DIPLOMAT AMBASSADOR INC, SB-2/A, 1998-02-04

DIPLOMAT AMBASSADOR INC
SB-2/A, 1998-02-04
PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 1998.

REGISTRATION STATEMENT 333-31343
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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

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AMENDMENT NO. 2 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933

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AMBASSADOR EYEWEAR GROUP, INC.
(Name of Small Business Issuer in Its Charter)

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<TABLE>
<S> <C> <C>
DELAWARE 5040 23-2807063
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code No.) Identification No.)
</TABLE>

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3600 MARSHALL LANE
BENSALEM, PENNSYLVANIA 19020
(800) 523-4675
(Address and Telephone Number of Principal Executive Offices)

3600 MARSHALL LANE
BENSALEM, PENNSYLVANIA 19020
(Address of Principal Place of Business or Intended Principal Place of Business)

MR. BARRY BUDILOV
PRESIDENT AND CHIEF EXECUTIVE OFFICER
3600 MARSHALL LANE
BENSALEM, PENNSYLVANIA 19020
(800) 523-4675
(Name, Address and Telephone Number of Agent for Service)

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COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
JEFFREY A. BAUMEL, ESQ. JAMES M. JENKINS, ESQ.
Gibbons, Del Deo, Dolan, Griffinger & Vecchione Harter, Secrest & Emery LLP
One Riverfront Plaza 700 Midtown Tower
Newark, New Jersey 07102 Rochester, NY 14604
(973) 596-4500 (716) 232-6500
</TABLE>

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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.

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If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>

SUBJECT TO COMPLETION, DATED FEBRUARY 4, 1998

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

<PAGE>

PRELIMINARY PROSPECTUS

AMBASSADOR EYEWEAR GROUP, INC.

1,200,000 SHARES OF COMMON STOCK

$6.00 PER SHARE

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Ambassador Eyewear Group, Inc., a Delaware corporation ("Ambassador" or the
"Company"), hereby offers 1,200,000 shares (the "Shares") of its Common Stock,
par value $.01 per share (the "Common Stock"). See "Description of Securities."

Prior to this offering of Stock (the "Offering"), there has been no public
market for the Shares and there can be no assurance that an active market will
develop. Application has been made for listing of the Shares for quotation on
the Pacific Stock Exchange and on the Chicago Stock Exchange, subject to notice
of issuance. There can be no assurance that any of these listing applications
will be approved. If such listing applications are not approved, the Company
will apply for the listing of the Shares offered hereby on the National
Association of Securities Dealers, Inc.'s ("NASD's") Over-the-Counter Electronic
Bulletin Board Service (the "OTC"). See "Risk Factors--Uncertain Public Market
for the Company's Common Stock."

It is anticipated that the public offering price for the Common Stock will
be $6.00 per share. The offering price of the Common Stock has been determined
by negotiation between the Company and H.J. Meyers & Co., Inc., and National
Securities Corporation, the representatives (the "Representatives") of the
several underwriters (the "Underwriters") and is not necessarily related to the
Company's asset value or any other established criterion of value. For the
method of determining the public offering price of the Common Stock, see "Risk
Factors" and "Underwriting."

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THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A SUBSTANTIAL
DEGREE OF RISK. PERSONS WHO PURCHASE THESE SECURITIES WILL INCUR IMMEDIATE AND
SUBSTANTIAL DILUTION. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FACTORS SET FORTH UNDER "RISK FACTORS," AT PAGE 4.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS
PRICE TO PUBLIC AND COMMISSIONS(1) PROCEEDS TO COMPANY (2)
<S> <C> <C> <C>
Per Share................... $6.00 $.60 $5.40
Total (3)................... $7,200,000 $720,000 $6,480,000
</TABLE>

(1) Does not reflect additional compensation to be received by the
Representatives in the form of (a) a non-accountable expense allowance of
$216,000 (or $248,400 if the Underwriters' over-allotment option described
in Footnote (3) is exercised in full) and other compensation payable to the
Representatives, and (b) warrants to purchase up to 120,000 shares of Common
Stock at a purchase price of $9.90 per share (that being 165% of the public
offering price) exercisable over a period of four years, commencing one year
from the date of this Prospectus (the "Representatives' Warrants"). In
addition, the Company has agreed to indemnify the Underwriters against
certain civil liabilities under the Securities Act of 1933, as amended (the
"Securities Act"). See "Underwriting."

(2) Before deducting additional expenses of the Offering payable by the Company,
estimated at $650,000, and the Representative's non-accountable expense
allowance.

(3) The Company has granted the Underwriters an option, exercisable within 45
days, to purchase up to an additional 180,000 shares of Common Stock on the
same terms and conditions as set forth above, solely to cover
over-allotments, if any. If the over-allotment option is exercised in full,
the total "Price to Public," "Underwriting Discount" and "Proceeds to
Company" will be $8,280,000, $828,000 and $7,452,000, respectively. See
"Underwriting."

The Shares are being offered on a "firm commitment basis" by the
Underwriters, when, as, and if delivered to and accepted by the Underwriters and
subject to prior sale, withdrawal or cancellation of the offer without notice.
It is expected that delivery of certificates representing the Shares will be
made at the offices of H.J. Meyers & Co., Inc. ("H.J. Meyers"), 1895 Mount Hope
Avenue, Rochester, New York 14620, on or about , 1998.

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H.J. MEYERS & CO., INC. NATIONAL SECURITIES CORPORATION

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The date of this Prospectus is , 1998

<PAGE>

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SHARES, INCLUDING
PURCHASES OF THE SHARES TO STABILIZE ITS MARKET PRICE, PURCHASES OF THE SHARES
TO COVER SOME OR ALL OF A SHORT POSITION IN THE SHARES MAINTAINED BY THE
REPRESENTATIVES AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."

This Prospectus refers to various registered trademarks that are owned by
parties other than the Company.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS AND NOTES
THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR SHOULD
READ THIS PROSPECTUS IN ITS ENTIRETY. EXCEPT AS OTHERWISE INDICATED, ALL
INFORMATION IN THIS PROSPECTUS ASSUMES THAT THE UNDERWRITER'S OVER-ALLOTMENT
OPTION IS NOT EXERCISED AND REFLECTS A 1,166 2/3-FOR-ONE STOCK SPLIT EFFECTED AS
OF JUNE 30, 1997. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
INFORMATION SET FORTH UNDER "RISK FACTORS."

THE COMPANY

The Company designs, sources, markets and distributes high quality
prescription eyeglass frames and non-prescription sunglasses to department and
specialty stores, optical chains and eyewear boutiques throughout the United
States. The Company also provides integrated marketing, merchandising materials
and consulting support to assist its customers in the sales of the Company's
eyewear products. The Company distributes its eyewear products to a broad and
substantial customer base, including Wal-Mart, K-Mart, National Vision
Associates and U.S. Vision, as well as to many regional chain stores and local
outlets. The Company has established relationships with various fashion
designers, fashion celebrities and marketing organizations including Kathy
Ireland, Halston, and the John Lennon Estate and highly recognizable consumer
products brands such as Playskool, Nintendo and international jewelry designer
Kenneth Jay Lane. The Company intends to continue to identify and license trade
names and trademarks from various high profile brand sources in an effort to
target and capture additional segments of the eyewear market.

The Company utilizes a diverse team of freelance experienced fashion eyewear
designers to work with fashion houses, celebrities, manufacturers and
experienced members of the optical industry to design eyewear styles that convey
fashion, elegance and sophistication. The Company's eyeglass frames and
sunglasses are manufactured at a variety of independent factories in the United
States and internationally. The Company distributes products through independent
sales representatives situated throughout the world and intends to increase the
size of its dedicated sales force, expand its sales and marketing capabilities
and develop additional alliances with fashion designers and licensors.

In 1996, approximately 60% of Americans used some form of corrective
eyewear. Retail sales of eyewear products totaled $14.6 billion in 1996, up from
$13.8 billion in 1995, representing a 5.8% increase. Furthermore, it is
generally accepted that vision deteriorates with age. As the American population
ages, demand for corrective eyewear is likely to continue to grow. In addition,
the growing medical and public concern with respect to exposure to harmful sun
rays has led to an increase in the sale of sunglasses, reaching $2.95 billion in
1996, representing an 8% increase from 1995.

The Company's business strategy is to become a leading source of eyewear in
the United States and globally. The Company intends to focus on: (i) growth
through the acquisition of businesses and companies that will complement its
business; (ii) the continued development of relationships with distributors
throughout the world; and (iii) expanding its products line by seeking and
negotiating licenses with high fashion and highly recognizable brand names and
licensors. In particular, the Company intends to increase its sales of
sunglasses by substantially expanding its sunglass product line and its sunglass
distribution network. The Company has accomplished a great deal of its growth
through the acquisition of other eyewear distributors that are similarly
situated. In June 1996, the Company acquired substantially all of the assets of
Windsor Optical, Inc. ("Windsor") and in February 1997, the Company acquired
substantially all of the assets of Renaissance Eyewear Group ("Renaissance")
from the secured creditor of Renaissance, thereby substantially increasing its
sales base and available resources. The Company also assumed certain liabilities
of Windsor. Renaissance had total sales of approximately $14 million during its
fiscal year ended October 31, 1996 of which approximately $2.5 million were
sunglass products. Through the acquisition of substantially all of the assets of
Renaissance and the establishment of licensing arrangements and employment
agreements as a result of such acquisition, the Company not only expanded its
sales base, but also its product lines to include additional designer product
lines and sunglasses. The Company intends to continue to seek strategic
acquisitions as a method of broadening its product lines and expanding its
potential market.

<PAGE>
The Company was incorporated in Delaware in May 1995 as Diplomat Ambassador
Inc. when it acquired the business of Chanuk, Inc. ("Chanuk"), a Pennsylvania
corporation. On July 10, 1997, the Company changed its name to Ambassador
Eyewear Group, Inc. The principal executive offices of the Company are located
at 3600 Marshall Lane, Bensalem, Pennsylvania 19020, and its telephone number is
(800) 523-4675.

THE OFFERING

<TABLE>
<S> <C>
Shares of Common Stock Offered............... 1,200,000 shares(1)

Shares of Common Stock to be Outstanding
after the Offering......................... 4,700,000 shares (1)(2)

Use of Proceeds.............................. The Company intends to use the estimated net
proceeds from the Offering of $5,614,000
($6,553,600 if the Underwriter's
over-allotment option is exercised in full)
for reduction of debt and general corporate
purposes, including working capital and to
finance potential acquisitions. See "Use of
Proceeds."

Risk Factors................................. Investment in the Common Stock offered hereby
involves a high degree of risk as well as
immediate and substantial dilution. See "Risk
Factors" and "Dilution".

Proposed Pacific Stock Exchange Symbol.......

Proposed Chicago Stock Exchange Symbol.......
</TABLE>

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(1) Assumes no exercise of the Underwriters' over-allotment option with respect
to shares of Common Stock that would be offered by the Company.

(2) Excludes (i) 529,333 shares of Common Stock issuable upon exercise of
outstanding options and warrants, (ii) 120,000 shares of Common Stock
issuable upon exercise of the Representatives' Warrants and (iii) 196,834
shares of Common Stock issuable to two officers, directors and principal
stockholders of the Company who are holders of $1,181,000 principal amount
8% Convertible Promissory Notes (assuming an initial public offering price
of $6.00 per share) that are convertible at the option of the holders at any
time at a per share price equal to the initial public offering price (the
"Convertible Notes"). See "Certain Relationships and Related Party
Transactions" "Description of Securities" and "Underwriting."

2
<PAGE>
SUMMARY FINANCIAL INFORMATION

The following table presents summary historical, pro forma (condensed) and
as adjusted financial data for the Company derived from the Company's financial
statements which have been included elsewhere in this Prospectus. This
information should be read in conjunction with "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements and notes thereto each included elsewhere herein.

<TABLE>
<CAPTION>
PERIOD FROM
MAY 10, 1995 PRO FORMA SIX MONTHS ENDED
(INCEPTION) (CONDENSED) SEPTEMBER 30,
THROUGH MARCH YEAR ENDED MARCH 31, 1997 ------------------------------
31, 1996 MARCH 31, 1997 (1) 1996 1997
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<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
STATEMENT OF OPERATIONS
DATA:
Net Sales................. $ 11,005 $ 16,455 $ 29,129 $ 8,030 $ 12,542
Gross profit.............. 4,179 7,903 14,038 3,490 6,849
Selling, general and
administrative
expenses................ 4,258 6,145 12,727 2,881 5,772(3)
Income (loss) from
operations.............. (79) 1,758 1,311 609 1,077
Net income (loss)......... (299) 680 136 194 306
Net income (loss) per
share................... (.08) .18 .04 .05 .08
Weighted average number of
shares outstanding
(2)..................... 3,864,000 3,864,000 3,864,000 3,864,000 3,864,000
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
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AS ADJUSTED
ACTUAL (4)
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<S> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Working capital...................................................................... $ 1,587 $ 7,351
Total assets......................................................................... 22,395 23,204
Non-current notes payable--stockholders/officer(5)................................... 1,181 1,181
Long-term debt....................................................................... 325 325
Total liabilities.................................................................... 22,047 17,242
Stockholders' equity................................................................. 348 5,962
</TABLE>

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(1) The pro forma unaudited condensed statement of operations reflects the
acquisitions of substantially all of the assets of Windsor and Renaissance
and the assumption of certain debt of Windsor as if such transactions had
occurred on April 1, 1996. The information contained herein should be read
in conjunction with the pro forma condensed statement of operations and the
notes thereto, the financial statements of the Company and of Renaissance
and the related notes thereto and with "Management's Discussion and Analysis
of Financial Condition and Results of Operations," each included elsewhere
in this Prospectus. The pro forma condensed statement of operations for the
year ended March 31, 1997 gives effect to the operations for each of the
Company, Renaissance and Windsor as if the acquisitions of substantially all
of the assets of Renaissance and Windsor had occurred on April 1, 1996, but
do not reflect the anticipated efficiencies of scale or other cost reduction
measures being implemented by the Company, the success of which cannot be
assured. However, no assurance can be given that any such efficiencies will
be achieved. The pro forma condensed statement of operations is presented
for informational purposes only, and is not necessarily indicative of what
the actual results of operations would have been had the transactions
occurred at April 1, 1996, nor do they purport to indicate the results of
future operations.

(2) See Note B(8) to the Company's Financial Statements.

(3) Includes approximately $766,000 relating to redundant costs of operating
Renaissance in a separate facility through July 1997, consisting primarily
of duplicate overhead and personnel expenses incurred prior to the
consolidation of the Company's operations into one location as well as
actual costs related to the relocation.

(4) Adjusted to reflect the sale of the Shares offered by the Company hereby at
an assumed initial public offering price of $6.00 per Share and the
repayment of $4,614,000 of debt with the proceeds therefrom. See "Use of
Proceeds" and "Capitalization."

(5) Represents the Convertible Notes.

3
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND SHOULD NOT BE MADE BY PERSONS WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. PROSPECTIVE INVESTORS, PRIOR TO MAKING AN INVESTMENT DECISION,
SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS (INCLUDING THE FINANCIAL STATEMENTS AND NOTES THERETO), THE
FOLLOWING FACTORS. THIS PROSPECTUS CONTAINS, IN ADDITION TO HISTORICAL
INFORMATION, FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.
THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS.

SUBSTANTIAL INDEBTEDNESS The Company has, from time to time, experienced
cash flow shortfalls and has been required to borrow substantial amounts from
banks. The Company had total liabilities of approximately $22.0 million at
September 30, 1997, approximately $19.7 million of which are current which
amounts have increased to date. Of such debt, approximately $12.5 million is
payable to CoreStates Bank (the "Bank") pursuant to the Company's revolving line
of credit. During the year ended March 31, 1997, and the six months ended
September 30, 1997, the Company incurred $738,000 and $640,000, respectively, in
net interest expenses. The revolving line of credit is secured by substantially
all of the assets of the Company. The credit facility is represented by demand
notes payable to the Bank under which the Bank may demand repayment at any time.
The Company intends to reduce outstanding borrowings from the Bank by
approximately $4.1 million from the proceeds of this Offering. The Company
anticipates that even after the proposed repayment of a portion of the Company's
indebtedness from the proceeds of this Offering, the Company's outstanding
indebtedness and ongoing interest expense will continue to be signficant. In
addition, if the Bank were to demand repayment of the entire outstanding
borrowings under the facility, the Company would be required to identify
alternative financing to satisfy its repayment obligation and to continue its
operations. There can be no assurance that any such alternative funding sources
will be available on a commercially reasonable basis if at all. If it is
unsuccessful in so identifying such financing the Company may be required to
cease operations. The loan agreement with the Bank also contains provisions
which restrict certain activities of the Company, including the declaration of
dividends and also provides for various other restrictive covenants, including
the continuing participation of Rudy A. Slucker, the Chairman of the Board of
Directors and Barry Budilov, the President and Chief Executive Officer, in their
current management positions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Financial Statements.

RISKS RELATED TO SUBSTANTIAL INVENTORY AND ACCOUNTS RECEIVABLE BALANCES. As
of September 30, 1997, the Company had an inventory of approximately $11.9
million consisting principally of eyeglass frames and sunglasses held at its
warehouse for distribution and accounts receivable valued at approximately $8.6
million. The market for eyewear and accessories is subject to the risk of
changing consumer trends. In order to be able to promptly fill orders from
distributors, the Company maintains substantial inventories. In the event that a
significant number of models or accessories do not achieve widespread consumer
acceptance, the Company may be required to take significant price markdowns,
which could have a material adverse effect on the Company's business, prospects,
results of operations or financial condition. The Company's balance sheet as of
September 30, 1997 reflects a reserve against accounts receivable of
approximately $1.9 million which includes approximately $365,000 to cover
returns of goods sold. If the reserve is insufficient to cover the Company's
accounts receivable or if returns exceed the amounts reserved for, the Company
would be required to recognize additional expenses in the future to the extent
of such amounts.

CONTINUING LOSSES FROM RENAISSANCE OPERATIONS; POTENTIAL CLAIMS RELATING TO
PURCHASE OF ASSETS. The Company acquired substantially all of the assets of
Renaissance in February 1997 and only recently coordinated the integration of
the assets relating to the business of Renaissance into the business of the
Company. Renaissance has experienced substantial and increased losses in recent
years. For the Renaissance fiscal years ended October 31, 1996 and 1995,
Renaissance had net losses of approximately $5.6 million and $200,000,
respectively. In addition, net sales for Renaissance declined to approximately
$14.1

4
<PAGE>

million in the Renaissance fiscal year 1996 from approximately $17.4 million in
the Renaissance fiscal year 1995. No assurance can be given that net sales of
products relating to product lines acquired from Renaissance will not continue
to decline. Furthermore, there can be no assurance that the Company will be able
to integrate successfully the assets of Renaissance into the Company's
operations or that Renaissance's operations will not continue to adversely
affect the results of operations of the Company. In connection with the
acquisition of substantially all of the assets of Renaissance from the secured
creditor of Renaissance upon a default by Renaissance of its loan to such
creditor, no liabilities of Renaissance were contractually assumed by the
Company. A number of creditors of Renaissance have instituted collection actions
in court against Renaissance for amounts due to them from Renaissance. The
Company is not a party to any of these actions. To the extent that any creditors
of Renaissance seek recourse against the Company as the purchaser of
substantially all of the assets of Renaissance, the Company may incur
substantial expenses in connection with defending any such actions. Furthermore,
to the extent that any such creditors are successful in asserting any claims
against the Company as a successor to the business of Renaissance or challenge
the acquisition from the secured creditor, the Company could be responsible for
substantial liabilities and its business, prospects, results of operations or
financial condition could be adversely affected. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Financial
Statements.

RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH, IMPLEMENTATION OF GROWTH
STRATEGY AND POTENTIAL INABILITY TO SUCCESSFULLY INTEGRATE ACQUISITIONS. The
successful implementation of the Company's expansion strategy will be dependent
on, among other things, the continued growth of the designer eyewear and premium
sunglass markets; the Company's ability to develop and introduce new products to
consumers and the marketplace; the Company's ability to identify and obtain
additional licenses for currently popular styles on a timely basis and on
favorable terms; the Company's ability to identify potential acquisition
prospects; the establishment of additional distribution arrangements; the hiring
and retaining of additional marketing, creative and other personnel; and the
successful management of such growth (including monitoring operations,
controlling costs and maintaining effective quality, inventory and service
controls). As the Company continues to grow, there will be additional demands on
the Company's financial, technical and administrative resources. The failure to
maintain and improve such resources or the occurrence of unexpected difficulties
relating to the Company's expansion strategy, could have a material adverse
effect on the Company's business, prospects, results of operations or financial
condition. There can be no assurance that the Company will be able to implement
successfully its business strategy or otherwise expand its operations. The
complete integration and consolidation into the Company of the product lines
acquired upon the acquisition of the assets of Renaissance as well as any future
corporate acquisitions and new product licensing arrangements will require
substantial management, financial and other resources, and could pose
significant pressure on the financial condition and operating results of the
Company. There can be no assurance that the Company's resources will be
sufficient to accomplish such integration, or that the Company will not
experience difficulties with customers, personnel or others. In addition,
although the Company believes that its acquisitions and licensing arrangements
will enhance its competitive position and business prospects, there can be no
assurance that such benefits will be realized or that the combination of the
Company with other companies will be successful. Although the Company regularly
evaluates possible acquisition opportunities, the Company is not a party to any
agreements, commitments, arrangements or understanding with respect to any such
acquisition and there can be no assurance that any such acquisitions will be
effected. See "Use of Proceeds" and "Business--Strategy."

DEPENDENCE ON MAJOR CUSTOMERS. The Company's sales to its five largest
customers represented approximately 62% of its sales in fiscal 1996,
approximately 51% in fiscal 1997 (30% on a pro forma basis during fiscal 1997
giving effect to the acquisitions of substantially all of the assets of Windsor
and Renaissance) and approximately 47% during the six months ended September 30,
1997. Sales to the Company's top customer, Wal-Mart, accounted for approximately
51% of the Company's sales in fiscal 1996, approximately 35% of its sales in
fiscal 1997 (20% on a pro forma basis during fiscal 1997 giving effect to the
acquisitions of substantially all of the assets of Windsor and Renaissance) and
approximately

5
<PAGE>

37% for the six months ended September 30, 1997. The Company anticipates that
sales to its top five customers will continue to account for a significant
percentage of its sales. The Company has no long term commitments or contracts
with any of its customers. The loss or decreased sales from one or more of these
customers and in particular, Wal-Mart, would have a material adverse effect on
the Company's business, prospects, results of operations or financial condition.
Furthermore, the inability of any of the Company's customers to satisfy any of
their obligations to the Company at any time or on a timely basis could have a
material adverse effect on the business, prospects, results of operations or
financial condition of the Company. See "Business--Marketing and Advertising."

DEPENDENCE ON LICENSES AND SIGNIFICANT CONTINUING ROYALTY OBLIGATIONS AND
ACQUISITION COSTS. Sales of eyewear under license agreements represented
approximately 35% and 30% of the pro forma sales of the Company and Renaissance
combined sales for fiscal 1996 and 1997, respectively, and 35% for the six
months ended September 30, 1997. The Company's license agreements generally
require the Company to satisfy minimum purchase requirements or to make annual
royalty payments and advertising expenditures and maintain quality control and
retail distribution commensurate with the licensor's image. Accordingly, certain
licensors are entitled to receive payment from the Company whether or not
specified minimum levels of annual sales for licensed products are met. For the
years ending March 31, 1998 and 1999, the annual aggregate royalty obligations
of the Company under current license agreements will exceed $969,000 and
582,750, respectively, even if the Company were to generate no sales under the
agreements. The license agreements also generally provide that the licensor has
the right to approve products sold pursuant to the license and to terminate the
license if the Company does not satisfy its contractual obligations in any
material respect. Management believes that the value of its licenses depends to
a great extent upon the Company's ability to anticipate, gauge and respond to
changing consumer tastes and the popularity of certain fashion trends and
styles. The agreements licensing to the Company the rights to use certain
trademarks and trade names will terminate on various dates through the year
2000. The Company's successful efforts in developing licensed products and other
factors may result in increased royalty requirements to the Company for
renewals. Although the Company has no reason to believe it will not be able to
renew its licenses upon their respective expiration dates on favorable terms,
the loss of one or more of the licenses, or the decline in popularity of certain
trade names, could have a material adverse effect on the Company's business,
prospects, results of operations or financial condition. The Company's
obligations under employment agreements and consulting agreements with members
of management and its Board of Directors aggregate approximately $500,000 for
the year ending March 31, 1998. In addition, payments under notes,
non-competition and other agreements relating to the acquisition of
substantially all of the assets of Chanuk, Windsor and Renaissance, will
aggregate approximately an additional $348,000 for each of the years ending
March 31, 1998 and March 31, 1999. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements
attached hereto.

DEPENDENCE ON OFFERING PROCEEDS TO IMPLEMENT PROPOSED EXPANSION; NEED FOR
ADDITIONAL FINANCING. The Company intends to continue to expand by identifying
and acquiring the businesses or assets of companies with product lines and
distribution channels that are complementary to those of the Company. The
Company is dependent on the proceeds of this Offering or other financing to
implement its proposed expansion. Although the Company anticipates that the
proceeds of this Offering with the continuing availability of funds under its
line of credit will be sufficient to meet its cash needs for at least the next
12 months, in the event that the Company's plans change, its assumptions change
or prove to be inaccurate or the proceeds of this Offering and future cash flow
proves to be insufficient to fund the Company's expansion plans (due to
unanticipated expenses, delays, problems, difficulties or otherwise), the
Company would be required to seek additional financing sooner than anticipated
or curtail its expansion activities. The Company may determine, depending upon
the opportunities available to it, to seek additional debt or equity financing
to fund the cost of continuing expansion. To the extent the Company finances an
acquisition with a combination of cash and equity securities, any such issuance
of equity securities would result in dilution to the interests of the Company's
stockholders. Additionally, to the extent that the Company incurs indebtedness
or issues debt securities in connection with any acquisition, the Company

6
<PAGE>

will be subject to risks associated with incurring substantial indebtedness,
including the risks that interest rates may fluctuate and cash flow may be
insufficient to pay principal and interest on any such indebtedness. Other than
its Bank line of credit, the Company has no current arrangements with respect
to, or sources of, additional financing, and it is not anticipated that existing
stockholders will provide any portion of the Company's future financing
requirements. There can be no assurance that additional financing will be
available to the Company on reasonable terms, if at all. See "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Relationships and Related Party Transactions."

CONSUMER PREFERENCES AND INDUSTRY TRENDS. The fashion eyewear industry is
characterized by the frequent introduction of new products and services, and is
subject to changing consumer preferences and industry trends, which may
adversely affect the Company's ability to plan for future design, development
and marketing of its products and services. The Company's success will depend on
the Company's ability to anticipate and respond to these and other factors
affecting the industry. Moreover, if a downturn occurs in the economy, the
fashion industry including fashion eyewear, may be particularly vulnerable.
There can be no assurance that the Company will be able to anticipate and
respond quickly and effectively to changing consumer preferences and industry
trends or that competitors will not develop and commercialize new products that
render the Company's products and services obsolete or less marketable. See
"Business-- Industry Background" and "--Competition."

DEPENDENCE ON LIMITED NUMBER OF SUPPLIERS. The Company is currently
dependent on a limited number of third-party manufacturers for its entire supply
of eyewear. The Company does not have an agreements with any of such
manufacturers and purchases eyewear pursuant to purchase orders placed from time
to time in the ordinary course of business. The Company is substantially
dependent on the ability of its manufacturers to provide adequate inventories of
quality eyewear on a timely basis and on favorable terms. The Company's
manufacturers also produce eyewear for certain of the Company's competitors, as
well as other large customers, and there can be no assurance that such
manufacturers will have sufficient production capacity to satisfy the Company's
inventory or scheduling requirements during any period of sustained demand, or
that the Company will not be subject to the risk of price fluctuations and
periodic delays. Although the Company believes that its relationship with its
manufacturers is satisfactory and that numerous alternative sources for its
eyewear are currently available, the loss of services of such manufacturers or
substantial price increases imposed by such manufacturers, in the absence of
readily available alternative sources of supply, would have a material adverse
effect on the Company's business, prospects, results of operations or financial
condition. See "Business--Sources of Supply."

RISKS RELATING TO THE USE OF FOREIGN SUPPLIERS. The Company imports
substantially all of its frames from foreign suppliers located in Taiwan, Korea,
Japan, Germany and Italy, and, therefore, its prices for and supply of those
frames may be adversely affected by changing economic conditions
internationally. The Company may also be subject to other risks associated with
its international relationships, including tariff regulations and requirements
for export licenses, unexpected changes in regulatory requirements, potentially
adverse tax consequences, economic and political instability, restrictions on
repatriation of earnings and the burdens of complying with a wide variety of
foreign laws. In addition, the laws of certain countries may not protect the
Company's products and intellectual property rights to the same extent as do the
laws of the United States. There can be no assurance that such factors will not
have a material adverse effect on the Company's future sales or licenses and,
consequently, on the Company's business, prospects, results of operations or
financial condition as a whole.

USE OF PROCEEDS TO REPAY DEBT; BROAD DISCRETION IN APPLICATION OF PROCEEDS;
BENEFITS TO INSIDERS. Approximately $4,144,000 (74%) will be used for the
repayment of bank indebtedness by reducing the Company's debt under its line of
credit and $1,000,000 (18%) of the estimated net proceeds of this offering have
been allocated to working capital and general corporate purposes. Accordingly,
the Company will have broad discretion as to the application of the proceeds of
the offering and capital available under its

7
<PAGE>

revolving line of credit. Additionally, approximately $470,000 (8%) of the
proceeds will be used to repay indebtedness to Rudy A. Slucker, the Company's
Chairman of the Board of Directors, incurred by the Company from February 1997
to November 10, 1997 to assist the Company in financing its costs relating to
the acquisition of substantially all of the assets of Renaissance and the
integration of the business of Renaissance into the business of the Company. In
addition, since Rudy Slucker, the Chairman of the Board of the Company, and
Barry Budilov, the President and Chief Executive Officer of the Company, have
each guaranteed up to $1.1 million of such debt, the likelihood of a default and
a call on their guarantee is reduced to the extent of the reduction in the
amount of the debt. In addition, Messers. Slucker and Budilov have agreed to
increase their personal guarantees by $375,000 each if the Company fails to
complete this public offering by February 20, 1998. Accordingly, upon the
completion of this Offering, the personal obligations of Messrs. Slucker and
Budilov will be reduced further. Finally, the Company's obligations under
existing or contingent employment agreements and consulting agreements with
members of management and its Board of Directors, including Messrs. Slucker and
Budilov, aggregate approximately $470,000 (8%) over the next 12 months. See "Use
of Proceeds."

HIGHLY COMPETITIVE MARKET. The prescription and non-prescription eyewear
markets are highly competitive. The major competitive factors in the eyewear
market include, but are not limited to, fashion trends, brand recognition,
method of distribution, the number and range of products offered, an increase in
contact lens users and the increase acceptance of laser surgery as a viable
method to correct or assist poor vision. The Company competes with a number of
established companies, including Luxotica, Safilo, Marchon, and Bausch & Lomb,
which collectively control a substantial portion of the premium market segment,
other large companies and with several companies having smaller but significant
market shares. Several of these companies have substantially greater resources
and better name recognition than the Company and sell their products through
broader and more diverse distribution channels. In addition, several of these
competitors have their own manufacturing facilities. The Company could also face
competition from new competitors, including established branded consumer
products companies, such as Nike, Inc., that also have greater financial and
other resources than the Company. In addition, as the Company expands
internationally, it will face substantial competition from companies that have
already established their products in international markets and consequently
have significantly more experience in those markets than the Company. In
addition, to retain and increase its market share, the Company must continue to
be competitive in the areas of quality and performance, technology, obtaining
attractive licenses, customer service and price, of which there can be no
assurance. See "Business--Competition."

DEPENDENCE ON NEW PRODUCT INTRODUCTIONS, TRADEMARKS AND TRADE NAMES.
Although a substantial portion of the Company's product lines are designed to be
"traditional" designs, that are not necessarily subject to changing fashion
trends, the eyewear industry is nevertheless subject to continuing broader as
well as often subtle shifts in consumer taste and preferences. The Company
offers in excess of 700 eyewear styles at any given time and may introduce up to
100 new styles in any given year. The sustainability of the Company's growth
will depend, in part, on its continued ability to develop, identify and
introduce innovative designs and products and on the acceptance of such designs
and products by consumers. Innovative designs are often not successful and
successful product designs can be displaced by other product designs introduced
by competitors that shift market preferences in their favor. Sunglasses are
particularly subject to shifting consumer tastes and may have relatively short
life cycles, thereby requiring the Company to introduce new products more
frequently. In addition, competitors may follow the Company's introduction of
successful products with similar product offerings, thereby decreasing the
Company's market share. If the Company misjudges the market for a particular
product, particularly its sunwear line of products, the Company's sales may be
adversely affected and it may be faced with excess inventories and there may be
an adverse effect on the Company's business, prospects, results of operations or
financial condition. As a result of these and other factors, there can be no
assurance that the Company will successfully maintain or increase its market
share. In addition, the Company owns and has obtained licenses to various
domestic and international trademarks related to its products and business.
These licenses expire at various times through the year 2000. The loss of one or
more of the trademarks could

8
<PAGE>

have a material adverse effect on the Company's business, prospects, results of
operations or financial condition. Further, if the Company had to defend against
any litigation proceedings, suits or claims relating to its intellectual
property rights or to its intellectual property or institute any action to
protect such rights, the Company's involvement in such action could have a
material adverse effect on the Company's business, prospects, results of
operations or financial condition.

DEPENDENCE UPON KEY PERSONNEL AND CONSULTANTS. The Company is dependent on
certain of its executive officers, including Barry Budilov, the Company's
President and Chief Executive Officer, and Rudy A. Slucker, the Company's
Chairman of the Board. The Company intends to obtain and become the beneficiary
of key person life insurance policies in the face amount of $1,000,000 on the
lives of each of Mr. Budilov and Mr. Slucker. The loss of the services of such
persons, or an inability to attract, retain and motivate additional highly
skilled management personnel, could materially adversely effect the Company's
business, prospects, results of operations or financial condition. There can be
no assurance that the Company will be able to retain its existing personnel or
attract and retain additional qualified employees. Mr. Slucker is employed on a
full time basis by another corporation and provides limited amounts of
consulting services to the Company's business, on an as needed basis. See
"Management."

SEASONALITY. The Company believes that its business is subject to seasonal
trends, resulting in lower sales of prescription eyewear during its third
quarter (the three months ended December 31) and higher sales of sunglass
products during the spring. Accordingly, sales and results of operations may
fluctuate from month to month throughout the year and quarterly results may not
always be indicative of the entire year.

CONTROL OF THE COMPANY BY OFFICERS AND DIRECTORS. Immediately following
this Offering, Rudy A. Slucker and Barry Budilov will beneficially own an
aggregate of approximately 77% of the outstanding shares of the Company's Common
Stock. As a result, such persons, acting together, have the ability to exercise
control over all matters requiring stockholder approval. In addition, the
Company's revolving line of credit includes a provision that requires the
continuing involvement and control of the Company by current management as a
condition to the continuing availability of the revolving line of credit. The
concentration of ownership could delay or prevent a change in control of the
Company. See "Management" and "Principal Stockholders."

DILUTION. Purchasers of the Shares offered hereby will suffer an immediate
and substantial dilution of $4.75 per Share (79.2%) from the initial public
offering price (assuming an initial public offering price of $6.00 per Share).
In addition, investors purchasing Shares in the Offering will incur additional
dilution to the extent that stock options are exercised. See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE. Upon completion of the Offering, the
Company will have 4,700,000 shares of Common Stock outstanding, as well as
options and warrants to purchase an additional 649,333 shares of Common Stock
(including the Representatives' Warrants). An additional 196,834 shares of
Common Stock are issuable upon the conversion of the Convertible Notes. The
1,200,000 Shares sold in the Offering will be freely tradable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"). The 3,500,000 shares of Common Stock owned by existing
stockholders are deemed to be "restricted securities," as that term is defined
in Rule 144 promulgated under the Securities Act, in that such shares were
issued in a private transaction not involving a public offering. All of the
3,500,000 shares of Common Stock held by existing stockholders will be eligible
for sale under Rule 144 ninety days after the Offering. The Company and each of
the Company's directors, officers and shareholders have agreed not to offer,
assign, issue, sell, hypothecate or otherwise dispose of any shares of Common
Stock or any securities exercisable for or convertible into shares of Common
Stock, other than with respect to up to 300,000 shares of Common Stock, for a
period of 18 months after the date of this Prospectus without the prior, written
consent of the Representatives. No prediction can be made as to the effect, if
any, that sales of securities or the availability of securities for sale will
have on the market price of the Shares prevailing from time to time. The holders
of the Representatives' Warrants will have certain demand and "piggyback"
registration rights with respect to such warrants and the shares of

9
<PAGE>

Common Stock underlying such warrants commencing one year after the date hereof.
If the Underwriter should exercise their registration rights to effect a
distribution of the Representatives' Warrants or the Warrant Shares, the
Representatives, prior to and during such distribution, will be unable to make a
market in the Company's securities, which may therefore be limited. If the
Representatives cease making a market in the Common Stock, the Company could
lose the ability to list the Common Stock on the Pacific Stock Exchange, Chicago
Stock Exchange or the OTC because of each such market's requirement of at least
two market makers, the market and market prices for the Common Stock may be
materially adversely affected, and holders thereof may be unable to sell or
otherwise dispose of shares of Common Stock. See "Shares Eligible For Future
Sale" and "Underwriting."

NO PRIOR MARKET; DETERMINATION OF OFFERING PRICE. Prior to the Offering,
there has been no public market for the Company's Common Stock. Although the
Company is seeking listing of the Common Stock on the Pacific Stock Exchange and
the Chicago Stock Exchange, there can be no assurance that such application will
be approved or that an active public market will develop. The initial public
offering price has been determined by negotiation between the Company and the
Representatives. There can be no assurance that the initial public offering
price will correspond to the price at which the Common Stock will trade in the
public after the Offering or that an active trading market for the Common Stock
will develop and continue after the Offering. See "Underwriting."

DIFFICULTY OF TRADING "PENNY STOCKS." If the Company is unable to obtain
listing of the Common Stock on the Pacific Stock Exchange and the bid price of
the Company's Common Stock falls below $5.00 per share, and under certain other
circumstances, the Company's Common Stock may be subject to rules that impose
additional sales practice and market making requirements on broker-dealers who
sell or make a market in lower-priced securities which constitute "penny
stocks". The additional requirements will generally apply if sales are made to
persons other than established customers (as defined in such rules) and
accredited investors (generally, institutions and, for individuals, an investor
with assets in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with such investors' spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchaser and must have received the purchaser's written consent to the
transaction prior to the purchase. Consequently, many broker-dealers may be
unwilling to sell or make a market in the Company's securities because of the
added disclosure requirements, thereby making it more difficult for purchasers
in this Offering to resell the Common Stock in the secondary market.

UNCERTAIN PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK. The Company has
applied to list the Common Stock on the Pacific Stock Exchange and Chicago Stock
Exchange. There can be no assurance that either of such listing will be
approved, or that a market for the Common Stock will develop or be sustained.
The investment community could show little or no interest in the Company in the
future. As a result, purchasers of the Company's securities may have difficulty
in selling such securities should they desire to do so. If neither of the
Pacific Stock Exchange or Chicago Stock Exchange listing applications are
approved, the Company will apply to list its Common Stock on the NASD's OTC
Bulletin Board Service. It is substantially more difficult for investors to
dispose of securities or to obtain accurate quotations as to securities in the
OTC Bulletin Board Service. In the event the Company's Common Stock is not
approved for listing on the Pacific Stock Exchange or Chicago Stock Exchange or
the Company's Common Stock is subsequently delisted from the Pacific Stock
Exchange or Chicago Stock Exchange, the Company intends to use its best efforts
to list its Common Stock on the OTC Bulletin Board Service.

POSSIBLE VOLATILITY OF STOCK PRICE. The market price of the Common Stock
may be highly volatile. Factors such as fluctuations in the Company's operating
results, announcements of new products by the Company or its competitors,
developments with respect to trademarks or proprietary rights, changes in stock
market analyst recommendations regarding the Company, other companies selling
similar products and general market conditions may have a significant effect on
the market price of the Common Stock. In addition, the stock market has
periodically experienced significant price and volume fluctuations unrelated to
operating performance of particular companies. These broad market fluctuations
may adversely affect

10
<PAGE>
the market price of the Common Stock. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Underwriting."

ABSENCE OF DIVIDENDS. The Company's current policy is to retain earnings
for use in its business and, accordingly, the Company does not intend to pay
cash dividends on its Shares in the foreseeable future. Furthermore, the
Company's credit facility with CoreStates Bank restricts the payment of cash
dividends while amounts are outstanding under the facility. See "Dividend
Policy."

ELIMINATION OF LIABILITY FOR DIRECTORS. The Company's Articles of
Incorporation limit the liability of a director of the Company to the Company
and its stockholders for monetary damages for breach of fiduciary duty to the
fullest extent permitted by the Delaware General Corporate Law ("DGCL"). The
DGCL permits elimination of a director's personal liability for monetary damages
for breach of fiduciary duty, except: (i) for breach of the director's duty of
loyalty to a company or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of the law;
(iii) for acts specified in Section 174, DGCL; and (iv) for transactions in
which the director directly or indirectly derived an improper personal benefit.
As a result of such provisions, the rights of Company stockholders to recover
monetary damages from directors of the Company for certain breaches of
directors' fiduciary duties may be significantly limited. See
"Management--Indemnification of Directors and Executive Officers and Limitation
of Liability."

BLANK CHECK PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS; ISSUANCE OF
SERIES A PREFERRED STOCK. The Company's Articles of Incorporation authorizes
the Board of Directors to issue up to 1,000,000 shares of Preferred Stock, $.01
par value per share. The Preferred Stock may be issued in one or more series,
the terms of which may be determined at the time of issuance by the Board of
Directors, without further action by stockholders, and may include, among other
things, voting rights (including the right to vote as a series on particular
matters), preferences as to dividends and liquidation, conversion and redemption
rights, and sinking fund provisions. The issuance of any such preferred stock
could materially adversely affect the rights of holders of Common Stock and,
therefore, could reduce the value of the Common Stock. In addition, specific
rights granted to future holders of preferred stock could be used to restrict
the Company's ability to merge with, or sell its assets to a third party,
thereby preserving control of the Company's existing stockholders. The issuance
of the preferred stock may, in some circumstances, deter or discourage takeover
attempts and other changes in control of the Company, including takeovers and
changes in control which some holders of the Common Stock may deem to be in
their best interests and in the best interest of the Company, by making it more
difficult for a person who has gained a substantial equity interest in the
Company to obtain voting control or to exercise control effectively thereby
preserving control of the Company by the current controlling stockholders. See
"Description of Securities."

SETTLED NASD INVESTIGATION OF H.J. MEYERS. On July 16, 1996, the National
Association of Securities Dealers, Inc. issued a Notice of Acceptance, Waiver
and Consent (the "AWC") whereby H.J. Meyers was censured and ordered to pay
fines and restitution to retail customers in the amount of $250,000 and
approximately $1.025 million, respectively. The AWC was issued in connection
with claims by the NASD that H.J. Meyers charged excessive markups and markdowns
in connection with the trading of four securities originally underwritten by
H.J. Meyers. The activities in question occurred between December 1990 and
October 1993. H.J. Meyers has informed the Company that the fines and refunds
will not have a material adverse effect on H.J. Meyers' operations and H.J.
Meyers has effected remedial measures to help ensure that the subject conduct
does not recur.

11
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Shares offered by the
Company hereby are estimated to be $5,614,000 (or $6,553,600 if the Underwriters
over-allotment option is exercised in full), based on an assumed initial public
offering price of $6.00 per share and after deducting the estimated underwriting
discounts and offering expenses payable by the Company. The Company intends to
apply the proceeds of the Offering substantially as follows:

<TABLE>
<CAPTION>
USE OF PROCEEDS AMOUNT PERCENTAGE
- ---------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Repayment of indebtedness....................................... $ 4,614,000 82%
General corporate purposes...................................... 1,000,000 18%
Total......................................................... $ 5,614,000
</TABLE>

The Company intends to use the net proceeds from the Offering over the next
12 months for reduction of approximately $4,144,000 (74% of net proceeds) of the
Company's bank debt and repayment of approximately $470,000 (8% of net proceeds)
of indebtedness to Rudy A. Slucker, the Chairman of the Board of Directors of
the Company; and general corporate purposes, including for working capital and
to finance potential acquisitions ($1,000,000, 18% of net proceeds). The Company
intends to use the funds available upon the partial repayment of its line of
credit for the expansion of sales and marketing activities, for the purchase of
inventory and for general corporate purposes. A portion of the Company's working
capital will be used to satisfy the Company's obligations under employment
agreements and consulting agreements with members of management and its Board of
Directors which aggregate approximately $470,000 (8% of net proceeds) over the
next 12 months. Any proceeds from the exercise of the Underwriters'
over-allotment option will be added to working capital and may be used to
finance potential acquisitions.

The debt that is being repaid from the proceeds of this Offering is
comprised of (i) $4,144,000 of principal, interest and fees to CoreStates Bank
which reflects a portion of the amounts outstanding to such bank and (ii)
$470,000 to Rudy A. Slucker, the Chairman of the Board of Directors of the
Company. The CoreStates Bank debt is pursuant to a demand note that bears
interest at an annual rate equal to the prime rate (8.5% at September 30, 1997).
The debt to Mr. Slucker was incurred between February 4, 1997 and November 10,
1997 to assist the Company in financing its costs relating to the acquisition of
substantially all of the assets of Renaissance and the integration of the
business of Renaissance into the Company. The loan from Mr. Slucker is repayable
upon demand and bears interest at the rate of 8% per annum. The cash used by the
Company from its loan facilities has been used by the Company to fund working
capital, including, among other things, to pay salaries of management to pay for
costs associated with moving the Company's facilities, and to pay interest to
the Company's principal stockholders on outstanding debt. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Certain Relationships and Related Party Transactions."

The foregoing represents the Company's best estimate of the allocation of
the net proceeds of this Offering based upon the Company's currently
contemplated operations, business plans, as well as current economic and
industry conditions, and is subject to reapportionment among the categories
listed above or to new categories in response to, among other things, changes in
the Company's plans, unanticipated future revenues and expenditures, and
unanticipated industry conditions. The amount and timing of expenditures will
vary depending on a number of factors, including, without limitation, the
results of operations and changing industry conditions. To the extent deemed
appropriate by management, the Company may acquire fully developed products or
businesses that are complementary to the Company's operations and which, in the
opinion of management, facilitate the growth of the Company and enhance the
market penetration or reputation of its products. To the extent that the Company
identifies any such opportunities, an acquisition may involve the expenditure of
significant cash or the issuance of Common Stock. Any expenditure of cash will
reduce the amount of cash available for working capital or marketing

12
<PAGE>
and advertising activities. Although the Company has been engaged in discussions
with a number of potential candidates, the Company currently has no commitments,
understandings or arrangements with respect to any such acquisition. The
Company's current corporate policy would not prohibit any such transactions
between the Company and any business or company in which management or any
affiliate or associate of any member of management have an ownership interest,
but would require that the terms of any such transaction be on terms no less
favorable to the Company as those that could be obtained from an independent
third party.

Pending application of the net proceeds, the Company intends to invest the
net proceeds in short-term investment grade, interest-bearing securities.

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its Common
Stock and presently does not intend to do so in the foreseeable future.
Management intends to retain all available earnings to finance and expand its
business. Declaration of dividends in the future will be at the discretion of
the Board of Directors and will depend on the Company's future earnings, capital
requirements, financial position, contractual restrictions, and other factors
deemed relevant by the Company's Board of Directors. The Company's loan
agreement with CoreStates Bank contains restrictions on the payment of
dividends. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

13
<PAGE>
CAPITALIZATION

The following table sets forth the actual short-term debt and capitalization
of the Company at September 30, 1997 and as adjusted to give effect to the sale
of the Shares offered hereby at an assumed initial public offering price of
$6.00 per Share and the repayment of certain indebtedness with the proceeds
therefrom. See "Use of Proceeds" and "Capitalization." This table should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements and notes thereto
appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------
<S> <C> <C>
AS
ACTUAL ADJUSTED(1)
---------- -------------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Short-term debt........................................................................ $ 13,154 $ 8,540
---------- -------------
---------- -------------
Long-term debt......................................................................... 325 325
Non-current notes payable--stockholders/officer(2)..................................... 1,181 1,181
Stockholders' equity:
Preferred Stock, $.01 per value; 1,000,000 shares authorized, none issued............ -- --
Common stock, $.01 par value; 20,000,000 shares authorized; 3,500,000 shares 35
outstanding 4,700,000 shares issued and outstanding
as adjusted (3).................................................................... 47
Additional paid-in capital........................................................... 187 5,789
Unearned portion of compensatory stock options....................................... (165) (165)
Retained earnings.................................................................... 291 291
---------- -------------
Total stockholders' equity......................................................... 348 5,962
---------- -------------
Total capitalization............................................................. $ 1,854 $ 7,468
---------- -------------
---------- -------------
</TABLE>

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

(1) Includes the repayment of $4,144,000 owed by the Company to CoreStates Bank
pursuant to a revolving line of credit agreement and $470,000 of
indebtedness to Rudy A. Slucker, the Chairman of the Board of Directors of
the Company.

(2) Represents the Convertible Notes.

(3) Excludes (i) 529,333 shares of Common Stock issuable upon exercise of
outstanding options; (ii) 120,000 shares of Common Stock issuable upon
exercise of the Representatives' Warrants and (iii) 196,834 shares of Common
Stock issuable pursuant to the Convertible Notes. See "Certain Relationships
and Related Party Transactions" and "Underwriting."

14
<PAGE>
DILUTION

At September 30, 1997, the negative net tangible book value of the Company
was approximately $76,000, or $(.02) per Share. "Net tangible book value per
share" represents the amount of total tangible assets of the Company less total
liabilities of the Company, divided by the number of shares of Common Stock then
outstanding. "Dilution per share" represents the difference between the price to
be paid by new investors and the net tangible book value per share of Common
Stock outstanding after the Offering. After giving effect to the receipt of the
net proceeds from the sale by the Company of the Shares offered hereby at an
assumed initial public offering price of $6.00 per share, the net tangible book
value of the Company at September 30, 1997 would have been approximately
$5,879,000, or $1.25 per Share. This represents an immediate increase in net
tangible book value of $1.27 per share to existing stockholders and an immediate
dilution of $4.75 per share of Common Stock to new stockholders purchasing
Shares offered hereby at an assumed initial offering price of $6.00 per Share,
as illustrated in the following table:

<TABLE>
<S> <C> <C>
Assumed initial public offering price......................... $ 6.00
Negative net tangible book value per share at September 30,
1997...................................................... $ (.02)
Increase per share attributable to sale of Shares in the
Offering.................................................. $ 1.27
---------
Net tangible book value per share after the Offering.......... $ 1.25
---------
Dilution to new investors this Offering....................... $ 4.75
---------
---------
</TABLE>

The following table summarizes on a pro forma basis as of September 30, 1997
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by the
existing stockholders and by new investors purchasing Shares in the Offering at
an assumed initial offering price of $6.00 per Share (before deducting the
estimated underwriting discount and offering expenses payable by the Company).

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- --------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Existing Stockholders.................................. 3,500,000 74.47% $ 1,000 .01% $ .0003
New Investors.......................................... 1,200,000 25.53% 7,200,000 99.99% $ 6.00
---------- --------- ------------- ---------
Total.................................................. 4,700,000 100.00% $ 7,201,000 100.00%
---------- --------- ------------- ---------
---------- --------- ------------- ---------
</TABLE>

The above discussion and tables assume no exercise of any outstanding stock
options. See "Capitalization" and "Underwriting."

If the over-allotment option is exercised in full, the net tangible book
value per share after the Offering would be approximately $1.40 per share,
resulting in dilution to new investors of $4.60 per share. See "Capitalization"
and "Underwriting".

15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW. The Company designs, markets, sources and distributes high
quality prescription eyeglass frames and non-prescription sunglasses to
department and specialty stores, optical chains and eyewear boutiques throughout
the United States and the world. On May 3, 1995 (inception), the Company was
organized and on May 10, 1995, the Company acquired substantially all of the
assets and assumed certain of the liabilities of Chanuk. Chanuk was engaged in
substantially the same business as the Company and a majority stockholder of
Chanuk is the mother-in-law of the President of the Company. The Company has
expanded through the acquisition of other companies in related and complementary
businesses and through the increase of its sales base. On June 26, 1996 the
Company acquired substantially all of the assets and assumed certain of the
liabilities of Windsor and on February 26, 1997, the Company acquired from a
bank substantially all of the assets of Renaissance. The bank had foreclosed on
Renaissance upon default of its loan agreement. In connection with the
acquisition, the Company paid the bank $3,446,000. The Company also entered into
a consulting agreement with the former owner of Renaissance which provided for
annual aggregate payments of $200,000 per year for five years. In addition,
under a consulting agreement, the Company granted the former owner of
Renaissance options to purchase 180,833 shares of Common Stock of the Company
for $3.00 per share. Following the acquisition, the Company paid an aggregate of
approximately $400,000 to various creditors of Renaissance deemed to be
necessary to preserve the value of the acquired assets.

The results of operations for the Company for the period from inception to
March 31, 1996 ("Fiscal 1996") gives effect to the operations of the Company
independent of Windsor and Renaissance. The operations of the Company for the
year ended March 31, 1997 include the results of operations of the Company
during such period, including nine months of operations attributable to the
operations of Windsor as well as approximately one month of operations of
Renaissance. The pro forma condensed statement of operations for the year ended
March 31, 1997 gives effect to the operations for each of the Company,
Renaissance and Windsor as if the acquisitions of substantially all of the
assets of Renaissance and Windsor had occurred on April 1, 1996. The operations
of Renaissance give effect to its conduct as a stand-alone business and do not
reflect the anticipated efficiencies of scale or other cost reduction measures
being implemented by the Company. However, no assurance can be given that any
such efficiencies will be achieved. The discussion of the liquidity and capital
resources of the Company at March 31, 1997, includes information with respect to
the Company that gives effect to both the acquisition of Renaissance and Windsor
since the respective acquisitions occurred prior to such date.

The Company has, from time to time, experienced cash flow shortfalls and has
been required to borrow substantial amounts from banks. The Company had total
liabilities of approximately $22.0 million at September 30, 1997, approximately
$19.7 million of which are current which amounts have increased to date. Of such
debt, approximately $12.5 million is payable to CoreStates Bank (the "Bank")
pursuant to the Company's revolving line of credit. During the year ended March
31, 1997, and the six months ended September 30, 1997, the Company incurred
$738,000 and $640,000, respectively, in net interest expenses. The revolving
line of credit is secured by substantially all of the assets of the Company. The
credit facility is represented by demand notes payable to the Bank under which
the Bank may demand repayment at any time. The Company intends to reduce
outstanding borrowings from the Bank by approximately $4.1 million from the
proceeds of this Offering. The Company anticipates that even after the proposed
repayment of a portion of the Company's indebtedness from the proceeds of this
Offering, the Company's outstanding indebtedness and ongoing interest expense
will continue to be significant. In addition, if the Bank were to demand
repayment of the entire outstanding borrowings under the facility, the Company
would be required to identify alternative financing to satisfy its repayment
obligation and to continue its operations. There can be no assurance that any
such alternative funding sources will be available on a commercially reasonable
basis if at all. If it is unsuccessful in so identifying such financing the
Company may be required to cease operations. The loan agreement with the Bank
also contains provisions which

16
<PAGE>

restrict certain activities of the Company, including the declaration of
dividends and also provides for various other restrictive covenants, including
the continuing participation of Rudy A. Slucker, the Chairman of the Board of
Directors and Barry Budilov, the President and Chief Executive Officer, in their
current management positions.

Financial information for the nine months ended December 31, 1997 is not yet
complete. Nevertheless, the Company anticipates that although net income for the
three month period ended December 31, 1997 will be comparable to the prior two
three month periods, that sales may be lower on a period to period basis,
primarily as a result of seasonality.

YEAR ENDED MARCH 31, 1997 ("FISCAL 1997") COMPARED TO FISCAL 1996. Net
sales for Fiscal 1997 were approximately $16.5 million as compared to
approximately $11.0 million for Fiscal 1996. The increase in sales was
attributable to the addition of the product lines and sales resulting from the
acquisition of Windsor in June 1996 as well as to increases in sales of existing
product lines of the Company. In addition, Fiscal 1996 reflects approximately
one less month of operations than Fiscal 1997.

Cost of sales for Fiscal 1997 were approximately $8.6 million (approximately
52% of net sales) as compared to approximately $6.8 million for Fiscal 1996
(approximately 62% of net sales) for Fiscal 1996. Cost of sales includes the
purchase price for eyeglass frames, in addition to the costs of the Company of
importing such frames. Cost of sales decreased from 1997 to 1996 as a percentage
of net sales because the Company was able to identify lower cost sources of
manufacturing as its sales volume increased and established efficiencies of
scale in connection with the distribution and maintenance of its inventories.

Selling, general and administrative expenses, consisting of advertising,
marketing, accounting and salaries of officers, increased from approximately
$4.3 million (approximately 39% of net sales) for Fiscal 1996 to approximately
$6.1 million (approximately 37% of net sales) for Fiscal 1997. Selling, general
and administrative expenses increased in aggregate dollar amounts reflecting
increased sales and marketing costs and increased administrative costs relating
to the acquisition of substantially all of the assets of Windsor and Renaissance
and the increase in accounting and overhead expense relating to the introduction
of new product lines.

Income from operations increased from a loss of approximately $79,000
(approximately .7% of net sales) for Fiscal 1996 to income of approximately $1.8
million (approximately 10.7% of net sales) during Fiscal 1997, reflecting the
increased sales by the Company from its pre-existing base of customers as well
as the addition of the Windsor operations and a decrease in cost of sales.

Interest expense increased from approximately $474,000 for Fiscal 1996 to
approximately $742,000 during Fiscal 1997, reflecting the increased borrowing by
the Company both to finance the acquisition of Windsor, to finance the growth of
the Company's operations and to finance the increase in the Company's inventory
necessary to allow the Company to provide improved delivery capabilities for its
increase in customer base.

SIX MONTHS ENDED SEPTEMBER 30, 1997 ("1997 SIX MONTHS") COMPARED TO SIX
MONTHS ENDED SEPTEMBER 30, 1996 ("1996 SIX MONTHS"). Net sales for the 1997 Six
Months were approximately $12.5 million as compared to approximately $8.0
million for the 1996 Six Months. The increase in sales was attributable to the
addition of the product lines and sales resulting from the acquisition of
Windsor in June 1996 and Renaissance in February 1997, as well as to increases
in sales of existing product lines of the Company.

Cost of sales for the 1997 Six Months were approximately $5.7 million
(approximately 45% of net sales) as compared to approximately $4.5 million for
the 1996 Six Months (approximately 57% of net sales). Cost of sales includes the
purchase price for eyeglass frames, in addition to the costs to the Company of
importing such frames. Cost of sales decreased in 1997 compared to 1996 as a
percentage of net sales because the Company was able to identify lower cost
sources of manufacturing as its sales volume increased and established
efficiencies of scale in connection with the distribution and maintenance of its
inventories.

17
<PAGE>

Selling, general and administrative expenses, consisting principally of
advertising, marketing, accounting and salaries of officers, increased from
approximately $2.9 million (approximately 36% of net sales) for the 1996 Six
Months to approximately $5.8 million (approximately 46% of net sales) for the
1997 Six Months. Selling, general and administrative expenses increased as a
result of increased sales and marketing costs and increased administrative costs
relating to the acquisition of substantially all of the assets of Windsor and
Renaissance and the increase in accounting and overhead expense relating to the
introduction of new product lines. Selling, general and administrative expenses
during the 1997 Six Months includes approximately $766,000 relating to redundant
costs of operating Renaissance in a separate facility through July 1997,
consisting primarily of duplicate overhead and personnel expenses incurred prior
to the consolidation of the Company's operations into one location as well as
actual costs related to the relocation. The Company expects that, in future
quarters, with the addition of Renaissance, its selling, general and
administrative expenses will decline as a percentage of net sales as it achieves
increased efficiencies of scale.

Income from operations increased from approximately $609,000 (approximately
7.6% of net sales) for the 1996 Six Months to approximately $1.1 million
(approximately 9% of net sales) during the 1997 Six Months, reflecting the
increased sales by the Company from its pre-existing base of customers as well
as the addition of the Windsor and Renaissance operations and a decrease in cost
of sales partially offset by an increase in overhead costs.

Interest expense increased from approximately $266,000 for the 1996 Six
Months to approximately $640,000 during the 1997 Six Months, reflecting the
increased borrowing by the Company both to finance the acquisition of Windsor
and Renaissance, to finance the growth of the Company's operations and to
finance the increase in the Company's inventory necessary to allow the Company
to provide improved delivery capabilities for its increase in customer base.

LIQUIDITY AND CAPITAL RESOURCES. At September 30, 1997, the Company had
working capital of approximately $1.6 million. The Company's total current
assets at September 30, 1997 of approximately $21.3 million includes accounts
receivable of approximately $8.6 million and inventories of approximately $11.9
million. The Company's accounts receivable reflects an allowance for doubtful
accounts of approximately $1.9 million. The Company's inventories consist
principally of eyeglass frames and sunglasses held at its warehouse for
distribution. The market for eyewear and accessories is subject to the risk of
changing consumer trends. In order to be able to promptly fill orders from
distributors, the Company maintains a significant level of inventory. In the
event that a significant number of particular models or accessories does not
achieve widespread consumer acceptance, the Company may be required to take
significant price markdowns, which could have a material adverse effect on the
business results of operations and financial condition of the Company. However,
the Company believes that current reserves adequately reflect the Company's
exposure for reduction in the value of its inventory and does not anticipate any
material write-downs of inventory in the near future.

The Company's current liabilities as of September 30, 1997 include
approximately $12.4 million relating to its revolving line of credit with
CoreStates Bank which liability has increased to approximately $13 million to
date. The Company has used its line of credit to fund its continuing operations,
to fund its increased inventory and to fund the acquisitions of Windsor and
Renaissance. The revolving line of credit expires annually on June 1st and is
automatically renewed for one year period and provides for a maximum borrowing
amount of $12 million. Indebtedness under the line accrues interest at the prime
rate (8.5% at September 30, 1997) and, is collateralized by substantially all of
the assets of the Company. Rudy A. Slucker, the Chairman of the Board of
Directors of the Company, and Barry Budilov, the President of the Company, have
each provided personal guarantees for the line of credit for up to $1.1 million
of such debt. In addition, Messrs. Slucker and Budilov have agreed to increase
their present guarantees by $375,000 each if the Company fails to complete this
public offering by February 20, 1998. Accordingly, upon the completion of this
Offering, the personal obligations of Messrs. Slucker and Budilov will be
reduced further. At September 30, 1997, approximately $12.5 million was
outstanding under the credit facility. In

18
<PAGE>

November 1997, the facility was increased to $13 million. The Company intends to
repay approximately $4.1 million of this debt from the proceeds of this
Offering, including a transaction fee of $100,000 which relates to the
acquisition of Renaissance, which is payable to CoreStates Bank upon the closing
of this Offering. The revolving line of credit restricts the payment of
dividends to stockholders and provides for various restrictive covenants,
including the continuing participation of Rudy A. Slucker and Barry Budilov in
their current management positions. The Company has also borrowed an aggregate
of $470,000 from Mr. Slucker from February 4, 1997 through November 10, 1997 to
assist the Company in financing its costs relating to the acquisition of
substantially all of the assets of Renaissance and the integration of the
business of Renaissance into that of the Company. The loan is payable on demand
with interest at the rate of 8% per annum. The Company will repay the debt upon
the closing of the Offering.

At September 30, 1997, the Company's current liabilities also include
approximately $4.8 million of accounts payable and $1.1 million accrued
expenses, payable in the ordinary course of its business. The Company's
long-term debt includes approximately $268,000 of indebtedness in connection
with the acquisition of Windsor, approximately $788,000 of net deferred credit,
representing the excess value of net assets of Renaissance acquired over cost.
This amount is being amortized over a period of five years from the date of
acquisition.

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 with interest at 8% per annum subject
to restrictions contained in the Company's loan agreement with CoreStates Bank
on March 31, 2000. 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 a rate equal to
initial public offering price per share.

Sales of eyewear under license agreements represented approximately 35% and
30% of the pro forma sales of the Company and Renaissance for fiscal 1996 and
1997, respectively. The Company's license agreements generally require the
Company to satisfy minimum purchase requirements or to make annual royalty
payments and advertising expenditures and maintain quality control and retail
distribution commensurate with the licensor's image. Accordingly, certain
licensors are entitled to receive payment from the Company whether or not
specified minimum levels of annual sales for licensed products are met. For the
year ending March 31, 1998 and 1999, the annual aggregate commission obligations
of the Company under current license agreements will exceed $969,000 and
$583,000, respectively, even if the Company were to generate no sales under the
agreements.

As of September 30, 1997, the Company's obligations under existing and
proposed employment agreements and consulting agreements with members of
management and its Board of Directors aggregate approximately $630,000 over the
next 18 months. In addition, payments under notes, non-competition and other
agreements relating to the acquisition of substantially all of the assets of
Chanuk, Windsor and Renaissance, will aggregate approximately an additional
$375,000 for the years ending March 31, 1998 and March 31, 1999.

The Company currently leases office, warehouse and showroom facilities and
equipment under operating leases, which expire at various times through the year
2002. Future minimum lease payments under non-cancelable leases at September 30,
1997 aggregate approximately $2.2 million through the year 2002.

The Company leased its prior principal offices in Philadelphia, Pennsylvania
under a lease that expires in the year 2000. Monthly rental payments under such
lease are approximately $11,000. The Company has since moved to an alternative
location in Pennsylvania for its management, inventory and distribution
operations for which it pays a base annual rent of approximately $300,000 per
year. The Company does not intend to use its Philadelphia facility and is
seeking to sublet the facility. If the Company sublets the facility

19
<PAGE>
for less than the full rental amount, if at all, the Company will be required to
recognize a charge to the extent of any shortfall.

In connection with the acquisitions of substantially all of the assets of
Renaissance in 1997, the Company satisfied certain obligations of that business
to particular creditors, the cooperation of which was deemed to be necessary to
continue conducting business. In connection with the acquisition of
substantially all of the assets of Renaissance, no liabilities of Renaissance
were contractually assumed by the Company. The Company has been provided with
estimates indicating that the net liabilities of Renaissance exceeded $3.0
million at the time the Company acquired the assets. A number of creditors of
Renaissance have instituted collection actions in court against Renaissance for
amounts due to them from Rennaissance. The Company is not a party to any of
these actions, and has no knowledge of the amounts involved in such proceedings.
To the extent that any creditors of Renaissance seek recourse against the
Company as the purchaser of substantially all of the assets of Renaissance, the
Company may incur substantial expenses in connection with defending any such
actions. Furthermore, to the extent that creditors are successful in asserting
any claims against the Company as a successor to Renaissance or challenge the
acquisition from the secured creditor, the Company could be responsible for
substantial liabilities and its financial position could be adversely affected.

PRO FORMA RESULTS OF OPERATIONS FOR THE COMPANY AND RENAISSANCE. The pro
forma unaudited condensed statement of operations for the Company reflects the
acquisitions of Windsor and Renaissance as if such transactions had occurred on
April 1, 1996. Pro forma net sales were approximately $29.1 million for Fiscal
1997, reflecting net sales for the Company of approximately $16.5 million, net
sales for Renaissance for the eleven months ended February 28, 1997 of
approximately $11.7 million and net sales for Windsor for the three months ended
June 30, 1996 (being the period during which Windsor's sales were not included
in those of the Company) of approximately $1.0 million. Cost of sales for
Renaissance for the eleven months ended February 28, 1997 were approximately
$6.1 million (approximately 52% of net sales), resulting in a gross profit of
approximately $5.6 million (approximately 48% of net sales). However, selling,
general and administrative expenses for Renaissance were approximately $6.5
million for the eleven months (approximately 56% of net sales), resulting in a
loss from operations for Renaissance of approximately $900,000. On a pro forma
basis, $332,000 of expenses for the Company are eliminated to reflect the
acquisition of Windsor and Renaissance as if they had taken place on April 1,
1996. Income from operations on a pro forma basis are approximately $1,311,000,
resulting in a pro forma income before taxes of approximately $205,000.

INFLATION. Management believes that there has been no significant impact on
the Company's operations as a result of inflation.

20
<PAGE>
BUSINESS

OVERVIEW

The Company designs, sources, markets and distributes high quality
prescription eyeglass frames and non-prescription sunglasses to department and
specialty stores, optical chains and eyewear boutiques throughout the United
States and the world. The Company also provides integrated marketing,
merchandising materials and consulting support to its distributors and sales
force in the sale of the Company's eyewear products. The Company distributes its
eyewear products to a broad and substantial customer base including Wal-Mart,
K-Mart, National Vision Associates and U.S. Vision as well as many regional
chain stores and local outlets. The Company has established relationships with
various fashion designers, fashion celebrities and marketing organizations
including Kathy Ireland, Halston and the John Lennon Estate, and highly
recognizable consumer products brands such as Playskool, Nintendo and
international jewelry designer Kenneth Jay Lane. The Company intends to continue
to identify and license trade names and trademarks from various high profile
brand sources in an effort to target and capture additional segments of the
eyewear markets. As used in this Prospectus, the term "sources" means that the
Company retains third parties to manufacture products to the Company's
specifications.

The Company utilizes a diverse team of freelance experienced fashion eyewear
designers to work with fashion houses, celebrities, manufacturers and
experienced members of the optical industry to design eyewear styles that convey
fashion, elegance and sophistication. The Company's eyeglass frames and
sunglasses are manufactured at a variety of independent factories throughout the
world. The Company distributes products through independent sales
representatives situated in the United States and internationally and intends to
increase the size of its dedicated sales force, expand its sales and marketing
capabilities and develop additional alliances with fashion designers and
licensors.

INDUSTRY BACKGROUND

In 1996 approximately 60% of the nation's population, used some form of
corrective eyewear. Retail sales of eyewear products totaled $14.6 billion in
1996. According to a recent study, this represents a 6% increase over $13.8
billion that was spent in 1995, when actual sales increased by 7% over 1994. The
market for corrective eyewear has grown steadily over the past five years and
the demographic trends of an aging population are expected to generate increased
demand for corrective eyewear and optical services in the immediate future.

Industry sources attribute growing retail sales of eyewear to the industry's
success in generating consumer interest in fashion eyewear. It has been reported
that American consumers are showing a distinct preference for high fashion and
high performance in eyewear frame styles. Frames accounted for $5.5 billion in
retail sales in 1996, up 7% over $5.1 billion in 1995. The average retail price
for frames also increased by about two dollars to nearly $59 in 1996. This
accounted for about 39% of an average sale of $150 for a complete set of
eyewear. It is reported that designers and brand names are leading the growth in
sales of eyewear. It has been estimated that 41% of all frame sales in 1996 were
designer/branded/licensed products, an increase of 1% from 1995. In addition,
premium materials are also being embraced by consumers, including light weight
stainless steel and titanium eyeglass frames. Metal frames are estimated to
account for 61% of all frames sold in 1996. It is estimated that in 1986,
plastic frames accounted for over two-thirds of all frames sold.

The Company believes that since the mid-1980s the sunglass market has
experienced significant growth, driven primarily by the expansion of the
premium-priced sunglass market segment. According to a 1996 sunwear survey in
the United States, retail sales of sun related eyewear grew to $2.95 billion in
1996, up 8% over 1995. The premium priced sunglass segment accounts for
approximately 53% of such sales.

21
<PAGE>
STRATEGY

The Company's business strategy for growth focuses on maintaining and
expanding its competitive position in the markets it currently serves and
establishing competitive market positions in other geographic areas, primarily
within the United States and, to a lesser extent, globally. The principal
elements of the Company's strategy include:

- TARGET MID-RANGE PRICE CONSUMERS. The Company has specifically targeted
and developed the market segment for high-quality designer eyewear sold at
retail price points below those of "designer" eyewear of comparable
quality. The Company identified in the early 1990's the potential that
mass market discount stores such as Wal-Mart and K-Mart had for marketing
eyewear and established its important supply relationships when such
retailers were only first entering the eyewear market. The Company
distributes eyewear and related products that are comparable in fashion
and quality to any product in the market and yet generally lower in cost.

- TARGET ADDITIONAL DISTRIBUTORS, COORDINATE AND MANAGE DISTRIBUTION. The
Company is pursuing additional relationships with distributors throughout
the world and globally. The Company believes that by continually
establishing such relationships, it will be able to increase its share of
the eyewear market in the United States as well as abroad. Currently, the
Company distributes its products through a coordinated network of Company
employed and independent sales representatives. The Company maintains
strict control over its sales network by employing a substantial
percentage of its sales representatives on a full-time basis, and by
monitoring pricing policy and participating in advertising and promotional
activities.

- PURSUE ACQUISITIONS TO INCREASE PENETRATION IN EXISTING AND NEW
MARKETS. The Company seeks to increase its penetration in new and existing
markets by acquiring businesses and product lines that are complementary
to that of the Company. The Company expects to pursue selective
acquisitions of customer bases or businesses, companies that complement
the Company's current operations or expand its services or network
capabilities. The Company believes that such acquisitions, investments and
strategic alliances are an important means of increasing sales volume.
Through the acquisition of substantially all of the assets of Windsor in
1996, the Company acquired eight new lines of eyewear including licenses
for Kenneth Jay Lane and John Lennon. Through the acquisition of
substantially all of the assets of Renaissance, the Company significantly
enhanced its sunglass product lines as well as its channels of
distributions for sunglass products. In addition, following the
acquisition, the Company negotiated licenses to use additional trade
names, including Oscar de la Renta and Nintendo. Renaissance had sales of
approximately $14 million for the year ended October 31, 1996 and
distributed five different lines of eyeglass frames and sunglasses. The
Company intends to continue to expand its sales of sunglasses by
increasing its sales and efforts and identifying and acquiring additional
sunwear product lines.

PRODUCTS

The Company offers hundreds of models of prescription eyeglass frames and
sunglasses in a wide range of styles under the Kathy Ireland, Halston,
Playskool, Menrad, Atrio, John Lennon, Kenneth Jay Lane, Harve Bernard, Sarah
Coventry, Nintendo, Georgio de Marco trademarks and trade names, among others,
and under the Company's proprietary Phoenix, Da Vinci, Tarelli, Details,
Landolfi trademarks and/ or trade names. The Company's prescription eyeglass
frames and sunglasses, which are characterized by high quality and design and
are often intricately detailed, are affordable, and are priced less than
"designer" eyewear of comparable quality sold by other manufacturers. The
Company's products generally are sold at retail price points between $80 and
$150, while the Company believes that eyewear of comparable quality sold by
other distributors is generally sold at retail price points between $130 and
$300. The following describes certain of the Company's licensing and
distribution arrangements:

22
<PAGE>

KATHY IRELAND. The Company, in association with Kathy Ireland, has designed
a line of eyeglass frames and sunglasses for men and women. Kathy Ireland,
actress, model, and executive in the combined industries of fitness and fashion,
continues to run her businesses with the same integrity and success that first
launched her Signature collections. She directs every aspect of her products
including design, self testing and production. The styles, sold exclusively by
the Company, are designed to be stylish, contemporary and casual. The eyeglasses
are designed using a variety of materials, including the latest metal alloys and
plastic colorations. All are available in either ophthalmic or sun styles.
Shapes include cat-eye, rectangles, ovals and "preppie-designs." The Company has
entered into a four year exclusive (sunglasses, eyeglasses, readers and
ophthalmic frames and accessories) and non-exclusive agreement with Kathy
Ireland, Inc. under which the Company has been granted a worldwide license to
use certain licensed products (the "Ireland Agreement"). In addition, Ms.
Ireland has agreed to endorse the Company's line of eyeglasses and provide
limited marketing assistance including attending various marketing events. The
Ireland Agreement expires on January 30, 2000. The Ireland Agreement provides
for guaranteed minimum royalties to Kathy Ireland for the term of the Ireland
Agreement. The Company is required to pay a royalty fee based on net sales.

HALSTON. Halston is a world renowned designer of sophisticated and elegant
fashion. Halston eyewear is designed for men and women and is intended to serve
the moderate to upper price market. Each frame is airbrushed with a lacquer to
provide a stylish long-lasting finish. The Company entered into a Supply
Agreement (the "Halston Agreement") with Styl-Rite Optical Mfg. Co.
("Styl-Rite") under which the Company has been granted a right to purchase from
Styl-Rite certain ophthalmic frames bearing the Halston trademark for resale to
retail outlets and specialty shops. The Halston Agreement expires on December
31, 1998. The Company has an option to renew the agreement for an additional
three year period provided that it meets certain minimum purchase requirements
and that Styl-Rite renews its license agreement with Halston Investments, Ltd.,
the successor-in-interest by assignment from Halston Trademarks, Inc., owner of
the "Halston" trademark.

PLAYSKOOL. The Company has developed a children's line of eyewear that is
marketed under the Playskool brand name. Playskool is one of the most recognized
names in children's products and produces the largest number of frames in the
industry exclusively for children. The Playskool styles are designed in
consultation with pediatric specialists to insure proper fit for a child's face
and comfort for a child's unique requirements. The frames are designed with
bright colors and light designs, include spring hinges and silicon nosepads to
maintain fit and which contain hypo-allergenic coatings. Frames carry an
unconditional guarantee. The Company has entered into a non-exclusive license
agreement with Playskool under which the Company has been granted a license to
use certain licensed products in the United States (the "Playskool Agreement").
The Playskool Agreement expires on December 31, 1998 pursuant to the second
renewal term. Additional renewal of the Playskool agreement is at the discretion
of the licensor. The Playskool Agreement provides for guaranteed minimum
royalties to the licensor for the term of the Playskool Agreement. The Company
is required to pay a royalty fee based on net sales.

NINTENDO. The Nintendo Eyewear collection is intended to be a functional
children to teen line of eyeglass frames and to be fashionable with quality
features such as dual action spring hinges and double lacquer coatings to add
strength and durability. Nintendo is one of the largest video game companies in
the world and its products are in millions of households in the United States.
The Nintendo Eyewear collection is targeted to the six to fourteen year old age
group, mirroring Nintendo's most heavily penetrated video game market. The
Company entered into a merchandise license agreement with Nintendo of America,
Inc. under which the Company has been granted a non-exclusive license to
manufacture and sell prescription eyewear, sunglasses and non-prescription
sunglasses in the United States, Canada, Mexico, Panama, and Guatemala (the
"Nintendo Agreement"). The Nintendo Agreement expires on December 31, 2000. The
Company has an option to renew the Nintendo Agreement for one additional three
year term. The Nintendo Agreement provides for guaranteed minimum royalties to
the licensor for the term of the agreement. The Company is also required to pay
a royalty fee based on net sales.

23
<PAGE>

THE MENRAD GRUPPE. The Company's high end lines of eyewear, including its
Menrad, Atrio and Jaguar line are manufactured by the Menrad Gruppe, a 100
year-old German manufacturer of high-quality precision metal eyeglass frames.
The Menrad line of eyeglasses are intended to exhibit superb anatomical fit,
comfort, optical precision and durability. Menrad frames are made with rare and
fine precious metals. The base metal in many of their frames are nickel-free and
every frame is coated with a plastic film that insures complete protection from
metal induced allergies, while providing the added benefit of scratch and
corrosion resistance. The Menrad eyewear, which includes sunglasses, is marketed
under the Atrio and Menrad names. The Company distributes these products on a
non-exclusive basis. The Company is subject to certain minimum purchase
requirements. The Company is not required to pay a royalty in connection with
its use of the trademarks.

JOHN LENNON. John Lennon's round, wire framed glasses became an
unmistakable part of his image and a symbol for his time. John Lennon frames
vary from high-end to moderate-priced and include designs for men and women. The
Company is negotiating to renew its distribution agreement with Eagle Eyewear,
Inc. in order to be the exclusive distributor of adult optical frames and adult
sunglasses for Eagle Eyewear, Inc. in the United States and Canada. If the
distribution agreement is renewed, the Company would order and purchase John
Lennon products solely from Eagle Eyewear, Inc. Further, Eagle Eyewear, Inc.
would retain final approval of the use of John Lennon's name or likeness by the
Company. The Company would be subject to certain minimum purchase requirements.
The Company is required to pay a royalty fee on a weekly basis. The Company
distributes John Lennon frames on a non-exclusive basis.

KENNETH JAY LANE. Kenneth Jay Lane is a world-famous designer of costume
jewelry. The Company's Kenneth Jay Lane collection was designed to emulate his
elegant, luxurious designs. The collection features unique metal trims, temples,
bridges and colors with colored stones and pearls integrated into the frame
designs to achieve a high-fashion appearance. The sunwear collection includes
frames adorned with colored stones and gold and silver points intended to
emulate Kenneth Jay Lane's jewelry designs. The license to Kenneth Jay Lane was
acquired at the time of the Windsor acquisition under a license agreement
between Windsor and Kenneth Jay Lane (the "Lane Agreement") The license provides
the Company with an exclusive right to use the Kenneth Jay Lane name in the
United States, Canada, Puerto Rico, the Caribbean Islands, Central America and
Mexico. The Lane Agreement was renewed in September 1997. The Lane Agreement
provided for guaranteed minimum royalties to the licensor and for the payment by
the Company of a royalty fee based on net sales. In addition, the Company was
required to spend a certain percentage of net sales for advertising and
promotional purposes.

HARVE BENARD LTD. Harve Benard is an upscale women's clothing designer that
has had a significant name brand recognition for many years. The Harve Benard
eyewear collection is designed to be sophisticated yet practical, designed in a
glamorous, wearable, daytime look. The frame styles feature exceptional fashion
in a finely crafted product. The license to Harve Benard was acquired at the
time of the Chanuk acquisition under a license agreement between Chanuk and
Harve Benard Ltd. The license gives the Company an exclusive right to use the
Harve Benard mark in connection with the manufacture, distribution and sale of
men's and women's sunglasses and ophthalmic spectacle frames in the United
States and Canada. The Agreement expires on December 31, 1998. The Company has
an option to renew this agreement after the expiration date. The Agreement
provides for guaranteed minimum royalties to the licensor for the term of the
Agreement. The Company is required to pay a royalty fee based on net sales.

SARAH COVENTRY. The Company believes that the Sarah Coventry label
represents classic feminine styling with mass appeal. Sarah Coventry products
appear in national advertising in consumer magazines such as Redbook and
Glamour. Targeted to the value conscious customer, the Sarah Coventry eyewear
collection is intended to offer a quality image at an excellent value. The
Company has entered into two separate exclusive license agreements with
Lifestyle Brands, Ltd., owner of the Sarah Coventry trade name, under which the
Company has been granted a license to manufacture and sell sunglasses, sunglass
cases, accessories, ophthalmic frames, and cases under the Sarah Coventry trade
name (the "Lifestyle

24
<PAGE>

Agreements"). The Lifestyle Agreements expire on June 30, 1998. With respect to
the license related to sunglasses, sunglass cases and related accessories, the
Lifestyle Agreements shall renew automatically for an additional three year term
if the Company achieves certain minimum net sales. The Lifestyle Agreements also
provide for guaranteed minimum royalties to the licensor for the term of the
Lifestyle Agreements. The Company is required to pay a royalty fee based on net
sales.

FLEX SPECS. Flex Specs are flexible eyeglass frames with a mechanism at the
temple hinge that maintains constraint and strong pressure on the eyeglass
frame. In addition, the Flex-Specs frame has no screws at the hinge. The Company
has licensed exclusively the right to distribute Flex-Specs eyeglass frames in
the United States.

OTHER BRANDS. The Company has also entered into license agreements with
other brand names that provide for the payment of guaranteed minimum royalties
to licensors and additional royalty fees. Additionally, the Company has arranged
for the manufacture of a variety of proprietary brands, including agreements
with Tarelli Eyewear and Landolfi, Phoenix and DaVinci, intended to provide
European styling at moderate prices to its consumers.

MARKETING AND ADVERTISING

The Company markets its eyewear products primarily to independent retailers,
mass merchandisers, chain stores, department stores and international
distributors. The Company's sales efforts include the direct channels of a
dedicated sales force and telephone sales. The Company advertises primarily
through print trade journals and the distribution of catalogs. The Company
intends to expand its print advertising to include consumer oriented media. In
addition, through promotions, the Company assists the retailers in enhanced
distribution of the Company's products to consumers. Promotional incentives to
sell-through the Company's eyewear plus cooperative advertising to the retailers
clientele will generate additional distribution for the Company.

CHAIN STORES, DEPARTMENT STORES AND MASS MERCHANDISERS. Chain stores and
superstores have begun to be a factor in the market share of eyewear. In 1995,
chain stores and superstores comprised 18% of the retail market or $2.5 billion.
Further, according to Jobson Optical Group Data Base, in 1995, the top 100 chain
stores held over 29% of the retail market. A substantial majority of the
Company's sales during fiscal 1996 included sales to customers in this category.

INDEPENDENT RETAILERS. Independent optical shops and eyecare professionals,
including franchises; comprised over 60% of the retail eyewear market during
1996. The Company employs direct sales efforts to identify and market to
independent retailers this market through a dual sales force, promoting distinct
product lines. Although this constitutes a large part of the eyeglass market,
this category accounts for a lesser part of the Company's sales during fiscal
1996 included sales to customers in this category.

INTERNATIONAL DISTRIBUTORS. The Company believes that substantial sales
opportunities may be exploited outside of the United States. Although the
Company has limited sales abroad it intends to expand its international business
to markets outside the United States. Sales during fiscal 1996 to customers in
this category were not material, although the Company has identified foreign
sales as a source of possible expansion.

The Company's sales to its five largest customers represented over 62% of
its sales in fiscal 1996 and 51% in 1997 (30% on a pro forma basis giving effect
to the acquisitions of the assets of Windsor and Renaissance) and approximately
47% for the six months ended September 30, 1997. Sales to the Company's top
customer, Wal-Mart accounted for approximately 49%, of the Company's sales in
1996, and approximately 34%, of its sales in 1997 (20% on a pro forma basis
giving effect to the acquisitions of the assets of Windsor and Renaissance) and
approximately 37% for the six months ended September 30, 1997. The Company
anticipates that sales to its top five customers will continue to account for a
significant percentage of its sales. The Company has no long term commitments or
contracts with any of its customers. The loss or decreased sales from one or
more of these customers and in particular, Wal-Mart, would have a material
adverse effect on the Company's financial condition. The inability of any of the

25
<PAGE>
Company's significant customers to satisfy any of their bills at any time or on
a timely basis for any reason could have a material adverse effect on the
financial condition of the Company.

The Company makes use of a dedicated and independent sales force of an
aggregate of approximately 30 sales representatives. This direct sales force
targets small, medium, and large-sized retailers from high-end boutiques to
discount frame outlets. The sales force is equipped to provide sales training,
support, and management consulting to the retailer. In addition, sales
representatives are equipped to assist with retail window displays, designer
boutique creating, and eyewear promotions.

The Company also employs telephone sales methods which consist of a
telemarketing program developed by the Company that enables small accounts and
remote location accounts to gain access to the Company's variety of products and
services. Monthly contacts by phone representatives assist these key accounts in
the selection and distribution of products. The Company plans to expand its
telemarketing organization by adding six additional employees on a part-time
basis.

National trade shows and international conventions have become the sounding
boards for the global eyewear industry. New products are launched and designers
showcase their creations and themselves during these events. The Company plans
to exhibit its products to an increasing number of distributors, retailers, and
consumers worldwide. The four most popular shows occur annually and include
Silmo in Paris, Mido in Milan, the Vision Expo in New York and the Vision Expo
in California.

The Company develops point of purchase materials that feature the Company's
products and brands which are provided to individual retail accounts. Original
display materials are periodically constructed to help design boutique
atmospheres within the retail accounts and properly display the Company's
products in the account's showroom and window display. Some of these products
include actual record albums to display the John Lennon Collection, Playskool
figurines and toys to complement the children's line, designer scarves, hats and
accessories to cross-merchandise designer eyewear. The Company believes that
advertising a designer's eyewear adjacent to other products also created by the
designer is a valuable method for creating name recognition and demand for the
Company's product.

SOURCES OF SUPPLY

The Company arranges for the production of its products primarily with
foreign suppliers on a purchase order basis on standard commercial terms,
secured in each case by the Company's general credit. At the present time, the
Company secures its supplies in three ways. First, the Company enters into
arrangements with certain suppliers whereby the Company provides such suppliers
with, among other things, specifications, materials and designs pursuant to
which certain products requested by the Company are made. Second, the Company
enters into arrangements with certain suppliers whereby such specifications and
designs are provided to the Company who then has the option of having products
made pursuant to such specifications and designs. Finally, the Company enters
into arrangements whereby certain finished products are presented to the Company
and the Company then chooses from the selections presented. These arrangements
have worked well for the Company and the Company intends to continue such
relationships in the future.

The Company imports substantially all of its frames from international
suppliers located in Taiwan, Korea, Italy, Germany and Japan, and, therefore,
its prices for and supply of those frames may be adversely affected by changing
economic conditions in foreign countries and fluctuations in currency exchange
rates. The Company may also be subject to other risks associated with
international operations, including tariff regulations and requirements for
export licenses, unexpected changes in regulatory requirements, receivable
requirements, difficulties in managing international operations, potentially
adverse tax consequences, economic and political instability, restrictions on
repatriation of earnings and the burdens of complying with a wide variety of
foreign laws. In addition, the laws of certain countries may not protect the
Company's products and intellectual property rights to the same extent as do the
laws of the United States. There can be no assurance that such factors will not
have a material adverse effect on the Company's future international sales or
licenses and, consequently, on the Company's business and operations as a whole.

26
<PAGE>
COMPETITION

The eyewear industry is highly competitive and fragmented. The Company
competes with different companies in different markets. The prescription and
non-prescription eyewear markets are highly competitive. The Company competes
with a number of established companies, including Luxotica, Safilo, Marchon and
Bausch & Lomb, which together control a substantial portion of the premium
market. In the sunglass market, the Company competes with a variety of
competitors with substantially greater financial and other resources than the
Company including Bausch & Lomb, the manufacturer of Ray-Ban, Oakley and
Gangoyles sunglasses. All of the aforementioned companies have substantially
greater resources and better name recognition than the Company and sell their
products through broader and more diverse distribution channels. In addition,
several of these competitors have their own manufacturing facilities. The
Company could also face competition from new market entrants, including
established branded consumer products companies, such as Nike, Inc., that also
have greater financial and other resources than the Company. In addition, as the
Company expands internationally, it will face substantial competition from
companies that have already established their products in international markets
and consequently have significantly more experience in those markets than the
Company. The Company also faces competition from the expanded use of contact
lenses and expanding laser surgery to correct vision. The major competitive
factors in the eyewear market include fashion trends, brand recognition, method
of distribution and the number and range of products offered. In addition, to
retain and increase its market share, the Company must continue to be
competitive in the areas of price, quality and performance, technology,
intellectual property protection and customer service.

LICENSES AND TRADEMARKS

The Company owns and has obtained licenses to various domestic and
international trademarks related to its products and business. These licenses
expire at various times through the year 2000. While these trademarks in the
aggregate are important to the Company's competitive position, no single
trademark or license thereof is material to the Company. The trade names
Halston, Kathy Ireland, Playskool and others and certain trademarks are owned by
various third parties and licensed to the Company for limited purposes on a
royalty basis.

EMPLOYEES

At September 30, 1997, the Company had 75 full-time employees and one
part-time employee. Approximately 26 of such employees are engaged in
administrative positions, six in sales management, seven in management and 36
provide warehouse and distribution support. The Company considers its relations
with its employees to be good. None of the Company's employees are represented
by labor unions. See "Legal Proceedings."

PROPERTY

In September 1995, the Company leased its former principal offices occupying
30,000 square feet in Philadelphia, Pennsylvania, which were used to house all
the Company's management, inventory and distribution operations. Pursuant to the
lease relating to such facility, the Company is obligated to make monthly rental
payments of approximately $11,000. Such lease expires in 2000. In July 1997, the
Company moved to a new location in Bensalem, Pennsylvania, for its management,
inventory and distribution operations. The new facility has 64,000 square feet.
The Company has entered into a new lease expiring August 2002, under which
monthly base rent is approximately $25,000 per month. The Company will seek to
sublease the Philadelphia facility, although no assurance can be given that it
will be successful in such effort.

LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

27
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --------- ------------------------------------------
<S> <C> <C>
Rudy A. Slucker........................... 47 Chairman of the Board of Directors
Barry Budilov............................. 42 President, Chief Executive Officer and
Director
Kenneth B. Kitnick........................ 35 Executive Vice President
Raymond Green............................. 35 Treasurer
Jay Rice(1)............................... 45 Director
Jeffrey Seiken(1)......................... 44 Director
</TABLE>

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

(1) Member of the Compensation and Audit Committees.

In connection with the Offering, the Company intends to increase the size of
the Board of Directors to accommodate two additional directors who will not be
officers or employees of the Company.

The business experience of each of the executive officers and directors is
set forth below.

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
Major League Fitness, a chain of fitness centers associated with Major League
Baseball through a licensing agreement and Babylon 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
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.

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. 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 the President of
the Board of Trustees of the United Jewish Federation of Metrowest since 1995.
Prior to joining Nagel

28
<PAGE>

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 State 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. 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.

The Representatives have the right to appoint 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. See "Underwriting-- Observer to the Board of
Directors."

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.

EMPLOYMENT AND CONSULTING AGREEMENTS

The Company intends to enter into an employment agreement with Barry
Budilov, effective on the effective date of this Offering, pursuant to which he
will serve on a full-time basis as President and Chief Executive Officer of the
Company for a period of three years. The agreement will provide for an annual
base salary of $200,000 subject to annual increases at the discretion of the
Board of Directors. The agreement will also contain a confidentiality provision
and a provision prohibiting Mr. Budilov from competing with the Company for a
period of one year subsequent to the termination of his employment.

The Company intends to enter into a consulting agreement with Rudy Slucker,
effective on the effective date of this Offering, 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 will also contain a confidentiality provision and a
provision prohibiting Mr. Slucker from competing with the Company for a period
of one year subsequent to the termination of his employment.

Upon consummation of the acquisition of substantially all of the assets of
Windsor, the Company entered into an employment agreement with Kenneth Kitnick,
who became the Executive Vice President of the Company and into a consulting
agreement with Jay Kitnick, Kenneth Kitnick's father. The employment agreement
with Kenneth Kitnick became 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 2000 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

29
<PAGE>

to purchase 151,667 shares of Common Stock at an exercise price of $1.50 per
share, vesting over a period of 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. For a description of
the Consulting Agreement with Jay Kitnick, see "Certain Relationships and
Related Party Transactions."

The Company has entered into a five-year employment agreement with Edward
Kauz which became effective on February 27, 1997. The agreement provides for
aggregate annual payments to Mr. Kauz of $200,000, subject to certain conditions
set forth in a supplemental agreement, dated February 27. In addition, under an
amendment to the consulting agreement dated as of June 30, 1997, Mr. Kauz agreed
to waive his right to serve as Vice Chairman of the Board of Directors and was
granted on February 27, 1997 an option to purchase 180,833 shares of Common
Stock for five years at an exercise price of $3.00 per share.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY

As permitted by Section 145 of the Delaware General Corporation Law (the
"DGCL"), the Certificate of Incorporation includes a provision that eliminates
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 $2
million.

DIRECTOR COMPENSATION

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.

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid or accrued by the
Company for services rendered in all capacities for named executive officers of
the Company who received compensation in excess of $100,000 during the period
from inception to March 31, 1996 and the year ended March 31, 1997.

30
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION SECURITIES
FISCAL --------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)
- --------------------------------------------------------- ----------- ---------- --------------- -------------------
<S> <C> <C> <C> <C>
Rudy A. Slucker, Chairman of the Board of Directors...... 1997(1) $ 260,000 0 0
1996(2) $ 172,000 0 54,833
Barry Budilov, President and Chief Executive Officer..... 1997(1) $ 250,000 0 0
1996(2) $ 169,900 0 54,833
</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 the
effective date of this Offering.

(2) Fiscal 1996 consisted of approximately 11 months.

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.

No stock options were exercised by the Chief Executive Officer or other
named executive officers of the Company. The following table sets forth certain
information regarding unexercised options held by the Chief Executive Officer
and other named executive officers of the Company at March 31, 1997.

AGGREGATED OPTION EXERCISES THROUGH MARCH 31, 1997

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE- MONEY OPTIONS AT
OPTIONS AT MARCH 31, 1997 MARCH 31, 1997($)(1)
---------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------------------------------------- ---------------------------- -------------------------
<S> <C> <C>
Rudy A. Slucker, Chairman of the Board of Directors..... 54,833/0 $ 260,456/0
Barry Budilov, President and Chief Executive Officer.... 54,833/0 $ 260,456/0
</TABLE>

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

(1) Assuming a value of $5 per share.

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 this Offering, the Company has agreed not to grant any options under
the Plan with an exercise price per shares 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 not 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.

31
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY 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 shares of Common Stock for $.0003 per
share and, as of such date, were each granted options to acquire 54,833 shares
of Common Stock at an exercise price of $.25 per share.

On May 10, 1995, the Company acquired from Chanuk, the predecessor to 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 principle 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 with interest at 8% per annum,
subject to restrictions contained in the Company's loan agreement with
CoreStates Bank, on March 31, 2000. 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 restricts 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 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. 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

32
<PAGE>

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 26, 1996. See "Management--Executive Compensation"

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. Kauz,
owed Renaissance $2.8 million which receivable has 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.

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 which amounts may be increased by $375,000 in
February 1998, under certain circumstances.

From February 4, 1997 through November 10, 1997, 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 Renaissance into the business of the Company, Rudy A. Slucker loaned
the Company $470,000, payable upon demand with interest at 8% per annum. This
loan will be repaid from the proceeds of this Offering.

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.

33
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of September 30, 1997, 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.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
---------------------- ---------------------
NAME NUMBER PERCENT NUMBER PERCENT
- ------------------------------------------------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Rudy A. Slucker(1)(2)(3)............................... 2,444,500 66.17% 2,444,500 49.94%
Barry Budilov(3)....................................... 1,862,000 51.55% 1,862,000 38.69%
Kenneth Kitnick(4)..................................... 151,667 4.15% 151,667 3.13%
Raymond Green.......................................... 0 -- 0 --
Jay Rice............................................... 0 -- 0 --
Jeffrey Seiken......................................... 0 -- 0 --
All directors and executive officers as a group
(6 persons)(1)(3)(4)................................. 3,958,167 100.00% 3,958,167 76.74%
</TABLE>

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

(1) Includes 94,680 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 the Convertible Notes. See "Description of Securities."

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

Commencing 90 days after the completion of this Offering each of Mr. Slucker
and Mr. Budilov intend to donate up to 47,000 shares of Common Stock each, every
90 days (not to exceed 150,000 shares of Common Stock each), 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.

34
<PAGE>
DESCRIPTION OF SECURITIES

The authorized capital stock of the Company is 21,000,000 consisting of
20,000,000 shares of Common Stock, $.01 par value and 1,000,000 shares of
Preferred Stock, $.01 par value. As of the date of this Prospectus, 3,500,000
shares of Common Stock are outstanding and held of record by five stockholders.
Upon the completion of this Offering there will be 4,700,000 shares of Common
Stock outstanding (4,880,000 if the Underwriter's over-allotment option is
exercised in full).

PREFERRED STOCK

The Company's Certificate of Incorporation authorizes the issuance of
1,000,000 shares of Preferred Stock without further stockholder approval. The
Preferred Stock may be divided into such classes or series as the Board of
Directors may determine by resolution. The Board of Directors is authorized to
determine and fix the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued series of Preferred Stock , including
dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices and liquidation preferences and to fix the number of shares of
any series of Preferred Stock and the designation of any such series of
Preferred Stock. Currently no shares of Preferred Stock are outstanding.

COMMON STOCK

The holders of the shares of Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of stockholders. Subject
to preferences that may be applicable to any outstanding shares of Preferred
Stock, the holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of the funds
legally available for the payment of dividends. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of the Company, subject to the
liquidation preferences of Preferred Stock, the holders of Common Stock are
entitled to receive any declared and unpaid dividends, in addition to being
entitled to share ratably in all assets remaining after payment of liabilities
and liquidation preferences of any then outstanding shares of Preferred Stock.
Holders of Common Stock have no preemptive rights to convert their Common Stock
into any other securities. There are no redemption or sinking fund provisions
applicable to the Common Stock.

All outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable, and the shares of Common Stock
issued upon completion of this Offering have been duly authorized and, when
issued, will be fully paid and non-assessable.

TRANSFER AGENT AND REGISTRAR

The transfer agent registrar for the Shares is the Continental Stock
Transfer & Trust Company, Two Broadway, New York, New York 10005.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been no public market for the Common Stock
of the Company, and no predictions can be made as to the effect, if any, that
market sales of Shares or the availability of such Shares will have on the
market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock, or the perception that such sales could
occur, could adversely affect prevailing market price of the Common Stock and
the ability of the Company to raise capital through a sale of equity securities.

Upon the closing of the Offering, the Company will have 4,700,000 (4,880,000
if the Underwriters' over allotment option is exercised in full) shares of
Common Stock outstanding. Of those shares, the 1,200,000 Shares sold in the
Offering (1,380,000 Shares if the Underwriters' over-allotment option is

35
<PAGE>

exercised in full) will be freely tradable without restriction, except as to
affiliates of the Company, or further registration under the Securities Act. The
remaining Shares held by existing stockholders are "restricted securities"
within the meaning of Rule 144 promulgated under the Securities Act and may not
be sold in the absence of registration under the Securities Act unless an
exemption from registration is available, including the exemption contained in
Rule 144. Rule 701 under the Securities Act provides that Common Stock acquired
on the exercise of options granted under a written compensatory plan of the
Company or contract with the Company prior to the date of this Prospectus may be
resold by persons, other than Affiliates, beginning 90 days after the date of
this Prospectus, subject only to the manner of sale provisions of Rule 144, and
by affiliates, as such term is defined under Rule 144, without compliance with
the one-year minimum holding period contained in Rule 144, subject to certain
limitations. There are 529,333 shares of Common Stock issuable upon the exercise
of outstanding options (the "Option Shares"). Beginning 90 days after the date
of this Prospectus, all of the Option Shares would be eligible for sale in
reliance on Rule 701.

In general, under Rule 144(e), as currently in effect, a stockholder (or
stockholders whose shares are aggregated), including an affiliate, who has
beneficially owned for at least one year shares of Common Stock that are treated
as "restricted securities," would be entitled to sell publicly, within any
three-month period, up to the greater of 1% of the then outstanding shares of
Common Stock (47,000 shares immediately after the completion of this offering)
or the average weekly reported trading volume in the Common Stock during the
four calendar weeks preceding the date on which notice of sale is given,
provided certain requirements are satisfied. In addition, affiliates of the
Company must comply with additional requirements of Rule 144 in order to sell
shares of Common Stock (including shares acquired by affiliates in this
Offering). Under Rule 144, a stockholder deemed not to have been an affiliate of
the Company at any time during the 90 days preceding a sale by him, and who has
beneficially owned for at least two years shares of Common Stock that are
treated as "restricted securities," would be entitled to sell those shares
without regard to the foregoing requirements. Since all outstanding shares of
Common Stock have been held for at least one year and are not subject to the
above described restriction on sale, they will be eligible for immediate sale
without restriction in the public market.

The holders of the Representatives' Warrant will also have certain demand
and incidental registration rights with respect to the Representatives' Warrant
and the 120,000 shares of Common Stock underlying the Warrants commencing after
the date of this Prospectus.

The Company and each of its directors, officers and stockholders have agreed
with the Underwriter that they will not offer, assign, issue, sell, hypothecate
or otherwise dispose of any Shares or any securities exercisable for or
convertible into shares of Common Stock, other than with respect to up to
300,000 shares of Common Stock, for a period of 18 months after the date of this
Prospectus without the prior written consent of the Representatives. See
"Underwriting."

36
<PAGE>

UNDERWRITING

The Underwriters named below have agreed, subject to the terms and
conditions of the Underwriting Agreement between the Company, H.J. Meyers & Co.,
Inc. and National Securities Corporation, as Representatives of the
Underwriters, to purchase from the Company the number of Shares set forth
opposite their names. The 10% underwriting discount set forth on the cover page
of this Prospectus will be allowed to the Underwriters at the time of delivery
to the Underwriters of the Shares so purchased

<TABLE>
<CAPTION>
NUMBER
OF SHARES
NAME OF UNDERWRITER PURCHASED
- --------------------------------------------------------------------------------- ----------
<S> <C>
H.J. Meyers & Co., Inc...........................................................
National Securities Corporation..................................................

----------
TOTAL.................................................................... 1,200,000
----------
----------
</TABLE>

The Underwriters have advised the Company that they propose to offer the
Shares to the public at the initial public offering price set forth on the front
cover page of this Prospectus, and at such price less a concession not in excess
of $ per share of Common Stock to certain dealers who are members of the
National Association of Securities Dealers, Inc., of which the Underwriters may
allow and such dealers may reallow concessions not in excess of $ per share
of Common Stock to certain other dealers. The public offering price and
concession and discount may be changed by the Underwriters after the initial
public offering.

The Company has granted to the Underwriters an over-allotment option
expiring at the close of business on the 45th day subsequent to the date of this
Prospectus, to purchase up to an additional 180,000 Shares at the public
offering price, less the underwriting discount set forth on the cover page of
this Prospectus. The Underwriters may exercise such option only to satisfy
over-allotments in the sale of the Shares.

The Company has agreed to pay to the Representatives a non-accountable
expense allowance equal to 3% of the total proceeds of this Offering, or
$216,000 (and 3% of the total proceeds from the sale of any shares of Common
Stock pursuant to the exercise of the over-allotment option, or $248,400 if the
Underwriters exercise the over-allotment option in full). In addition to the
Underwriters' commissions and the Representatives' expense allowance, the
Company is required to pay the costs of qualifying the shares of Common Stock
under federal and state securities laws, together with legal and accounting
fees, printing and other costs in connection with this Offering.

At the closing of this Offering, the Company will issue to the
Representatives, for nominal consideration, the Representatives' Warrant to
purchase up to 120,000 shares of Common Stock of the Company (also referred to
herein as the "Representatives' Warrants"). The shares of Common Stock subject
to the Representatives' Warrant are identical to the shares of Common Stock sold
to the public, except for the purchase price and certain registration rights.
The Representatives' Warrants will be exercisable for a four-year period
commencing one year from the date of this Prospectus, at an exercise price of
$9.90 per share of Common Stock (that being 165% of the initial public offering
price per share of Common Stock). The Representatives' Warrants will be
restricted from sale, assignment, pledge or hypothecation prior to their initial
exercise date except to successors in interest to the Representatives and/or one
or more officers of the Representatives.

37
<PAGE>

The Representatives' Warrants will contain anti-dilution provisions
providing for appropriate adjustment in the event of any recapitalization,
reclassification, stock dividend, stock split or similar transactions. The
Representatives' Warrants does not entitle the Representatives to any rights as
stockholders of the Company until such warrants are exercised and the shares of
Common Stock are purchased thereunder.

The Representatives' Warrants and the shares of Common Stock issuable
thereunder may not be offered for sale to the public except in compliance with
the applicable provisions of the Securities Act. The Company has agreed that if
it causes a post-effective amendment to the Registration Statement of which this
Prospectus is a part, or a new registration statement or offering statement
under Regulation A, to be filed with the Securities and Exchange Commission
("Commission"), the Representatives shall have the right during the life of the
Representatives' Warrant to include therein for registration the
Representatives' Warrants and/or the shares of Common Stock issuable upon their
exercise at no expense to the Representatives. Additionally, the Company has
agreed that, upon demand by the holder(s) of at least 50% of the (i) total
unexercised Representatives' Warrants and (ii) shares of Common Stock issued
upon the exercise of the Representatives' Warrants, made on no more than two
separate occasions during the exercise period of the Representatives' Warrants,
the Company shall use its best efforts to register the Representatives' Warrants
and/or any of the shares of Common Stock issuable upon the exercise thereof,
provided that the Company has available current financial statements, the
initial such registration to be at the Company's expense and the second at the
expense of the holder(s).

For the period during which the Representatives' Warrants are exercisable,
the holder(s) will have the opportunity to profit from a rise in the market
value of the Company's Common Stock, with a resulting dilution in the interests
of the other stockholders of the Company. The holder(s) of the Representatives'
Warrants can be expected to exercise the warrants at a time when the Company
would, in all likelihood, be able to obtain any needed capital from an offering
of its unissued Common Stock on terms more favorable to the Company than those
provided for in the Representatives' Warrants. Such facts may materially
adversely affect the terms on which the Company can obtain additional financing.

The Company has agreed to enter into a one year consulting agreement with
H.J. Meyers, pursuant to which H.J. Meyers will act as financial consultant to
the Company, commencing upon the closing date of this Offering. Under the terms
of this agreement, H.J. Meyers, to the extent reasonably required in the conduct
of the business of the Company and at the prior written request of the President
of the Company, has agreed to evaluate the Company's managerial and financial
requirements, assist in the preparation of budgets and business plans, advise
with regard to sales planning and sales activities, and assist in financial
arrangements. H.J. Meyers will make available qualified personnel for this
purpose. The non-refundable consulting fee of $ will be payable, in full,
on the closing date of this Offering.

The Company has agreed that it will engage a public relations firm
acceptable to the Representatives and the Company. The Company also has agreed
to maintain a relationship with such public relations firm for minimum period of
two years and on such other terms as are acceptable to the Reprsentatives.

The Company has also agreed that, for a period of two years from the closing
of this Offering, if it participates in any merger, consolidation or other
transaction which H.J. Meyers has brought to the Company (including an
acquisition of assets or stock for which it pays, in whole or in part, with
shares of the Company's Common Stock or other securities), which transaction is
consummated within three years of the closing of this Offering, then it will pay
for H.J. Meyers' services an amount equal to 5% of the first $3 million of value
paid or value received in the transaction, 3% of any consideration above $3
million and less than $5 million and 2% of any consideration in excess of $5
million. The Company has also agreed that if, during this two-year period,
someone other than H.J. Meyers brings such a merger, consolidation, or other
transaction to the Company, and if the Company in writing retains H.J. Meyers
for consultation or other services in connection therewith, than upon
consummation of the transaction the Company will pay to H.J. Meyers as a fee the
appropriate amount as set forth above or as otherwise agreed to between the
Company and H.J. Meyers.

38
<PAGE>

The Company has agreed that for a period of one year from the date of this
Prospectus the Company will not sell or otherwise dispose of any securities
without the prior written consent of the Respresentatives, which consent shall
not be unreasonably withheld, with the exception of shares of Common Stock
issued pursuant to the exercise of options, warrants or other convertible
securities outstanding prior to the date of this Prospectus. The Company will
not sell or issue any securities pursuant to Regulation S under the Securities
Act without the Respresentatives' prior written consent.

The Company's officers, directors and 5% shareholders have agreed that for a
period of 18 months from the date of this Prospectus they will not offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock acquired
prior to this Offering, other than up to 300,000 shares of Common Stock, without
the prior written consent of the Representatives.

For a period of 36 months from the closing of this Offering, the
Representatives are entitled to designate one member as a nominee for election
to the Company's Board of Directors. Rudy A. Slucker and Barry Budilov have
agreed to vote their shares in favor of such nominee. If the Representatives
elect not to nominate a Board of Directors Member, then they shall have the
right to select a person to act as an observer to attend all meetings of the
Board of Directors. The Company has agreed to hold at least four meetings and to
indemnify the Representatives' observer against any claims arising out of his
participating at meetings.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection with
the Registration Statement, including liabilities under the Act.

The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.

The offering price of the securities being offered hereby was determined by
negotiation between the Company and the Representatives. Factors considered in
determining such price include the history of and the prospects for the industry
in which the Company competes, the past and present operations of the Company,
the future prospects of the Company, the ability of the Company's management,
the earnings, net worth and financial condition of the Company and the general
condition of the securities markets at the time of this Offering.

On July 16, 1996, the NASD issued a Notice of Acceptance, Waiver and Consent
(the "AWC") whereby H.J. Meyers was censured and ordered to pay fines and
restitution to retail customers in the amount of $250,000 and approximately
$1.025 million, respectively. The AWC was issued in connection with claims by
the NASD that H.J. Meyers charged excessive markups and markdowns in connection
with the trading of four securities originally underwritten by H.J. Meyers. The
activities in question occurred between December 1990 and October 1993. H.J.
Meyers has informed the Company that the fines and refunds will not have a
material adverse effect on H.J. Meyers' operations and that H.J. Meyers has
effected remedial measures to help ensure that the subject conduct does not
recur.

39
<PAGE>
LEGAL MATTERS

The validity of the shares of Common Stock will be passed upon by Gibbons,
Del Deo, Dolan, Griffinger & Vecchione, a Professional Corporation, Newark, New
Jersey. Certain legal matters in connection with this Offering will be passed
upon for the Underwriter by Harter, Secrest & Emery, LLP, Rochester, New York.

EXPERTS

The financial statements of the Company as at March 31, 1997 and for the
period from May 3, 1995 (Inception) to March 31, 1996 and for the year ended
March 31, 1997, and the financial statements of Renaissance as at October 31,
1996 and for the year then ended, appearing in this Prospectus and Registration
Statement have been audited by Richard A. Eisner & Company, LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

The financial statements of Renaissance for the year ended October 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
J.H. Cohn LLP, independent public accountants, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Commission, a Registration Statement on Form
SB-2 (together with all amendments, exhibits, schedules and supplements thereto,
the "Registration Statement") under the Securities Act with respect to the
Shares offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Company and
the Shares offered hereby, reference is made to the Registration Statement.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to herein are not necessarily complete and, where
such contract or other document is filed as an exhibit to the Registration
Statement, each such statement is qualified in all respects by the provisions in
such exhibit, to which reference is hereby made. Copies of the Registration
Statement may be inspected without charge at the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 or at the
Regional Offices of the Commission located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60604 and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of all or any portion of the
Registration Statement can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
certain fees prescribed by the Commission.

Prior to the date of this Prospectus, the Company was not subject to the
information requirements of the Exchange Act. Upon the effectiveness of the
Registration Statement, the Company will be subject to certain of the
informational requirements of the Exchange Act and, in accordance therewith,
will file periodic reports and other information with the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of the reports and
information so filed can be obtained from the Public Reference Section of the
Commission upon payment of certain fees prescribed by the Commission.

The Commission maintains a Web site that contains reports, proxy statements
and other information regarding registrants that file electronically with the
Commission that can be electronically examined. The address of the Commission's
Web site is http://www.sec.gov.

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and with such other periodic reports as
the Company may from time to time deem appropriate or as may be required by law.

40
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
PRO FORMA:
Pro Forma Unaudited Condensed Statement of Operations for the Year Ended March 31,
1997............................................................................. F-2
HISTORICAL:
AMBASSADOR EYEWEAR GROUP, INC.
Report of Independent Auditors..................................................... F-3
Balance Sheet as at March 31, 1997 and September 30, 1997 (unaudited).............. F-4
Statements of Operations for the Period from May 3, 1995 (Inception) through March
31, 1996, for the Year Ended March 31, 1997 and for the six-month periods
(unaudited) ended September 30, 1996 and 1997.................................... F-5
Statements of Changes in Stockholders' Equity for the Period from May 3, 1995
(Inception) through March 31, 1996, for the Year Ended March 31, 1997 and for the
six months ended September 30, 1997 (unaudited).................................. F-6
Statements of Cash Flows for the Period from May 3, 1995 (Inception) through March
31, 1996, for the Year Ended March 31, 1997 and for the six-month periods
(unaudited) ended September 30, 1996 and 1997.................................... F-7
Notes to Financial Statements...................................................... F-8
RENAISSANCE EYEWEAR, INC.
Report of Independent Auditors..................................................... F-20
Report of Independent Public Accountants........................................... F-21
Statement of Assets, Liabilities and Capital Deficiency Preceding the Bank Taking
Possession of the Assets as at October 31, 1996.................................. F-22
Statements of Operations Preceding the Bank Taking Possession of the Assets for the
Years Ended October 31, 1995 and October 31, 1996................................ F-23
Statements of Changes in Stockholders' Equity (Capital Deficiency) for the Years
Ended October 31, 1995 and October 31, 1996...................................... F-24
Statements of Cash Flows Preceding the Bank Taking Possession of the Assets for the
Years ended October 31, 1995 and October 31, 1996................................ F-25
Notes to Financial Statements...................................................... F-26
</TABLE>

F-1
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED MARCH 31, 1997

(IN THOUSANDS EXCEPT PER SHARE DATA)

The following pro forma unaudited condensed statement of operations reflects
the acquisitions of Windsor Optical, Inc. ("Windsor") and Renaissance Eyewear
Inc. ("Renaissance") as if such transactions had occurred on April 1, 1996. The
acquisitions have been accounted for as purchases in accordance with Accounting
Principles Board Opinion No. 16. In the opinion of management of the Company,
all adjustments necessary to present fairly such pro forma statements of
operations have been made.

This pro forma condensed statement of operations should be read in
conjunction with the notes thereto, the financial statements of the Company and
of Renaissance and the related notes thereto and with "Management's Discussion
and Analysis of Financial Condition and Results of Operations," each included
elsewhere in this Prospectus. The pro forma condensed statement of operations is
presented for informational purposes only and is not necessarily indicative of
what the actual results of operations would have been had the transactions
occurred at April 1, 1996, nor do they purport to indicate the results of future
operations.

The Ambassador column presents results of operations of Ambassador for the
full year ended March 31, 1997 which includes the operations of Windsor and
Renaissance from their respective dates of acquisition, June 26, 1996 and
February 26, 1997. The Windsor and Renaissance columns present respectively,
their separate unaudited results of operations for the portion of the year ended
March 31, 1997 prior to their dates of acquisition.

<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------
<S> <C> <C> <C> <C> <C>
RENAISSANCE WINDSOR PRO FORMA
AMBASSADOR ELEVEN MONTHS THREE MONTHS RESULTS
YEAR ENDED ENDED ENDED YEAR ENDED
MARCH 31, FEBRUARY 28, JUNE 30, PRO FORMA MARCH 31,
1997 1997 1996 ADJUSTMENTS 1997
------------- -------------- ----------------- ----------- -----------
Net sales................................. $ 16,455 $ 11,705 $ 969 $ 29,129
Cost of sales............................. 8,552 6,060 479 15,091
------------- -------------- ----- -----------
Gross profit.............................. 7,903 5,645 490 14,038
Selling, general and administrative
expenses................................ 6,145 6,522 392 $ (332)(A) 12,727
------------- -------------- ----- ----------- -----------
Income (loss) from operations............. 1,758 (877) 98 332 1,311
Interest expense (net).................... 738 337 23 8(A) 1,106
Writedown in connection with bank taking
possession of assets.................... 7,054 (7,054)(B) -0-
------------- -------------- ----- ----------- -----------
Income (loss) before taxes................ 1,020 (8,268) 75 7,378 205
Income tax expense (benefit).............. 340 (475) 25 179(A) 69
------------- -------------- ----- ----------- -----------
NET INCOME (LOSS)......................... $ 680 $ (7,793) $ 50 $ 7,199 $ 136
------------- -------------- ----- ----------- -----------
------------- -------------- ----- ----------- -----------
Earnings per share (C).................... $ .18 $ .04
------------- -----------
------------- -----------
Weighted average shares outstanding....... 3,864 3,864
------------- -----------
------------- -----------
</TABLE>

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

Notes:

(A) Expense adjustments (for depreciation and amortization of deferred credit)
for the period ended March 31, 1997 to reflect the acquisitions as if they
had taken place April 1, 1996 and the related tax effect.

(B) Elimination of loss resulting from bank taking possession of and selling all
of the assets of Renaissance. The bank took possession of assets with a book
value of $10,500 in connection with a default on bank debt of $3,446.

(C) Pursuant to the Commission's Staff Accounting Bulletin common share
equivalents issued at prices below the anticipated public offering price
during the twelve months preceding the proposed initial filing date have
been included in the calculation as if they were outstanding for the entire
period presented using the treasury stock method.

F-2
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Ambassador Eyewear Group, Inc.
Bensalem, Pennsylvania

We have audited the accompanying balance sheet of Ambassador Eyewear Group,
Inc. as at March 31, 1997 and the related statements of operations, changes in
stockholders' equity and cash flows for the period from May 3, 1995 (inception)
through March 31, 1996 and for the year ended March 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements enumerated above present fairly, in
all material respects, the financial position of Ambassador Eyewear Group, Inc.
at March 31, 1997 and the results of its operations and its cash flows for the
period from May 3, 1995 (inception) through March 31, 1996 and for the year
ended March 31, 1997 in conformity with generally accepted accounting
principles.

Richard A. Eisner & Company, LLP

New York, New York
June 12, 1997

With respect to
Notes G and I[1]

June 30, 1997

F-3
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1997
------------- -------------
<S> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash............................................................................. $ 75,000 $ 116,000
Accounts receivable, less allowance for returns and doubtful accounts of
$2,394,000 and $1,862,000...................................................... 7,403,000 8,562,000
Inventories...................................................................... 11,508,000 11,894,000
Prepaid expenses................................................................. 175,000 142,000
Deferred taxes................................................................... 586,000 516,000
Other current assets............................................................. 4,000 25,000
------------- -------------
Total current assets........................................................... 19,751,000 21,255,000
Fixed assets, net of accumulated depreciation of $276,000 and $389,000............. 744,000 668,000
Deferred financing cost............................................................ 119,000 83,000
Deferred offering costs............................................................ 341,000
Other assets....................................................................... 42,000 48,000
------------- -------------
TOTAL........................................................................ $ 20,656,000 $ 22,395,000
------------- -------------
------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable--banks............................................................. $ 12,098,000 $ 12,490,000
Notes payable--stockholders/officers............................................. 280,000 495,000
Current portion of long-term debt................................................ 96,000 100,000
Accounts payable................................................................. 4,242,000 4,831,000
Accrued expenses................................................................. 808,000 1,094,000
Income taxes payable............................................................. 544,000 589,000
Current portion of capital leases payable........................................ 69,000 69,000
------------- -------------
Total current liabilities...................................................... 18,137,000 19,668,000
Consulting payable................................................................. 29,000 50,000
Long-term debt, less current portion............................................... 319,000 268,000
Notes payable--stockholders/officers............................................... 1,181,000 1,181,000
Capital leases payable, less current portion....................................... 90,000 57,000
Deferred taxes..................................................................... 41,000 35,000
Deferred credit, net............................................................... 836,000 788,000
------------- -------------
Total liabilities.............................................................. 20,633,000 22,047,000
------------- -------------
Commitments, contingencies and other matters
Stockholders' equity:
Preferred stock, par value $.01 per share; authorized 1,000,000 shares; none
issued
Common stock, par value $.01 per share; authorized 10,000,000 shares; issued and
outstanding 3,500,000 shares................................................... 35,000 35,000
Additional paid-in capital....................................................... 187,000 187,000
Unearned portion of compensatory stock options................................... (184,000) (165,000)
Retained earnings (accumulated deficit).......................................... (15,000) 291,000
------------- -------------
Total stockholders' equity..................................................... 23,000 348,000
------------- -------------
TOTAL........................................................................ $ 20,656,000 $ 22,395,000
------------- -------------
------------- -------------
</TABLE>

The accompanying notes to financial statements are an integral part hereof.

F-4
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
MAY 3, 1995
(INCEPTION) SIX MONTHS ENDED
THROUGH YEAR ENDED SEPTEMBER 30,
MARCH 31, MARCH 31, ----------------------------
1996 1997 1996 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED)
Net sales........................................... $ 11,005,000 $ 16,455,000 $ 8,030,000 $ 12,542,000
Cost of sales....................................... 6,826,000 8,552,000 4,540,000 5,693,000
------------- ------------- ------------- -------------
Gross profit........................................ 4,179,000 7,903,000 3,490,000 6,849,000
Selling, general and administrative expenses........ 4,258,000 6,145,000 2,881,000 5,772,000
------------- ------------- ------------- -------------
Income (loss) from operations....................... (79,000) 1,758,000 609,000 1,077,000
Interest income..................................... 4,000 4,000
Interest (expense).................................. (474,000) (742,000) (266,000) (640,000)
------------- ------------- ------------- -------------
Income (loss) before provision for income taxes..... (553,000) 1,020,000 347,000 437,000
Income tax provision (benefit)...................... (254,000) 340,000 153,000 131,000
------------- ------------- ------------- -------------
NET INCOME (LOSS)................................... $ (299,000) $ 680,000 $ 194,000 $ 306,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net income (loss) per share......................... $ (.08) $ .18 $ .05 $ .08
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of common shares
outstanding....................................... 3,864,000 3,864,000 3,864,000 3,864,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

The accompanying notes to financial statements are an integral part hereof.

F-5
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
UNEARNED
COMMON STOCK PORTION OF
-------------------------- ADDITIONAL COMPENSATORY RETAINED TOTAL
NUMBER OF PAID-IN STOCK EARNINGS STOCKHOLDERS'
SHARES AMOUNT CAPITAL OPTIONS (DEFICIT) EQUITY
------------ ------------ ---------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>

Issuance of common stock............... 3,500,000 $ 35,000 $ (34,000) $ 1,000

Acquisition of Chanuk.................. (362,000) (362,000)

Net loss for the period May 3, 1995
(inception) through March 31, 1996... (299,000) (299,000)

Balance--March 31, 1996................ 3,500,000 35,000 (695,000) (660,000)

Fair value of options granted.......... $ 187,000 $ (184,000) 3,000

Net income for the year................ 680,000 680,000
------------ ------------ ---------- ------------- ----------- ------------

Balance--March 31, 1997................ 3,500,000 $ 35,000 $ 187,000 $ (184,000) $ (15,000) $ 23,000

Amortization of unearned portion of
compensatory stock options........... 19,000 19,000

Net income for the six months.......... 306,000 306,000
------------ ------------ ---------- ------------- ----------- ------------

BALANCE--SEPTEMBER 30, 1997
(unaudited).......................... $ 3,500,000 $ 35,000 $ 187,000 $ (165,000) $ 291,000 $ 348,000
------------ ------------ ---------- ------------- ----------- ------------
------------ ------------ ---------- ------------- ----------- ------------
</TABLE>

The accompanying notes to financial statements are an integral part hereof.

F-6
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
MAY 3, 1995
(INCEPTION) SIX MONTHS ENDED
THROUGH YEAR ENDED SEPTEMBER 30,
MARCH 31, MARCH 31, --------------------------
1996 1997 1996 1997
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net income (loss)........................................... $ (299,000) $ 680,000 $ 194,000 $ 306,000
Adjustments to reconcile net income (loss) to net cash (used
in) operating activities:
Depreciation............................................ 110,000 175,000 77,000 100,000
Amortization of deferred financing costs................ 127,000 71,000 36,000
Amortization of deferred credit......................... (8,000) (48,000)
Deferred taxes.......................................... (372,000) 173,000 (91,000) 64,000
Compensatory stock option............................... 3,000 19,000
Loss on disposal of assets.............................. 94,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable............ 57,000 (3,992,000) (1,462,000) (1,159,000)
(Increase) in inventories............................. (1,550,000) (1,364,000) (66,000) (386,000)
(Increase) decrease in prepaid expenses............... 222,000 98,000 (48,000) 33,000
(Increase) decrease in other assets................... (153,000) 173,000 (326,000) (27,000)
Increase in accounts payable.......................... 28,000 252,000 589,000
Increase in consulting payable........................ 29,000 21,000
Increase in accrued expenses.......................... 302,000 106,000 365,000 95,000
Increase in income taxes payable...................... 119,000 425,000 214,000 45,000
----------- ----------- ----------- -------------
Net cash (used in) operating activities............. (1,365,000) (3,525,000) (1,095,000) (218,000)
----------- ----------- ----------- -------------
Cash flows from investing activities:
Fixed asset acquisitions.................................... (199,000) (136,000) (67,000) (118,000)
Cash obtained through acquisitions.......................... 2,000 59,000 59,000
Deferred financing costs acquired........................... (127,000) (34,000)
Proceeds from insurance claim............................... 30,000
----------- ----------- ----------- -------------
Net cash (used in) investing activities............. (294,000) (77,000) (42,000) (118,000)
----------- ----------- ----------- -------------
Cash flows from financing activities:
Net borrowings from bank--line of credit.................... 1,667,000 3,675,000 1,135,000 392,000
Payments of financing costs................................. (190,000)
Payments of registration costs.............................. (150,000)
Proceeds from stockholder/officer........................... 15,000 265,000 73,000 245,000
Payments of notes payable--stockholders/officer............. (13,000) (30,000)
Payments of notes payable--Windsor.......................... (35,000) (26,000) (47,000)
Payments on capital leases.................................. (48,000) (14,000) (33,000)
----------- ----------- ----------- -------------
Net cash provided by financing activities........... 1,669,000 3,667,000 1,168,000 186,000
----------- ----------- ----------- -------------
NET INCREASE IN CASH.......................................... 10,000 65,000 31,000 41,000
Cash--beginning of period..................................... -0 - 10,000 -0 - 75,000
----------- ----------- ----------- -------------
CASH--END OF PERIOD........................................... $ 10,000 $ 75,000 $ 31,000 $ 116,000
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
Supplementary cash flow information:
Income taxes paid........................................... $ 88,000 $ 88,000
Interest paid............................................... $ 300,000 629,000 $ 244,000 447,000
Supplementary schedule of noncash investing and financing
activities:
Deferred financing fee.................................... 100,000
Acquisitions (see Note C)
Accrued offering costs.................................... 191,000
</TABLE>

The accompanying notes to financial statements are an integral part hereof.

F-7
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE A)--THE COMPANY AND BASIS OF PRESENTATION:

Ambassador Eyewear Group, Inc. (the "Company", formerly Diplomat Ambassador,
Inc.), designs, markets and distributes prescription eyeglass frames and
nonprescription sunglasses to department and specialty stores, optical chains
and eyewear boutiques worldwide. On May 3, 1995 the Company was organized and on
May 10, 1995, acquired substantially all of the assets and assumed certain of
the liabilities of Chanuk Inc. ("Chanuk") and became the business successor. On
June 26, 1996 the Company acquired substantially all of the assets and assumed
certain of the liabilities of Windsor Optical, Inc. ("Windsor"). On February 26,
1997 the Company acquired from a bank substantially all of the assets of
Renaissance Eyewear Inc. ("Renaissance") and incurred certain other obligations
(see Note C and L [7]).

The Company imports substantially all of its frames and nonprescription
sunglasses from a limited number of international suppliers, principally in the
Far East.

(NOTE B)--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

[1] USE OF ESTIMATES:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

[2] INVENTORIES:

Inventories, consisting principally of eyeglass frames and sunglasses, are
stated at the lower of cost or market. Cost is determined by the first-in,
first-out method.

[3] FIXED ASSETS:

Fixed assets, including assets held under capital leases, are stated at cost
and depreciation is computed by the straight line method over the estimated
useful lives of 5 to 10 years. Leasehold improvements are stated at cost and are
amortized over the shorter of the lease term or the estimated useful lives of
the related assets.

[4] AMORTIZATION OF INTANGIBLE ASSETS:

Deferred financing costs are being amortized on a straight line basis over
the remaining term of the revolving credit facility. (See Note F[1]).
Accumulated amortization was $71,000 and $107,000, respectively at March 31,
1997 and September 30, 1997.

[5] DEFERRED CREDIT:

The deferred credit represents the excess value of net assets of Renaissance
acquired over cost, which is being amortized over a period of five years.
Accumulated amortization was $8,000 and $56,000, respectively at March 31, 1997
and September 30, 1997.

[6] INCOME TAXES:

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" which
requires the use of the liability method of accounting for income taxes. The
Company reports on a calendar year end for income tax purposes.

F-8
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE B)--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
[7] REVENUE RECOGNITION:

Revenue is recognized when merchandise is shipped to customers. The Company
accrues a sales return allowance in accordance with its return policy for
estimated returns of inventory subsequent to the balance sheet date that relate
to sales prior to the balance sheet date. Estimated sales returns are provided
for and at March 31, 1997 and September 30, 1997 the allowance for returns was
$555,000 and $365,000, respectively.

[8] NET INCOME PER SHARE:

Net income per share is computed using the weighted average number of shares
outstanding during the period. The effect of outstanding options is computed, if
dilutive, using the treasury stock method. In accordance with Securities and
Exchange Commission requirements, the common shares and options issued during
the twelve-month period prior to the filing of the proposed initial public
offering at a price below the anticipated initial public offering price ($6.00
per share) have been included in the calculation as if they were outstanding for
all periods prior to the offering using the treasury stock method.

[9] CONCENTRATION OF CREDIT RISK:

Financial instruments which potentially subject the Company to significant
concentrations of credit risk consist principally of accounts receivable. The
Company extends credit to a substantial number of its customers and performs
ongoing credit evaluations of the customers' financial condition while requiring
no collateral.

[10] FAIR VALUES OF FINANCIAL INSTRUMENTS:

Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires the Company to disclose estimated fair
values for its financial instruments. The carrying amounts reported in the
balance sheet for cash, accounts receivable, accounts payable and accrued
expenses approximate fair value because of the short maturity period of those
instruments. In addition the carrying amounts reported for notes payable
approximate fair value based on recent market rates of interest for similar
instruments.

[11] STOCK-BASED COMPENSATION:

During the year ended March 31, 1997 the Company adopted Statement of
Financial Accounting Standards Board No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"). The provisions of SFAS No. 123 allow companies
to either expense the estimated fair value of stock options or other awards
granted to employees or to continue to follow the intrinsic value method set
forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25") but disclose the pro forma effects on net income
(loss) had the fair value of the options been expensed. The Company has elected
to continue to apply APB No.25 to its stock-based compensation awards to
employees and will disclose pro forma net income and net income per share in
accordance with SFAS No. 123. Accordingly, the Company accounts for the
difference between the exercise price of compensatory stock options and the fair
value of the stock as "Unearned Compensatory Stock Options," which the Company
charges to operations over the vesting period.

F-9
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE B)--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
[12] FOREIGN CURRENCY TRANSACTIONS:

Foreign currency transaction gain and losses are recognized as incurred.
During the period from May 3, 1995 (inception) through March 31, 1996, the year
ended March 31, 1997 and the six months ended September 30, 1997 gains/losses
were not material.

[13] ADVERTISING:

The costs of advertising are expensed when incurred or the first time the
advertising takes place. Advertising expense for the period from May 3, 1995
(inception) through March 31, 1996, for the year ended March 31, 1997 and the
six months ended September 30, 1997 was approximately $155,000, $277,000 and
$116,000, respectively.

[14] RECENT ACCOUNTING PRONOUNCEMENTS:

SFAS No. 128, "Earnings Per Share" ("EPS"), is effective for both interim
and annual periods ending after December 15, 1997. SFAS No. 128 supersedes APB
No. 15 and specifies the computation, presentation and disclosure requirement
for basic and diluted EPS. The Company has determined that the adoption of this
new standard will not have a material effect on EPS for all periods presented.

In June 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 129, "Disclosure of Information about Capital
Structure", No. 130, "Reporting Comprehensive Income", and No. 131, "Disclosure
about Segments of an Enterprise and Related Information". The Company believes
that the above pronouncements will not have a significant effect on the
information presented in the financial statements.

[15] UNAUDITED INTERIM FINANCIAL STATEMENTS:

In the opinion of management, the unaudited financial statements include all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the Company's financial position at September 30, 1997 and
results of operations and cash flows for the six-month periods ended September
30, 1997 and 1996. The financial statements as of September 30, 1997 and for the
six months ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending March 31, 1998.

(NOTE C)--ACQUISITIONS:

[1] ACQUISITION OF CHANUK:

In May 1995 the Company acquired substantially all of the assets and assumed
certain of the liabilities of Chanuk, an eyewear distributor and a predecessor
entity. The majority stockholder (74 percent) of Chanuk is the mother-in-law of
one of the Company's 50% stockholders. Such 50% stockholder is the President and
Chief Executive Officer of the Company and was the President of Chanuk. The
Company's other 50% stockholder owned a minority interest (approximately 10%) in
Chanuk. The Company became the business successor to Chanuk and the transaction
is considered a recapitalization rather than a business combination. The
acquisition was recorded at Chanuk's historical cost basis which approximates
fair value. The Company issued two notes payable aggregating $687,000, for the
value of the net assets acquired, to its two stockholders as consideration for a
note issued by the stockholders to Chanuk for the same amount

F-10
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE C)--ACQUISITIONS: (CONTINUED)
(see Note F). The excess ($362,000) of the notes payable over the historical
basis of the net assets acquired has been accounted for as a reduction of
stockholders' equity. The cost was recorded as follows:

<TABLE>
<S> <C>
Cash............................................................ $ 2,000
Accounts receivable, net........................................ 2,089,000
Inventory....................................................... 2,995,000
Prepaid expenses & other assets................................. 442,000
Fixed assets.................................................... 468,000
Note payable--bank.............................................. (2,288,000)
Accounts payable................................................ (2,875,000)
Loans payable--stockholders..................................... (508,000)
Deficit......................................................... 362,000
----------
Notes payable--stockholders..................................... $ 687,000
----------
----------
</TABLE>

[2] ACQUISITION OF WINDSOR:

In June 1996 the Company acquired substantially all of the assets and
assumed certain of the liabilities of Windsor, an eyewear distributor. In
addition, the Company paid $100,000 cash and issued two notes payable to Windsor
aggregating $450,000. This acquisition was treated for accounting purposes as a
purchase. Accordingly, the various assets acquired and liabilities assumed were
recorded at their respective estimated fair values as of the date of
acquisition. The cost of the acquisition was allocated as follows:

<TABLE>
<S> <C>
Cash............................................................ $ 59,000
Accounts receivable, net........................................ 448,000
Inventory....................................................... 1,937,000
Fixed assets.................................................... 45,000
Other assets.................................................... 66,000
Loan payable--bank (including $100,000 borrowed in connection
with the purchase)............................................ (1,022,000)
Accounts payable................................................ (1,083,000)
----------
Notes payable--Windsor.......................................... $ 450,000
----------
----------
</TABLE>

The Company entered into a three year employment agreement with one of the
principal stockholders of Windsor, who is currently an officer of the Company
(see Note L[2]). The Company also granted options to purchase 151,667 shares of
common stock at $1.50 per share to this individual. In addition the Company
entered into a consulting agreement with another principal stockholder of
Windsor (see Note L[3]).

[3] ACQUISITION OF THE ASSETS OF RENAISSANCE:

In February 1997 the Company purchased substantially all of the assets of
Renaissance, an eyewear distributor, from Summit Bank after Summit Bank had
passively foreclosed on Renaissance upon default of its loan agreement. The
Company also satisfied certain obligations aggregating $400,000 and entered into
a noncompete agreement and a consulting agreement with the former owner of
Renaissance which

F-11
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE C)--ACQUISITIONS: (CONTINUED)

provide for annual aggregate payments of $200,000 per year for five years (see
Note L[3]). In addition the Company granted the former owner options to purchase
180,833 shares of common stock at $3 per share. The Company valued the option at
$187,000 representing the fair value at date of grant which is being charged to
operations over five years. The excess of the fair value of the net assets
acquired over the purchase price was first applied as a reduction of noncurrent
assets and the remaining balance is treated for accounting purposes as a
deferred credit. The cost of the acquisition was allocated as follows:

<TABLE>
<S> <C>
Accounts receivable, net........................................ $ 975,000
Inventory....................................................... 3,662,000
Prepaid expenses................................................ 53,000
Note payable--bank.............................................. (3,446,000)
Deferred credit................................................. (844,000)
Accrued expenses................................................ (400,000)
</TABLE>

The Company's financial statements include the operations of the acquired
entities from the respective dates of such acquisitions.

[4] PRO FORMA RESULTS OF OPERATIONS:

The following unaudited pro forma summary of results of operations has been
prepared as if each of the acquisitions had occurred on May 3, 1995 (inception)
after giving effect to all purchase price adjustments and the elimination of
nonrecurring items:

<TABLE>
<CAPTION>
PERIOD FROM
MAY 3, 1995
(INCEPTION) YEAR ENDED
TO MARCH 31, MARCH 31,
PRO FORMA 1996 1997
- --------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Net revenue.................................................... $ 28,172,000 $ 29,129,000
Net income (loss).............................................. (475,000) 136,000
Net income (loss) per share.................................... $ (.12) $ .04
</TABLE>

The pro forma results do not purport to be indicative of the results that
would have actually been achieved if the respective acquisitions had taken place
as of May 3, 1995 (inception) or of results which may occur in the future.

(NOTE D)--ACCOUNTS RECEIVABLE:

The Company has recorded allowances of $2,394,000 and $1,862,000 as of March
31, 1997 and September 30, 1997, respectively, against accounts receivable.
Management believes, based on information available at the financial statement
dates, that such allowances are adequate valuation reserves against potential
uncollectable accounts and returns. Management does not believe that there
exists presently a substantial risk that receivable recovery will be materially
less than the net carrying amount of its accounts receivable. Additionally,
receivables over 180 days have been substantially reserved.

F-12
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE E)--FIXED ASSETS:

Fixed assets are summarized as follows:

<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1997
------------ -------------
<S> <C> <C>
Furniture, fixtures and displays................................. $ 232,000 $ 262,000
Equipment........................................................ 636,000 676,000
Leasehold improvements........................................... 152,000 119,000
------------ -------------
Total........................................................ 1,022,000 1,057,000
Accumulated depreciation......................................... 276,000 (389,000)
------------ -------------
Balance...................................................... $ 744,000 $ 668,000
------------ -------------
------------ -------------
</TABLE>

(NOTE F)--BANK LOANS AND LONG-TERM DEBT:

[1] BANK LOANS:

The Company has entered into a revolving line of credit agreement with a
bank which expires annually on June 1, is automatically renewed for one year and
provides for borrowings of up to a maximum of $12,000,000 based on specified
percentages, described in the agreement, of eligible accounts receivable and
inventories. Borrowings under the agreement bear interest at the prime rate
(8.5% at March 31, 1997 and September 30, 1997). The credit facility is
collateralized by substantially all of the assets of the Company and contains
certain restrictive covenants including the payment of dividends. During the six
months ended September 30, 1997 the Company entered into an overadvance line of
credit of $500,000 pursuant to an agreement which is due on the earlier of
December 31, 1997 or the closing of the proposed public offering. $2.2 million
under the revolving line of credit is guaranteed by the stockholders/officers of
the Company. At March 31, 1997 and September 30, 1997 $11,998,000 and
$12,390,000, respectively was outstanding under the credit facility.

Upon the closing of the Company's anticipated initial public offering, a fee
of $100,000 will be due to the bank. This fee was recorded as a deferred
financing cost and is being amortized over the remaining term of the credit
facility.

[2] LONG-TERM DEBT:

Long-term debt consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER
MARCH 31, 30,
1997 1997
--------- -----------
<S> <C> <C>
Notes payable--Windsor(a)............................ $ 415,000 $ 368,000
Less amounts due within one year..................... 96,000 100,000
--------- -----------
Amounts due after one year........................... $ 319,000 $ 268,000
--------- -----------
--------- -----------
</TABLE>

(a) In connection with the acquisition of Windsor in June 1996, the Company
issued two notes aggregating $450,000 to Windsor which bear interest at the rate
of 7% per annum. The notes are payable in aggregate monthly installments of
principal and interest of approximately $10,000 through January 2000 and
approximately $5,000 thereafter through July 2003.

F-13
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE F)--BANK LOANS AND LONG-TERM DEBT: (CONTINUED)

Long-term debt is payable as follows:

<TABLE>
<CAPTION>
YEAR ENDING MARCH 31,
- ----------------------------------------------------------------------------------
<S> <C>
1998.............................................................................. $ 96,000
1999.............................................................................. 103,000
2000.............................................................................. 58,000
2001.............................................................................. 45,000
2002.............................................................................. 48,000
Thereafter........................................................................ 65,000
----------
TOTAL......................................................................... $ 415,000
----------
----------
</TABLE>

(NOTE G)--NOTES PAYABLE--STOCKHOLDERS/OFFICER:

In connection with the acquisition of Chanuk in May 1995 the Company assumed
a note payable to a stockholder/officer of the Company in the amount of
$508,000. The note bears interest at the rate of 8% per annum and is payable on
demand. At March 31, 1997 and September 30, 1997 the balance due on the note was
$495,000.

Two stockholders/officers personally satisfied a portion of the purchase
price and the Company issued notes payable of $343,500 to each of the officers
for such amounts. The notes payable bear interest at a rate of 8% per annum and
are due on demand but no later than January 1, 2000 and are subordinate to the
bank debt. At March 31, 1997 and September 30, 1997 the balance on these notes
aggregated $686,000.

The foregoing demand notes are subject to an agreement entered into by the
Company as of June 30, 1997 to convert principal balances outstanding into
redeemable cumulative preferred stock on the effective date of the initial
public offering. Accordingly, the notes have been classified as long-term at
March 31, 1997 and September 30, 1997.

In February 1997, stockholders/officers loaned the Company $280,000 in
connection with the acquisition of substantially all of the assets of
Renaissance. The loan is payable on demand and bears interest at the rate of 8%
per annum. During the six months ended September 30, 1997 the Company repaid
$30,000 of this loan and borrowed an additional $245,000 under the same terms.

Subsequent to September 30, 1997, the Company agreed to issue convertible
notes in exchange for $1,181,000 of the outstanding balance of these notes. Such
notes are convertible, at the holder's option, into Common Shares at the initial
public offering price.

(NOTE H)--CAPITAL LEASES PAYABLE:

The Company leases equipment under various agreements with terms of 32 to 60
months and accounts for these leases as capital leases. Equipment purchases
under these leases for the period from May 3, 1995 (inception) through March 31,
1996, for the year ended March 31, 1997 and for the six months ended September
30, 1997 were $189,000, $51,000 and $0, respectively. The net book value of
equipment held under capital leases was approximately $183,000 and $143,000,
respectively at March 31, 1997 and September 30, 1997.

F-14
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE H)--CAPITAL LEASES PAYABLE: (CONTINUED)

Future lease payments as of March 31, 1997 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING MARCH 31,
- ----------------------------------------------------------------------------------
<S> <C>
1998.............................................................................. $ 91,000
1999.............................................................................. 69,000
2000.............................................................................. 29,000
2001.............................................................................. 5,000
----------
Total......................................................................... 194,000
Less amounts representing interest................................................ 35,000
----------
Present value of future lease payments............................................ 159,000
Less amount due within one year................................................... 69,000
----------
Amounts due after one year........................................................ $ 90,000
----------
----------
</TABLE>

(NOTE I)--STOCKHOLDERS' EQUITY:

[1] COMMON STOCK:

In May 1995 the Company issued 1,500 shares of its common stock to each of
its two stockholders, both of whom are officers of the Company.

In June 1997 the Company effected a 1,166.67 for 1 stock split. The
financial statements give retroactive effect to this transaction as if it
occurred on May 3, 1995 (inception).

In June 1997 the Company amended its certificate of incorporation to
increase the authorized capital stock to 11,000,000 shares, of which 10,000,000
are common stock and 1,000,000 preferred stock. The accompanying financial
statements reflect this increase retroactively.

[2] STOCK OPTIONS:

The Company applies APB 25 in accounting for stock-based compensation to
employees and, accordingly, recognizes compensation expense for the difference
between the fair value of the underlying common stock and the exercise price of
the option at the date of grant. The effect of applying SFAS No. 123 on fiscal
1996 and 1997 pro forma net income (loss) is not necessarily representative of
the effects on reported net income (loss) for future years due to, among other
things, (1) the vesting period of the stock options and (2) the fair value of
additional stock options that may be granted in future years. Had compensation
cost for the Company's stock options granted to employees been determined based
upon the fair value at the grant date consistent with the methodology prescribed
under SFAS No. 123, the Company's net income (loss) and net income (loss) per
share would have been approximately (i) $(302,000) and $(.08) for the period May
3, 1995 (inception) through March 31, 1996 and (ii) $661,000 and $.17 for the
year ended March 31, 1997. The weighted average fair value of the options
granted during fiscal 1996 and 1997 are estimated at $.09 and $.80,
respectively, on the date of grant using the Black-Scholes option-pricing model
with the following assumptions: dividend yield of 0%, volatility of 30%, risk-
free interest rate of 6.74%, and expected life of four years.

F-15
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE I)--STOCKHOLDERS' EQUITY: (CONTINUED)

THE FOLLOWING TABLE SUMMARIZES INFORMATION ABOUT STOCK OPTIONS OUTSTANDING
AT MARCH 31, 1997 AND SEPTEMBER 30, 1997 (ALL EXERCISABLE):

<TABLE>
<CAPTION>
WEIGHTED AVERAGE AVERAGE
EXERCISE NUMBER REMAINING CONTRACTUAL EXERCISE
PRICE OUTSTANDING LIFE (IN YEARS) PRICE
- -------------------------------------- ----------- ------------------------- -----------
<S> <C> <C> <C>
$ .25................................. 166,833 2 $ .25
1.50................................. 151,667 3 1.50
3.00................................. 180,833 5 3.00
-----------
Total................................. 499,333 1.63
-----------
-----------
</TABLE>

(NOTE J)--PROPOSED PUBLIC OFFERING:

The Company has signed a letter of intent with an underwriter with respect
to a proposed public offering of the Company's securities. There is no assurance
that such offering will be consummated. In connection therewith, the Company
anticipates incurring substantial costs, which, if the offering is not
consummated, will be charged to expense.

(NOTE K)--INCOME TAXES:

The provisions for federal and state income taxes for the period from May 3,
1995 (inception) through March 31, 1996, for the year ended March 31, 1997 and
for the six-month periods ended September 30, 1996 and 1997 are comprised of the
following:

<TABLE>
<CAPTION>
PERIOD FROM
MAY 3, 1995
(INCEPTION) SIX MONTHS ENDED
THROUGH YEAR ENDED SEPTEMBER 30,
MARCH 31, MARCH 31, ----------------------
1996 1997 1996 1997
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Current:
Federal.................................. $ 75,000 $ 325,000 $ 155,000 $ 43,000
State.................................... 43,000 188,000 89,000 24,000
----------- ----------- ---------- ----------
118,000 513,000 244,000 67,000
----------- ----------- ---------- ----------
Deferred:
Federal.................................. (238,000) (111,000) (58,000) 41,000
State.................................... (134,000) (62,000) (33,000) 23,000
----------- ----------- ---------- ----------
(372,000) (173,000) (91,000) 64,000
----------- ----------- ---------- ----------
Total.............................. $(254,000) $ 340,000 $ 153,000 $ 131,000
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
</TABLE>

F-16
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE K)--INCOME TAXES: (CONTINUED)

The deferred tax asset of $586,000 and liability of $41,000 at March 31,
1997 and the deferred tax asset of $516,000 and liability of $35,000 at
September 30, 1997 represent the anticipated future tax consequences
attributable to temporary differences between the basis of assets and
liabilities for financial and tax reporting purposes and consists of the
following components:

<TABLE>
<CAPTION>
MARCH 31, 1997 SEPTEMBER 30, 1997
----------------------- -----------------------
CURRENT NONCURRENT CURRENT NONCURRENT
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Accounts receivable........................ $ 283,000 $ 205,000
Inventory valuation........................ 252,000 252,000
Depreciation............................... $ (41,000) $ (35,000)
Accounts payable........................... 12,000 22,000
Other...................................... 39,000 37,000
---------- ----------- ---------- -----------
Total.............................. $ 586,000 $ (41,000) $ 516,000 $ (35,000)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>

Expected tax expense based on the statutory rate is reconciled with actual
tax expense as follows:

<TABLE>
<CAPTION>
PERIOD FROM
MAY 3, 1995 SIX MONTHS ENDED
(INCEPTION)
THROUGH YEAR ENDED SEPTEMBER 30,
MARCH 31, MARCH 31, --------------------
1996 1997 1996 1997
--------------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Federal statutory rate............................. 34.0% 34.0% 34.0% 34.0%
State income tax, net of federal benefit........... 10.8% 8.1% 10.7% 7.1%
Recognition of liability for tax purposes.......... (8.6)% (11.0)%
Other.............................................. 1.1% (.2)% (.6)% (.1)%
--- --- --- ---------
Effective tax rate................................. 45.9 % 33.3 % 44.1% 30.0%
--- --- --- ---------
--- --- --- ---------
</TABLE>

(NOTE L)--COMMITMENTS, CONTINGENCIES AND OTHER MATTERS:

[1] OPERATING LEASES:

The Company currently leases office, warehouse, showroom facilities and
equipment under operating leases, which expire at various times through 2002.

F-17
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE L)--COMMITMENTS, CONTINGENCIES AND OTHER MATTERS: (CONTINUED)

Future minimum lease payments under noncancelable leases at March 31, 1997
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31,
- ----------------------------------------------------------------------------------
<S> <C>
1998........................................................................ $ 231,000
1999........................................................................ 150,000
2000........................................................................ 150,000
2001........................................................................ 47,000
2002........................................................................ 13,000
Thereafter.................................................................. 3,000
----------
Total................................................................... $ 594,000
----------
----------
</TABLE>

During the six months ended September 30, 1997 the company entered into a
lease and moved to a new facility. The lease agreement provides for aggregate
minimum rental payments of approximately $1.6 million through December 2002. In
connection therewith the Company wrote off certain assets which will no longer
be utilized, resulting in a charge to operations of $79,000 during the six
months ended September 30, 1997.

Rent expense for the period from May 3, 1995 (inception) through March 31,
1996, for the year ended March 31, 1997 and for the six months ended September
30, 1997 was approximately $76,000, $140,000 and $148,000, respectively.

[2] EMPLOYMENT AGREEMENTS:

The Company has entered into an employment agreement with the
President/Chief Executive Officer which provides for an annual salary of
$175,000. The Agreement was amended by oral agreement to increase the annual
salary to $250,000. The agreement shall continue so long as the President
remains a stockholder of the Company, unless the agreement is terminated as
defined in the agreement. The Company has an employment agreement with one of
the former principal stockholders of Windsor. The employment agreement provides
for annual salaries ranging from $105,000 to $120,000 through the year 2000 and
a minimum bonus of 5% of the bonuses granted to the principal stockholders of
the Company and annual base salary as follows:

[3] CONSULTING AND NONCOMPETE AGREEMENTS:

The Company has entered into an agreement with an affiliate of one of the
officers/stockholders to provide consulting, advisory and other supportive
services for an annual fee of $208,000. In March 1997 the agreement was orally
amended to increase payments to $5,000 per week. The agreement shall continue as
long as the officer remains a stockholder of the Company, unless the agreement
is terminated as defined in the agreement.

In May 1995 in connection with the Chanuk acquisition the Company entered
into two separate ten year consulting agreements to provide consulting, advisory
and support services to the Company for $500 per week each.

In connection with the acquisition of Renaissance the Company entered into a
noncompete agreement and consulting agreement with the stockholder of
Renaissance which provide for annual aggregate payments of $200,000 per year
through February 2002.

F-18
<PAGE>
AMBASSADOR EYEWEAR GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO DATA AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997)

(NOTE L)--COMMITMENTS, CONTINGENCIES AND OTHER MATTERS: (CONTINUED)

In addition the Company entered into a three year consulting agreement,
which began in June 1996, with a principal stockholder of Windsor which provides
for 36 monthly payments of $6,944 commencing June 2004. The Company has present
valued the payments and has recorded an expense of approximately $29,000 and a
corresponding liability for the year ended March 31, 1997.

[4] MAJOR CUSTOMER:

One major customer accounted for approximately 51%, 35% and 37% of net sales
for the period May 3, 1995 (inception) through March 31, 1996, for the year
ended March 31, 1997 and for the six months ended September 30, 1997,
respectively.

[5] ROYALTY AND LICENSING AGREEMENTS:

The Company has entered into various license agreements which provide for
the payment of royalties ranging from 6% to 8% of net selling price of products
sold, as defined.

The Company is obligated under these agreements to make future minimum
payments as follows:

<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31,
- --------------------------------------------------------------------------------
<S> <C>
1998...................................................................... $ 944,000
1999...................................................................... 528,000
2000...................................................................... 269,000
2001...................................................................... 97,000
------------
Total................................................................. $ 1,838,000
------------
------------
</TABLE>

[6] LETTERS OF CREDIT:

At March 31, 1997 and September 30, 1997 the Company had outstanding
irrevocable letters of credit in the amount of $52,000 and $100,000,
respectively.

[7] SUCCESSOR LIABILITIES:

In connection with the acquisition of all of the assets of Renaissance in
February 1997 no liabilities of Renaissance were assumed by the Company. To the
extent that any creditors of Renaissance seek recourse against the Company as
the purchaser of substantially all of the asssets of Renaissance, the Company
may incur substantial expenses in connection with defending any such actions.
Additionally, to the extent that creditors are successful on asserting any
claims against the Company as successor to Renaissance, the Company would be
required to charge its operations.

F-19
<PAGE>
REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
Renaissance Eyewear, Inc.
Cranford, NJ

We have audited the accompanying statement of assets, liabilities and
capital deficiency of Renaissance Eyewear, Inc. (the "Company") as at October
31, 1996 and the related statements of operations, changes in capital deficiency
and cash flows all preceding the bank taking possession of the assets (Note A)
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements enumerated above present fairly, in
all material respects, the financial position of Renaissance Eyewear, Inc. at
October 31, 1996 and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

As discussed in Notes A and K to the financial statements, the Company
defaulted on its bank loan. In February 1997, the bank took possession of all of
the Company's assets.

Richard A. Eisner & Company, LLP

New York, New York
June 12, 1997

F-20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors
Renaissance Eyewear, Inc.

We have audited the accompanying combined statements of operations, changes
in stockholders' equity and cash flows of Renaissance Eyewear, Inc. and
Affiliate for the year ended October 31, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

In our opinion, the 1995 combined financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Renaissance Eyewear, Inc. and Affiliate for the year ended October 31,
1995, in conformity with generally accepted accounting principles.

J. H. Cohn LLP

Roseland, New Jersey
December 22, 1995

F-21
<PAGE>
RENAISSANCE EYEWEAR, INC.

STATEMENT OF ASSETS, LIABILITIES AND CAPITAL DEFICIENCY
PRECEDING THE BANK TAKING POSSESSION OF THE ASSETS
(NOTE A)

AS AT OCTOBER 31, 1996

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash.......................................................................... $ 8,000
Accounts receivable, net of allowance for returns and doubtful accounts of
$967,000.................................................................... 2,268,000
Other receivables............................................................. 87,000
Inventories................................................................... 3,705,000
Prepaid expenses.............................................................. 90,000
----------
Total current assets...................................................... 6,158,000
Other assets.................................................................... 273,000
----------
TOTAL..................................................................... $6,431,000
----------
----------
LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities:
Loan payable--bank............................................................ $2,663,000
Long-term debt................................................................ 638,000
Accounts payable and accrued expenses......................................... 3,597,000
Bank acceptances payable...................................................... 219,000
Due to related party.......................................................... 180,000
----------
Total current liabilities................................................. 7,297,000
----------
Commitments and contingencies
Capital deficiency:
Preferred stock, $1,000 par value, nonvoting; 5,000 shares authorized;
1,970.915 shares issued..................................................... 1,971,000
Common stock, no par value; 15,000 shares authorized, issued and
outstanding................................................................. 81,000
Additional paid-in capital.................................................... 2,124,000
(Accumulated deficit)......................................................... (4,844,000)
Treasury stock, 198 shares of preferred stock at cost......................... (198,000)
----------
Total capital deficiency.................................................. (866,000)
----------
TOTAL..................................................................... $6,431,000
----------
----------
</TABLE>

Attention is directed to the foregoing accountants' report
and to the accompanying notes to financial statements.

F-22
<PAGE>
RENAISSANCE EYEWEAR, INC.

STATEMENTS OF OPERATIONS

PRECEDING THE BANK TAKING POSSESSION OF THE ASSETS

(NOTE A)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
----------------------------
<S> <C> <C>
1996 1995
------------- -------------
Revenue:
Net sales........................................................................ $ 14,097,000 $ 17,382,000
Other income, including interest................................................. 469,000 446,000
------------- -------------
Total.......................................................................... 14,566,000 17,828,000
------------- -------------
Costs and expenses:
Cost of sales.................................................................... 7,497,000 8,162,000
Selling expenses................................................................. 5,541,000 6,773,000
General and administrative expenses.............................................. 3,018,000 2,946,000
Interest expense................................................................. 478,000 523,000
------------- -------------
Total.......................................................................... 16,534,000 18,404,000
------------- -------------
Loss from operations before write off of receivable from affiliate, impairment of
fixed assets and income tax benefit.............................................. (1,968,000) (576,000)
Income tax (benefit)............................................................... (19,000) (389,000)
Write off of uncollectible receivable from affiliate............................... 2,810,000
Loss on Impairment of fixed assets................................................. 876,000
------------- -------------
NET LOSS........................................................................... $ (5,635,000) $ (187,000)
------------- -------------
------------- -------------
</TABLE>

Attention is directed to the foregoing accountants' report
and to the accompanying notes to financial statements.

F-23
<PAGE>
RENAISSANCE EYEWEAR, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)

PRECEDING THE BANK TAKING POSSESSION OF THE ASSETS
(NOTE A)

<TABLE>
<CAPTION>
PROFESSIONAL
RENAISSANCE EYEWEAR, INC. TECHNOLOGY
------------------------------------ CONSULTANTS ADDITIONAL RETAINED
PREFERRED COMMON TREASURY COMMON PAID-IN EARNINGS
STOCK STOCK STOCK STOCK CAPITAL (DEFICIT) TOTAL
------------ --------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance--November 1, 1994... $ 1,971,000 $ 81,000 $ (167,000) $ 1,000 $ 2,124,000 $ 977,000 $ 4,987,000
Purchase of treasury
stock..................... -- -- (15,000) -- -- -- (15,000)
Dissolution of affiliate.... -- -- -- (1,000) -- 1,000 -0 -
Net loss.................... -- -- -- -- -- (187,000) (187,000)
------------ --------- ----------- ----------- ------------ ------------- -------------
Balance--October 31, 1995... 1,971,000 81,000 (182,000) -0 - 2,124,000 791,000 4,785,000
Purchase of treasury
stock..................... -- -- (16,000) -- -- -- (16,000)
Net loss.................... -- -- -- -- -- (5,635,000) (5,635,000)
------------ --------- ----------- ----------- ------------ ------------- -------------
BALANCE-- OCTOBER 31, 1996.. $ 1,971,000 $ 81,000 $ (198,000) $ -0 - $ 2,124,000 $ (4,844,000) $ (866,000)
------------ --------- ----------- ----------- ------------ ------------- -------------
------------ --------- ----------- ----------- ------------ ------------- -------------
</TABLE>

Attention is directed to the foregoing accountants' report
and to the accompanying notes to financial statements.

F-24
<PAGE>
RENAISSANCE EYEWEAR, INC.

STATEMENTS OF CASH FLOWS

PRECEDING THE BANK TAKING POSSESSION OF THE ASSETS
(NOTE A)

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
----------------------------
<S> <C> <C>
1996 1995
------------- -------------
Cash flows from operating activities:
Net loss.......................................................................... $ (5,635,000) $ (187,000)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization................................................. 216,000 241,000
Provision for bad debts....................................................... 770,000 239,000
Write off of affiliate receivable............................................. 2,810,000
Loss on impairment of fixed assets............................................ 876,000
Gain on sale of fixed assets.................................................. (72,000)
Deferred income taxes......................................................... 134,000 (120,000)
Changes in operating assets and liabilities:
Accounts receivable......................................................... 1,068,000 (980,000)
Inventories................................................................. 809,000 (22,000)
Prepaid expenses and other current assets................................... 273,000 230,000
Due from related parties.................................................... (486,000) (381,000)
Other assets................................................................ 3,000 (2,000)
Bank acceptances payable.................................................... (99,000)
Accounts payable and accrued expenses....................................... 641,000 940,000
Income taxes payable........................................................ (150,000) (195,000)
------------- -------------
Net cash provided by (used in) operating activities....................... 1,257,000 (336,000)
------------- -------------
Cash flows from investing activities:
Proceeds from sale of fixed assets................................................ 72,000
Capital expenditures.............................................................. (5,000) (26,000)
------------- -------------
Net cash provided by (used in) investing activities....................... 67,000 (26,000)
------------- -------------
Cash flows from financing activities:
Net (payments) proceeds under line of credit agreement............................ (457,000) 943,000
Proceeds of long-term debt........................................................ 1,250,000
Payments of long-term debt........................................................ (853,000) (1,824,000)
Purchase of preferred stock for treasury.......................................... (16,000) (15,000)
------------- -------------
Net cash (used in) provided by financing activities....................... (1,326,000) 354,000
------------- -------------
NET DECREASE IN CASH................................................................ (2,000) (8,000)
Cash--beginning of year............................................................. 10,000 18,000
------------- -------------
CASH--END OF YEAR................................................................... $ 8,000 $ 10,000
------------- -------------
------------- -------------
Supplementary disclosures of cash flow information:
Interest paid................................................................... $ 442,000 $ 495,000
</TABLE>

Attention is directed to the foregoing accountants' report
and to the accompanying notes to financial statements.

F-25
<PAGE>
RENAISSANCE EYEWEAR, INC.

NOTES TO FINANCIAL STATEMENTS

(NOTE A)--THE COMPANY:

Renaissance Eyewear, Inc. (the "Company") markets and distributes
prescription eyeglass frames and nonprescription sunglasses to department and
specialty stores, optical chains and eyewear boutiques worldwide.

In February 1997, the Company defaulted on its credit facility and the bank
took possession of all of the Company's assets, which were acquired from the
bank by a third party, Ambassador Eyewear Group, Inc. ("Ambassador"). In
connection therewith, Ambassador paid off the remaining balance due under bank's
credit facility. As a result, the Company has no assets remaining with which to
pay its creditors (see Note K). The Company's current operations are limited to
leasing its employees to and being reimbursed for expenses by Ambassador.

(NOTE B)--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

[1] Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash and trade accounts receivable. The
Company maintains its cash in bank deposit accounts which, at times, may exceed
federally insured limits. Concentrations of credit risk with respect to trade
receivables, other than trade receivables from an affiliate, are limited due to
the large number of customers comprising the Company's customer base and their
dispersion across different geographic areas. In addition, the Company routinely
assesses the financial strength of its customers.

[2] Inventories:

Inventories are stated at the lower of cost (first-in, first-out method) or
market.

[3] Depreciation and amortization:

Provision is made for depreciation and amortization of equipment and
improvements principally on the straight-line method over the estimated useful
lives of the related assets as follows:

<TABLE>
<CAPTION>
RANGE OF
ESTIMATED
CATEGORY USEFUL LIVES
- -------------------------------------------------------------------------------- ------------
<S> <C>
Machinery and equipment......................................................... 5-10 years
Furniture and fixtures.......................................................... 5-10 years
Vehicles........................................................................ 3 years
Leasehold improvements.......................................................... 3-15 years
</TABLE>

[4] Advertising:

The Company expenses the cost of advertising and promotions as incurred.
Advertising costs charged to operations amounted to $397,000 and $550,000 in
1996 and 1995, respectively.

[5] Reclassifications:

Certain accounts in the 1995 financial statements have been reclassified to
conform to the 1996 presentation.

F-26
<PAGE>
RENAISSANCE EYEWEAR, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(NOTE B)--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
[6] Income taxes:

The Company applies Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes", which requires deferred income tax assets
and liabilities to be computed for differences between the financial statement
and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the period
in deferred tax assets and liabilities.

[7] Long lived assets:

The Company has adopted the provisions of SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" in
1996. SFAS 121 requires impairment losses to be recorded on long-lived assets
(i.e. property and equipment and patent and trademarks) used in operations when
impairment indicators are present and undiscounted cash flows estimated to be
generated by those assets are less than the asset's carrying amount. Based on
current circumstances, the adoption of SFAS 121 has a material effect on the
Company's financial statements for the year ended October 31, 1996.

[8] Use of estimates in the preparation of financial statements:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

(NOTE C)--INVENTORIES:

Inventories consist of the following at October 31, 1996:

<TABLE>
<S> <C>
Raw material.................................................... $ 99,000
Work in process................................................. 37,000
Finished goods.................................................. 3,569,000
---------
Total..................................................... $3,705,000
---------
---------
</TABLE>

(NOTE D)--NOTE PAYABLE--BANK:

At October 31, 1996, the Company has a $5,295,000 credit facility with a
bank which, in addition to the term loans discussed in Note E, provides for a
revolving line of credit. Borrowings under the facility bear interest at rates
ranging from 1% to 1 3/4% over the prime rate, are collateralized by
substantially all of the Company's assets and are personally guaranteed by the
principal stockholder. Subsequent to October 31, 1996 the Company defaulted on
this credit facility (see Notes A and K).

F-27
<PAGE>
RENAISSANCE EYEWEAR, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(NOTE E)--LONG-TERM DEBT:

Long-term debt consists of the following at October 31, 1996:

<TABLE>
<S> <C>
Bank term loans (see Note D):
Payable in monthly installments of $35,000 plus
interest through January 31, 1997........................... $ 535,000
Payable in monthly installments of $4,416 plus
interest through January 31, 1997........................... 53,000
Payable in monthly installments of $4,167 plus
interest through January 31, 1997........................... 17,000
Mortgage--payable in monthly installments through July 2006 with
interest at 9%. Secured by a condominium held for sale (included
in other assets) with a book value of $65,323................... 33,000
---------
Current maturities................................................ $ 638,000
---------
---------
</TABLE>

The minimum payment on notes required to be made through October 31, 1997 is
approximately $605,000.

An investment in real estate, which acted as security on the mortgage was
sold in January 1997 and the remaining debt was paid off at that time.
Therefore, the amount due during the year ending October 31, 1997 only includes
payments on the mortgage through the date of the sale.

(NOTE F)--INCOME TAXES:

The income tax (benefit) consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
--------------------------
<S> <C> <C>
1996 1995
------------- -----------
Current:
Federal....................................................... $ (1,635,000) $ (270,000)
State......................................................... (192,000)
------------- -----------
(1,827,000) (270,000)
------------- -----------
Deferred:
Federal....................................................... 1,601,000 (92,000)
State......................................................... 207,000 (27,000)
------------- -----------
1,808,000 (119,000)
------------- -----------
Total....................................................... $ (19,000) $ (389,000)
------------- -----------
------------- -----------
</TABLE>

At October 31, 1996 the Company has available net operating loss
carryforwards to reduce future federal and state taxable income of approximately
$6,246,000 and $7,812,000, respectively, which expire in various amounts through
2011.

Deferred tax assets result primarily from allowances for bad debts that are
not deductible for tax purposes until losses are identified and written off,
certain costs which are capitalized to inventory for tax

F-28
<PAGE>
RENAISSANCE EYEWEAR, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(NOTE F)--INCOME TAXES: (CONTINUED)
purposes and become deductible when the inventory is sold and federal and state
net operating loss carryforwards ("NOL's"). Deferred tax liabilities result from
certain expense items (primarily rent) being treated differently for financial
and tax reporting purposes. A valuation allowance which increased by
approximately $2,253,000 during the year ended October 31, 1996, has been
established for the full amount of the deferred tax assets which would otherwise
have been recorded due to management's uncertainty regarding the Company's
ability to generate taxable income in future periods. The Company's deferred tax
assets (liabilities) at October 31, 1996 consist of the following:

<TABLE>
<CAPTION>
CURRENT NONCURRENT TOTAL
----------- ------------ -------------
<S> <C> <C> <C>
Allowance for bad debts............................. $ 372,000 $ 372,000
Inventory capitalized............................... 120,000 120,000
Depreciation........................................ $ 108,000 108,000
NOL's............................................... 2,468,000 2,468,000
Other............................................... (100,000) (100,000)
----------- ------------ -------------
$ 392,000 $ 2,576,000 2,968,000
----------- ------------
----------- ------------
Valuation allowance................................. (2,968,000)
-------------
$ -0 -
-------------
-------------
</TABLE>

The difference between the statutory federal income tax rate and the
effective income tax rate based on net loss before taxes stated in the statement
of operations for the year ended October 31, 1996 is due to (i) state income tax
benefit net of federal expense, (ii) an income tax refund and (iii) an increase
in the valuation allowance on deferred tax assets.

(NOTE G)--PREFERRED STOCK:

The Company's cumulative preferred stock has a minimum dividend rate of 9%
and a maximum rate of 16%. Dividends of approximately $2,069,000 were in arrears
on the preferred stock at October 31, 1996. These dividends are payable in cash
or by the issuance of additional shares of preferred stock having a par value
equal to the amount of the dividends declared. Such dividends are payable at the
sole discretion of the Board of Directors or upon the liquidation of the
Company.

(NOTE H)--BENEFIT PLANS:

[1] Profit sharing plan:

Prior to June 30, 1995, the Company maintained a qualified employee stock
ownership plan ("ESOP") covering all eligible salaried and hourly employees.
Annual contributions were determined by the Board of Directors and made in the
form of the Company's preferred stock. No contribution was made during 1996 and
1995.

Upon an employee's death or retirement at age 65, the Company is required to
redeem, at par value, all of the shares of preferred stock previously issued to
the employee. During 1996 and 1995, 15.79 and 15.08 shares of preferred stock,
respectively, were redeemed by the Company and are being held in the treasury.

F-29
<PAGE>
RENAISSANCE EYEWEAR, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(NOTE H)--BENEFIT PLANS: (CONTINUED)
Effective July 1, 1995, the Board of Directors approved the restatement of
the ESOP to a profit sharing plan. Annual contributions by the Company are made
at the discretion of the Board of Directors. No contributions were made during
fiscal 1996.

[2] 401(k) plan:

The Company has a 401(k) plan for the benefit of substantially all
employees. Annual contributions are made at the discretion of the Board of
Directors. The Company did not make a contribution to the 401(k) plan for the
years ended October 31, 1996 and October 31, 1995.

(NOTE I)--RELATED PARTY TRANSACTIONS:

Transactions with a Canadian entity, which is 50% owned by the principal
stockholder of the Company, are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
----------------------
<S> <C> <C>
1996 1995
---------- ----------
Sales to.............................................................. $ 248,000 $ 449,000
Management fees charged to............................................ 75,000 75,000
</TABLE>

At October 31, 1996 and October 31, 1995, amounts due related party consist
of a note payable to the wife of the principal stockholder, which was originally
due on demand, but has been subordinated to the bank debt described in Notes D
and E. Interest on the note (9% per annum) amounted to $16,000 in 1996 and 1995.
In addition, the Company leases various facilities from its sole stockholder
(see Note J).

(NOTE J)--COMMITMENTS AND CONTINGENCIES:

[1] Leases:

The Company leases various office facilities from the sole stockholder under
noncancelable operating leases expiring through 2004. Rent expense amounted to
approximately $249,000 in both 1996 and 1995.

The Company also leased a showroom under a noncancelable operating lease
which expired in July 1996. The Company entered into a new showroom lease
effective July 1996. This lease expires in July 1999. Rent expense amounted to
approximately $24,000 and $25,000 in 1996 and 1995, respectively.

F-30
<PAGE>
RENAISSANCE EYEWEAR, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(NOTE J)--COMMITMENTS AND CONTINGENCIES: (CONTINUED)
Minimum future lease payments under noncancelable operating leases in years
subsequent to October 31, 1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING PRINCIPAL NEW YORK
OCTOBER 31, STOCKHOLDER SHOWROOM TOTAL
- ------------------------------------------------------ ------------ ----------- ------------
<S> <C> <C> <C>
1997.................................................. $ 177,000 $ 11,000 $ 188,000
1988.................................................. 231,000 21,000 252,000
1999.................................................. 223,000 16,000 239,000
2000.................................................. 215,000 215,000
2001.................................................. 207,000 207,000
Thereafter............................................ 537,000 537,000
------------ ----------- ------------
Total........................................... $ 1,590,000 $ 48,000 $ 1,638,000
------------ ----------- ------------
------------ ----------- ------------
</TABLE>

The future minimum lease payments have been adjusted to reflect Ambassador's
assumption of various operating leases effective March 1, 1997.

[2] Royalties:

The Company has entered into various royalty agreements with licensers,
expiring through 1998, which require royalty payments based on sales volume.
Royalties charged to operations amounted to $530,000 and $644,000 in 1996 and
1995, respectively. The minimum royalty payment due under these agreements in
the year ending October 31, 1997 is $100,000.

The minimum royalty payment disclosed above has been adjusted to reflect
payments due through February 28, 1997. Subsequent to this date, Ambassador will
continue to make payments on any continuing license agreements.

[3] Letters of credit:

At October 31, 1996, the Company is contingently liable for letters of
credit aggregating $80,000 to be used for future inventory purchases.

(NOTE K)--SUBSEQUENT EVENTS:

As described in Note A, in February 1997 the Company defaulted on its bank
loan and the bank seized all of the Company's assets, which were acquired from
the bank by Ambassador, who paid off the remaining balance of the bank loan.

The following proforma unaudited summary financial information gives effect
to the bank taking possession of the Company's assets as if it had occurred on
October 31, 1996:

<TABLE>
<S> <C>
Total assets.................................................... $ - 0 -
----------
----------
Total liabilities............................................... $4,634,000
Capital deficiency.............................................. (4,634,000)
----------
Total liabilities and capital deficiency........................ $ -0 -
----------
----------
</TABLE>

F-31
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON ASKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary.............................. 1
Risk Factors.................................... 4
Use of Proceeds................................. 12
Dividend Policy................................. 13
Capitalization.................................. 14
Dilution........................................ 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 16
Business........................................ 21
Management...................................... 28
Certain Relationships and Related Party
Transactions.................................. 32
Principal Stockholders.......................... 34
Description of Securities....................... 35
Shares Eligible for Future Sale................. 35
Underwriting.................................... 37
Legal Matters................................... 40
Experts......................................... 40
Available Information........................... 40
Index to Financial Statements................... F-1
</TABLE>

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

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
AFFECTING TRANSACTIONS IN THE SHARES OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

1,200,000 SHARES

AMBASSADOR EYEWEAR
GROUP, INC.
COMMON STOCK

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

PROSPECTUS

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

H.J. MEYERS & CO., INC.
NATIONAL SECURITIES CORPORATION

, 1998

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the DGCL grants corporations the power to indemnify
directors, officers, employees and agents in accordance with the provisions
thereof. Article 17 of the Registrant's By-Laws provides, in effect, that the
Registrant shall indemnify any and all of its directors and officers to the
fullest extent permitted by the DGCL, as the same may be amended. The
indemnification so provided is expressly not exclusive of any other rights to
which those seeking indemnification may be entitled and shall inure to the
benefit of the heirs, executors and administrators of such persons.

Section 102(b)(7) of the DGCL grants corporations the power to eliminate a
director's personal liability for monetary damages to the corporation or its
stockholders for breach of fiduciary duty as a director, except in circumstances
involving a breach of director's duty to loyalty to the corporation or its
stockholders, acts or omissions not in good faith or which involve intentional
misconduct or knowing violations of the law, self-dealing or the unlawful
payment of dividends or repurchase of stock. Section 10 of the Registrant's
Amended and Restated Certificate of Incorporation provides, in effect, that
personal liability of a director of the Registrant shall be eliminated to the
fullest extent permitted by the DGCL, as the same may be amended.

Reference is hereby made to Section 10 of the Amended and Restated
Certificate of Incorporation of the Company, Section 17 of the By-Laws and the
Underwriting Agreement regarding relevant indemnification provisions described
above and elsewhere herein.

The Underwriting Agreement, included as Exhibit 1.1 hereto, provides that,
in certain circumstances, each of the underwriters will indemnify the directors
and officers of the Registrant against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below is an estimate of the fees and expenses to be incurred in
connection with the issuance and distribution of the shares of Common Stock, par
value $.01 per share, offered hereby.

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 4,582
National Association of Securities Dealers, Inc. Filing Fee....... $ 2,012
NASDAQ Listing Fee................................................ $ 5,000
Pacific Stock Exchange Listing Fee................................ 500
Chicago Stock Exchange Listing Fee................................ 15,000
Underwriters Expense Allowance.................................... 216,000
Blue Sky Fees and Expenses........................................ $ 35,000
Legal Fees and Expenses........................................... $ 150,000
Accounting Fees and Expenses...................................... $ 275,000
Printing and Engraving Costs...................................... $ 100,000
Transfer Agent Fees and Expenses.................................. $ 7,500
Miscellaneous Expenses............................................ $ 55,406
---------
TOTAL....................................................... $ 866,000
</TABLE>

II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

The following table sets forth all sales of unregistered securities by the
Registrant within the past three years.

<TABLE>
<CAPTION>
AGGREGATE
NATURE OF CLASS OF OFFERING
TRANSACTION AND DATE PURCHASERS SECURITIES SOLD PRICE PRICE PER SHARE
- -------------------------------- ------------------ ------------------ ------------- ---------------
<C> <S> <C> <C> <C>
Initial Capitalization May 1995 Rudy Slucker and 3,500,000 shares $ 1,000 $ .0003
Barry Budilov of Common Stock
</TABLE>

<TABLE>
<CAPTION>
SHARES NUMBER OF SHARES PRICE PER
OPTIONEE ISSUANCE DATE EXERCISABLE EXERCISABLE SHARE
- ---------------------------------------------- ---------------- ----------------- ----------------- -----------
<S> <C> <C> <C> <C>
Barry Budilov................................. May 1995 5 year option 54,833 $ .25
Kenneth Butchin............................... May 1995 5 year option 57,167 $ .25
Rudy Slucker.................................. May 1995 5 year option 54,833 $ .25
Edward Kauz................................... February 1997 5 year option 180,833 $ 3.00
Kenneth Kitnick............................... June 1997 5 year option 151,667 $ 1.50
</TABLE>

The Company relied on Section 4(2) of the Securities Act in connection with
the initial capitalization of the Company and the sale of shares of Common Stock
to two officers and Directors of the Company, as a transaction by the issuer not
involving a public offering. These investors were both accredited investors as
defined under the Securities Act. The Company relied upon Section 4(2) of the
Securities Act or under Rule 701 under the Securities Act in connection with the
grant of options to the extent that the number of shares subject to such options
does not exceed 15% of the outstanding number of shares of Common Stock. No
underwriters or sales agents were involved nor any commissions paid in
connection with any of the above transactions.

II-2
<PAGE>
ITEM 27. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 ** Amended and Restated Certificate of Incorporation.
3.1a** Amendment to Amended and Restated Certificate of Incorporation.
3.2 ** By-Laws.
4.3 * Specimen Common Stock Certificate.
5.1 * Opinion of Crummy, Del Deo, Dolan, Griffinger & Vecchione.
10.1 ** Asset Sale Agreement dated June 26, 1996 by and among the Company, Windsor Optical, Inc. and Jay
Kitnick and Kenneth Kitnick.
10.2 ** Possession Agreement dated February 26, 1997 by and among Summit Bank, Edward Kauz and Barbara Kauz
and Renaissance Eyewear, Inc.
10.3 ** Collateral Sale Agreement dated February 26, 1997 by and between the Company and Summit Bank.
10.4 Form of Underwriter's Warrant to Purchase Common Stock of the Company.
10.5 * Employment Agreement between the Company and Barry Budilov.
10.6 * Consulting Agreement between the Company and Rudy A. Slucker.
10.7 ** Employment Agreement dated June 26, 1996 between the Company and Kenneth Kitnick.
10.8 ** Employment Agreement dated February 27, 1997 between the Company and Edward Kauz.
10.9 ** Supplemental Employment Agreement dated February 27, 1997 between the Company and Edward Kauz.
10.10** Consulting Agreement dated June 26, 1996 between the Company and Jay Kitnick.
10.11** Consulting Agreement dated May 9, 1995 between the Company and Chanuk, Inc.
10.12** Promissory Note payable to Windsor Optical, Inc. dated June 26, 1996 in the principal amount of
$150,000.
10.13** Promissory Note payable to Windsor Optical, Inc. dated June 26, 1996 in the principal amount of
$300,000.
10.14** Loan Agreement dated June 7, 1996 between the Company and CoreStates Bank, N.A.
10.15** First Amendment to Loan Agreement dated February 25, 1997.
10.16** Second Rider to Guaranty dated February 25, 1997 amending and restating Rider to Guaranty dated
June 7, 1996 executed by Barry Budilov and Carole Budilov in favor of CoreStates Bank, N.A.
10.17** Second Rider to Guaranty dated February 25, 1997 amending and restating Rider to guaranty dated
June 7, 1996 executed by Rudy A. Slucker and Linda Slucker in favor of CoreStates Bank, N.A.
10.18** Second Rider to Subordination Agreement dated February 25, 1997.
10.19** Demand Note payable to CoreStates Bank, N.A. dated February 25, 1997 in the principal amount of
$12,000,000.
10.20+** Product License Agreement dated June 14, 1995 between the Company and Lifestyle Brands, Ltd.
(sunglasses, sunglass cases and accessories).
10.21+** Product License Agreement dated June 14, 1995 between the Company and Lifestyle Brands, Ltd.
(opthalmic frames and cases).
10.22+** License Agreement dated January 1, 1992 between Diplomat Optical Company and Playskool.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------
<C> <S>
10.23+** License Agreement dated January 1, 1992 between Chanuk Inc. d/b/a Diplomat Optical Company and
Harve Bernard Ltd.
10.24+ License Agreement dated April 10, 1989 between Renaissance Eyewear Inc. and Nintendo of America
Inc.
10.25 [Intentionally Omitted].
10.26 [Intentionally Omitted].
10.27+** License Agreement dated April 1, 1994 between Windsor Optical, Inc. and Kenneth Jay Lane, Inc.
10.28+** License Agreement dated August 24, 1995 by and among Kathy Ireland, Inc., the Sterling/ Winters Co.
and Diplomat Ambassador Eyewear Group.
10.29+** License Agreement dated January 1, 1993 between Jones Investment Co., Inc. and Diplomat Ambassador
Eyewear Group.
10.30+** Supply Agreement dated November 18, 1996 between StylRite Optical Mfg. Co., Inc. and the Company.
10.31+** Merchandise License Agreement dated February 21, 1997 between Nintendo of America, Inc. and the
Company.
10.32+** Amendment dated November 1995 to License Agreement dated January 1, 1992 between Diplomat Optical
Company and Playskool.
10.33 Form of Lock-up Agreement.
10.34+** License Renewal Agreement, dated September 22, 1997, between the Company and Kenneth Jay Lane, Inc.
10.35** 1997 Stock Option Plan.
10.36** Lease, dated July 10, 1997, between the Company and 3600 Meadow Lane Partnership.
10.37* Stock Option Agreement between the Company and Barry Budilov.
10.38* Stock Option Agreement between the Company and Rudy Slucker.
10.39* Stock Option Agreement between the Company and Kenneth Butchin.
10.40* Stock Option Agreement between the Company and Edward Kauz.
10.41* Stock Option Agreement between the Company and Kenneth Kitnick.
10.42* Financial Consulting Agreement.
10.43* Mergers and Acquisitions Agreement.
23.1 * Consent of Crummy, Del Deo, Dolan, Griffinger & Vecchione, P.C. (included in Exhibit 5.1).
23.2 Consent of Richard A. Eisner & Company, LLP.
23.3 Consent of J. H. Cohn LLP.
24.1 Power of Attorney (Page II-5).
27 ** Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

** Previously filed.

+ Portions of these Exhibits have been omitted and have been filed separately
with the Secretary of the Commission pursuant to Registrant's Application
Requesting Confidential Treatment under Rule 406 of the Securities Act.

ITEM 28. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

II-4
<PAGE>

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

(2) That the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
Offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities Act") may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

II-5
<PAGE>
SIGNATURES AND POWER OF ATTORNEY

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Amendment No. 2
to the Registration Statement to be signed on its behalf by the undersigned, in
the City of Philadelphia, State of Pennsylvania, on February 4, 1998.

AMBASSADOR EYEWEAR GROUP, INC.

By: /s/ BARRY BUDILOV
------------------------------------------
Barry Budilov
President and Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------------------ ----------------------------------- --------------------
<C> <S> <C>

*
------------------------------------------- Chairman of the Board February 4, 1998
Rudy A. Slucker

/s/ BARRY BUDILOV President, Chief Executive Officer
------------------------------------------- and Director (Principal Executive February 4, 1998
Barry Budilov Officer)

/s/ RAYMOND GREEN
------------------------------------------- Treasurer and Principal Financial February 4, 1998
Raymond Green and Accounting Officer

*
------------------------------------------- Director February 4, 1998
Jay Rice

*
------------------------------------------- Director February 4, 1998
Jeffrey Seiken

*/s/ BARRY BUDILOV
- -------------------------------------------
Barry Budilov, February 4, 1998
as attorney-in-fact
</TABLE>

II-6

<PAGE>

Exhibit 1.1

Underwriting Agreement

Dated: [EFFECTIVE DATE]

H.J. Meyers & Co., Inc.
As Representative of the
Underwriters Named in
Schedule I Hereto
1895 Mt. Hope Avenue
Rochester, New York 14620

Ladies and Gentlemen:

Ambassador Eyewear Group, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the one or more Underwriters named in Schedule I
hereto (the "Underwriters"), including H.J. Meyers & Co., Inc. (the
"Representative" or "you"), the Representative of the several Underwriters,
pursuant to this Underwriting Agreement (this "Agreement"), an aggregate of
2,000,000 of the Common Stock, par value $.01 per share, ("Common Stock") of the
Company. In addition, the Company proposes to grant to the Underwriters the
Over-Allotment Option, referred to and defined in Section 2(c), to purchase all
or any part of an aggregate of 15% of number of Shares of Common Stock, and to
issue to you the Representative's Warrant, referred to and defined in
Section 12, to purchase certain further additional shares of Common Stock.

The 2,000,000 shares of Common Stock to be sold by the Company, together
with the 300,000 additional shares of Common Stock that are the subject of the
Over-Allotment Option, are herein collectively called the "Shares." The Shares
and the shares of Common Stock issuable upon exercise of the Representative's
Warrant, are herein collectively called the "Securities." The term
"Representative's Counsel" shall mean the firm of Harter, Secrest & Emery,
counsel to the Representative, and the term "Company Counsel" shall mean the
firm of Gibbons, Del Deo, Dolan, Griffinfer & Vecchione, counsel to the Company.
Unless the context otherwise requires, all references herein to a "Section"
shall mean the appropriate Section of this Agreement.

You have advised the Company that the Underwriters desire to purchase the
Shares as herein provided, and that you have been authorized to execute this
Agreement as representative of the Underwriters. The Company confirms the
agreements made by it with respect to the purchase of the Shares by the
Underwriters, as follows:

1. Representations and Warranties.

Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each Underwriter that:

<PAGE>

(a) Registration Statement; Prospectus. A registration statement
(SEC File No. 333-31343) on Form SB-2 relating to the public offering of the
Securities (the "Offering"), including a preliminary form of prospectus, copies
of which have heretofore been delivered to you, has been prepared by the Company
in conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated thereunder (the "Rules and
Regulations"), and has been filed with the Commission under the Act. As used
herein, the term "Preliminary Prospectus" shall mean each prospectus filed
pursuant to Rule 430 or Rule 424(a) of the Rules and Regulations. The
Preliminary Prospectus bore the legends required by Items 501 and 502 of
Regulation S-B under the Act and the Rules and Regulations. Such registration
statement (including all financial statements, schedules and exhibits) as
amended at the time it becomes effective and the final prospectus included
therein are herein respectively called the "Registration Statement" and the
"Prospectus," except that (i) if the prospectus first filed by the Company
pursuant to Rule 424(b) or Rule 430A of the Rules and Regulations shall differ
from such final prospectus as then amended, then the term "Prospectus" shall
instead mean the prospectus first filed pursuant to said Rule 424(b) or
Rule 430A, and (ii) if such registration statement is amended or such prospectus
is amended or supplemented after the effective date of such registration
statement and prior to the Option Closing Date (as defined in Section 2(c)),
then (unless the context necessarily requires otherwise) the term "Registration
Statement" shall include such registration statement as so amended, and the term
"Prospectus" shall include such prospectus as so amended or supplemented, as the
case may be.

(b) Contents of Registration Statement. On the Effective Date, and
at all times subsequent thereto for so long as the delivery of a prospectus is
required in connection with the offering or sale of any of the Securities,
(i) the Registration Statement and the Prospectus shall in all respects conform
to the requirements of the Act and the Rules and Regulations, and (ii) neither
the Registration Statement nor the Prospectus shall include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make statements therein not misleading; provided,
however, that the Company makes no representations, warranties or agreements as
to information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriters specifically for
use in the preparation thereof. It is understood that the statements set forth
in the Prospectus with respect to stabilization, the material set forth under
the caption "UNDERWRITING," and the identity of counsel to the Representative
under the caption "LEGAL MATTERS," constitute the only information furnished in
writing by or on behalf of the Underwriters for inclusion in the Registration
Statement and Prospectus, as the case may be.

(c) Organization, Standing, Etc. The Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware. Each subsidiary of the Company (each a
"Subsidiary") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company and each of its Subsidiaries have full power and corporate authority to
own their respective properties and conduct their respective businesses as

-2-
<PAGE>

described in the Prospectus, and are duly qualified or licensed to do business
as foreign corporations and are in good standing in each other jurisdiction in
which the nature of their respective businesses or the character or location of
their respective properties requires such qualification, except where failure so
to qualify will not materially affect the business, properties or financial
condition of the Company or such Subsidiary, as the case may be.

(d) Capitalization. The authorized, issued and outstanding capital
stock of the Company as of the date of the Prospectus is as set forth in the
Prospectus under the caption "CAPITALIZATION." The shares of Common Stock
issued and outstanding on the Effective Date have been duly authorized, validly
issued and are fully paid and non-assessable. No options, warrants or other
rights to purchase, agreements or other obligations to issue, or agreements or
other rights to convert any obligation into, any shares of capital stock of the
Company or any Subsidiary have been granted or entered into by the Company or
such Subsidiary, except as expressly described in the Prospectus. The
Securities conform to all statements relating thereto contained in the
Registration Statement or the Prospectus.

(e) Securities. The Securities and the Representative's Warrant have
been duly authorized and, when issued and delivered against payment therefor
pursuant to this Agreement, will be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights of any security holder of the
Company. Neither the filing of the Registration Statement nor the offering or
sale of any of the Securities or the Representative's Warrant as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any securities of the
Company, except as described in the Registration Statement.

(f) Authority, Etc. This Agreement, the Representative's Warrant,
the Financial Consulting Agreement and the M/A Agreement (each as hereinafter
defined), have been duly and validly authorized, executed and delivered by the
Company and, assuming due execution of this Agreement and such other agreements
by the other party or parties hereto and thereto, constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms. The Company has full right, power and lawful authority
to authorize, issue and sell the Securities and the Representative's Warrant on
the terms and conditions set forth herein. All consents, approvals,
authorizations and orders of any court or governmental authority which are
required in connection with the authorization, execution and delivery of such
agreements, the authorization, issue and sale of the Securities and the
Representative's Warrant, and the consummation of the transactions contemplated
hereby have been obtained.

(g) No Conflict. Except as described in the Prospectus, neither the
Company nor any Subsidiary is in violation, breach or default of or under, and
consummation of the transactions hereby contemplated and fulfillment of the
terms of this Agreement will not conflict with or result in a breach of, any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance pursuant to the terms
of, any contract, indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or such Subsidiary is a
party or by which the Company or such Subsidiary may be bound or to which any of
the property

-3-

<PAGE>

or assets of the Company or such Subsidiary are subject, nor will such action
result in any violation of the provisions of the Certificate of Incorporation or
the By-laws of the Company or any Subsidiary, or any statute, order, rule or
regulation applicable to the Company or any Subsidiary of any court or
governmental authority.

(h) Assets. Subject to the qualifications stated in the Prospectus:
(i) the Company and each Subsidiary, as the case may be, has title in fee simple
to all real property and good and marketable title to all personal property and
assets owned by it described in the Prospectus as owned by it, including without
limitation intellectual property, free and clear of all liens, charges,
encumbrances or restrictions, except such as are not materially significant or
important in relation to its business; (ii) all of the material leases and
subleases under which the Company or any Subsidiary is the lessor or sublessor
of properties or assets or under which the Company or any Subsidiary holds
properties or assets as lessee or sublessee, as described in the Prospectus, are
in full force and effect and, except as described in the Prospectus, neither the
Company nor any Subsidiary is in default in any material respect with respect to
any of the terms or provisions of any of such leases or subleases, and no claim
has been asserted by any party adverse to the rights of the Company or such
Subsidiary as lessor, sublessor, lessee or sublessee under any such lease or
sublease, or affecting or questioning the right of the Company or such
Subsidiary to continued possession of the leased or subleased premises or assets
under any such lease or sublease, except as described or referred to in the
Prospectus; and (iii) the Company and each Subsidiary, as the case may be, owns
or leases all such properties, described in the Prospectus, as are necessary to
its operations as now conducted and, except as otherwise stated in the
Prospectus, as proposed to be conducted as set forth in the Prospectus.

(i) Independent Accountants. Richard A. Eisner & Co., LLP anf J.H.
Cohn LLP who have each given their report on certain financial statements filed
or to be filed with the Commission as a part of the Registration Statement, and
which are included in the Prospectus, are with respect to the Company,
independent public accountants as required by the Act and the Rules and
Regulations.

(j) Financial Statements. The financial statements and schedules,
together with related notes, set forth in the Registration Statement and the
Prospectus present fairly and accurately the financial position, results of
operations and cash flows of the Company and its Subsidiaries on the basis
stated in the Registration Statement, at the respective dates and for the
respective periods to which they apply, in accordance with Generally Accepted
Accounting Principles ("GAAP"). Such financial statements, schedules and
related notes have been prepared in accordance with GAAP applied on a consistent
basis throughout the entire period involved, except to the extent disclosed
therein. The financial information for each of the periods presented in the
Registration Statement and the Prospectus present a true and complete statement
of the financial position of the Company and its Subsidiaries at the dates
indicated and the results of its operations for the periods then ended, in
accordance with GAAP. The Summary Financial Information and Selected Financial
Data included in the Registration Statement and the Prospectus present fairly
and accurately the information shown therein and have been prepared on a basis
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus.

-4-

<PAGE>

(k) No Material Change. Except as otherwise set forth in the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has: (i) incurred any liability or obligation, direct or contingent,
or entered into any transaction not in the ordinary course of its business,
which is material to its business; (ii) effected or experienced any change in
its capital stock; (iii) issued any options, warrants or other rights to acquire
its capital stock; (iv) declared, paid or made any dividend or distribution of
any kind on its capital stock; or (v) effected or experienced any material
adverse change, or development involving a prospective material adverse change,
in its general affairs, management, business, property, operations, condition
(financial or otherwise) or earnings, whether or not such material adverse
change is or may be converted by insurance.

(l) Litigation. Except as set forth in the Prospectus, there is
not now pending nor, to the best knowledge of the Company, threatened, any
action, suit or proceeding (including any related to environmental matters or
discrimination on the basis of age, sex, religion or race), whether or not in
the ordinary course of business, to which the Company or any Subsidiary is a
party or its business or property is subject, before or by any court or
governmental authority, which might result in any material adverse change in
the business, property, operations, condition (financial or otherwise) or
earnings of the Company or such Subsidiary; and no labor disputes involving
the employees of the Company or any Subsidiary exist which might be expected
to affect materially adversely the business, property, operations, condition
(financial or otherwise) or earnings of the Company or such Subsidiary.

(m) No Unlawful Prospectuses. The Company has not distributed any
prospectus or other offering material in connection with the Offering
contemplated herein, other than any Preliminary Prospectus, the Prospectus or
other material permitted by the Act and the Rules and Regulations.
Additionally, no order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the Rules and Regulations.

(n) Taxes. Except as disclosed in the Prospectus, the Company and
each Subsidiary has filed all necessary federal, state, local and foreign income
and franchise tax returns and has paid all taxes shown as due thereon; and there
is no tax deficiency which has been or, to the best knowledge of the Company,
might be asserted against the Company or any Subsidiary.

(o) Licenses, Etc. The Company and each Subsidiary has in effect all
necessary licenses, permits and other governmental authorizations currently
required for the conduct of its business or the ownership of its property, as
described in the Prospectus, and is in all material respects in compliance
therewith. The Company owns or possesses adequate rights to use all material
patents, patent applications, trademarks, mark registrations, copyrights and
licenses disclosed in the Prospectus and/or which are necessary for the conduct
of such business, and except as disclosed in the Prospectus has not received any
notice of conflict with the asserted rights of others in respect thereof. To
the best knowledge of the Company, none of the activities or business of the
Company or any

-5-

<PAGE>

Subsidiary is in violation of, or would cause the Company or such
Subsidiary to violate, any law, rule, regulation or order of the United States,
any state, county or locality, the violation of which would have a material
adverse effect upon the business, property, operations, condition (financial or
otherwise) or earnings of the Company or such Subsidiary.

(p) No Prohibited Payments. Neither the Company nor any Subsidiary
have, directly or indirectly at any time: (i) made any contribution to any
candidate for political office, or failed to disclose fully any such
contribution in violation of law; or (ii) made any payment to any federal,
state, local or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments or
contributions required or allowed by applicable law. The Company's internal
accounting controls and procedures are sufficient to cause the Company to comply
in all material respects with the Foreign Corrupt Practices Act of 1977, as
amended.

(q) Transfer Taxes. On the Closing Dates (as defined in
Section 2(d)), all transfer and other taxes (including franchise, capital stock
and other tax, other than income taxes, imposed by any jurisdiction), if any,
which are required to be paid in connection with the sale and transfer of the
Shares to the Underwriters hereunder shall have been fully paid or provided for
by the Company, and all laws imposing such taxes shall have been fully complied
with.

(r) Exhibits. All contracts and other documents of the Company or
any Subsidiary which are, under the Rules and Regulations, required to be filed
as exhibits to the Registration Statement have been so filed.

(s) Subsidiaries. Except as described in the Prospectus, the Company
has no Subsidiaries. All of the issued and outstanding capital stock of each
Subsidiary is owned by the Company.

(t) Shareholder Agreements, Registration Rights. Except as described
in the Prospectus, no security holder of the Company has any rights with respect
to the purchase, sale or registration of any Securities, and any registration
rights held by any security holders with respect to the Offering have been
effectively waived.

(u) Labor Relations. No labor dispute with the employees of the
Company or any subsidiary exists or, to the best knowledge of the Company, is
imminent; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers, manufacturers or
contractors which might be expected to result in any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise.

2. Purchase, Delivery and Sale of Shares.

-6-

<PAGE>

(a) Purchase Price for Shares. The Shares shall be sold to and
purchased by the Underwriters hereunder at the purchase price of $4.50 per Share
(that being the public offering price of $5.00 per Share less an underwriting
discount of ten percent) (the "Purchase Price").

(b) Firm Shares.

(i) Subject to the terms and conditions of this Agreement, and
on the basis of the representations, warranties and agreements herein contained
the Company agrees to issue and sell, and each of the Underwriters agrees,
severally and not jointly, to buy from the Company at the Purchase Price, the
number of Shares set forth opposite such Underwriter's name in Schedule I hereto
(the "Firm Shares").

(ii) Delivery of the Firm Shares against payment therefor shall
take place at the offices of the Representative, 1895 Mt. Hope Avenue,
Rochester, New York 14620 (the "Representative's Offices") (or at such other
place as may be designated by agreement between you and the Company) at
10:00 a.m., New York time, on [CLOSING DATE], or at such later time and date,
not later than ten banking days after the Effective Date, as you may designate
(such time and date of payment and delivery for the Firm Shares being herein
called the "First Closing Date"). Time shall be of the essence and delivery of
the Firm Shares at the time and place specified in this Section 2(b)(ii) is a
further condition to the obligations of the Underwriters hereunder.

(i) In addition, subject to the terms and conditions of this
Agreement, and on the basis of the representations, warranties and agreements
herein contained, the Company hereby grants to the Underwriters an option (the
"Over-Allotment Option") to purchase from the Company all or any part of an
aggregate of an additional 300,000 Shares at the Purchase Price (the "Option
Shares"). In the event that the Over-Allotment Option is exercised by the
Underwriters in whole or in part, each Underwriter shall purchase Option Shares
in the same proportion as the number of Firm Shares purchased by it bore to the
total number of Firm Shares, unless you and the other Underwriters shall
otherwise agree.

(ii) The Over-Allotment Option may be exercised by the
Underwriters, in whole or in part, within 45 days after the Effective Date, upon
notice by you to the Company advising it of the number of Option Shares as to
which the Over-Allotment Option is being exercised, the names and denominations
in which the certificates for the Shares comprising such Option Shares are to be
registered, and the time and date when such certificates are to be delivered.
Such time and date shall be determined by you but shall not be less than four
nor more than ten banking days after exercise of the Over-Allotment Option, nor
in any event prior to the First Closing Date (such time and date being herein
called the "Option Closing Date"). Delivery of the Option Shares against
payment therefor shall take place at the Representative's Offices. Time shall
be of the essence and delivery at the time and place specified in this
Section 2(c)(ii) is a further condition to the obligations of the Underwriters
hereunder.

-7-

<PAGE>

(iii) The Over-Allotment Option may be exercised only to
cover over-allotments in the sale by the Underwriters of Firm Shares.

(d) Delivery of Certificates; Payment.

(i) The Company shall make the certificates for the Shares to be
purchased hereunder available to you for checking at least one banking day prior
to the First Closing Date or the Option Closing Date (each, a "Closing Date"),
as the case may be. The certificates shall be in such names and denominations
as you may request at least two banking days prior to the relevant Closing Date.
Time shall be of the essence and the availability of the certificates at the
time and place specified in this Section 2(d)(i) is a further condition to the
obligations of the Underwriters hereunder.

(ii) On the First Closing Date the Company shall deliver to you
for the several accounts of the Underwriters definitive engraved certificates in
negotiable form representing all of the Shares comprising the Firm Shares to be
sold by the Company, against payment of the Purchase Price therefor by you for
the several accounts of the Underwriters, by certified or bank cashier's checks
payable in same day funds, or by wire transfer, to the order of the Company.

(iii) In addition, if and to the extent that the Underwriters
exercise the Over-Allotment Option, then on the Option Closing Date the Company
shall deliver to you for the several accounts of the Underwriters definitive
engraved certificates in negotiable form representing the Shares comprising the
Option Shares to be sold by the Company, against payment of the Purchase Price
therefor by you for the several accounts of the Underwriters, by certified or
bank cashier's checks payable in same day funds to the order of the Company.

(iv) It is understood that the Underwriters propose to offer the
Shares to be purchased hereunder to the public, upon the terms and conditions
set forth in the Registration Statement, after the Registration Statement
becomes effective.

3. Covenants.

Covenants of the Company. The Company covenants and agrees with each
Underwriter that:

(a) Registration.

(i) The Company shall use its best efforts to cause the
Registration Statement to become effective and, upon notification from the
Commission that the Registration Statement has become effective, shall so advise
you and shall not at any time, whether before or after the Effective Date, file
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus of which you shall not previously have been advised and furnished
with a copy, or to which you or Representative's Counsel shall

-8-

<PAGE>

have objected in writing, or which is not in compliance with the Act and the
Rules and Regulations. At any time prior to the later of (A) the completion by
the Underwriters of the distribution of the Shares contemplated hereby (but in
no event more than nine months after the Effective Date), and (B) 25 days after
the Effective Date, the Company shall prepare and file with the Commission,
promptly upon your request, any amendments to the Registration Statement or any
amendments or supplements to the Prospectus which, in your reasonable opinion,
may be necessary or advisable in connection with the distribution of the Shares.

(ii) Promptly after you or the Company shall have been advised
thereof, you shall advise the Company or the Company shall advise you, as the
case may be, and confirm such advice in writing, of (A) the receipt of any
comments of the Commission, (B) the effectiveness of any post-effective
amendment to the Registration Statement, (C) the filing of any supplement to the
Prospectus or any amended Prospectus, (D) any request made by the Commission for
amendment of the Registration Statement or amendment or supplementing of the
Prospectus, or for additional information with respect thereto, or (E) the
issuance by the Commission or any state or regulatory body of any stop order or
other order denying or suspending the effectiveness of the Registration
Statement, or preventing or suspending the use of any Preliminary Prospectus, or
suspending the qualification of the Securities for offering in any jurisdiction,
or otherwise preventing or impairing the Offering, or the institution or threat
of any proceeding for any of such purposes. The Company and you shall not
acquiesce in such order or proceeding, and shall instead actively defend such
order or proceeding, unless the Company and you agree in writing to such
acquiescence.

(iii) The Company has caused to be delivered to you copies of
each Preliminary Prospectus, and the Company has consented and hereby consents
to the use of such copies for the purposes permitted by the Act. The Company
authorizes the Underwriters and selected dealers to use the Prospectus in
connection with the sale of the Shares for such period as in the opinion of
Representative's Counsel the use thereof is required to comply with the
applicable provisions of the Act and the Rules and Regulations. In case of the
happening, at any time within such period as a prospectus is required under the
Act to be delivered in connection with sales by an underwriter or dealer, of any
event of which the Company has knowledge and which materially affects the
Company or the Securities, or which in the opinion of Company Counsel or of
Representative's Counsel should be set forth in an amendment to the Registration
Statement or an amendment or supplement to the Prospectus in order to make the
statements made therein not then misleading, in light of the circumstances
existing at the time the Prospectus is required to be delivered to a purchaser
of the Shares, or in case it shall be necessary to amend or supplement the
Prospectus to comply with the Act or the Rules and Regulations, the Company
shall notify you promptly and forthwith prepare and furnish to the Underwriters
copies of such amended Prospectus or of such supplement to be attached to the
Prospectus, in such quantities as you may reasonably request, in order that the
Prospectus, as so amended or supplemented, shall not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements in the Prospectus, in the light of the
circumstances under which they are made, not misleading. The preparation and
furnishing of each such amendment to the Registration Statement, amended
Prospectus or

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<PAGE>

supplement to be attached to the Prospectus shall be without expense to the
Underwriters, except that in the case that the Underwriters are required, in
connection with the sale of the Shares, to deliver a prospectus nine months or
more after the Effective Date, the Company shall upon your request and at the
expense of the Underwriters, amend the Registration Statement and amend or
supplement the Prospectus, or file a new registration statement on Form SB-2 (if
applicable) or Form S-1, if necessary, and furnish the Underwriters with
reasonable quantities of prospectuses complying with section 10(a)(3) of the
Act.

(iv) The Company shall comply with the Act, the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder in connection with
the offering and issuance of the Securities.

(b) Blue Sky. The Company shall, at its own expense, use its best
efforts to qualify or register the Securities for sale under the securities or
"blue sky" laws of such jurisdictions as you may designate, and shall make such
applications and furnish such information to Representative's Counsel as may be
required for that purpose, and shall comply with such laws; provided, however,
that the Company shall not be required to qualify as a foreign corporation or a
dealer in securities or to execute a general consent to service of process in
any jurisdiction in any action other than one arising out of the offering or
sale of the Common Stock. The Company shall bear all of the expense of such
qualifications and registrations, including without limitation the legal fees
and disbursements of Representative's Counsel, which fees, exclusive of
disbursements, shall not exceed $25,000 (unless otherwise agreed). After each
Closing Date the Company shall, at its own expense, from time to time take such
actions and prepare and file such statements and reports as may be required to
continue each such qualification in effect for so long a period as you may
reasonably request.

(c) Exchange Act Registration. The Company shall, at its own
expense, prepare and file with the Commission a registration statement (on
Form 8-A or Form 10) under section 12(b) or 12(g) of the Exchange Act
concurrently with the completion of the Offering or promptly thereafter, but in
no event later than 45 days from the Effective Date, and shall use its best
efforts to cause such registration statement to be declared effective and
maintained in effect for at least five years from the Effective Date.

(d) Prospectus Copies. The Company shall deliver to you on or before
the First Closing Date two signed copies of the Registration Statement including
all financial statements, schedules and exhibits filed therewith, and of all
amendments thereto. The Company shall deliver to or on the order of the
Underwriters, from time to time until the Effective Date, as many copies of any
Preliminary Prospectus filed with the Commission prior to the Effective Date as
the Underwriters may reasonably request. The Company shall deliver to the
Underwriters on the Effective Date, and thereafter for so long as a prospectus
is required to be delivered under the Act, from time to time, as many copies of
the Prospectus, in final form, or as thereafter amended or supplemented, as the
Underwriters may from time to time reasonably request.

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<PAGE>

(e) Amendments and Supplements. The Company shall, promptly upon
your request, prepare and file with the Commission any amendments to the
Registration Statement, and any amendments or supplements to the Preliminary
Prospectus or the Prospectus, and take any other action which in the reasonable
opinion of Representative's Counsel may be reasonably necessary or advisable in
connection with the distribution of the Securities, and shall use its best
efforts to cause the same to become effective as promptly as possible.

(f) Certain Market Practices. The Company has not taken, and shall
not take, directly or indirectly, any action designed, or which might reasonably
be expected, to cause or result in, or which has constituted, the stabilization
or manipulation of the price of the Securities to facilitate the sale or resale
thereof.

(g) Certain Representations. Neither the Company nor any
representative of the Company has made or shall make any written or oral
representation in connection with the Offering and sale of the Securities or the
Representative's Warrant which is not contained in the Prospectus, which is
otherwise inconsistent with or in contravention of anything contained in the
Prospectus, or which shall constitute a violation of the Act, the Rules and
Regulations, the Exchange Act or the rules and regulations promulgated under the
Exchange Act.

(h) Continuing Registration of Warrants and Underlying Common Stock.
For so long as any portion of the Representative's Warrant is outstanding and
exercisable, the Company shall, at its own expense and within 15 days of receipt
from the Representative of notice of the Representative's intent to exercise all
or any portion of the Representative's Warrant: (i) use its best efforts to
cause post-effective amendments to the Registration Statement, or new
registration statements (which may be on Forms SB-2, S-2 or S-3, or any
successor form, as the case may be) relating to the Representative's Warrant and
the Common Stock underlying the Representative's Warrant to become effective in
compliance with the Act and without any lapse of time between the effectiveness
of the Registration Statement and of any such post-effective amendment or new
registration statement; (ii) cause a copy of each Prospectus, as then amended,
to be delivered to each holder of record of a portion of the Representative's
Warrant; (iii) furnish to the Underwriters and dealers as many copies of each
such Prospectus as the Underwriters or dealers may reasonably request; and
(iv) maintain the "blue sky" qualification or registration of the
Representative's Warrant and the Common Stock underlying the Representative's
Warrant, or have a currently available exemption therefrom, in each jurisdiction
in which the Securities were so qualified or registered for purposes of the
Offering. In addition, for so long as any portion of the Representative's
Warrant is outstanding, the Company shall promptly notify you of any material
change in the business, financial condition or prospects of the Company.

(i) Use of Proceeds. The Company shall apply the net proceeds from
the sale of the Shares for the purposes set forth in the Prospectus under the
caption "USE OF PROCEEDS," and shall file such reports with the Commission with
respect to the sale of the Shares and the application of the proceeds therefrom
as may be required pursuant to Rule 463 of the Rules and Regulations.

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<PAGE>

(j) Twelve Months' Earnings Statement. The Company shall make
generally available to its security holders and deliver to you as soon as it is
practicable so to do, but in no event later than 90 days after the end of twelve
months after the close of its current fiscal quarter, an earnings statement
(which need not be audited) covering a period of at least twelve consecutive
months beginning after the Effective Date, which shall satisfy the requirements
of section 11(a) of the Act.

(k) NASDAQ, Exchange Listings, Etc. The Company shall immediately
make all filings required to seek approval for the quotation of the Securities
on The Nasdaq National Market ("NASDAQ"), the Pacific Stock Exchange ("Pacific")
and the Chicago Stock Exchange ("Chicago") and shall use its best efforts to
effect and maintain such approvals for at least five years from the Effective
Date. The Company shall also use its best efforts to cause the Securities to be
accepted for listing such other exchange(s) acceptable to you, prior to the
Effective Date or, failing that, as soon as is possible after the First Closing
Date, and to maintain such listings for five years. Within 10 days after the
Effective Date, the Company shall also use its best efforts to list itself in
Moody's OTC Industrial Manual and to cause such listing to be maintained for
five years from the Effective Date.

(l) Board of Directors. The Company shall maintain a Board of
Directors comprised of a minimum of six and a maximum of eight directors, at
least a majority of whom shall be neither employed by nor otherwise affiliated
with the Company. The Board of Directors shall hold at least four meetings
annually.

(m) Periodic Reports. For so long as the Company is a reporting
company under section 12(g) or section 15(d) of the Exchange Act, the Company
shall, at its own expense, furnish to its shareholders an annual report
(including financial statements audited by certified public accountants) in
reasonable detail. In addition, during the period ending five years from the
date hereof, the Company shall, at its own expense, furnish to you: (i) within
90 days of the end of each fiscal year, a balance sheet of the Company and its
Subsidiaries as at the end of such fiscal year, together with statements of
income, stockholders' equity and cash flows of the Company and its Subsidiaries
as at the end of such fiscal year, all in reasonable detail and accompanied by a
copy of the certificate or report thereon of certified public accountants;
(ii) as soon as they are available, a copy of all reports (financial or
otherwise) distributed to security holders; (iii) as soon as they are available,
a copy of all non-confidential reports and financial statements furnished to or
filed with the Commission; and (iv) such other information as you may from time
to time reasonably request. The financial statements referred to herein shall
be on a consolidated basis to the extent the accounts of the Company and its
Subsidiaries are consolidated in reports furnished to its shareholders
generally. In addition, during the period ending one year from the date hereof,
the Company shall, at its own expense, furnish you monthly with Depository Trust
Company stock transfer sheets.

(n) Certain Options. For a period of 90 days following the First
Closing Date, the Company shall not, without your prior written consent, grant
any options, warrants or

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<PAGE>

other rights to purchase shares of Common Stock at a price less than the initial
public Offering price of the Shares.

(o) Form S-8 Registrations. For a period of one year following the
First Closing Date, the Company shall not register or otherwise facilitate the
registration of any of its securities issuable upon the exercise of options,
warrants (other than the Representative's Warrant) or other rights, whether by
means of a Registration Statement on Form S-8 or otherwise, without your prior
written consent.

(p) Future Sales. For a period of 12 months following the First
Closing Date, the Company shall not sell or otherwise dispose of any securities
of the Company without your prior written consent, which consent shall not be
unreasonably withheld; provided, however, that the Company may at any time issue
shares of Common Stock pursuant to the exercise of the Representative's Warrant,
and options, warrants or conversion rights issued and outstanding on the
Effective Date and described in the Prospectus. In addition, for a period of
two years following the First Closing Date, the Company shall not sell or
otherwise dispose of any shares of Preferred Stock without your prior written
consent. Additionally, for a period of 24 months following the First Closing
Date, the Company shall not issue or sell any securities pursuant to Regulation
D or Regulation S under the Act without your prior written consent, which
consent shall not be unreasonably withheld.

(q) Rule 144 Sales. The Company shall cause each of its officers and
directors to provide you the right, for a period of three years following the
First Closing Date, to purchase for your own account, or to sell for the account
of such person, all securities of the Company sold by such person pursuant to
Rule 144 of the Rules and Regulations. The Company shall use its best efforts
to cause each of the other beneficial holders of at least 5 percent of the
Company's securities to provide you the right, for a period of three years
following the First Closing Date, to purchase for your own account, or to sell
for the account of such holder, all securities of the Company sold by such
holder pursuant to said Rule 144.

(r) Available Shares. The Company shall reserve and at all times
keep available that maximum number of its authorized but unissued Securities
which are issuable upon exercise of the Representative's Warrant, taking into
account the anti-dilution provisions thereof.

(s) Agreement of Management and Shareholders. On or before the
Effective Date, the Company shall cause the parties named therein to execute and
deliver to you an agreement, in the form previously delivered to the Company by
you, regarding certain undertakings by such parties in connection with the
Offering (the "Agreement of Management and Shareholders").

(t) Financial Consulting Agreement. On the First Closing Date and
simultaneously with the delivery of the Firm Shares, the Company shall execute
and deliver to you an agreement with you, in the form previously delivered to
the Company by you, regarding your services as a financial consultant to the
Company (the "Financial Consulting Agreement").

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<PAGE>

(u) M/A Agreement. On the First Closing Date and simultaneously with
the delivery of the Firm Shares, the Company shall execute and deliver to you an
agreement with you, in the form previously delivered to the Company by you,
regarding mergers, acquisitions, joint ventures and certain other forms of
transactions (the "M/A Agreement").

(v) Management. On each Closing Date, management of the Company
shall consist of Rudy A. Slucker as Chairman of the Board of Directors, Barry
Budilov as President and Chief Executive Officer and Kenneth B. Kitnick as
Executive Vice President. Prior to the Effective Date the Company shall have
obtained "key man" life insurance coverage on the life of each of such officers,
naming the Company as beneficiary and having a face value of at least one
million dollars for terms, and with an insurance agency, mutually agreed upon by
the Company and you. The Company shall use its best efforts to maintain such
insurance during the three-year period commencing on the First Closing Date.

(w) Public Relations. Prior to the Effective Date, the Company shall
have retained a public relations firm acceptable to you, and shall continue to
retain such firm, or an alternate firm acceptable to you, for a minimum period
of two years or such terms as are acceptable to you. The public relations firm
shall, at a minimum: (i) have five years experience in Nasdaq; (ii) covenant to
the Company that it will make introductions to potential institutional buyers;
(iii) provide the Company with a list of all current public clients; and (iv)
engage in such other actions as you shall reasonably request.

(x) Bound Volumes. Within 90 days from the First Closing Date, the
Company shall deliver to you, at the Company's expense, three bound volumes in
form and content acceptable to you, containing the Registration Statement and
all exhibits filed therewith and all amendments thereto, and all other
agreements, correspondence, filings, certificates and other documents filed
and/or delivered in connection with the Offering.

(y) Board of Directors Seat/Observer. For a period of thirty-six
(36) months from the closing of the Offering, you shall have the option to
either: (i) select an observer designated by you and acceptable to the Company,
to receive notice of and to attend all meetings of the Board of Directors of the
Company (the "Observer"); or (ii) appoint a member of the Company's Board of
Directors (a "Director"). In the event you elect to appoint an Observer, such
Observer shall have no voting rights, and shall be reimbursed for all
out-of-pocket expenses incurred in attending meetings of the Board of Directors.
In the event you elect to appoint a Director, such Director shall have full
voting rights and such other rights as the Company's other Directors, without
limitation. Such Director shall receive the same reimbursement and compensation
as the Company's other Directors. The Company shall hold at least four meetings
of the Board of Directors per year. If you elect to appoint an Observer, the
Observer will be indemnified by the Company against any claims arising out of
his participation at Board meetings. If you appoint a Director, such Director
shall specifically be covered by the Company's Officers and Directors insurance
policy.

(z) Officers and Directors Insurance. Three days prior to the First
Closing Date, the Company shall have obtained Officers and Directors insurance
satisfactory to you with a minimum face value of one million dollars
($1,000,000).

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<PAGE>

(aa) Stock Transfer Sheets. The Company shall supply you with OTC
Stock Transfer sheets on a weekly basis for the first six weeks following the
First Closing Date, and for six weeks following the Option Closing Date, and on
a monthly basis thereafter.

4. Conditions to Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Shares which they have agreed
to purchase hereunder are subject to the accuracy (as of the date hereof and as
of each Closing Date) of and compliance with the representations and warranties
of the Company contained herein, the performance by the Company of all of its
obligations hereunder and the execution, delivery and performance by each of the
parties thereto of all of their obligations under the Agreement of Management
and Shareholders, and the following further conditions:

(a) Effective Registration Statement; No Stop Order. The
Registration Statement shall have become effective and you shall have received
notice thereof not later than 6:00 p.m., New York time, on the date of this
Agreement, or at such later time or on such later date as to which you may agree
in writing. In addition, on each Closing Date (i) no stop order denying or
suspending the effectiveness of the Registration Statement shall be in effect,
and no proceedings for that or any similar purpose shall have been instituted or
shall be pending or, to your knowledge or to the knowledge of the Company, shall
be contemplated by the Commission, and (ii) all requests on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Representative's Counsel.

(b) Opinion of Company Counsel. On the First Closing Date, you shall
have received the opinion, dated as of the First Closing Date, of Company
Counsel, in form and substance satisfactory to Representative's Counsel, to the
effect that:

(i) the Company and each Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, respectively, with full power
and corporate authority to own their properties and conduct their
businesses as described in the Prospectus, and each of the Company and
its Subsidiaries is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each other jurisdiction
in which the nature of its business or the character or location of
its properties requires such qualification, except where failure so to
qualify will not materially affect the business, properties or
financial condition of the Company or such Subsidiary;

(ii) to the best knowledge of such counsel, (A) the Company
and each Subsidiary has obtained all necessary licenses, permits and
other governmental authorizations currently required for the conduct
of its business or the ownership of its property, as described in the
Prospectus, (B) such obtained licenses, permits and other governmental
authorizations are in full force and effect, and (C) the Company and
each Subsidiary is, in all material respects, in compliance therewith;

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<PAGE>

(iii) (A) the authorized capitalization of the Company
as of the date of the Prospectus was as is set forth in the Prospectus
under the caption "CAPITALIZATION;" (B) all of the shares of Common
Stock now outstanding have been duly authorized and validly issued,
are fully paid and non-assessable, conform to the description thereof
contained in the Prospectus, have not been issued in violation of the
preemptive rights of any shareholder and, except as described in the
Prospectus, are not subject to any restrictions upon the voting or
transfer thereof; (C) all of the Shares have been duly authorized and,
when paid for as provided herein, shall be validly issued, fully paid
and non-assessable, shall not have been issued in violation of the
preemptive rights of any shareholder, and no personal liability shall
attach to the ownership thereof; (D) the shareholders of the Company
do not have any preemptive rights or other rights to subscribe for or
purchase, and there are no restrictions upon the voting or transfer
of, any of the Securities except as set forth in the prospectus or as
otherwise required by the Underwriters; (E) the Shares and the
Representative's Warrant conform to the respective descriptions
thereof contained in the Prospectus; (F) all prior sales of the
Company's securities have been made in compliance with, or under an
exemption from, the Act and applicable state securities laws; (G) a
sufficient number of shares of Common Stock has been reserved for
issuance upon exercise of the Representative's Warrant; and (H) to the
best knowledge of such counsel, neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any registration rights or other rights,
other than those which have been effectively waived or satisfied, for
or relating to the registration of any securities of the Company;

(iv) the certificates evidencing the Shares are each in
valid and proper legal form under the laws of Delaware; and the
Representative's Warrant is exercisable for shares of Common Stock in
accordance with its terms and at the prices therein provided for;

(v) this Agreement, the Representative's Warrant, the
Financial Consulting Agreement and the M/A Agreement have been duly
and validly authorized, executed and delivered by the Company and
(assuming due execution and delivery thereof by each party other than
the Company) all of such agreements are, or when duly executed shall
be, the valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms (except as
enforceability may be limited by bankruptcy, insolvency or other laws
affecting the rights of creditors generally); provided, however, that
no opinion need be expressed as to the enforceability of the indemnity
provisions contained in Section 6 or the contribution provisions
contained in Section 7;

(vi) to the best knowledge of such counsel, (A) there is no
pending, threatened or contemplated legal or governmental proceeding
affecting the Company or any Subsidiary which could materially and
adversely affect the business, property, operations, condition
(financial or otherwise) or earnings of

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<PAGE>

the Company or such Subsidiary, or which questions the validity of the
Offering, the Securities, this Agreement, the Representative's Warrant, the
Financial Consulting Agreement or the M/A Agreement, or of any action taken
or to be taken by the Company pursuant thereto; and (B) there is no legal
or governmental proceeding or regulation required to be described or
referred to in the Registration Statement which is not so described or
referred to;

(vii) to the best knowledge of such counsel, (A) the
Company is not in violation of or default under this Agreement, the
Representative's Warrant, the Financial Consulting Agreement or the
M/A Agreement; and (B) the execution and delivery hereof and thereof
and the incurrence of the obligations herein and therein set forth and
the consummation of the transactions herein or therein contemplated
shall not result in a violation of, or constitute a default under, the
Certificate of Incorporation or By-laws of the Company, or any
material obligation, agreement, covenant or condition contained in any
bond, debenture, note or other evidence of indebtedness, or in any
material contract, indenture, mortgage, loan agreement, lease, joint
venture or other agreement or instrument to which the Company is a
party or by which its assets are bound, or any material order, rule,
regulation, writ, injunction or decree of any government, governmental
instrumentality or court;

(viii) the Registration Statement has become effective under
the Act, and to the best knowledge of such counsel, no stop order denying
or suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for that or any similar purpose have been instituted or
are pending before or threatened by the Commission;

(ix) the Registration Statement and the Prospectus (except for
the financial statements, notes thereto and other financial information and
statistical data contained therein, as to which no opinion need be
rendered), comply as to form in all material respects with the Act and the
Rules and Regulations;

(x) all descriptions contained in the Registration
Statement or the Prospectus of contracts and other documents are
accurate and fairly present the information required to be described,
and such counsel is familiar with all contracts and other documents
referred to in the Registration Statement and the Prospectus or filed
as exhibits to the Registration Statement and, to the best knowledge
of such counsel, no contract or document of a character required to be
summarized or described therein or to be filed as an exhibit thereto
is not so summarized, described or filed;

(xi) the descriptions contained in the Registration
Statement and the Prospectus which purport to summarize the provisions
of statutes, rules and regulations are accurate summaries in all
material respects, and such descriptions fairly present in all
material respects the information shown, and the other descriptions
contained in the Registration Statement and the Prospectus that

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concern matters of law or legal conclusions have been reviewed by such
counsel and are materially correct;

(xii) the Agreement of Management and Shareholders have
been duly and validly executed and delivered by each party thereto
(other than American Stock Transfer & Trust Company); and

(xiii) except for registration under the Act and
registration or qualification of the Securities under applicable state
or foreign securities or blue sky laws, no authorization, approval,
consent or license of any governmental or regulatory authority or
agency is necessary in connection with: (A) the authorization,
issuance, sale, transfer or delivery of the Securities by the Company;
(B) the execution, delivery and performance of this Agreement by the
Company or the taking of any action contemplated herein; (C) the
issuance of the Representative's Warrant or the Securities issuable
upon exercise thereof; or (D) the execution, delivery and performance
of this Agreement by the Company or the taking of any action
contemplated herein.

Such opinion shall also state that such counsel has participated in the
preparation of the Registration Statement and the Prospectus, and nothing has
come to the attention of such counsel to cause such counsel to have reason to
believe that the Registration Statement at the time it became effective
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except, in the case of both the Registration Statement and the
Prospectus, for the financial statements, notes thereto and other financial
information and statistical data contained therein, as to which no opinion need
be expressed. Such opinion shall also cover such matters incident to the
transactions contemplated hereby as you or Representative's Counsel shall
reasonably request. In rendering such opinion, Company Counsel may rely as to
matters of fact upon certificates of officers of the Company, and of public
officials and may rely as to all matters of law other than the law of the United
States or the State of Delware upon opinions of counsel satisfactory to you, in
which case the opinion shall state that they have no reason to believe that you
and they are not entitled so to rely.

(c) Corporate Proceedings. All corporate proceedings and other legal
matters relating to this Agreement, the Registration Statement, the Prospectus
and other related matters shall be reasonably satisfactory to or approved by
Representative's Counsel, and you shall have received from such counsel a signed
opinion, dated as of the First Closing Date, with respect to the validity of the
issuance of the Securities, the form of the Registration Statement and
Prospectus (other than the financial statements and other financial or
statistical data contained therein), the execution of this Agreement and other
related matters as you may reasonably require. The Company shall have furnished
to Representative's Counsel such documents as they may reasonably request for
the purpose of enabling them to render such opinion.

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<PAGE>

(d) Comfort Letters. Prior to the Effective Date, and again on and
as of the First Closing Date, you shall have received a letter from Richard A.
Eisner & Co., LLP, certified public accountants for the Company, substantially
in the form approved by you. Additionally, you shall have received "no-default
letters" from all financial institutions with which the Company and any
subsidiary conducts its business. Such letters shall confirm that: (i) the
Company or any subsidiary is not presently in default on any indenture, credit
agreement, line of credit, promissory note or any other agreement between such
financial institution and the Company ("Bank Agreements"); (ii) that such
financial institution knows of no reason why the Company or any subsidiary,
either presently or with the passage of time, would default upon any Bank
Agreements; and (iii) that the completion of the Offering in accordance with its
terms will not result in a default by the Company or any subsidiaries on any
Bank Agreements. Furthermore, you shall have received litigation "comfort
letters" from the Company's (including any subsidiary) litigation counsel. Such
letters shall describe in detail any litigation to which the Company or any
subsidiary is a party or with respect to which the Company or any subsidiary is
likely to become a party. Additionally, such letters shall discuss the merits
of the Company's or any subsidiary's case as well as the merits of any claims
third parties may have against the Company or any subsidiary and the likelihood
that any such claims will be resolved successfully in favor of the Company or
any subsidiary.

(e) Bring Down. At each of the Closing Dates, (i) the
representations and warranties of the Company contained in this Agreement shall
be true and correct with the same effect as if made on and as of such Closing
Date, and the Company shall have performed all of its respective obligations
hereunder and satisfied all the conditions on its part to be satisfied at or
prior to such Closing Date; (ii) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all material
respects conform to the requirements of the Act and the Rules and Regulations,
and neither the Registration Statement nor the Prospectus shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; (iii) there shall have been, since the respective dates as of which
information is given, no material adverse change in the business, property,
operations, condition (financial or otherwise), earnings, capital stock,
long-term or short-term debt or general affairs of the Company from that set
forth in the Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the Effective
Date, and the Company shall not have incurred any material liabilities nor
entered into any material agreement other than as referred to in the
Registration Statement and Prospectus; and (iv) except as set forth in the
Prospectus, no action, suit or proceeding shall be pending or threatened against
the Company which would be required to be disclosed in the Registration
Statement, and no proceedings shall be pending or threatened against the Company
before or by any commission, board or administrative agency in the United States
or elsewhere, wherein an unfavorable decision, ruling or finding would
materially adversely affect the business, property, operations, condition
(financial or otherwise), earnings or general affairs of the Company. In
addition, you shall have received, at the First Closing Date, a certificate
signed by the principal executive officer and by the principal financial officer
of the Company, dated as of the First Closing Date, evidencing compliance with
the provisions of this Section 4(e).

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(f) Opinion of Patent Counsel. On the First Closing Date, you shall
have received the opinion, dated as of the First Closing Date, of
_____________________, patent counsel to the Company, in form and substance
satisfactory to Representative's Counsel, to the effect that the descriptions
contained in the Registration Statement and the Prospectus which purport to
summarize the provisions of statutes, rules and regulations pertaining to
patents and trademarks are accurate summaries in all respects, and such
descriptions fairly present in all respects the information shown, and the
descriptions contained in the Registration Statement and the Prospectus that
concern matters of law or legal conclusions with respect to patents and
trademarks have been reviewed by such counsel and are correct.

(g) Transfer and Warrant Agent. On or before the Effective Date, the
Company shall have appointed American Stock Transfer & Trust Company (or other
agent mutually acceptable to the Company and you), as its transfer agent and
warrant agent to transfer all of the Shares issued in the Offering and the
Representative's Warrant, as well as to transfer other shares of the Common
Stock outstanding from time to time.

(h) Certain Further Matters. On each Closing Date, Representative's
Counsel shall have been furnished with all such other documents and certificates
as they may reasonably request for the purpose of enabling them to render their
legal opinion to the Underwriter and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements, the
performance of any of the covenants, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company on or
prior to each of the Closing Dates in connection with the authorization,
issuance and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to you and to Representative's Counsel.

(i) Additional Conditions. Upon exercise of the Over-Allotment
Option, the Underwriters' obligations to purchase and pay for the Option Shares
shall be subject (as of the date hereof and as of the Option Closing Date) to
the following additional conditions:

(i) The Registration Statement shall remain effective at the
Option Closing Date, no stop order denying or suspending the effectiveness
thereof shall have been issued, and no proceedings for that or any similar
purpose shall have been instituted or shall be pending or, to your knowledge or
the knowledge of the Company, shall be contemplated by the Commission, and all
reasonable requests on the part of the Commission for additional information
shall have been complied with to the satisfaction of Representative's Counsel.

(ii) On the Option Closing Date there shall have been delivered
to you the signed opinion of Company Counsel, dated as of the Option Closing
Date, in form and substance satisfactory to Representative's Counsel, which
opinion shall be substantially the same in scope and substance as the opinion
furnished to you on the First Closing Date pursuant to Section 4(b), except that
such opinion, where appropriate, shall cover the Option Shares rather than the
Firm Shares. If the First Closing Date is the same as the Option Closing Date,
such opinions may be combined.

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<PAGE>

(iii) All proceedings taken at or prior to the Option Closing Date
in connection with the sale and issuance of the Option Shares shall be
satisfactory in form and substance to you, and you and Representative's Counsel
shall have been furnished with all such documents, certificates and opinions as
you may request in connection with this transaction in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company or its compliance with any of the covenants or
conditions contained herein.

(iv) On the Option Closing Date there shall have been delivered
to you a letter in form and substance satisfactory to you from Richard A. Eisner
& Co., LLC, dated the Option Closing Date and addressed to you, confirming the
information in their letter referred to in Section 4(d) as of the date thereof
and stating that, without any additional investigation required, nothing has
come to their attention during the period from the ending date of their review
referred to in such letter to a date not more than five banking days prior to
the Option Closing Date which would require any change in such letter if it were
required to be dated the Option Closing Date.

(v) On the Option Closing Date there shall have been delivered
to you a certificate signed by the principal executive officer and by the
principal financial or accounting officer of the Company, dated the Option
Closing Date, in form and substance satisfactory to Representative's Counsel,
substantially the same in scope and substance as the certificate furnished to
you on the First Closing Date pursuant to Section 4(e), dated the Option Closing
Date, in form and substance satisfactory to Representative's Counsel,
substantially the same in scope and substance as the certificate furnished to
you by the Company on the First Closing Date pursuant to Section 4(e).

(j) Cancellation. If any of the conditions provided by this
Section 4 shall not have been completely fulfilled as of the date indicated,
then this Agreement and all obligations of the Underwriters hereunder may be
cancelled at, or at any time prior to, either Closing Date by your notifying the
Company of such cancellation in writing or by telegram at or prior to the
applicable Closing Date. Any such cancellation shall be without liability of
the Underwriters to the Company, except as otherwise provided herein.

5. Conditions to the Obligations of the Company. The obligations of the
Company to sell and deliver the Shares are subject to the following conditions:

(a) Effective Registration Statement. The Registration Statement
shall have become effective not later than 6:00 p.m. New York time, on the date
of this Agreement, or at such later time or on such later date as the Company
and you may agree in writing.

(b) No Stop Order. On the applicable Closing Date, no stop order
denying or suspending the effectiveness of the Registration Statement shall have
been issued under the Act or any proceedings therefor initiated or threatened by
the Commission.

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<PAGE>

(c) Payment for Shares. On the applicable Closing Date, you shall
have made payment, for the several accounts of the Underwriters, of the
aggregate Purchase Price for the Shares then being purchased, by certified or
bank cashier's checks payable in same day funds or wire transfer to the order of
the Company.

If the conditions to the obligations of the Company provided by this Section 5
have been fulfilled on the First Closing Date but are not fulfilled after the
First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company to sell and deliver the Option Shares upon exercise of
the Over-Allotment Option shall be affected.

6. Indemnification.

(a) Indemnification by the Company. As used in this Agreement, the
term "Liabilities" shall mean any and all losses, claims, damages and
liabilities, and actions and proceedings in respect thereof (including without
limitation all reasonable costs of defense and investigation and all attorneys'
fees) including without limitation those asserted by any party to this Agreement
against any other party to this Agreement. The Company hereby indemnifies and
holds harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act, from and against all Liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such Liabilities arise
out of or are based upon: (i) any untrue statement or alleged untrue statement
of any material fact contained in (A) the Registration Statement or any
amendment thereto, or the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto, or (B) any "blue sky" application or other
document executed by the Company specifically for that purpose, or based upon
written information furnished by the Company, filed in any state or other
jurisdiction in order to qualify any or all of the Securities under the
securities laws thereof (any such application, document or information being
herein called a "Blue Sky Application"); or (ii) the omission or alleged
omission to state in the Registration Statement or any amendment thereto, or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or in any Blue Sky Application, a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company shall not be liable in any such case to the extent,
but only to the extent, that any such Liabilities arise out of or are based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company through you by or on behalf of any Underwriter specifically for use
in the preparation of the Registration Statement or any such amendment thereto,
or the Prospectus or any such Preliminary Prospectus, or any such amendment or
supplement thereto, or any such Blue Sky Application. The foregoing indemnity
shall be in addition to any other liability which the Company may otherwise
have.

(b) Indemnification by Underwriters. Each Underwriter, severally and
not jointly, hereby indemnifies and holds harmless the Company, each of its
directors, each nominee (if any) for director named in the Prospectus, each of
its officers who have signed the Registration Statement, and each person, if
any, who controls the Company within the

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<PAGE>

meaning of the Act, from and against all Liabilities to which the Company or any
such director, nominee, officer or controlling person may become subject under
the Act or otherwise, insofar as such Liabilities arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
any such Liabilities arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company through you,
by or on behalf of such Underwriter, specifically for use in the preparation
thereof. In no event shall any Underwriter be liable or responsible for any
amount in excess of the compensation received by such Underwriter, in the form
of underwriting discounts or otherwise, pursuant to this Agreement or any other
agreement contemplated hereby.

(c) Procedure. Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify in writing the indemnifying
party of the commencement thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 6. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions hereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the indemnified party; provided,
however, that if the indemnified party is any Underwriter or a person who
controls any Underwriter within the meaning of the Act, the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action (including any
impleaded parties) include both such Underwriter or such controlling person and
the indemnifying party and, in your judgment, it is advisable for such
Underwriter or controlling person to be represented by separate counsel (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of such Underwriter or such controlling person, it
being understood, however, that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising

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<PAGE>

out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnified party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnified party.

7. Contribution. In order to provide for just and equitable contribution
under the Act in any case in which (a) any indemnified party makes claims for
indemnification pursuant to Section 6 but it is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case, notwithstanding the fact
that the express provisions of Section 6 provide for indemnification in such
case, or (b) contribution under the Act may be required on the part of any
indemnified party, then such indemnified party and each indemnifying party (if
more than one) shall contribute to the aggregate Liabilities to which it may be
subject, in either such case (after contribution from others) in such
proportions that the Underwriters are responsible in the aggregate for that
portion of such Liabilities represented by the percentage that the underwriting
discount per Share appearing on the cover page of the Prospectus bears to the
public Offering price per Share appearing thereon, and the Company shall be
responsible for the remaining portion; provided, however, that if such
allocation is not permitted by applicable law, then the relative fault of the
Company, and the Underwriters in connection with the statements or omissions
which resulted in such Liabilities and other relevant equitable considerations
shall also be considered. The relative fault shall be determined by reference
to, among other things, whether in the case of an untrue statement of a material
fact or the omission to state a material fact, such statement or omission
relates to information supplied by the Company, or the Underwriters, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if the respective
obligations of the Company and the Underwriters to contribute pursuant to this
Section 7 were to be determined by pro rata or per capita allocation of the
aggregate Liabilities (even if the Underwriters were to be treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this Section 7. In addition, the contribution of any Underwriter shall not be
in excess of its proportionate share of the portion of such Liabilities for
which such Underwriter is responsible. No person guilty of a fraudulent
misrepresentation (within the meaning of section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. As used in this Section 7, the term "Company" shall include
any officer, director or person who controls the Company within the meaning of
section 15 of the Act. The Underwriters' obligations under this Section 7 to
contribute are several in proportion to their respective underwriting
obligations and not joint. If the full amount of the contribution specified in
this Section 7 is not permitted by law, then each indemnified party and each
person who controls an indemnified party shall be entitled to contribution from
each indemnifying party to the full extent permitted by law. The foregoing
contribution agreement shall in no way affect the contribution liabilities of
any persons having liability under section 11 of the Act other than the Company
and the Underwriters. No contribution shall be requested with regard to the

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<PAGE>

settlement of any matter from any party who did not consent to the settlement;
provided, however, that such consent shall not be unreasonably withheld in light
of all factors of importance to such party.

8. Costs and Expenses.

(a) Certain Costs and Expenses. Whether or not this Agreement
becomes effective or the sale of the Shares to the Underwriters is consummated,
the Company shall pay all costs and expenses incident to the issuance, offering,
sale and delivery of the Shares and the performance of its obligations under
this Agreement, including without limitation: (i) all fees and expenses of the
Company's legal counsel and accountants; (ii) all costs and expenses incident to
the preparation, printing, filing and distribution of the Registration Statement
(including the financial statements contained therein and all exhibits and
amendments thereto), each Preliminary Prospectus and the Prospectus, each as
amended or supplemented, this Agreement and the other agreements and documents
referred to herein, each in such quantities as you shall deem necessary;
(iii) all fees of NASD required in connection with the filing required by NASD
to be made by the Representative with respect to the Offering; (iv) all
expenses, including fees (but not in excess of the amount set forth in
Section 3(b)) and disbursements of Representative's Counsel in connection with
the qualification of the Securities under the "blue sky" laws which you shall
designate; (v) all costs and expenses of printing the respective certificates
representing the Shares; (vi) the expense of placing one or more "tombstone"
advertisements or promotional materials as directed by you (provided, however,
that the aggregate amount thereof shall not exceed $20,000); (vii) all costs and
expenses of the Company and its employees (but not of the Representative or its
employees) associated with due diligence meetings and presentations; (viii) all
costs and expenses associated with the preparation of a seven to ten minute
professional video presentation concerning the Company, its products and its
management for broker due diligence purposes; (ix) any and all taxes (including
without limitation any transfer, franchise, capital stock or other tax imposed
by any jurisdiction) on sales of the Shares to the Underwriters hereunder; and
(x) all costs and expenses incident to the furnishing of any amended Prospectus
or any supplement to be attached to the Prospectus as required by Sections 3(a)
and 3(d), except as otherwise provided by said Sections.

(b) Representative's Expense Allowance. In addition to the expenses
described in Section 8(a), the Company shall on the First Closing Date pay to
you, the balance of a non-accountable expense allowance (which shall include
fees of Representative's Counsel exclusive of the fees referred to in
Section 3(b)) of $300,000 (that being an amount equal to three percent of the
gross proceeds received upon sale of the Firm Shares), of which $________ has
been paid to you prior to the date hereof. In the event that the Over-Allotment
Option is exercised, then the Company shall on the Option Closing Date pay to
you, an additional amount equal to three percent of the gross proceeds received
upon sale of any of the Option Shares. In the event that the transactions
contemplated hereby fail to be consummated for any reason, then you shall return
to the Company that portion of the $________ heretofore paid by the Company to
the extent that it has not been utilized by you in connection with the Offering
for accountable out-of-pocket expenses; provided, however,

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<PAGE>

that if such failure is due to a breach by the Company of any covenant,
representation or warranty contained herein or because any other condition to
the Underwriters' obligations hereunder required to be fulfilled by the Company
is not fulfilled, then the Company shall be liable for your accountable
out-of-pocket expenses to the full extent thereof (with credit given to the
$________ paid).

(c) No Finders. No person is entitled either directly or indirectly
to compensation from the Company, the Underwriters or any other person for
services as a finder in connection with the Offering, and the Company hereby
indemnify and holds harmless the Underwriters, and the Underwriters hereby
indemnifies and hold harmless the Company from and against all Liabilities,
joint or several, to which the indemnified party may become subject insofar as
such Liabilities arise out of or are based upon the claim of any person (other
than an employee of the party claiming indemnity) or entity that he or it is
entitled to a finder's fee in connection with the Offering by reason of such
person's or entity's influence or prior contact with the indemnifying party.

9. Substitution of Underwriters.

(a) Substitution. If any Underwriter defaults in its obligation to
purchase the numbers of Shares which it has agreed to purchase under this
Agreement, you shall be obligated to purchase all of the Shares not purchased by
the defaulting Underwriter unless such purchase shall cause you to be in
violation of the net capital requirements of Rule 15c3-1 of the Exchange Act, in
which case you, and any other Underwriters satisfactory to you who so agree,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) all of the Shares. If you or the
other Underwriters satisfactory to you do not elect to purchase the Shares which
the defaulting Underwriter or Underwriters agreed but failed to purchase, then
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company except for: (i) the payment by the
Company of expenses as provided by Section 8(a); (ii) the payment by the Company
of accountable expenses as provided by Section 8(b); and (iii) the indemnity and
contribution agreements of the Company and the Underwriters provided by
Sections 6 and 7.

(b) Further Matters. Nothing contained herein shall relieve a
defaulting Underwriter of any liability it may have for damages caused by its
default. If the other Underwriters satisfactory to you are obligated or agree
to purchase the Shares of a defaulting Underwriter, either you or the Company
may postpone the First Closing Date for up to seven banking days in order to
effect any changes that may be necessary in the Registration Statement, any
Preliminary Prospectus or the Prospectus or in any other document or agreement,
and to file promptly any amendments to the Registration Statement, or any
amendments or supplements to any Preliminary Prospectus or the Prospectus, which
in your opinion may thereby be made necessary.

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<PAGE>

10. Effective Date. The Agreement shall become effective upon its
execution, except that you may, at your option, delay its effectiveness until
10:00 a.m., New York time, on the first full business day following the
Effective Date, or at such earlier time after the Effective Date as you in your
discretion shall first commence the initial public Offering by the Underwriters
of any of the Shares. The time of the initial public Offering shall mean the
time of release by you of the first newspaper advertisement with respect to the
Shares, or the time when the Shares are first generally offered by you to
dealers by letter or telegram, whichever shall first occur. This Agreement may
be terminated by you at any time before it becomes effective as provided above,
except that the provisions of Sections 6, 7, 8, 13, 14, 15 and 16 shall remain
in effect notwithstanding such termination.

11. Termination.

(a) Grounds for Termination. This Agreement, except for Sections 6,
7, 8, 13, 14, 15 and 16, may be terminated at any time prior to the First
Closing Date, and the Over-Allotment Option, if exercised, may be cancelled at
any time prior to the Option Closing Date, by you if in your sole judgment it is
impracticable to offer for sale or to enforce contracts made by the Underwriters
for the resale of the Shares agreed to be purchased hereunder, by reason of:
(i) the Company having sustained a material loss, whether or not insured, by
reason of fire, earthquake, flood, accident or other calamity, or from any labor
dispute or court or government action, order or decree; (ii) trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq Stock Market having been suspended or limited; (iii) material
governmental restrictions having been imposed on trading in securities generally
which are not in force and effect on the date hereof; (iv) a banking moratorium
having been declared by federal or New York State authorities; (v) an outbreak
or significant escalation of major international hostilities or other national
or international calamity having occurred; (vi) the passage by the Congress of
the United States or by any state legislature, of any act or measure, or the
adoption of any order, rule or regulation by any governmental body or any
authoritative accounting institute or board, or any governmental executive,
which is reasonably believed by you likely to have a material adverse effect on
the business, property, operations, condition (financial or otherwise) or
earnings of the Company; (vii) any material adverse change in the financial or
securities markets beyond normal fluctuations in the United States having
occurred since the date of this Agreement; or (viii) any material adverse change
having occurred since the respective dates for which information is given in the
Registration Statement and Prospectus, in the business, property, operations,
condition (financial or otherwise), earnings or business prospects of the
Company, whether or not arising in the ordinary course of business.

(b) Notification. If you elect to prevent this Agreement from
becoming effective or to terminate this Agreement as provided by this Section 11
or by Section 10, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.

12. Representative's Warrant. On the First Closing Date, the Company
shall issue and sell to you, for a total purchase price of $5.00, and upon the
terms and conditions

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<PAGE>

set forth in the form of Representative's Warrant filed as an exhibit to the
Registration Statement, a warrant entitling you to purchase 200,000 Shares (the
"Representative's Warrant"). In the event of conflict in the terms of this
Agreement and the Representative's Warrant, the terms and conditions of the
Representative's Warrant shall control.

13. Representations, Warranties and Agreements to Survive Delivery. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company and the Underwriters set forth in or made
pursuant to this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any other party, and shall survive
delivery of and payment for the Securities and the termination of this
Agreement. The Company hereby indemnifies and holds harmless the Underwriters
from and against all Liabilities, joint or several, to which the Underwriters
may become subject insofar as such Liabilities arise out of or are based upon
the breach or failure of any representation, warranty or covenant of the Company
contained in this Agreement.

14. Notices. All communications hereunder shall be in writing and, except
as otherwise expressly provided herein, if sent to you, shall be mailed,
delivered or telegraphed and confirmed to you at H.J. Meyers & Co., Inc., Attn:
Managing Director of Corporate Finance, 1895 Mt. Hope Avenue, Rochester, New
York 14620, with a copy sent to James M. Jenkins, Esq., Harter, Secrest & Emery,
700 Midtown Tower, Rochester, New York 14604; or if sent to the Company, shall
be mailed, delivered, or telegraphed and confirmed to it at Ambassador Eyewear
Group, Inc., Attention: President, 3600 Marshall Lane, Bensalem, Pennsylvania
19020, with a copy sent to Jeffrey A. Baumel, Esq., Gibbons, Del Deo, Dolan,
Griffinger & Vechionne, One Riverfront Plaza, Newark, New Jersey 07102.

15. Parties in Interest. This Agreement is made solely for the benefit of
the Underwriters, the Company and, to the extent expressed, any person
controlling the Company or an Underwriter, as the case may be, and the directors
of the Company, nominees for directors of the Company (if any) named in the
Prospectus, officers of the Company who have signed the Registration Statement,
and their respective executors, administrators, successors and assigns; and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser,
as such, from an Underwriter of the Shares.

16. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without reference to such
state's laws respecting the conflict of laws. The Company submits to the
jurisdiction of the federal and state courts located in Monroe County, New York
for such purposes.

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<PAGE>

17. Counterparts. This Agreement may be executed in two or more
counterpart copies, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this Agreement, whereupon it will become a binding
agreement between the Company and the Underwriters in accordance with its terms.

Yours very truly,

Ambassador Eyewear Group, Inc.

By:
--------------------------------
Name: Barry Budilov
Title: President and Chief Executive Officer

The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.

H.J. Meyers & Co., Inc.
As Representative of the
Several Underwriters Named
in Schedule I Hereto

By:
--------------------------------
Name: Karl A. Brenza
Title:

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<PAGE>

Schedule I

Underwriting Agreement dated [EFFECTIVE DATE]

Number of
Firm Shares
UNDERWRITER to be Purchased

H.J. Meyers & Co., Inc.

TOTAL 2,000,000

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Exhibit 10.4

Warrant to Purchase 200,000
Shares of Common Stock

Representative's Warrant

Dated: [Effective Date]

This Certifies That H.J. Meyers & Co., Inc. (herein sometimes called the
"Holder") is entitled to purchase from Ambassador Eyewear Group, Inc., a
Delaware corporation (the "Company"), at the respective prices and during the
period hereinafter specified, up to 200,000 shares of the Common Stock, $.01
par value, of the Company (the "Common Stock"). This Representative's
Warrant (this "Warrant") is issued pursuant to an Underwriting Agreement
dated [Effective Date] between the Company and H.J. Meyers & Co., Inc. (the
"Representative"), as representative of certain underwriters, including
itself (the "Underwriters"), in connection with a public offering, through
the Underwriters (the "Offering"), of 2,000,000 shares of Common Stock (and
up to 300,000 additional shares of Common Stock covered by an over-allotment
option granted to the Underwriters), in consideration of $5.00 received by
the Company for this Warrant. Except as otherwise expressly provided herein,
the shares of Common Stock issued upon exercise of this Warrant shall bear
the same terms and conditions described under the caption "Description Of
Securities" in the registration statement (File No. 33-31343) on Form SB-2
relating to the Offering (the "Registration Statement"), except that (i) the
Holder shall have registration rights under the Securities Act of 1933, as
amended (the "Act"), for this Warrant and the Common Stock as more fully
described in Section 6. Each certificate evidencing the Registrable
Securities (as hereinafter defined) shall bear the appropriate restrictive
legend set forth below, except that any such certificate shall not bear such
restrictive legend if (a) it is transferred pursuant to an effective
registration statement under the Act or in compliance with Rule 144 or Rule
144A promulgated under the Act, or (b) the Company is provided with an
opinion of counsel to the effect that such legend is not required in order to
establish compliance with the provisions of the Act:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT. COPIES OF THE REPRESENTATIVE'S WARRANT COVERING REGISTRATION
RIGHTS PERTAINING TO THESE SECURITIES AND RESTRICTING THEIR TRANSFER
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE
OFFICE OF THE COMPANY AT BENSALEM< PENNSYLVANIA."

<PAGE>

Unless the context otherwise requires, all references herein to a "Section"
shall mean the appropriate Section of this Warrant.

1. Exercise Price and Period. The rights represented by this Warrant
shall be exercised at the price and during the periods set forth below:

(a) During the period from [EFFECTIVE DATE] to
[EFFECTIVE DATE+1 YEAR-1 DAY] (the "First Anniversary Date") inclusive, the
Holder shall have no right to purchase any Securities hereunder, except that
in the event of any merger or consolidation of the Company into another
entity, or any sale of substantially all of the assets of the Company as an
entirety, prior to the First Anniversary Date, the Holder shall have the
right to exercise this Warrant at such time and into such kinds and amounts
of shares of stock and other securities and property (including cash) as
would be receivable by a holder of the number of shares of Common Stock into
which this Warrant might have been exercisable immediately prior thereto.

(b) Between [EFFECTIVE DATE +1 YEAR] and
[EFFECTIVE DATE+5 YEARS-1 DAY] (the "Expiration Date") inclusive, the Holder
shall have the right to purchase hereunder: (i) shares of Common Stock at a
price of $8.25 per share (that being 165 percent of the public offering price
of the shares of Common Stock) (the "Share Exercise Price").

(c) Notwithstanding the provisions of Section 1(b) with respect to
the Exercise Price to the contrary, the Holder may elect to exercise this
Warrant, in whole or in part, by receiving Common Stock equal to the value
(as herein determined) of the portion of this Warrant then being exercised,
in which event the Company shall issue to the Holder the number of shares of
Common Stock determined by using the following formula:

X = Y(A-B)
------
A

where: X = the number of shares of Common Stock to be issued to the
Holder under the provisions of this Section 1(c)

Y = the number of shares of Common Stock that would otherwise be
issued upon such exercise

A = the Current Fair Market Value (as hereinafter defined) of
one share of Common Stock calculated as of the last trading
day immediately preceding such exercise

B = the Exercise Price

As used herein, the "Current Fair Market Value" of the Common Stock as of a
specified date shall mean with respect to each share of Common Stock, (i) the
average of the closing prices of the Common Stock sold on all securities
exchanges on which the Common Stock may at

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<PAGE>

the time be listed, or (ii) if there have been no sales on any such exchange
on such day, the average of the highest bid and lowest asked prices on all
such exchanges at the end of such day, or (iii) if on such day the Common
Stock is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 p.m., New York time, or (iv) if
on such day the Common Stock is not quoted in the NASDAQ System, the average
of the highest bid and lowest asked prices on such day on such regional stock
exchnage on which the Company's Common Stock is then listed or in the
domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated or any similar successor organization, (the exchange to
be used in determining the Current Fair Market Value shall be determined in
the sole discretion of the Holder) in any such case, either (i) calculated on
the date which the form of election specified in Section 2 herein is deemed
to have been sent to the Company or (ii) averaged over a period of 5 days
consisting of the day as of which the Current Fair Market Value is being
determined and the 4 consecutive business days prior to such day. The Holder
hereof shall determine in its sole discretion which method of calculation to
use. If on the date for which Current Fair Market Value is to be determined
the Common Stock is not listed on any securities exchange or quoted in the
NASDAQ System, a regional exchange or the over-the-counter market, then
Current Fair Market Value of the Common Stock shall be the highest price per
share which the Company could then obtain from a willing buyer (not a current
employee or director) for Common Stock sold by the Company from authorized
but unissued shares, as determined in good faith by the Board of Directors of
the Company, unless prior to such date the Company has become subject to a
merger, consolidation, reorganization, acquisition or other similar
transaction pursuant to which the Company is not the surviving entity, in
which case the Current Fair Market Value of the Common Stock shall be deemed
to be the per share value received or to be received in such transaction by
the holders of Common Stock.

(d) After the Expiration Date, the Holder shall have no right to
purchase any shares of Common Stock hereunder.

2. Exercise. The rights represented by this Warrant may be exercised,
in whole or in part (with respect to shares of Common Stock, by the Holder at
any time within the periods specified in Section 1 by: (a) surrender of this
Warrant for cancellation (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or at such other
office or agency of the Company as it may designate by notice in writing to
the Holder at the address of the Holder appearing on the books of the
Company); (b) to the extent that the Holder does not use the election
provided by Section 1(c), payment to the Company of the Exercise Price for
the number of shares of Common Stock specified in the such purchase form,
together with the amount of applicable stock transfer taxes, if any; and (c)
delivery to the Company of a duly executed agreement signed by the person(s)
designated in the purchase form to the effect that such person(s) agree(s) to
be bound by all of the terms and conditions of this Warrant, including
without limitation the provisions of Sections 6 and 7. This Warrant shall be
deemed to have been exercised, in whole or in part to the extent specified,
immediately prior to the close of business on the date on which all of the
provisions of this Section 2 are satisfied, and the person(s) designated in
the purchase form shall become the holder(s) of record of the shares of
Common Stock issuable upon such exercise at that time and date. The
certificates representing the shares of Common Stock so

-3-
<PAGE>

purchased shall be delivered to the Holder within a reasonable time, not
exceeding ten business days, after this Warrant shall have been so exercised.

3. Transfer of Warrant.

(a) During the period from [EFFECTIVE DATE] to the First
Anniversary Date inclusive, this Warrant shall not be transferred, sold,
assigned or hypothecated, except that during such period this Warrant may be
transferred (i) to successors in interest of the Holder, or (ii) in whole or
in part to any one or more shareholders, directors or officers of the Holder,
in each case subject to compliance with applicable Federal and state
securities laws and Interpretations of the Board of Governors of the National
Association of Securities Dealers, Inc.

(b) Between [EFFECTIVE DATE+1 YEAR] and the Expiration Date
inclusive, this Warrant shall be freely transferable, in whole or in part,
subject to the other terms and conditions hereof and to compliance with
applicable Federal and state securities laws; provided, however, that this
Warrant shall be immediately exercised upon any such transfer to any person
or entity that is not a shareholder, director or officer of the Holder and
that if this Warrant is not so exercised upon a transfer to any person or
entity which is not a shareholder, director or officer of the Holder, that
this Warrant shall immediately lapse.

(c) Any transfer of this Warrant permitted by this Section 3 shall
be effected by: (i) surrender of this Warrant for cancellation (with the
assignment form at the end hereof properly executed) at the office or agency
of the Company referred to in Section 2; (ii) delivery of a certificate
(signed, if the Holder is a corporation or partnership, by an authorized
officer or partner thereof), stating that each transferee designated in the
assignment form is a permitted transferee under this Section 3; and (iii)
delivery of an opinion of counsel stating that the proposed transfer may be
made without registration or qualification under applicable Federal or state
securities laws. This Warrant shall be deemed to have been transferred, in
whole or in part to the extent specified, immediately prior to the close of
business on the date the provisions of this Section 3(c) are satisfied, and
the transferee(s) designated in the assignment form shall become the
holder(s) of record at that time and date. The Company shall issue, in the
name(s) of the designated transferee(s) (including the Holder if this Warrant
has been transferred in part) a new Warrant or Warrants of like tenor and
representing, in the aggregate, rights to purchase the same number of shares
of Common Stock as are then purchasable under this Warrant. Such new Warrant
or Warrants shall be delivered to the record holder(s) thereof within a
reasonable time, not exceeding ten business days, after the rights
represented by this Warrant shall have been so transferred. As used herein
(unless the context otherwise requires), the term "Holder" shall include each
such transferee, and the term "Warrant" shall include each such transferred
Warrant.

4. Covenants of the Company. The Company covenants and agrees that
all shares of Common Stock which may be issued upon exercise of this Warrant
shall, upon issuance in accordance with the terms hereof, be duly and validly
issued, fully paid and non-assessable, with no personal liability attaching
to the Holder thereof. The Company further covenants and agrees that during
the period within which this Warrant may be exercised, the

-4-
<PAGE>

Company shall at all times have authorized and reserved a sufficient number
of shares of Common Stock for issuance upon exercise of this Warrant.

5. Shareholders' Rights. This Warrant shall not entitle the Holder to
any voting rights or other rights as a shareholder of the Company.

6. Registration Rights.

(a) Certain Definitions. As used herein, the term:

(i) "Registrable Securities" shall mean this Warrant and/or
the shares of Common Stock issued or issuable upon exercise of this Warrant,
as the same shall be so designated by the Holder.

(ii) "50% Holder" shall mean the Holder(s) of at least 50
percent of the total number of shares of Common Stock comprising the
Registrable Securities (whether or not this Warrant has been exercised), and
shall include any Holder or combination of Holders.

(b) "Piggyback" Registration. From the date hereof until the
Expiration Date, the Company shall advise the Holder, whether the Holder
holds this Warrant or has exercised this Warrant and holds any of the Common
Stock, by written notice at least four weeks prior to the filing of any
post-effective amendment to the Registration Statement (unless the Company
determines that to comply with Federal securities law it must file such
post-effective amendment in less than four weeks' time, in which case the
Company shall give the Holder the most notice practicable under the
circumstances), or of any new registration statement or post-effective
amendment thereto under the Act (other than a registration statement on Form
S-8 or its counterpart), or any Notification on Form 1-A under the Act,
covering any securities of the Company, whether for its own account or for
the account of others, and shall, upon the request of the Holder, include in
any such post-effective amendment or new registration statement such
information as may be required to permit a public offering of any or all of
the Registrable Securities of the Holder, all at no expense whatsoever to the
Holder (except in the case of any post-effective amendment to the extent as
permitted by the Act or the rules and regulations promulgated thereunder),
except that each Holder whose Registrable Securities are included in such
registration shall bear the fees of its own counsel and any underwriting
discounts or commissions applicable to the Securities sold by it.

(i) If any 50% Holder shall give notice to the Company, at any
time after the First Anniversary Date and prior to the Expiration Date, to
the effect that such 50% Holder desires to register under the Act any
Registrable Securities under such circumstances that a public distribution
(within the meaning of the Act) of any such securities shall be involved,
then the Company shall promptly, but no later than 30 days after receipt of
such notice, use its reasonable best efforts to file a post-effective
amendment to the Registration

-5-
<PAGE>

Statement or a new registration statement under the Act, to the end that
Registrable Securities of such 50% Holder may be publicly sold under the Act
as promptly as practicable thereafter, and the Company shall use its best
efforts to cause such registration to become effective as soon as possible;
provided, however, that such 50% Holder shall furnish the Company with
appropriate information in connection therewith as the Company may reasonably
request in writing; and provided further that the Company shall then have
available current financial statements (unless the unavailability of current
financial statements results from the Company's fault or neglect). The 50%
Holder may, at its option, cause Registrable Securities to be included in
such registration under this Section 6(c) on a maximum of two occasions
during the four-year period beginning on the First Anniversary Date and
ending on the Expiration Date.

(ii) Within ten days after receiving any such notice pursuant
to this Section 6(c), the Company shall give notice to each other Holder
(whether such Holder holds a Warrant or has exercised the Warrant and holds
any of the Securities), advising that the Company is proceeding with such
post-effective amendment or new registration statement and offering to
include therein Registrable Securities held by such other Holders, provided
that they shall furnish the Company with such appropriate information in
connection therewith as the Company shall reasonably request in writing.

(iii) All costs and expenses (including without limitation,
legal, accounting, printing, mailing and filing fees) of the first such
registration effected under this Section 6(c) shall be borne by the Company,
except that the Holder(s) whose Registrable Securities are included in such
registration shall bear the fees of their own counsel and any underwriting
discounts or commissions applicable to the securities sold by them. All
costs and expenses of the second such registration effected under this
Section 6(c) shall be borne by the Holder(s) whose Registrable Securities are
included in such registration.

(iv) The Company shall cause each registration statement or
post-effective amendment filed pursuant to this Section 6(c) to remain
current under the Act (including the taking of such steps as are necessary to
obtain the removal of any stop order) for a period of at least six months
(and for up to an additional three months if requested by the Holder(s)) from
the effective date thereof, or until all the Registrable Securities included
in such registration have been sold, whichever is earlier.

(d) Further Rights. The registration rights provided by this
Section 6 may be exercised by the Holder either prior or subsequent to its
exercise of this Warrant. A 50% Holder may, at its option, request
registration pursuant to Section 6(b) and/or pursuant to Section 6(c), and
its request for registration under one such Section shall not affect its
right to request registration under the other. The registration rights
provided by this Section 6 shall supersede and be prior in right to any
registration rights granted by the Company to other holders of its
outstanding securities.

(e) Further Obligations of Company. With respect to all
registrations under this Section 6, the Company shall: (i) supply
prospectuses and such other documents as the Holder may reasonably request in
order to facilitate the public sale or other disposition of the

-6-
<PAGE>

Registrable Securities; (ii) use its best efforts to register and qualify the
Registrable Securities for sale in such states as the Holder designates
(provided, however, that in no event shall the Company be required to qualify
as a foreign corporation or a dealer in securities or to execute a general
consent to service of process); and (iii) do any and all other acts and
things which may be necessary or desirable to enable the Holder to consummate
the public sale or other disposition of the Registrable Securities.

7. Indemnification.

(a) Indemnification by the Company. As used in this Section 7,
the term "Liabilities" shall mean any and all losses, claims, damages and
liabilities, and actions and proceedings in respect thereof, including
without limitation all reasonable costs of defense and investigation and all
attorneys' fees. Whenever pursuant to Section 6 a registration statement
relating to any Registrable Securities is filed under the Act, or amended or
supplemented, the Company shall indemnify and hold harmless each Holder of
Registrable Securities included in such registration statement, amendment or
supplement (each, a "Distributing Holder"), and each person (if any) who
controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such Registrable Securities,
and each person (if any) who controls (within the meaning of the Act) any
such underwriter, from and against all Liabilities, joint or several, to
which the Distributing Holder or any such controlling person or underwriter
may become subject, under the Act or otherwise, insofar as such Liabilities
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement,
or any preliminary prospectus or final prospectus constituting a part
thereof, or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company shall not be liable in any
such case to the extent that any such Liabilities arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, preliminary prospectus, final
prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished by such Distributing Holder or
by any other Distributing Holder for use in the preparation thereof. The
foregoing indemnity shall be in addition to any other liability which the
Company may otherwise have.

(b) Indemnification by Holder. The Distributing Holder(s) shall
indemnify and hold harmless the Company, and each of its directors, each
nominee (if any) named in any preliminary prospectus or final prospectus
constituting a part of such registration statement, each of its officers who
have signed such registration statement and such amendments or supplements
thereto, and each person (if any) who controls the Company (within the
meaning of the Act) against all Liabilities, joint or several, to which the
Company or any such director, nominee, officer or controlling person may
become subject, under the Act or otherwise, insofar as such Liabilities arise
out of or are based upon any untrue or alleged untrue statement of any
material fact contained in such registration statement, preliminary
prospectus, final prospectus, or amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be

-7-
<PAGE>

stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent that such Liabilities arise
out of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary
prospectus, final prospectus or amendment or supplement thereto in reliance
upon and in conformity with written information furnished by such
Distributing Holder(s) for use in the preparation thereof. The foregoing
indemnity shall be in addition to any other liability which the Distributing
Holder(s) may otherwise have.

(c) Procedure. Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
any indemnifying party, give the indemnifying party notice of the
commencement thereof; but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any indemnified
party otherwise than under this Section 7. In case any such action is
brought against any indemnified party, and it notifies an indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.

(d) Limitation. Notwithstanding the foregoing, if the Registrable
Securities are to be distributed by means of an underwritten public offering,
to the extent that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in connection with such
underwriting are in conflict with the provisions of this Section 7, the
provisions of such underwriting agreement shall be controlling, provided that
the Holder is a party to such underwriting agreement.

8. Anti-Dilution. In the event that the outstanding shares of Common
Stock are at any time increased or decreased in number, or changed into or
exchanged for a different number or kind of shares or other security of the
Company or of another corporation through reorganization, merger,
consolidation, liquidation, recapitalization or, in the case of Common Stock,
stock split, reverse split, combination of shares or stock dividends payable
with respect to such Common Stock, sold at below the exercise price of this
Warrant, and for other unusual events (other than employee benefit and stock
option plans for employees and advisors of the Company) appropriate
adjustments shall be made in the number and kind of such securities then
subject to this Warrant and in the Exercise Price of this Warrant effective
as of the date of such occurrence, so that the position of the Holder upon
exercise of this Warrant shall be the same as it would have been had it owned
immediately prior to the occurrence of such event the Common Stock subject to
this Warrant; provided, however, that in no event shall two adjustments be
made for the same event. For example, if the Company declares a 2-for-1
stock dividend or stock split, then the number of shares of Common Stock then
subject to this Warrant shall each be doubled and the Share Exercise Price
shall each be

-8-
<PAGE>

reduced by 50 percent. Such adjustments shall be made successively whenever
any event described by this Section 8 shall occur.

9. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State, without reference to
such State's laws regarding the conflict of laws. The Company submits to the
jurisdiction of the state and federal courts located in Monroe County, New
York.

10. Amendment or Waiver. Any provision of this Warrant may be amended,
waived or modified upon the written consent of the Company and any 50%
Holder; provided, however, that such amendment, waiver or modification
applies by its terms to each Holder; and provided further, that a Holder may
waive any of its rights or the Company's obligations to such Holder without
obtaining the consent of any other Holder.

In Witness Whereof, Ambassador Eyewear Group, Inc. has caused this
Warrant to be signed by its duly authorized officers under its corporate seal
and to be dated as of the date set forth on the first page hereof.

Ambassador Eyewear Group, Inc.

By:___________________________
Name: Barry Budilov
Title: President and Chief Executive Officer

(Corporate Seal)

Attest:

________________________________
Secretary

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<PAGE>

Purchase Form

(To be signed only upon exercise of Warrant)

The undersigned, the Holder of the foregoing Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and
to purchase thereunder, ________ shares of Common Stock, $.01 par value, of
Ambassador Eyewear Group, Inc. (the "Company") and (i) herewith makes payment
of an aggregate of $____________ therefor and/or (ii) pursuant to Section
1(c) of such Warrant hereby tenders the right to exercise such Warrant to the
extent of ________ shares of Common Stock of the Company. The undersigned
requests that the certificates for the shares of such Common Stock be issued
in the name(s) of, and delivered to, the person(s) whose name(s) and
address(es) are set forth below:

Dated: _____________________

__________________________________
Name:

__________________________________
Address:

Signatures guaranteed by:

_____________________________

Taxpayer Identification Number:

_____________________________

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<PAGE>
Transfer Form

(To be signed only upon transfer of Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto ___________________________________________ the right to purchase shares
of the Common Stock, $.01 par value per share, of Ambassador Eyewear Group,
Inc. (the "Company") represented by the foregoing Warrant to the extent of
____ shares of Common Stock and appoints ________________________ attorney to
transfer such rights on the books of the Company, with full power of
substitution in the premises.

Dated: _____________________ _____________________________
Name:

_____________________________
Address

Signatures guaranteed by:

_____________________________

Taxpayer Identification Number:

_____________________________

-11-

<PAGE>

H.J. Meyers & Co., Inc.
1895 Mount Hope Avenue
Rochester, New York 14620

[Effective Date]

Ambassador Eyewear Group, Inc.
3600 Marshall Lane
Bensalem, Pennsylvania 19020

Ladies and Gentlemen:

You have agreed that H.J. Meyers & Co., Inc. ("H.J. Meyers") may act as a
finder or financial consultant for you in various Transactions (as
hereinafter defined), in which Ambassador Eyewear, Inc. or its subsidiaries
(collectively, the "Company") may be involved for a period of 36 months from
the date of this Agreement (the "Period").

1. DEFINITIONS.

For the purposes of this Agreement:

(a) A "Transaction" shall mean any transaction or series or
combination of transactions involving the Company, other than in the ordinary
course of trade or business, whereby, directly or indirectly, control of, or
a material interest in any businesses, assets or properties, is sold,
purchased, leased or otherwise transferred, including, without limitation, a
sale, purchase or exchange of capital stock or assets, a lease of assets with
or without a purchase option, a merger or consolidation, a tender or exchange
offer, a leveraged buy-out, a restructuring, a recapitalization, a repurchase
of capital stock, an extraordinary dividend or distribution (whether cash,
property, securities or a combination thereof), a liquidation, the formation
of a joint venture or partnership, a minority investment or any other similar
transaction.

(b) "Consideration" shall mean the total value of all cash,
securities, other property and any other consideration, including, without
limitation, any contingent, earned or other consideration paid or payable,
directly or indirectly, in connection with a Transaction and consideration
shall be determined at the closing. The value of any such securities
(whether debt or equity) or other property shall be determined as follows:
(1) the value of securities that are freely tradeable in an established
public market shall be the last closing market price of such securities prior
to the public announcement of the Transaction; and (2) the value of
securities which are not freely tradeable or which have no established public
market, or if the consideration consists of property other than securities,
the value of such securities or other property shall be the fair market value
thereof as mutually agreed by the Company and H.J. Meyers. Consideration
shall also be deemed to include any indebtedness, including, without
limitation, pension liabilities, guarantees and other obligations assumed,

<PAGE>

directly or indirectly, in connection with, or which survives the closing of,
a Transaction. If the consideration to be paid is computed or payable in any
foreign currency, the value of such foreign currency shall, for the purposes
hereof, be converted into U.S. Dollars at the prevailing exchange rate on the
dates on which such consideration is payable.

2. H.J. Meyers' Fee.

(a) If during the Period H.J. Meyers brings to the Company an
opportunity for a proposed Transaction, then upon the consummation of any
such Transaction (but only if such consummation occurs within 36 months from
the date of this Agreement) the Company will pay to H.J. Meyers as a fee the
amount provided for in Paragraph 2(c) hereof; provided, however, that H.J.
Meyers shall be deemed to have brought an opportunity to the Company for
purposes of this Paragraph 2(a) only if the opportunity is at least briefly
specifically described in a writing (which need not identify the other
parties) signed by H.J. Meyers and received (with receipt acknowledged in
writing by the Company) prior to any negotiations between representatives of
the Company and representatives of the other party or parties to such
Transaction, and such writing signed by H.J. Meyers refers to the Company's
obligations under this Section 2.

(b) If during the Period an opportunity for a proposed Transaction
is brought to the Company by someone other than H.J. Meyers, and if the
Company in writing retains H.J. Meyers for consultation or other services in
connection therewith, then upon the consummation of that transaction, the
Company will pay H.J. Meyers as a fee the amount provided for in Paragraph
2(c) hereof.

(c) The amount to be paid by the Company to H.J. Meyers in any
case described in Paragraphs 2(a) or 2(b) hereof shall be calculated based on
the Consideration paid to or received by the Company (or its stockholders),
as follows: five percent (5%) of the first three million dollars
($3,000,000); three and one-half percent (3.5%) of any consideration greater
than three million dollars ($3,000,000) and less than or equal to five
million dollars ($5,000,000); and two percent (2%) of any consideration in
excess of five million dollars ($5,000,000).

(d) In addition to those fees payable to H.J. Meyers under the
provisions of Paragraph 2 hereof, the Company shall reimburse H.J. Meyers for
its out-of-pocket and incidental expenses incurred in connection with the
performance by H.J. Meyers of its duties under this Agreement. Such
reimbursement shall occur promptly as requested and shall include the fees
and expenses of H.J. Meyers' legal counsel and those of any advisor retained
by H.J. Meyers, subject, in each case, to prior approval by the Company.

3. PAYMENT. The fee due to H.J. Meyers hereunder shall be paid by the
Company in cash at the closing of the Transaction, without regard to whether
the Transaction involves payment in cash, stock or a combination of stock and
cash, or is made on an installment sales basis. By way of example, if the
Transaction involves securities of the acquiring entity (whether securities
of the Company, if the Company is the acquiring party, or securities of
another entity, if the Company is the selling party) having a value of

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<PAGE>

$6,000,000, the cash consideration to be paid by the Company to H.J. Meyers
at closing shall be $240,000.

4. INDEMNIFICATION. The Company hereby agrees to indemnify and hold
harmless H.J. Meyers, its respective directors, officers, controlling persons
(within the meaning of Section 15 of the Securities Act of 1933 or Section
20(a) of the Securities Exchange Act of 1934), if any, (collectively,
"Indemnified Persons" and individually, and "Indemnified Person") from and
against any and all claims, liabilities, losses, damages and expenses
incurred by any Indemnified Person (including reasonable fees and
disbursements of H.J. Meyers and an Indemnified Person's counsel) which (A)
are related to or arise out of (i) actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made)
by the Company or (ii) actions taken or omitted to be taken by an Indemnified
Person with the Company's consent or in conformity with the Company's
instructions or the Company's actions or omissions or (B) are otherwise
related to or arise out of the performance by H.J. Meyers of duties pursuant
to this Agreement, and will reimburse H.J. Meyers and any other Indemnified
Person for all reasonable costs and expenses, including fees of H.J. Meyers
or an Indemnified Person's counsel, as they are incurred, in connection with
investigating, preparing for, or defending any action, formal or informal
claim, investigation, inquiry or other proceeding, whether or not in
connection with pending or threatened litigation, caused by or arising out of
or in connection with H.J. Meyers acting pursuant to this Agreement, whether
or not H.J. Meyers or any Indemnified Person is named as a party thereto and
whether or not any liability results therefrom. The Company will not,
however, be responsible for any claims, liabilities, losses, damages, or
expenses pursuant to clause (B) of the preceding sentence which are finally
judicially determined to have resulted primarily from H.J. Meyers' bad faith
or gross negligence. The Company also agrees that neither H.J. Meyers nor
any other Indemnified Person shall have any liability to the Company for or
in connection with this Agreement except for any such liability for claims,
liabilities, losses, damages, or expenses incurred by the Company which are
finally judicially determined to have resulted primarily from H.J. Meyers'
bad faith or gross negligence. The Company further agrees that the Company
will not, without the prior written consent of H.J. Meyers, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not H.J. Meyers or any
Indemnified Person is an actual or potential party to such claim, action,
suit or proceeding) unless such settlement, compromise or consent includes an
unconditional release of H.J. Meyers and each other Indemnified Person
hereunder from all liability arising out of such claim, action, suit or
proceeding.

In order to provide for just and equitable contribution, if a claim for
indemnification is made pursuant to these provisions but it is found in a
final judgment by a court of competent jurisdiction (not subject to further
appeal) that such indemnification is not available for any reason (except,
with respect to indemnification sought solely pursuant to clause (B) of the
first paragraph hereof, for the reasons specified in the second sentence
thereof), even though the express provisions hereof provide for
indemnification in such case, then the Company, on one hand, and H.J. Meyers,
on the other hand, shall contribute to such claim, liability, loss, damage or
expense for which such indemnification or reimbursement is held unavailable
in

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<PAGE>

such proportion as is appropriate to reflect the relative benefits to the
Company, on one hand, and H.J. Meyers, on the other hand, in connection with
the Transactions contemplated by this Agreement, subject to the limitation
that in any event H.J. Meyers' aggregate contribution to all losses, claims,
damages, liabilities and expenses to which contribution is available
hereunder shall not exceed the amount of fees actually received by H.J.
Meyers pursuant to this Agreement.

The foregoing right to indemnity and contribution shall be in addition
to any rights that H.J. Meyers and/or any other Indemnified Person may have
at common law or otherwise and shall remain in full force and effect
following the completion or any termination of this Agreement.

It is understood that, in connection with this Agreement, H.J. Meyers
may also be engaged to act for the Company in one or more additional
capacities, embodied in one or more separate written agreements. This
indemnification shall apply to this Agreement, any such additional
engagement(s) (whether written or oral) and any modification of this
Agreement or such additional engagement(s) and shall remain in full force and
effect following the completion or termination of this Agreement or such
additional engagements.

5. CONFIDENTIALITY. Any advice, either oral or written, provided to
the Company by H.J. Meyers hereunder shall not be publicly disclosed or made
available to third parties without the prior written consent of H.J. Meyers.
In addition, H.J. Meyers may not be otherwise publicly referred to without
its prior consent.

6. INFORMATION. In the event H.J. Meyers acts as finder or financial
advisor in a transaction, the Company will furnish H.J. Meyers with all
information concerning the Transaction which H.J. Meyers reasonably deems
appropriate and will provide H.J. Meyers with access to the Company's
officers, directors, accountants, counsel and other advisors. The Company
represents and warrants to H.J. Meyers that all such information concerning
the Company and its affiliates is and will be true and accurate in all
material respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in light of the circumstance under which
such statements are made. The Company acknowledges and agrees that H.J.
Meyers will be using and relying upon such information supplied by the
Company and its officers, agents and others and any other publicly available
information concerning the Company and its affiliates and any prospective
acquiror of the Company, its businesses or assets without any independent
investigation or verification thereof or independent appraisal by H.J. Meyers
of the Company and businesses or assets.

7. FINDERS. The Company represents and warrants to H.J. Meyers that
there are no brokers, representatives or other persons which have an interest
in compensation due to H.J. Meyers from any Transaction in which H.J. Meyers
has acted as finder or financial advisor.

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<PAGE>

8. ADVERTISEMENTS. H.J. Meyers shall have the right to place
advertisements in financial and other newspapers and journals at its own
expense describing its services to the Company hereunder in the event a
transaction is consummated.

9. BINDING OBLIGATION. The Company represents and warrants to H.J.
Meyers that H.J. Meyers' engagement hereunder has been duly authorized and
approved by the Board of Directors of the Company and that this letter
agreement has been duly executed and delivered by the Company and constitutes
a legal, valid and binding obligation of the Company.

10. IN GENERAL. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State, without reference to
such State's principles respecting the conflict of laws. The Company submits
to the jurisdiction of state and federal courts located in Monroe County, New
York. This Agreement sets forth the entire agreement and understanding
between the undersigned with respect to its subject matter and supersedes all
prior discussions, agreements and understandings of every kind and nature
between them with respect thereto. This Agreement shall inure to the benefit
of, and be enforceable against, each of the undersigned and their respective
successors and assigns.

Please sign this letter at the place indicated below, whereupon it will
constitute our mutually binding agreement with respect to the matters
contained herein.

Very truly yours,

H.J. Meyers & Co., Inc.

By:________________________________
Name: Karl A. Brenza
Title:

ACCEPTED AND AGREED TO:

Ambassador Eyewear Group, Inc.

By:___________________________________________
Name: Barry Budilov
Title: President and Chief Executive Officer

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<PAGE>
EXHIBIT 10.33

AGREEMENT OF MANAGEMENT AND SHAREHOLDERS

Dated: [EFFECTIVE DATE]

H.J. Meyers & Co., Inc.
As Representative of the
referenced Underwriters
1895 Mt. Hope Avenue
Rochester, New York 14620

Ladies and Gentlemen:

Pursuant to a certain Underwriting Agreement (the "Underwriting Agreement")
dated this date (the "Effective Date") between Ambassador Eyewear, Inc., a
Delaware corporation (the "Company"), and you, as Representative of the several
Underwriters, including yourself, named therein (the "Underwriters"), the
Company proposes to sell to the Underwriters, pursuant to a registration
statement (File No. 33-3-31343) on Form SB-2 relating to the public offering
thereof (the "Offering"), of shares of the Common Stock, $.01 par value, of the
Company (the "Common Stock" or "Securities"). Capitalized terms used in this
Agreement and not otherwise defined herein shall have the respective meanings
given them by the Underwriting Agreement.

To induce you to enter into the Underwriting Agreement, and in
consideration thereof, each of the undersigned, being an officer, director or
shareholder of the Company (each, an "Individual") agrees as follows:

1. Covenants. Each Individual, for himself individually and not jointly,
covenants and agrees with each Underwriter and the Company that:

(a) Restriction on Future Sales. For a period of 18 months following
the First Closing Date, such Individual shall not, without your prior written
consent, sell, assign, hypothecate, pledge or otherwise dispose of, directly or
indirectly, any Securities now or hereafter owned by him (whether acquired
through option exercise or otherwise), and such Individual hereby agrees to
permit all certificates evidencing such Securities to be endorsed with the
appropriate restrictive legends, and consents to the placement of appropriate
stop transfer orders with the transfer agent for the Company.

(b) Certain Market Practices. Such Individual represents that he has
not taken, and agrees that he shall not take, directly or indirectly, any action
designed, or which might reasonably be expected, to cause or result in, or which
has constituted, the stabilization or manipulation of the price of the
Securities to facilitate the sale or resale thereof.

(c) Certain Representations. Such Individual shall not make any
written or oral representation in connection with the Offering and sale of the
Securities or the Representative's Warrant which is not contained in the
Prospectus, which is otherwise inconsistent with or in contravention of any
thing contained in the Prospectus, or which shall constitute a violation of the
Securities Act of 1933, as amended (the "Act"), the rules and

<PAGE>

regulations promulgated thereunder, the Securities Exchange Act of 1934, as
amended, or the rules and regulations promulgated thereunder.

(d) Future Offerings. For a period of five years following the First
Closing Date, you shall have the right of first refusal to act as underwriter or
agent for any public offering or sale of the securities of the Company, or of
any successor to the Company, made by such Individual.

(e) Rule 144 Sales. For a period of five years following the First
Closing Date, you shall have the right to purchase for your own account, or to
sell for the account of such Individual, all securities of the Company sold by
such Individual pursuant to Rule 144 of the rules and regulations promulgated
under the Act.

2. Representations and Warranties. Each Individual, for himself
individually and not jointly, represents and warrants to, and agrees with, each
Underwriter and the Company as follows:

(a) Authority, Etc. Such Individual has the power and authority to
execute, deliver and perform its obligations under this Agreement. Such
Individual's execution and delivery of, and its performance of its obligations
under, this Agreement have been duly authorized by all necessary action.

(b) Enforceability. This Agreement has been duly and validly
executed and delivered by such Individual and, assuming due execution thereof by
you or the Company, as the case may be, constitutes valid and binding
obligations of such Individual, enforceable against him in accordance with their
respective terms.

(c) No Conflict. The compliance by such Individual with all of the
provisions of this Agreement will not conflict with or result in a breach of,
any of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance pursuant to the
terms of, any contract, indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which such Individual is a party or by
which he may be bound or to which any of his property or assets are subject, nor
will such action result in any violation of the provisions of any statute,
order, rule or regulation applicable to such Individual of any court or
governmental authority having jurisdiction over him or his property.

(d) Shareholder Agreements, Registration Rights. Except for options
granted under the Company's Stock Option Plan and disclosed in the Prospectus,
such Individual has no rights with respect to the purchase, sale or registration
of any Securities.

(e) No NASD Affiliation. Except as described in Schedule 2(e)
hereto, such Individual has no direct or indirect affiliation or association
with any member of the National Association of Securities Dealers, Inc.

3. Effectiveness. This Agreement shall become effective upon the
effectiveness, in accordance with its terms, of the Underwriting Agreement.

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<PAGE>

4. Termination. This Agreement shall terminate upon the termination by
you of the Underwriting Agreement in accordance with the terms of the
Underwriting Agreement.

5. In General.

(a) Survival. The respective covenants, representations and
warranties of the Individuals set forth in this Agreement shall survive delivery
of and payment for the Securities.

(b) Parties in Interest. This Agreement is made solely for the
benefit of the Underwriters and, to the extent expressed, the Individuals, any
person controlling an Underwriter, and their respective executors,
administrators, successors and assigns; and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such, of Securities from an
Underwriter.

(c) Gender. Wherever used herein, the masculine pronoun shall
include the feminine and the neuter, as appropriate in the context.

(d) Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be performed entirely within such State. The individuals
agree to submit to the jurisdiction of state and federal courts located in
Monroe County, New York.

(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Agreement, whereupon it will become a
binding agreement among the Individuals, the Company and the Underwriters in
accordance with its terms.

Yours very truly,

_______________________________________
Rudy A. Slucker

_______________________________________
Barry Budilov

_______________________________________
Kenneth Kitnick

_______________________________________

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<PAGE>

Jay Rice

_______________________________________

_______________________________________
Frank T. DiPalma

_______________________________________
Robert Droste

_______________________________________
Kenneth R. Konikowski

_______________________________________
Michael Vanechanos

The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.

H.J. Meyers & Co., Inc.
As Representative of the
referenced Underwriters

By:____________________________________
Its

DynamicWeb Enterprises, Inc.

By:____________________________________
Name: Steven L. Vanechanos, Jr.
Title: Chief Executive Officer

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<PAGE>
EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the inclusion in this Amendment No. 2 to Registration
Statement on Form SB-2 of our report dated June 12, 1997 (June 30, 1997 with
respect to the last paragraphs of Notes G and I(1)) on the financial statements
of Ambassador Eyewear Group, Inc. as at March 31, 1997 and for the period May 3,
1995 (inception) through March 31, 1996 and for the year ended March 31, 1997.
We also consent to the inclusion in this Amendment No. 2 to Registration
Statement on Form SB-2 of our report dated June 12, 1997 on the financial
statements of Renaissance Eyewear, Inc. as at October 31, 1996 and for the year
then ended. We also consent to the reference to our firm under the caption
"Experts" in the Prospectus.

Richard A. Eisner & Company, LLP

New York, New York
February 3, 1998

<PAGE>
EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the incorporation by reference in this Registration Statement
on Form SB-2 being filed by Ambassador Eyewear Group, Inc. of our report dated
December 22, 1995 on the combined financial statements of Renaissance Eyewear,
Inc. for the year ended October 31, 1995. We also consent to the reference to
our firm under the caption "Experts" in the Prospectus of the Registration
Statement.

/s/ J. H. COHN LLP
--------------------------------------
J. H. COHN LLP

Roseland, New Jersey
January 30, 1998, 1998