period of three years. The agreement will provide for
an annual consulting fee of $100,000, subject to annual increases at the
discretion of the Board of Directors. Mr. Slucker will not be required to devote
any minimum amount of time to the affairs of the Company and is subject to an
employment agreement with another company. The consulting agreement also
contains a confidentiality provision and a provision prohibiting Mr. Slucker
from competing with the Company for a period of six months subsequent to the
termination of his employment. The company has agreed to pay Mr. Slucker an
amount equal to six months fee in the event of a change of control or in the
event his agreement is not renewed. In the event Mr. Slucker is terminated
without cause the Company breaches the terms of the agreement or upon the
relocation of the Company to a place outside of the Philadelphia metropolitan
area, which leads to Mr. Slucker's resignation, the Company will also pay Mr.
Slucker his basic fee unpaid through the greater of the term date or a period of
six months. The agreement also provides for the payment of additional benefits
of approximately $41,000 annually.

      The Company entered in to an employment agreement with Kenneth Kitnick,
effective on June 26, 1996, pursuant to which he is serving on a full-time basis
as a Vice President of the Company for a period of four years. The agreement
provides for an initial base salary of $105,000, plus an automobile allowance
and provides for annual minimum increases through the year 1999 to a maximum of
$120,000. The agreement has been amended, as of June 30, 1997, to provide for
the grant as of the date of the agreement to Kenneth Kitnick of options to
purchase 151,667 shares of Common stock at an exercise price of $1.50 per share,
vesting over a period of


                                       7
<PAGE>

five years. The agreement contains a non-compete provision which prohibits
Kenneth Kitnick from directly or indirectly competing with the Company for a
period of one year upon termination.

COMPENSATION OF DIRECTORS

      At present, no separate cash compensation or fees are payable to directors
of the Company, other than reimbursement of expenses incurred in connection with
attending meetings. The Company expects, however, that new non-employee
directors not otherwise affiliated with the Company or its stockholders will be
paid $500 per meeting and reimbursement for reasonable out-of-pocket costs for
attending meetings.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY

      As permitted by Section 145 of the Delaware General Corporation Law (the
"DGCL"), the Company's Certificate of Incorporation includes a provision that
eliminated personal liability for its directors for monetary damages for breach
of fiduciary duty as a director except for liability; (i) for any breach of the
director's duty of loyalty to the Company or its stockholders; (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the DGCL; and (iv) for any
transaction from which the director derived an improper personal benefit.

      As permitted by Section 145 of the DGCL, the Company's Amended Certificate
of Incorporation and By-Laws provide that: (i) the Company is required to
indemnify its directors and officers to the fullest extent permitted by the
DGCL; (ii) the Company may indemnify other persons as set forth in the DGCL;
(iii) rights conferred in the By-Laws are not exclusive; and (iv) the Company is
authorized to enter into indemnification agreements with its directors,
officers, employees and agents. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted for directors, officers and
controlling persons of the Company pursuant to the foregoing provisions or
otherwise, the Company has been advised that in the opinion of the Commission,
such indemnification is against public policy as expressed in the Securities Act
and is therefore, unenforceable.

      The Company, intends to apply for, and expects to obtain, directors and
officers liability insurance with an annual aggregate coverage limit of at least
$1 million.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      The following table sets forth certain information with respect to the
beneficial ownership of the Company's common Stock as of March 31, 1998, and as
adjusted to reflect the sale of the Shares offered hereby, by: (i) each of the
company's directors and executive officers; (ii) each person who is known to the
Company to own beneficially more than 5% of the Company's shares of Common
stock; and (iii) all directors and executive officers of the Company as a group.
Unless otherwise indicated, the persons named in this table have sole voting and
investment power with respect to the shares of Common Stock shown as
beneficially owned by them and have an address, care of the Company, of 3600
Marshall Lane, Bensalem, Pennsylvania 19020. Under the rules of the Securities
and Exchange commission, a person is deemed to be a beneficial owner of any
securities of which that person has the right to acquire beneficial ownership
within 60 days. More than one person may be deemed to be a beneficial owner of
the same securities.

                                           AMOUNT AND NATURE
                                                  OF
NAME OF BENEFICIAL OWNER                  BENEFICIAL OWNERSHIP  PERCENT OF CLASS
------------------------                  --------------------  ----------------
Rudy A. Slucker (1)(2)(3)                       2,444,500             49.94%
Barry Budilov(3)                                1,862,000             38.69%
Kenneth Kitnick(4)                                151,667              3.13%
Raymond Green                                           0              --
Jay Rice                                              700              *
Jeffrey Seiken                                          0              --
All directors and executive officers as
a group (6 persons)(1)(3)(4)                    3,958,867             76.74%

----------

* Less than 1%


                                       8
<PAGE>

(1)   Includes 225,000 shares of Common Stock held in the names of Mr. Slucker's
      wife and two children over which Mr. Slucker disclaims beneficial
      ownership.

(2)   Also includes an option to purchase 500,000 shares granted to Mr. Slucker
      from Barry Budilov.

(3)   Includes (i) options to acquire 54,833 shares of Common Stock held by each
      of Mr. Slucker and Mr. Budilov and (ii) 57,167 shares of Common Stock for
      Mr. Budilov and 139,667 shares of Common Stock for Mr. Slucker issuable
      upon the conversion of Convertible Notes.

(4)   Includes options to acquire 151,667 shares of Common Stock of the Company.

      As of June 18, 1998 each of Mr. Slucker and Mr. Budilov donated 47,000
shares of Common Stock each, and intend to donate an additional 47,0000 shares
each, every 90 days (not to exceed 150,000 shares of Common Stock each including
the initial 47,000 shares), to the Slucker Family Foundation, a charitable
foundation over which Mr. Slucker will be a controlling person. The Common Stock
donated to the foundation will not be subject to a lock-up agreement with the
underwriters of the Company's initial public offering. The above table does not
reflect those donations.


                                       9
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      On May 3, 1995, the Company was formed by Rudy A. Slucker, the Company's
current Chairman of the Board of Directors, and Barry Budilov, the current
President and Chief Executive Officer of the Company, at which time each of Mr.
Slucker and Budilov were issued 1,750,000 (giving effect to the 1,166,667 for
one stock split) shares of Common Stock for $.0003 per share and, as of such
date, were each granted options to acquire 54,833 of Common Stock at an exercise
price of $.25 per share.

      On May 10, 1995, the Company acquired from Chanuk, the predecessor of the
Company, substantially all of the assets of Chanuk valued at approximately $6
million and assumed an aggregate of approximately $5.7 million of liabilities of
the business of Chanuk. The Company acquired Chanuk for approximately $700,000,
which amount was determined by negotiation between the shareholders of Chanuk
and the Company based primarily on the perceived net asset value of Chanuk at
the time. The assumed liabilities included indebtedness of Chanuk to Mr. Slucker
of approximately $508,000. In addition, Daniel Messinger, an uncle of Mr.
Budilov's wife, was repaid $250,000 in debt from the proceeds of the sale.
Chanuk, a company engaged in the wholesale sale and distribution of eyewear, was
a company owned approximately 10% by a partnership controlled by Rudy A. Slucker
and 74% by the mother-in-law of Barry Budilov. Chanuk was incorporated in
Pennsylvania on December 3, 1965 and commenced its eyewear business in 1980. The
above $700,000 purchase price was represented by the issuance by Messrs. Budilov
and Slucker of promissory notes in the principal amount of $343,500 each to
Chanuk.

      In consideration of the issuance of promissory notes to Chanuk, the
Company issued promissory notes for $343,500 to each of Rudy A. Slucker and
Barry Budilov. In addition, on May 8, 1995, the $508,000 in debt previously owed
from Chanuk to Mr. Slucker was assumed by the Company and took the form of a
promissory note. All three obligations are represented by demand promissory
notes that bear interest at 8% per annum.

      The Company's indebtedness includes approximately $1.18 million in
principal and interest, payable to Mr. Slucker and Mr. Budilov under the 8%
Convertible Notes. The Convertible Notes are repayable at 8% per annum, subject
to restrictions contained in the Company's loan agreement with CoreStates Bank,
on March 31, 2000. Interest accrues and is payable quarterly at the rate of 8%
per annum. If the Company has earnings equal to or in excess of $.60 per share
for the year ending March 31, 1999, the Convertible Notes may be prepaid at the
option of the holder commencing on March 31, 1999. The Convertible Notes may be
converted at any time into shares of Common Stock at the initial public offering
price per share. The Company's revolving line of credit with CoreStates Bank
restrict the payment of dividends to stockholders and provides for a variety of
conditions of default, including the continuing participation of Rudy A. Slucker
and Barry Budilov in their current management positions.

      Upon consummation of the acquisition of Chanuk, in May 1995, the Company
entered into a Consulting Agreement with Chanuk. The agreement became effective
on May 10, 1995


                                       10
<PAGE>

and terminates on May 9, 2005. Pursuant to the agreement, two prior officers of
Chanuk who are relatives of Mr. Budilov provided advisory and consulting
services to the Company on behalf of Chanuk, for which Chanuk received the sum
of $26,000 per year, which was to be payable over a ten year period in
installments of $500 per week. The time and effort devoted to the Company on a
weekly basis did not exceed five hours per week. The Company also entered into a
consulting agreement with Central City Optical, Inc. ("Central City"), a company
owned by Daniel Messinger (one of the relatives referred to above) pursuant to
the same terms as set forth above, which agreement will continue in effect until
May 9, 2005. In addition, in November 1997, Chanuk assigned its rights and
obligations under its consulting agreement to Central City. Mr. Messinger
provides consulting services to the Company on behalf of Central City.

      In June 1996, the Company acquired substantially all of the assets of
Windsor (the "Windsor Acquisition"). In connection with the Windsor Acquisition,
the Company acquired trademark licenses with Kenneth Jay Lane and John Lennon,
among others. The aggregate consideration for the Windsor Acquisition was
$550,000, including $100,000 in cash and two promissory notes, payable to
Windsor, in the aggregate principal amount of $450,000. Kenneth Kitnick, who
subsequently became an officer of the Company, was an officer and principal
shareholder of Windsor.

      Upon consummation of the Windsor Acquisition, the Company entered into an
employment agreement with Kenneth Kitnick and a consulting agreement with Jay
Kitnick. Jay Kitnick is the father of Kenneth Kitnick. The three-year consulting
agreement with Jay Kitnick provides for 36 monthly payments of $6,944 commencing
on June 20, 2004. The agreement contains a non-compete provision prohibiting Jay
Kitnick from directly or indirectly competing with the Company for a period of
three years from June 25, 1996.

      In February 1997, the Company acquired from Summit Bank (the "Bank"),
pursuant to a Collateral Sale Agreement (the "Renaissance Acquisition"),
substantially all of the assets of Renaissance. The Bank had acquired the assets
of Renaissance in a foreclosure proceeding instituted by the Bank. The aggregate
consideration paid to the Bank for Renaissance was $3,446,000. Edward Kauz, who
had a right to become a Vice Chairman of the Board of the Company was an
officer, principal stockholder and significant shareholder of a debtor to
Renaissance.

      Mr. Kauz remains the sole stockholder of Renaissance. At the time that the
Company acquired the assets of Renaissance, a company 50% owned by Mr. Kanz owed
Renaissance $2.8 million which receivable had been written down to no value at
the time of the acquisition of Renaissance. The Company has entered into a
five-year consulting agreement with Edward Kauz which became effective on
February 27, 1997. The agreement provides for aggregate payments to Mr. Kauz of
$200,000 subject to certain conditions set forth in a supplemental agreement,
dated February 27, 1997. In addition, under an amendment to such agreement dated
as of June 30, 1997, Mr. Kauz waived his right to serve as Vice Chairman of the
Board of Directors and was granted as of February 27, 1997 a five-year option to
purchase 180,833 shares of Common Stock for five years for $3.00 per share.


                                       11
<PAGE>

      In connection with the revolving loan facility from CoreStates Bank to the
Company, each of Rudy Slucker and Barry Budilov, and their respective spouses,
have provided personal guarantees of no more than $1.1 million each, securing
the Company's indebtedness.

      From February 4, 1997 through February 1, 1998, in connection with, and to
assist the Company in financing its costs related to the acquisition of
substantially all of the assets of Renaissance and the integration of the
business of the Company and for working capital, Rudy A. Slucker loaned the
Company $576,000, payable upon demand with interest at 8% per annum. This loan
was repaid from the proceeds of the Company's public offerings dated March 18,
1998.

      In July 1997, Messrs. Budilov and Slucker entered into an agreement with
the landlord of the Company's facility to purchase such facility. In
anticipation of such purchase, Messrs. Budilov and Slucker have also entered
into an agreement to rent such facility to the Company at substantially the same
terms and conditions set forth in the Company's current lease. Messrs. Budilov
and Slucker expect to close on the purchase of the facility shortly and to lease
the facility to the Company. The Company may be required to provide guarantees
of the obligations of Messrs. Budilov and Slucker under the loan agreements
between Messrs. Budilov and Slucker and CoreStates Bank relating to the purchase
of the facility.

      In January 1998, Mr. Budilov granted to Mr. Slucker an option to purchase
500,000 shares of Common Stock owned by Mr. Budilov for $6.00 per share.

      Management believes that each of the above transactions was made pursuant
to terms no less favorable than the terms reasonably expected in third-party,
unaffiliated transactions.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

      Section 16(a) of the Securities Exchange Act of 1934, as amended requires
the Company's executive officers and directors, and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the Chicago Stock Exchange. Based solely on a review of
copies of reports furnished to the Company and written representations from the
Company's executive officers, directors and persons who beneficially own more
than ten percent of the Company's equity securities, the Company believes that
the initial report (Form 3) of beneficial ownership by Kenneth Kitnick, Raymond
Green, Jeffrey Seiken, Barry Budilov, Rudy Slucker and Jay Rice were filed late.


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<PAGE>

                                   SIGNATURES

            In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                          AMBASSADOR EYEWEAR GROUP, INC.


Dated: July 30, 1998                      /s/ Barry Budilov
                                          --------------------------------------
                                          Barry Budilov
                                          President and Chief Executive Officer

      In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.


                                          /s/ Rudy A. Slucker
                                          --------------------------------------
Dated:  July 30, 1998                     Rudy A. Slucker
                                          Director


                                          /s/ Raymond Green
                                          --------------------------------------
Dated:  July 30, 1998                     Raymond Green
                                          Treasurer and Principal Financial
                                          Accounting Officer


                                          
                                          --------------------------------------
Dated:  July 30, 1998                     Jay Rice
                                          Director


                                          /s/ Jeffrey Seiken
                                          --------------------------------------
Dated:  July 30, 1998                     Jeffrey Seiken
                                          Director


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