U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB
(Mark One)

 X   Quarterly  report under Section 13 or 15(d) of the Securities  Exchange Act
---  of 1934

For the quarterly period ended March 31, 1998

        Transition  report under Section 13 or 15(d) of the Exchange Act for the
        transition period from __________ to ___________.

                         Commission file number 01-13470

                             BIG SMITH BRANDS, INC.

        (Exact Name of Small Business Issuer as Specified in Its Charter)

               Delaware                                  13-3005371
    -------------------------------                  -------------------
    (State or Other Jurisdiction of                    (I.R.S. Employer
     Incorporation or Organization)                   Identification No.)

           7100 West Camino Real, Suite 402, Boca Raton, Florida 33433
           -----------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (561) 367-8283
                (Issuer's Telephone Number, Including Area Code)

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

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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
   ------          ------
Number of shares of common stock outstanding as of May 15, 1998:  7,099,842

Transitional Small Business Disclosure Format (check one):  Yes      No  X
                                                               ------  ------ 

<PAGE>

<TABLE>
<CAPTION>

                                      INDEX


                                                                                         Pages

<S>                                                                                       <C>
PART I         FINANCIAL INFORMATION


               Item 1. Consolidated Financial Statements


                               Balance Sheet  as of  March 31, 1998                          3

                               Statements of Operations for the three
                                 months ended March 31, 1998 and 1997                        4

                               Statement of Stockholders' Equity for the
                                 three months ended March 31, 1998                           5

                               Statements of Cash Flows for the three months
                                 ended March 31, 1998 and 1997                               6

                               Notes to Financial Statements                                 7


               Item 2. Management's Discussion and Analysis of Financial
                                Condition and Results of Operations                          8

PART II OTHER INFORMATION                                                                   12


SIGNATURE                                                                                   15

EXHIBIT INDEX                                                                               16

</TABLE>

                                             -2-

<PAGE>

<TABLE>
<CAPTION>


                                    BIG SMITH BRANDS, INC.
                                  CONSOLIDATED BALANCE SHEET
                                         MARCH 31, 1998
                                          (UNAUDITED)

                                            ASSETS
CURRENT ASSETS
<S>                                                                             <C>        
  Cash                                                                          $     9,147
  Temporary investments                                                              16,193
  Accounts receivable, less allowance
       for doubtful accounts of  $261,333                                         1,165,033
  Inventories                                                                     4,382,424
  Prepaid expenses                                                                  287,108
                                                                                -----------
        Total current assets                                                      5,859,905
                                                                                 ----------

PROPERTY AND EQUIPMENT, AT COST
  Land                                                                               20,000
  Buildings                                                                         497,978
  Equipment                                                                       1,947,998
  Vehicles                                                                           81,511
                                                                                -----------
                                                                                  2,547,487
  Less accumulated depreciation                                                   1,421,518
                                                                                -----------
        Net property and equipment                                                1,125,969
                                                                                -----------

OTHER ASSETS
  Security deposits                                                                  12,530
  Deferred finance charges, less accumulated amortization of $113,266               309,187
  Trademarks, less accumulated amortization of $91,708                              424,152
                                                                                -----------
        Total other assets                                                          745,869

           Total assets                                                         $ 7,731,743
                                                                                ===========


                            LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
  Revolving line-of-credit                                                      $ 3,584,790
  Current maturities of long-term debt                                              432,748
  Checks outstanding in excess of bank balance                                       74,119
  Accounts payable                                                                2,367,048
  Accrued restructuring/litigation                                                  279,574
  Accrued royalties                                                                 665,674
  Accrued expenses                                                                  505,355
                                                                                -----------
        Total current liabilities                                                 7,909,308
                                                                                -----------


LONG-TERM DEBT                                                                    1,033,422

STOCKHOLDERS' DEFICIT
  Common stock, $.01 par value; authorized 10,000,000 shares:
       issued and outstanding  7,099,842 shares                                      70,998
  Additional paid-in capital                                                      8,784,120
  Accumulated Deficit                                                           (10,066,105)
                                                                                ------------
        Total stockholders'  deficit                                             (1,210,987)

           Total liabilities and stockholders'  deficit                         $ 7,731,743
                                                                                ===========

</TABLE>

See Notes to Consolidated Financial Statements

                                       -3-

<PAGE>

<TABLE>
<CAPTION>

                                    BIG SMITH BRANDS, INC.
                             CONSOLIDATED STATEMENTS OF OPERATIONS
                          THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                          (UNAUDITED)


                                             1998                          1997
                                             ----                          ----

<S>                                     <C>                             <C>        
NET SALES                               $ 2,263,917                     $ 1,743,823

COST OF GOODS SOLD                        1,802,510                       1,466,758
                                        -----------                     -----------

GROSS PROFIT                                461,407                         277,065
                                        -----------                     -----------



OPERATING EXPENSES
  Selling                                   366,991                         289,278
  General and administrative                468,480                         479,728
                                        -----------                     -----------
                                            835,471                         769,006
                                        -----------                     -----------



LOSS FROM OPERATIONS                       (374,064)                       (491,941)
                                        ------------                    ------------



OTHER INCOME (EXPENSE)
  Miscellaneous expense                     (34,754)                        (25,988)
  Amortization of debenture discount       (606,204)
  Interest expense                         (121,786)                       (108,163)
                                        ------------                    ------------
                                           (762,744)                       (134,151)
                                        -----------                     ------------



LOSS BEFORE INCOME TAXES                 (1,136,808)                       (626,092)

PROVISION FOR INCOME TAXES                        0                               0
                                        -----------                     -----------

NET LOSS                                $(1,136,808)                    $ ( 626,092)
                                        ============                    ============

NET LOSS PER SHARE                      $(     0.23)                    $ (    0.16)
                                        ============                    ============



WEIGHTED AVERAGE COMMON
  SHARES OUTSTANDING                      4,829,844                       3,930,000
                                        ============                    ===========

</TABLE>

See Notes to Consolidated Financial Statements


                                             -4-

<PAGE>

<TABLE>
<CAPTION>


                                    BIG SMITH BRANDS, INC.
                   CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
                               THREE MONTHS ENDED MARCH 31, 1998
                                          (UNAUDITED)



                                         Common Stock,
                                        $.01 par value
                                 -----------------------------
                                                                     Additional     Retained
                                                      Common          Paid-in       earnings
                                        Shares         Stock          capital       (deficit)           Total
                                        ------         -----          -------       ---------           -----
<S>                                     <C>             <C>        <C>            <C>             <C>          
Balance (deficit), January 1, 1998      4,198,842       $ 41,988   $ 7,181,620    $ (8,929,297)   $ (1,705,679)


Conversion of convertible debentures
into common shares                      2,900,000         29,000     1,602,500                      1,631,500

Net loss - March 31, 1998                  -               -            -          (1,136,808)      (1,136,808)
                                       -----------     ---------     ----------   ------------    -------------

Balance (deficit), March 31, 1998       7,099,842       $ 70,998   $ 8,784,120    $(10,066,105)   $ (1,210,987)
                                        =========       ========   ===========    =============    =============


</TABLE>

See Notes to Consolidated Financial Statements



                                             -5-

<PAGE>


<TABLE>
<CAPTION>

                                        BIG SMITH BRANDS, INC.
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                              THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                              (UNAUDITED)


                                                             1998              1997
                                                             ----              ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                    <C>               <C>         
  Net loss                                             $  (1,136,808)    $  (626,092)
  Item not requiring cash:
    Depreciation and amortization                             97,119          62,051
    Amortization of debenture discount                       606,204
  Changes in:
    Accounts receivable                                      839,143         669,774
    Inventories                                           (1,116,441)       (416,261)
    Prepaid expenses                                        (125,514)        (87,640)
    Other assets                                              14,559
    Accounts payable and accrued expenses                     47,964          73,504
                                                         -----------       ---------
       Net cash used in operating activities                (773,775)       (324,664)
                                                         -----------       ---------


CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                          (7,746)         (6,630)
  Reductions (Purchase) of temporary investments              (8,384)         70,649
      Net cash provided (used) in investing activities       (16,130)         64,019
                                                          ----------       ----------


CASH FLOWS FROM FINANCING ACTIVITIES
  Checks outstanding in excess of bank balance              (133,205)        273,342
  Net borrowings (repayments) under line-of-credit
    agreement                                                989,702        (132,622)
  Principal payments on long-term debt                       (98,627)        (14,834)
                                                         -----------       -----------
      Net cash provided by financing activities              757,870         125,886
                                                         -----------       -----------


DECREASE IN CASH                                            (32,035)        (134,759)

CASH, BEGINNING OF PERIOD                                    41,182          170,551
                                                         ------------       ----------

CASH, END OF PERIOD                                    $      9,147      $    35,792
                                                       ==============   ============

</TABLE>


See Notes to Consolidated Financial Statements



                                       -6-

<PAGE>



                             BIG SMITH BRANDS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF COMPANY

Big Smith  Brands,  Inc.  (the  "Company")  manufactures  and sells quality work
apparel and  sportswear  under a variety of brand  names,  including  Big Smith,
Smith Mountain Classics and Big Smith Vintage.  The Company markets its products
to national chains and local stores worldwide.

SIGNIFICANT ACCOUNTING POLICIES

The accounting  policies  followed by the Company are set forth in Note 1 to the
Company's financial  statements included in its Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1997.

NOTE 2:  INTERIM FINANCIAL STATEMENTS

The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance  with the  instructions to Form 10-QSB of the Securities and Exchange
Commission  and in accordance  with  generally  accepted  accounting  principles
applicable  to  interim  financial  statements  and  do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for audited  financial  statements.  The financial  statements should be read in
conjunction with the audited consolidated  financial statements and accompanying
notes of the Company for the year ended December 31, 1997, which are included in
its Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997.

In the opinion of the management of the Company,  the accompanying  consolidated
financial  statements  reflect all adjustments  necessary  (consisting solely of
normal  recurring  adjustments) to present fairly the financial  position of the
Company as of March 31,  1998 and the results of its  operations,  stockholders'
equity and cash flows for the three month period then ended.

The  results  of  operations  for the  period  ended  March  31,  1998,  are not
necessarily  indicative  of the results to be expected for the entire year.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Seasonality."


NOTE 3:  INCOME PER SHARE INFORMATION

Earnings per share are computed  based on the weighted  average number of common
shares outstanding  during the year. Stock warrants and options  outstanding are
common stock  equivalents  and are included in the  calculation  of earnings per
share to the extent they are dilutive using the treasury-stock method. Basic and
diluted earnings per share are the same.

NOTE 4:  CONVERTIBLE DEBENTURES

In March 1998,  the  convertible  long-term  debt was converted  into  2,900,000
shares of common stock. At the date of conversion  there was $606,204  remaining
of unamortized  discount  which had been netted against the principal  amount at
December  31, 1997.  Upon  conversion  this  unamortized  portion  resulted in a
non-cash,  non-recurring  charge  against income of $606,204 in the period ended
March 31, 1998.


                                       -7-

<PAGE>



ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS.


GENERAL

               The  discussion  and  analysis  set forth  below is for the three
month  periods  ended  March 31, 1998 and March 31,  1997.  It should be read in
conjunction with the unaudited  Consolidated Financial Statements of the Company
and the related Notes thereto appearing elsewhere in this Form 10-QSB as well as
the Financial  Statements of the Company for the fiscal years ended December 31,
1997 and  December  31,  1996 and the related  Notes  thereto  appearing  in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997 (the
"Form  10-K").  The Company  believes  that its  business  is  seasonal  and has
experienced and expects to continue to experience  generally higher sales in the
last six months of the year as compared to the first six months of the year both
in terms of revenues  generated  and, to a lesser  extent,  total garments sold.
This  seasonality is due to increased  sales in the apparel  industry during the
Christmas  season and to an increase in sales of winter weight  garments,  which
sell at higher  prices than the Company's  other  products,  and  back-to-school
clothes  during the months of August through  November,  combined with continued
sales of regular weight garments.  In addition,  the Company's quarterly results
may  fluctuate  depending  upon the timing of delivery  of large  orders and the
introduction of new product lines or additional labels, among other things. This
seasonality has a significant impact on the cash flow of the Company because the
Company's  inventory  levels  tend to  increase  during  the  summer  months  in
preparation  for  anticipated  higher  sales  levels in  September,  October and
November. See "--Seasonality."

         Forward  Looking-Statements.  When used in this report,  press releases
and  elsewhere by the  management  of the Company  from time to time,  the words
"believes", "anticipates", and "expects" and similar expressions are intended to
identify   forward-looking   statements   that   involve   certain   risks   and
uncertainties. Additionally, certain statements contained in this discussion may
be  deemed  forward-looking  statements  that  involve  a number  of  risks  and
uncertainties.  Among the  factors  that could  cause  actual  results to differ
materially  are the  following:  the  ability of the Company to meet its working
capital and liquidity  needs, the status of relations  between the Company,  its
primary  customers  and  distributors,  the  availability  of long-term  credit,
unanticipated  changes  in  the  U.S.  and  international  economies,   business
conditions  and  growth  in the  workwear/sportswear  industry  and the level of
growth in retail sales generally,  the timely  development and acceptance of new
products, the impact of competitive products and pricing, changes in the cost of
raw  materials,  changes in product mix, the outcome of  litigation in which the
Company is involved,  along with product  delays and other risks  detailed  from
time to time in the Company's SEC reports, including but not limited to the Form
10-K. Readers are cautioned not to place undue reliance on these forward-looking
statements  which speak only as of the date thereof.  The Company  undertakes no
obligation to publicly release the results of any events or circumstances  after
the date hereof or to reflect the occurrence of unanticipated events.

         Going Concern.  The Company's viability as a going concern is dependent
upon its ability to raise  sufficient  working capital and to meet any liquidity
needs that may exceed the  availability  under the Credit  Facility  (as defined
below).  The Company  experienced  a loss from  operations  in the periods ended
March 31, 1998 and 1997 and had a working  capital  deficit of $2.05  million at
March 31, 1998. See "--Liquidity and Capital Resources."

         The Company has authorized an investment  banker to identify  potential
purchasers of bridge notes and warrants of the Company. The terms and conditions
of such interim financing facility are currently under negotiation.  The Company
also has  entered a letter of  intent  for a  registered  public  offering  (the
"Proposed  Public  Offering")  of  the  Company's  Common  Stock  pursuant  to a
prospectus  during 1998. There can be no assurance,  however,  that the Proposed
Public Offering will be consummated or that interim financing can be obtained.


                                       -8-

<PAGE>

         At December  10, 1997,  the Company  secured a new  revolving  loan and
credit facility (the "Credit Facility") with NationsCredit Commercial Funding, a
NationsBank  Company  ("NationsCredit")  allowing  for maximum  availability  of
$10,000,000  based on a specified  percentage of eligible  accounts  receivable,
inventories,  real property,  equipment, and trademarks.  The amount outstanding
under the Credit Facility as of March 31, 1998 was $4,633,390.  See "--Liquidity
and Capital Resources."

RESULTS OF OPERATIONS

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

         Net sales,  for the three months ended March 31, 1998 increased by $.52
million,  or 29.9%,  to $2.26  million  from $1.74  million for the three months
ended March 31, 1997. Net sales for the three months ended March 31, 1998 of Big
Smith sportswear,  Big Smith workwear and other branded workwear,  private label
products and Caterpillar branded products were $.22 million, $1.83 million, $.21
million and $0, respectively,  as compared with $0 , $1.55 million, $.11 million
and $.08 million,  respectively,  for the three months ended March 31, 1997. The
increase in sales resulted from the  commencement  of sales of the new Big Smith
sportswear  to new  and  existing  customers,  the  addition  of  new  customers
including Mills Fleet & Farm Corp., and increased  product purchases by existing
customers,  especially Wal-Mart Stores, Inc., reflecting the increased marketing
by the Company of such products.

         Gross  profit  for the  three  months  ended  March  31,  1998 was $.46
million, or 20.4% of net sales, compared to $.28 million, or 16.1% of net sales,
for the three  months  ended  March  31,  1997.  The  increase  in gross  profit
percentage  was  primarily  due to the  increased  production  levels  and plant
efficiencies  resulting  in lower  overhead  and the  introduction  of Big Smith
sportswear  at higher  gross profit  margins  than Big Smith  workwear and other
branded  workwear and private label  products.  For the three months ended March
31, 1998, Big Smith  sportswear,  Big Smith workwear and other branded workwear,
private label products and Caterpillar branded products accounted for 9.7%, 81%,
9.3% and 0% of net sales,  respectively,  as compared with 0%,  89.1%,  6.3% and
4.6% of net sales, respectively, for the three months ended March 31, 1997.

         Selling expenses increased by $.08 million to $.37 million, or 16.2% of
net sales,  for the three  months ended March 31, 1998,  from $.29  million,  or
16.6% of net sales,  for the three months ended March 31, 1997. This increase in
selling  expenses  resulted  principally from an increase of $123,000 in selling
expense  related  to the new Big Smith  sportswear  line  partially  offset by a
decease  in  salesman   salaries  and   commissions  of  $43,000.   General  and
administrative  expenses  were $.47  million,  or 20.7% of net sales  during the
three months ended March 31, 1998,  compared with $.48 million,  or 27.6% of net
sales,  for the three months  ended March 31, 1997.  The decrease in the general
and  administrative  expenses  percentage  of net sales was primarily due to the
increase in sales for the three  months  ended March 31, 1998 as compared to the
three months ended March 31, 1997.

         On  March  19,  1998,  the  holders  of the  Company's  6%  Convertable
Preferred  Debentures  due  March  31,  2000 (the  "Debentures")  converted  the
remaining  $1,631,500 of the Debentures  into  2,900,000  shares of Common Stock
resulting  in a change to earnings of  $606,204 of related  discount  during the
three months ended March 31, 1998.

         The  Company's  interest  expense for the three  months ended March 31,
1998 was $122,000,  or 5.3% of net sales, as compared with $108,000,  or 6.3% of
net sales,  for the three months ended March 31, 1997.  The increase in interest
expense  was  primarily  due to  $20,000  of  interest  expense  related  to the
Debentures which were not outstanding in the three months ended March 31, 1997.

         As a result  of the  foregoing,  the  Company's  net loss for the three
months  ended March 31, 1998 was  $1,136,808  compared to a net loss of $626,092
for the three months ended March 31,  1997.  Excluding a one time  non-recurring
convertible debenture amortization discount of $606,204 arising as a result

                                       -9-

<PAGE>

of the retirement of all  outstanding  convertible  debentures of the Company in
March 1998, the Company's net loss for the three months ended March 31, 1998 was
$530,604.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company's  viability  as a going  concern  is  dependent  upon its
ability to raise sufficient working capital and to meet any liquidity needs that
may exceed the availability under the Credit Facility. The Company experienced a
loss from  operations  in the  periods  ended  March 31, 1998 and 1997 and had a
working capital deficiency of $(2.05) million at March 31, 1998. The Company has
commenced several steps to obtain additional sources of liquidity  including the
pursuit  of bridge  financing  arrangements  and the sale of  additional  common
stock.

         The Company has authorized an investment  banker to identify  potential
purchasers of bridge notes and warrants of the Company. The terms and conditions
of such interim financing facility are currently under negotiation.  The Company
also has  entered a letter of  intent  for a  Proposed  Public  Offering  of the
Company's  Common Stock  pursuant to a  prospectus.  There can be no  assurance,
however,  that the Proposed  Public Offering will be consummated or that interim
financing can be obtained.

         On April 2,  1997,  in order to meet its  liquidity  needs the  Company
closed an offshore placement of $1,700,000 of its Debentures. By March 1998, the
Debentures had been converted to 3,169,842 shares of the Company's Common Stock.
As a result, the Company no longer has outstanding any convertible debentures.

         The Company experienced a significant decrease in revenues in 1997 as a
result of the purported  termination  effective in January 1997 by  Caterpillar,
Inc.  ("Caterpillar")  of the Company's license to manufacture and sell workwear
under the Caterpillar label (the "Caterpillar Termination").  See "Part II. Item
1. Legal Proceedings - Caterpillar Litigation."

         At March 31, 1998 and 1997 working  capital was  approximately  $(2.05)
million and $.40 million,  respectively.  This decrease resulted  primarily from
the loss of revenue due to the Caterpillar Termination. Working capital also may
vary from time to time as a result of seasonal inventory requirements, the level
of trade credit available and the level of accounts receivable balances.

         Cash used in operating activities totaled $.77 million and $.32 million
for the three months ended March 31, 1998 and March 31, 1997 respectively.  This
increase  reflected  primarily  an  increase  in  inventory  resulting  from the
increased build-up of inventory of winter weight workwear and the new sportswear
products.  The Company typically  experiences negative cash flow from operations
during  the  first  half  of each  year  due to the  build-up  of  inventory  in
preparation  for increased  sales volume in the second half of each year. In the
three months ended March 31, 1998 such  inventory  build-up  increased  over the
three months ended March 31, 1997 due to  anticipation of increased sales in the
second half of 1998. See "-Seasonality."

         Cash flows from  financing  activities  totaled  $.76  million and $.13
million  for the  three  months  ended  March  31,  1998  and  March  31,  1997,
respectively.  This increase reflected  primarily increased net borrowings under
the line of credit  agreement which was only partially  offset by a reduction in
checks outstanding in excess of the bank balance.

         At December  10, 1997,  the Company  secured a new  revolving  loan and
Credit  Facility  with  NationsCredit   allowing  for  maximum  availability  of
$10,000,000 based upon a specified  percentage of eligible accounts  receivable,
inventories,  real property,  equipment, and trademarks.  The amount outstanding
under the  Credit  Facility  as of March 31,  1998 was  $4,633,390.  The  Credit
Facility bears interest at prime plus 1.875% (10.375% at March 31, 1998).

                                      -10-

<PAGE>

         The Credit Facility also provides for additional interest under certain
circumstances and other fixed fees payable annually during the term of the loan.
A portion of the  proceeds  under the Credit  Facility  were used to pay off the
previous revolving  line-of-credit and other equipment and working capital loans
in an aggregate  principal  amount of  approximately  $4.1 million.  The loan is
secured by all of the assets of the Company  including the accounts  receivable,
inventories, property and equipment and trademarks.

CAPITAL EXPENDITURES

         Capital expenditures totaled  approximately $8,000 for the three months
ended March 31, 1998.

INTANGIBLE ASSETS

         In 1995,  the Company  purchased  the Big Smith  trademark in the seven
countries  in Europe for which the Company  did not  previously  have  trademark
rights for an aggregate purchase price of $500,000 payable over four years.

SEASONALITY

         The Company's sales are generally  higher in the last six months of the
year as  compared  to the first six months of the year both in terms of revenues
generated and, to a lesser extent,  total garments sold. This seasonality is due
to increased sales in the apparel industry during the Christmas season and to an
increase in sales of winter  weight  garments,  which sell at higher prices than
the Company's other  products,  and back-to- school clothes during the months of
August  through  November,  combined  with  continued  sales of  regular  weight
garments.  In addition,  the Company's quarterly results may fluctuate depending
upon the timing of delivery of large orders and the  introduction of new product
lines  or  additional  labels,  among  other  things.  This  seasonality  has  a
significant  impact  on the  cash  flow of the  Company  because  the  Company's
inventory  levels tend to increase  during the summer months in preparation  for
anticipated higher sales levels in September, October and November.

                                      -11-

<PAGE>

                                     PART II


                                OTHER INFORMATION


ITEM 1.  Legal Proceedings.

Caterpillar Litigation

         On June 25,  1996,  Big  Smith  Global  Ltd.  ("BSG"),  a wholly  owned
subsidiary  of the Company  holding the rights to the Company's  agreement  (the
"Agreement")  with  Caterpillar   licensing  the  use  by  the  Company  of  the
Caterpillar and related  trademarks,  received a purported notice of termination
of the Agreement, citing purported violations of the Agreement.

         On July 9, 1996,  the Company  was served with a summons and  complaint
naming it, BSG and S. Peter Lebowitz, the Company's CEO, defendants in a suit by
Caterpillar  in the  U.S.  District  Court  for the  Central  District  Court of
Illinois (the "District Court").  The complaint alleges trademark  infringement,
unfair  competition,  false  advertising  and  breach  of  contract,  and  seeks
injunctive  relief and  unspecified  damages in  connection  with the  Company's
alleged violations of the Agreement and Caterpillar's proprietary marks.

         On  July  26,  1996  the  defendants   answered  the  complaint  filing
responsive defenses of failure to assert a claim, waiver, amendment,  promissory
estoppel, equitable estoppel, laches, failure to provide an opportunity to cure,
unclean  hands and misuse.  The Company and BSG  (collectively,  the  "Corporate
Defendants") filed counterclaims for breach of contract,  tortious  interference
with contractual  relations,  interference with prospective  business relations,
conspiracy,  commercial  disparagement  and  breach of  franchise  agreement  in
connection  with  what the  Corporate  Defendants  believe  to be  Caterpillar's
wrongful efforts to terminate the Corporate  Defendants'  license to use certain
Caterpillar  trademarks on its apparel. S. Peter Lebowitz also filed a motion to
dismiss for failure to state a claim against him in his individual capacity.

         On July 18, 1996,  Caterpillar  filed an  emergency  motion for summary
judgment  seeking a  declaratory  judgment  that the Agreement had been properly
terminated.  On July 29,  1996,  the  Company  filed a motion for a  preliminary
injunction  against  Caterpillar's  purported  termination of the Agreement.  On
August 19, 1996,  the District Court entered an order (the "August 19th Order"),
which  was  subsequently  confirmed  in  a  Reconsideration  Order  denying  the
Corporate   Defendants'  motion  for  a  preliminary   injunction  and  granting
Caterpillar's  motion for summary  judgment  on the basis of a finding  that the
Agreement,  by its terms,  provided for  termination  by  Caterpillar  following
certain  breaches  of the  Agreement  by BSG  regardless  of whether or not such
breaches were  material.  On August 28, 1996, the District Court granted in part
Mr.  Lebowitz's  motion  and  dismissed  him from the  breach  of  contract  and
declaratory judgment counts of the complaint.

         On April  16,  1997 Big  Smith  filed an  Amended  Counterclaim  adding
Overland Group, Ltd. and Stephen Palmer as counterdefendants  seeking damages in
excess of $20 million plus costs.  Thereafter,  on October 31, 1997, a Corrected
Second Amended  counterclaim  was filed by Big Smith naming  Overland  Footwear,
Limited as an  additional  counter-defendant.  The Second  Amended  Counterclaim
alleges similar claims as in the original  counterclaim and, among others, newly
alleges that Caterpillar was barred from  terminating the Corporate  Defendants'
license  to use its marks  since a common  law  franchise  relationship  existed
between the parties which could not be terminated absent good cause.

         Counterdefendants  have filed  motions to  dismiss  the Second  Amended
Counterclaim for failure to state a claim. Additionally, Palmer and the Overland
defendants  have filed motions seeking  dismissal for lack of jurisdiction  over
them.  On December  16, 1997,  the Court heard oral  arguments on the motions to
dismiss. To date the Court has not ruled on said motions.

                                      -12-

<PAGE>

         Management  intends to vigorously  defend the claims of Caterpillar and
to diligently  pursue its  counterclaims  and its claims  against Palmer and the
Overland defendants. At this stage of litigation, it is not possible to evaluate
the  likelihood of favorable or unfavorable  outcome.  There can be no assurance
that the outcome of this litigation  will be favorable to the Company,  that the
Company's  defenses to the claims against it will  vindicated or that any of its
counterclaims will be found to be valid. If the outcome of the litigation is not
favorable,  such outcome could have a material  adverse  effect on the financial
condition of the Company.

Other Litigation

         The  Company is  involved  in  litigation  with a number of its foreign
distributors  in  connection  with their  refusal to pay  royalties  the Company
believes  to be due in  respect  of sales by such  distributors  of  Caterpillar
branded  products  prior  to  the  Company's  ceasing  to  sell  such  products.
Additionally, certain distributors have made claims against the Company relating
to the effects of the purported  termination of the Caterpillar license on their
arrangements with the Company. A summary of these actions follows.

         On March 20, 1997,  the Company and BSG filed suit against All American
in the  Commercial  Court of Paris,  France  seeking  recovery of  approximately
$133,000 of accounts  receivable it believed were due and owing.  Since the suit
was  commenced,  All  American  has  paid  substantially  all of the  amount  in
controversy.

         On  March  21,  1997,   the  Company  filed  suit  against  KPR  Sports
International,  Inc.  ("KPR") in United  States  District  Court for the Eastern
District of  Pennsylvania,  in  connection  with KPR's breach of contract in its
failure to pay the full agreed  upon price  relating  to its  purchase  from the
Company of certain Caterpillar branded inventory.  In November 1997, the Company
and  KPR  entered  into  a  settlement   agreement  providing  for  six  monthly
installment  payments of $100,000  each  beginning  November 1, 1997.  The final
installment payment was made in April 1998.

         The Company has begun  discussions  with  Selected  Brands Shoe Company
seeking recovery of at least $73,000 of accounts  receivable it believes are due
and payable and with Fashion Fever CC seeking recovery of an as yet undetermined
amount of  royalties  it believes are due and  payable.  These  discussions  are
preliminary to filing collection  actions if satisfactory  settlements cannot be
reached.


ITEM 2.        Changes in Securities.
               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.

                                      -13-

<PAGE>

ITEM 6.        Exhibits and Reports on Form 8-K.
<TABLE>
<CAPTION>


(a)     EXHIBITS:
                                         EXHIBIT TABLE

  EXHIBIT
    NO.                                   DESCRIPTION
    --                                    -----------
<S>        <C>
3(a)       Form of Restated Certificate of Incorporation.*
(b)        By-laws.*
10(c)      Loan and Security  Agreement,  dated  December __, 1997,  between the
           Company and National Credit Commercial  Funding,  Inc., a NationsBank
           Company.***
(z)        Amended and Restated Employment Agreement, dated January 1, 1998, between the
           Company and S. Peter Lebowitz***
(ab)       Warrant to Purchase Common Stock, dated as of April 2, 1997.**

(ac)       Letter of Intent, dated February 10, 1998, from D.L. Cromwell Investments, Inc.
           ("Cromwell") to Willora Company Limited ("Willora") with respect to the conversion
           of the remaining Debentures.***

(ad)       Letter Agreement, dated February 10, 1998, among the Company, Willora and
           Cromwell, with respect to the conversion of the remaining Debentures.***


27         Financial Data Schedule****

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

    *      Previously filed with, and incorporated herein by reference to, the Registrant's Registration
           Statement on Form SB-2 (No. 33-85302), as amended, declared effective on February 8, 1995
           ("Form SB-2").

   **      Previously filed with, and  incorporated  herein by reference to, the
           Registrant's  Annual  Report on Form 10-KSB for the fiscal year ended
           December 31, 1996, filed on April 15, 1997.

 ***       Previously filed with, and  incorporated  herein by reference to, the
           Registrant's Annual Report on From 10-KSB, filed on April 15, 1998.

****       Filed herewith

</TABLE>

        (b)    Reports on Form 8-K

                      January  26, 1998 Reporting  under Item 4 the
                               resignation of Baird, Kurtz & Dobson
                               ("BK&D")     as    the     Company's
                               independent accountants.

                      January  28,  1998  Amending  the January 26,
                               1998 Form 8-K,  adding BK&D's letter
                               of consent under Item 4.

                      February 11, 1998 Reporting  under Item 4 the
                               appointment  of  Daszkal,  Bolton  &
                               Manela, CPAs, of Boca Raton, Florida
                               as   the    Company's    independent
                               accountants.

                                      -14-

<PAGE>

                                    SIGNATURE

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            BIG SMITH BRANDS, INC.


                                                   /s/ Terry L. Dober
Date:  May 20, 1998                         ------------------------------------
                                            By:    Terry L. Dober
                                                   Vice President of Finance and
                                                   Authorized Registrant Signer
                                                   (Principal Accounting
                                                   and Financial Officer)

                                      -15-

<PAGE>
<TABLE>
<CAPTION>


                                         EXHIBIT INDEX

  EXHIBIT
    NO.                                   DESCRIPTION
<S>        <C>
3(a)       Form of Restated Certificate of Incorporation.*
(b)        By-laws.*
10(c)      Loan and Security  Agreement,  dated  December __, 1997,  between the
           Company and National Credit Commercial  Funding,  Inc., a NationsBank
           Company.***
(z)        Amended and Restated Employment Agreement, dated January 1, 1998, between the
           Company and S. Peter Lebowitz***
(ab)       Warrant to Purchase Common Stock, dated as of April 2, 1997.**

(ac)       Letter of Intent, dated February 10, 1998, from D.L. Cromwell Investments, Inc.
           ("Cromwell") to Willora Company Limited ("Willora") with respect to the conversion
           of the remaining Debentures.***

(ad)       Letter Agreement, dated February 10, 1998, among the Company, Willora and
           Cromwell, with respect to the conversion of the remaining Debentures.***


27         Financial Data Schedule****

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

    *      Previously filed with, and incorporated herein by reference to, the Registrant's Registration
           Statement on Form SB-2 (No. 33-85302), as amended, declared effective on February 8, 1995
           ("Form SB-2").

   **      Previously filed with, and  incorporated  herein by reference to, the
           Registrant's  Annual  Report on Form 10-KSB for the fiscal year ended
           December 31, 1996, filed on April 15, 1997.

 ***       Previously filed with, and  incorporated  herein by reference to, the
           Registrant's Annual Report on From 10-KSB, filed on April 15, 1998.

****       Filed herewith

</TABLE>
     
                                      -16-