TRACK N TRAIL, S-1, 1997-03-12

TRACK N TRAIL
S-1, 1997-03-12

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 12, 1997

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TRACK 'N TRAIL, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 3140 91-1778085
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)
</TABLE>

4961-A WINDPLAY DRIVE
EL DORADO HILLS, CA 95762
(916) 933-4525

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

DANIEL J. NAHMENS
TRACK 'N TRAIL, INC.
4961-A WINDPLAY DRIVE
EL DORADO HILLS, CA 95762
(916) 933-4525

(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
--------------------------

COPIES TO:

<TABLE>
<S> <C>
NATHANIEL M. CARTMELL III RICHARD H. GILDEN
DAVID R. LAMARRE GREGG J. BERMAN
SHANNON M. HERNANDEZ FULBRIGHT & JAWORSKI L.L.P.
PILLSBURY MADISON & SUTRO LLP 666 FIFTH AVENUE
235 MONTGOMERY STREET NEW YORK, NY 10103
SAN FRANCISCO, CA 94104
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
--------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
TITLE OF EACH PROPOSED
CLASS OF SECURITIES MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock, $0.01 par value.............................................. $35,100,000 $10,637
</TABLE>

(1) Estimated solely for the purpose of computing the registration fee.
--------------------------

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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED , 1997
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>
PROSPECTUS

TRACK 'N TRAIL [TRACK 'N TRAIL LOGO]

COMMON STOCK
------------------

Of the shares of Common Stock offered hereby, are being sold by
Track 'n Trail ("Track 'n Trail" or the "Company") and shares are being
sold by certain selling stockholders of the Company (the "Selling
Stockholders"). See "Principal and Selling Stockholders." The Company will not
receive any proceeds from the sale of shares by the Selling Stockholders.

Prior to this offering (the "Offering"), there has been no public market for
the Common Stock, and there can be no assurance that a trading market will
develop after the sale of shares offered hereby. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company intends to apply to have the Common Stock approved
for quotation on The Nasdaq National Market, subject to official notice of
issuance, under the symbol "TKTL."

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

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 9 HEREOF.
------------------------

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 PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
Per Share.................. $ $ $ $
Total(3)................... $ $ $ $
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $700,000.

(3) The Selling Stockholders have granted the Underwriters an option,
exercisable within 30 days of the date hereof, to purchase up to
additional shares of Common Stock solely to cover over-allotments, if any,
on the same terms and conditions as the shares offered hereby. If such
option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Selling Stockholders will be
$ , $ and $ , respectively. See "Underwriting."

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

The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by the several Underwriters, subject to their
right to reject any order in whole or in part and to certain other conditions.
It is expected that delivery of the certificates representing the shares of
Common Stock will be made on or about , 1997 at the offices of
Ladenburg Thalmann & Co. Inc., New York, New York.

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

LADENBURG THALMANN & CO. INC. A.G. EDWARDS & SONS, INC.

The date of this Prospectus is , 1997
<PAGE>
[INSIDE FRONT COVER OF PROSPECTUS]

[TRACK 'N TRAIL LOGO]

[PICTURE OF UNITED STATES MAP
INDICATING TRACK 'N TRAIL LOCATIONS]

Track 'n Trail-TM-, Overland Trading Company-TM-, Nordic Trail-TM-, Coloma
Trail-TM-, Forza-TM-, New Terrain-TM- and Mole-TM- are trademarks of the
Company. This Prospectus also includes trade names and trademarks of other
companies.

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE COMMON
STOCK, INCLUDING SYNDICATE COVERING TRANSACTIONS AND THE IMPOSITION OF A PENALTY
BID. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE>
[INSIDE FRONT COVER GATEFOLD OF PROSPECTUS]

[PHOTOGRAPH SHOWS FRONT EXTERIOR OF TRACK 'N TRAIL STORE]

Every day is an adventure

[PHOTOGRAPH SHOWS INTERIOR WALL OF TRACK 'N TRAIL STORE WITH DISPLAY OF HIKING
BOOTS]

hike . . .

[PHOTOGRAPH SHOWS CLOSE-UP VIEW OF TREKKING BOOTS]

trek . . .

[PHOTOGRAPH SHOWS PANORAMIC VIEW OF LEGS AND FEET]

[PHOTOGRAPH SHOWS INTERIOR WALL OF TRACK 'N TRAIL STORE WITH DISPLAY OF WALKING
SHOES]

walk . . .
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING
ELSEWHERE IN THIS PROSPECTUS. EXCEPT AS SET FORTH IN THE CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO OR OTHERWISE AS SPECIFIED HEREIN, ALL INFORMATION
IN THIS PROSPECTUS ASSUMES (I) NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT
OPTION, (II) THAT TRACK 'N TRAIL, A CALIFORNIA CORPORATION ("TRACK 'N
TRAIL-CALIFORNIA"), AND OVERLAND MANAGEMENT CORPORATION HAVE BECOME SUBSIDIARIES
OF THE COMPANY, WHICH WILL OCCUR PRIOR TO THE EFFECTIVENESS OF THE REGISTRATION
STATEMENT OF WHICH THIS PROSPECTUS IS A PART (THE "REORGANIZATION") AND (III)
THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK THAT WILL BE OUTSTANDING
IMMEDIATELY AFTER THE REORGANIZATION. SEE "UNDERWRITING" AND NOTE 14 OF NOTES TO
THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS. EFFECTIVE JUNE 28, 1992, THE
COMPANY CHANGED ITS FISCAL YEAR-END FROM THE LAST SATURDAY IN JUNE TO THE LAST
SATURDAY IN DECEMBER. AS USED IN THIS PROSPECTUS, "FISCAL 1992," "FISCAL 1993,"
"FISCAL 1994," "FISCAL 1995" AND "FISCAL 1996" REFER TO THE COMPANY'S FISCAL
YEARS ENDED JUNE 27, 1992, DECEMBER 25, 1993, DECEMBER 31, 1994, DECEMBER 30,
1995 AND DECEMBER 28, 1996, RESPECTIVELY, AND "FISCAL 1997" REFERS TO THE
COMPANY'S FISCAL YEAR ENDING DECEMBER 27, 1997. "STORE CONTRIBUTION" REFERS TO
GROSS PROFIT AFTER DEDUCTING SELLING AND MARKETING EXPENSES.

THE COMPANY

Track 'n Trail ("Track 'n Trail" or the "Company") is one of the largest
specialty retailers in the United States focusing on high-quality casual,
outdoor and adventure footwear. The Company has increased its store base and net
sales each year since inception. In addition, the Company's net income has grown
at a compound annual rate of 37.5% from $1.1 million in fiscal 1993 to $2.9
million in fiscal 1996, after giving effect to assumed C corporation income
taxes.

As of February 22, 1997, the Company operated 128 stores in 23 states under
the Track 'n Trail and Overland Trading names. All but three of these stores
were located in regional or super-regional shopping malls, concentrated in
California, the Midwest and the Northeast. Each store offers a wide range of
rugged walking and fashion casual shoes, sandals and boots featuring brands such
as Timberland, Dr. Martens, Birkenstock, Vans, Teva, Airwalk, Clarks, Ecco and
Rockport.

The Company targets middle to upper income consumers, with the Track 'n
Trail stores focusing on consumers in the 15- to 40-year-old age group and the
Overland Trading stores focusing on the 25- to 55-year-old age group. The
Company markets to these two different customer segments through distinct
merchandise assortments and store designs. The Track 'n Trail stores offer a
merchandise selection that emphasizes fashionable, performance-oriented footwear
and typically feature an all-glass front, often accented with rock fixtures, and
earth-tone interiors reminiscent of an outdoor setting. The Company's Overland
Trading stores are merchandised and designed to appeal to a slightly older and
more conservative consumer, with a focus on traditional and comfort-oriented
styles displayed in a contemporary, natural wood setting. The Company operates
these two distinct retail concepts to capitalize on the rapid population growth
in the 15- to 24-year old age group and the 40- to 55-year-old age group, which
the U.S. Bureau of the Census estimates will grow 19.6% and 28.6% from 1995 to
2010, respectively. Track 'n Trail stores average approximately 1,880 square
feet in size, while the Overland Trading stores currently average approximately
1,450 square feet. The Company operates 94 Track 'n Trail stores in 22 states,
and 34 Overland Trading stores in seven states.

The Company obtained 33 Overland Trading stores by acquiring control of
Overland Management Corporation ("Overland") on October 25, 1996. Overland
generated net sales of approximately $23.9 million and total store contribution
of approximately $2.5 million for the 12 months preceding the acquisition, under
prior management. In addition to obtaining a distinct retail venue, by acquiring
Overland the Company strengthened its presence in the northeastern United
States. The Company also believes that the acquisition increases its purchasing
power and negotiating position with suppliers and real estate developers,
permits it to realize operational economies of scale, and increases the
potential number of stores it can open in both existing and future Track 'n
Trail markets.

3
<PAGE>
OPERATING STRATEGIES

The Company's goal is to become the premier destination specialty retailer
of better casual, outdoor and adventure footwear. To accomplish its goal, the
Company is pursuing the following operational strategies:

- Focus on authentic, well-established brands.

- Emphasize customer service and convenience.

- Appeal to two rapidly growing demographic groups through two distinct
retail concepts.

- Implement its focused merchandising strategy on a store-by-store basis.

- Recognize and respond to changing lifestyle trends and their effect on
customer preferences.

- Establish complementary private label brands.

GROWTH STRATEGIES

The Company's senior management team intends to continue to invest in and
strengthen the infrastructure of the Company. These investments in
infrastructure are designed to enhance the Company's ability to continue to grow
through new store openings and acquisitions. Management has developed the
following strategies to accelerate the Company's growth and increase its future
profitability:

- Strengthen its position in certain of its current markets by selectively
opening new Track 'n Trail and Overland Trading stores where management
believes demographics are attractive and opportunities exist to achieve
economies of scale in management and distribution.

- Increase comparable store net sales by gaining greater recognition through
increased market presence and by fully implementing the Track 'n Trail
operating strategies at the Overland Trading stores.

- Increase the store contribution of the Overland Trading stores as a
percentage of net sales to the level historically achieved by the Track 'n
Trail stores by improving gross profit and implementing the Company's
operating expense controls.

- Acquire, as appropriate, other regional specialty footwear retailers from
within the large and fragmented industry for high-quality casual, outdoor
and adventure footwear.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by:
The Company..................... shares
The Selling Stockholders........ shares

Common Stock to be outstanding
after the Offering.............. shares(1)

To repay indebtedness and fund S corporation
distributions to stockholders, and for general corporate
purposes.
Use of proceeds...................

Proposed Nasdaq National Market
symbol.......................... TKTL
</TABLE>

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

(1) Excludes options to purchase 851,786 shares of Common Stock at a weighted
average exercise price of $2.36, and warrants to purchase 49,593 and 74,390
shares of Common Stock at exercise prices equal to the initial public
offering price and 120% of such price, respectively.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER SQUARE FOOT AMOUNTS)

<TABLE>
<CAPTION>
ACQUISITION,
26 WEEKS REORGANIZATION
ENDED FISCAL AND OFFERING
FISCAL DEC. 26, ------------------------------------------- PRO FORMA
1992(1) 1992(1) 1993 1994(2) 1995 1996 1996(3)
--------- --------- --------- --------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales................... $ 38,181 $ 22,762 $ 41,858 $ 48,165 $ 50,691 $ 66,233 $ 84,186
Gross profit................ 18,275 10,735 19,956 23,086 24,499 32,171 39,726
Operating income............ 2,489 1,998 2,224 3,176 2,821 5,603 5,467
Income before provision for
income taxes............... 2,027 1,497 1,838 2,814 2,427 4,957 5,401
Net income.................. $ 1,202 $ 1,452 $ 1,783 $ 2,747 $ 2,386 $ 4,364 $ 4,375

PRO FORMA STATEMENT OF
OPERATIONS DATA(4):
Historical income before
provision for income
taxes...................... $ 1,497 $ 1,838 $ 2,814 $ 2,427 $ 4,957 $ 5,401
Pro forma provision for
income taxes............... 599 735 1,126 971 1,983 2,160
Minority interest........... -- -- -- -- 105 --
--------- --------- --------- --------- ---------- -------
Pro forma net income........ $ 898 $ 1,103 $ 1,688 $ 1,456 $ 2,869 $ 3,241
--------- --------- --------- --------- ---------- -------
--------- --------- --------- --------- ---------- -------
Pro forma net income per
share...................... $ 0.54 $
---------- -------
---------- -------
Common and common equivalent
shares used in computing
per share amounts(5)....... 5,293,885

SELECTED STORE OPERATING
DATA:
Store contribution(6)....... $ 6,125 $ 4,102 $ 6,880 $ 8,111 $ 7,647 $ 11,111 $ 12,450
Number of stores:
Opened or acquired during
period.................. 2 1 9 9 12 51(7) 21(7)
Closed during period...... 0 0 2 4 4 5 5
Open at end of period..... 61 62 69 74 82 128 128
Total weighted average
square feet(8)............. 110,147 110,732 114,793 130,510 144,624 168,971 205,366
Average square feet per
store...................... 1,792 1,792 1,851 1,894 1,880 1,744 1,744
Weighted average net sales
per square
foot(9).................... $ 347 $ 206 $ 365 $ 369 $ 351 $ 392 $ 410
Increase (decrease) in
comparable store net
sales(10).................. 2.0% 2.5% 4.1% 0.6% (1.4)% 3.1% 3.7%
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 28, 1996
----------------------------------------------
ACQUISITION ACQUISITION AND
AND REORGANIZATION PRO
REORGANIZATION FORMA AS
ACTUAL PRO FORMA(11) ADJUSTED(11)(12)
--------- -------------- -------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................................. $ 9,430 $ 3,589 $ 20,575
Total assets..................................................... 31,858 33,550 40,613
Total debt....................................................... 10,765 17,799 425
Stockholders' equity............................................. 10,646 5,410 29,847
</TABLE>

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

(1) Effective June 28, 1992, the Company changed its fiscal year end from the
last Saturday in June to the last Saturday in December. Results for the
26-week period ended December 26, 1992 are not indicative of full calendar
year results, as the second half of the year includes the Company's
strongest selling season.

(2) Fiscal 1994 consisted of 53 weeks. All other fiscal years presented consist
of 52 weeks. During the 53rd week of fiscal 1994, the Company generated $1.2
million in net sales. As a result, the Company's operating results in fiscal
1994 are not comparable to its results in any other fiscal year presented.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

(3) Gives effect to (i) the Company's acquisition of 100% of Overland's common
stock, (ii) the Reorganization and the resulting conversion of the Company
from S corporation to C corporation status, (iii) the sale by the Company,
in addition to those shares described in footnote 5 below, of only those
shares of Common Stock necessary to fund the repayment of indebtedness as
described in "Use of Proceeds" at an initial public offering price of $
per share (the midpoint of the Offering range), net of estimated
underwriting discounts and Offering expenses, and the application of such
portion of the net proceeds as described in "Use of Proceeds," and (iv)
certain other events intended or mandated to occur in connection with the
Offering, as if all of the foregoing had occurred on December 31, 1995, the
first day of fiscal 1996. See "The Company" and "Pro Forma Condensed
Consolidated Financial Information."

(4) Includes, for the 26 weeks ended December 26, 1992 and for fiscal 1993,
1994, 1995 and 1996, pro forma provision for income taxes using an assumed
combined federal and state tax rate of 40.0%, which the Company believes
approximates the statutory federal and state income tax rates that would
have been applied had the Company been taxed as a C corporation. Commencing
June 28, 1992, the Company has operated as an S corporation and has not been
subject to federal and certain state income taxes.

(5) Shares outstanding include shares issuable upon exercise of stock
options outstanding at December 28, 1996, after applying the treasury stock
method assuming an initial public offering price of $ per share (the
midpoint of the Offering range). The pro forma common and common equivalent
shares give effect to the sale by the Company of only those shares of Common
Stock necessary to fund the payment of the excess of the stockholder
distributions in fiscal 1996 and thereafter through the Reorganization over
the S corporation earnings in fiscal 1996, assuming that such shares are
sold at an initial public offering price of $ per share (the midpoint of
the Offering range), net of estimated underwriting discounts and Offering
expenses. See "Capitalization," "Management--Stock Option Plan" and "Pro
Forma Condensed Consolidated Financial Information."

(6) Store contribution refers to gross profit after deducting selling and
marketing expenses. Store contribution is presented to provide additional
information about the Company and is commonly used as a performance
measurement by retail companies. Store contribution should not be considered
in isolation or as a substitute for operating income, cash flow from
operating activities and other income or cash flow data prepared in
accordance with generally accepted accounting principles, or as a measure of
the Company's profitability or liquidity.

6
<PAGE>
(7) On October 25, 1996, the Company acquired 33 Overland Trading stores. The
Company opened one additional Overland Trading store in November 1996
pursuant to a commitment previously entered into by Overland. Opened or
acquired stores in fiscal 1996, pro forma for the acquisition, the
Reorganization and the Offering, are shown as if the acquisition had
occurred prior to fiscal 1996.

(8) Weighted to reflect store openings and closings during each period, assuming
that all periods presented consist of 52 weeks.

(9) Weighted average net sales for the 26 weeks ended December 26, 1992 reflect
only sales for that 26-week period. Weighted average net sales for fiscal
1994 have been adjusted as if such year consisted of 52 weeks.

(10) Comparable store net sales include only those stores that were open both
for the full fiscal period and for the full prior fiscal period. The fiscal
1994 and 1995 increases have been calculated by comparing net sales in such
years to net sales for the prior 53 and 52 weeks, respectively. The fiscal
1996 increase excludes the Overland Trading stores acquired in October 1996.
If such stores had been included since the acquisition, the increase in
comparable store net sales for fiscal 1996 would have been 2.4%.

(11) Pro forma balance sheet data give effect to (i) the acquisition by the
Company of the remaining 21.0% interest in Overland (the "Minority Interest
Acquisition"), (ii) the Reorganization, (iii) $1.7 million of S corporation
distributions made or to be made in fiscal 1997, primarily in consideration
of income tax payments made or to be made by the Existing Stockholders with
respect to fiscal 1996 S corporation income and (iv) the $4.7 million
distribution of previously undistributed accumulated S corporation earnings
to the Existing Stockholders, as if all of the foregoing had occurred on
December 28, 1996, the last day of fiscal 1996. See "Pro Forma Condensed
Consolidated Financial Information."

(12) Adjusted to reflect (i) the sale by the Company of shares of Common
Stock offered hereby at an assumed initial public offering price of $
per share (the midpoint of the Offering range) and the application of the
estimated net proceeds therefrom and (ii) certain other events intended or
mandated to occur in connection with the Offering. See "Use of Proceeds,"
"Capitalization" and "Pro Forma Condensed Consolidated Financial
Information."

7
<PAGE>
THE COMPANY

THE OVERLAND ACQUISITION

On October 25, 1996, the Company, together with its three stockholders (the
"Existing Stockholders"), obtained 33 Overland Trading stores by acquiring the
outstanding common stock of Overland in exchange for subordinated promissory
notes of approximately $3.2 million (the "Seller Notes") and warrants to
purchase one percent of the Company's Common Stock calculated on a fully diluted
basis immediately prior to an initial public offering. In connection with the
acquisition, Overland repurchased all of its outstanding preferred stock in
exchange for a $3.5 million subordinated promissory note (the "Subordinated
Note"), which the Company guaranteed. Due to the then-existing prohibition
against an S corporation owning 80.0% or more of a subsidiary's stock, the
Company initially purchased 79.0% of Overland's common stock, while the Existing
Stockholders personally acquired the remaining 21.0%. Following legislative
changes to the S corporation rules, the Company acquired the remaining 21.0%
effective January 1, 1997, and assumed the Existing Stockholders' pro rata
portion of the Seller Notes (the "Minority Interest Acquisition"). Total
payments in connection with the acquisition were approximately $9.0 million,
including the Seller Notes, the Subordinated Note, the refinancing of
approximately $2.1 million in indebtedness under Overland's credit facility
through borrowings under the Company's revolving loan agreement with a
commercial bank (the "Revolving Loan Agreement"), and associated expenses of
approximately $240,000. The Seller Notes, the Subordinated Note and the
Revolving Loan Agreement mature upon the consummation of the Offering. Pursuant
to consulting agreements entered into in connection with the acquisition, the
Company currently pays an aggregate of approximately $23,400 per month plus
related benefit expenses to certain former Overland stockholders. The consulting
agreements terminate upon the consummation of the Offering.

THE REORGANIZATION

The Company was formed to own the businesses conducted by Track 'n
Trail-California and its subsidiary, Overland. The Board of Directors of Track
'n Trail-California intends to approve a reorganization of Track 'n
Trail-California (the "Reorganization") in which the Track 'n Trail-California
stockholders will exchange 100% of their Track 'n Trail-California common stock
for 100% of the Common Stock of the Company. The Reorganization, which will be
accounted for in a manner similar to a pooling of interests, will be
accomplished in an exchange of one share of Track 'n Trail-California common
stock for approximately 100.6 shares of the Company's Common Stock. In
connection with the Reorganization, all of the common stock of Overland will be
transferred to the Company as a dividend resulting in the predecessor businesses
becoming wholly owned subsidiaries of the Company.

GENERAL

The Company was incorporated in Delaware in 1997, and Track 'n
Trail-California was incorporated in California in 1980. Except where the
context otherwise requires, all references to the "Company" in this Prospectus
are to Track 'n Trail, a Delaware corporation, and its consolidated
subsidiaries. The Company's executive offices are located at 4961-A Windplay
Drive, El Dorado Hills, CA 95762, and its telephone number is (916) 933-4525.

8
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING
RISK FACTORS IN ADDITION TO THE OTHER INFORMATION PRESENTED IN THIS PROSPECTUS,
BEFORE PURCHASING THE SHARES OF COMMON STOCK OFFERED HEREBY. THIS PROSPECTUS
CONTAINS, IN ADDITION TO HISTORICAL INFORMATION, FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS
THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED
BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS.

RISKS ASSOCIATED WITH EXPANSION

The Company's continued growth will depend largely upon the Company's
ability to open or acquire new stores in a timely manner and to operate them
profitably. The Company opened 18 stores in fiscal 1996, and presently
anticipates opening a substantial number of stores in fiscal 1997 and 1998. The
success of the Company's planned expansion will depend on many factors,
including the Company's ability to secure suitable store sites on satisfactory
leasing terms and to complete any necessary construction or refurbishment of
these sites, the hiring, training and retention of qualified managers and other
personnel and the successful integration of new stores into existing operations.
No assurance can be given that the Company will be able to expand as planned in
fiscal 1997, fiscal 1998 or any future period, that new stores will achieve
results similar to those achieved at prior locations, or that the Company will
be able to manage any future growth successfully. Because the Company's business
is highly seasonal, any delays in store openings past peak selling periods could
significantly reduce the new stores' near-term contribution to total net sales.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

DEPENDENCE ON MAJOR SUPPLIERS

The Company's business depends to a significant degree upon its ability to
obtain timely and plentiful shipments of brand name merchandise at competitive
prices. In fiscal 1995 and fiscal 1996, the Company's ten largest suppliers
(eight of which were the same in each period) accounted for approximately 66.8%
and 68.0% of its net sales, respectively. The Company does not have any
long-term supply agreements or other contractual assurances of continued supply,
pricing or access to new products. The deterioration of the Company's
relationship with any key vendor could result in delivery delays, merchandise
shortages or less favorable trade terms than the Company currently enjoys. The
Company has occasionally received allocations of merchandise from vendors,
particularly merchandise in high demand by many footwear retailers, that are
insufficient to meet the Company's desired levels of such merchandise. There can
be no assurance that the Company will receive its desired levels of such
merchandise in the future. The Company's business is also affected by its
suppliers' ability to manufacture and deliver merchandise in a timely and
cost-effective manner, which depends upon a number of factors beyond the
Company's control, including fluctuations in currency exchange rates, trade
barriers, and economic, labor and political conditions in the countries in which
the Company's vendors have manufacturing operations. In particular, a
significant deterioration in China's trade relationship with the United States
could adversely affect the supply and pricing of a substantial portion of the
Company's merchandise.

PRIVATE LABEL SOURCING

Private label products accounted for approximately 12.0% of net sales in
fiscal 1996. Substantially all of the Company's private label manufacturers are
located outside of the United States. Accordingly, the Company is subject to the
risks typically associated with an import business, including unexpected changes
in foreign regulatory requirements, disruptions or delays in shipments and the
risks associated with United States import laws and regulations, including
quotas, duties, taxes, tariffs and other restrictions. Because a portion of the
Company's purchases of private label goods are made in currencies other than the
U.S. dollar, fluctuations in exchange rates between the U.S. dollar and other
currencies may have a material adverse effect on the Company's financial
condition and results of operations. Although the Company

9
<PAGE>
entered into three forward contracts to purchase foreign currency in fiscal
1996, the Company has not typically hedged its currency risks. The Company's
private label products may experience higher markdowns than branded products,
because they require longer lead times and must be ordered in larger volumes,
and because the Company is typically unable to return private label products to
its manufacturers. The Company has no long-term contracts with its manufacturing
sources and competes with other companies for production facilities. There can
be no assurance that the foregoing factors will not disrupt the Company's supply
of private label goods or otherwise adversely impact the Company's operations in
the future. See "Business--Purchasing and Sourcing."

MERCHANDISE TRENDS

The Company's success depends in part on its ability to anticipate and
respond to changing merchandise trends and consumer demands in a timely manner.
Any failure by the Company to identify and respond to emerging trends could
adversely affect consumer acceptance of the merchandise in the Company's stores,
which in turn could adversely affect the Company's business, financial condition
and results of operations. Failure to anticipate and respond to changing
consumer preferences could lead to, among other things, shortages of styles in
high demand, lower net sales, additional markdowns and lower margins, which
would have a material adverse effect on the Company's results of operations and
financial condition.

DEPENDENCE ON MALL TRAFFIC

All but three of the Company's stores are located in regional or
super-regional shopping malls. The Company's net sales are derived, in large
part, from the volume of traffic in these malls, particularly because the
Company does little independent advertising to attract customers. The Company
therefore depends upon the ability of mall "anchor" tenants and other mall
attractions to generate consumer traffic in the vicinity of the Company's
stores, as well as the continuing popularity of malls as shopping destinations.
Mall traffic and the Company's net sales and profitability may be adversely
affected by regional economic downturns, competition from non-mall retailers and
other malls, the closing of "anchor" tenants or declines in the desirability of
the shopping environment in a particular mall. As with other specialty footwear
retailers, the Company's business is also subject to general economic
conditions, including the possibility of a nationwide recession, consumer
confidence and the level of consumer spending.

SEASONALITY

The Company's business is highly seasonal. The Company typically incurs
losses in the first quarter and expects to record a larger loss in the first
quarter of fiscal 1997 than in the first quarter of fiscal 1996, due primarily
to the operating loss and interest expense associated with the Overland
acquisition. The Company derives a substantial percentage of its annual net
sales and operating profitability during the "back-to-school" and year-end
holiday periods. In anticipation of increased net sales activity during these
periods, the Company incurs significant additional expenses, including the
hiring of a substantial number of temporary employees. As a result of this
seasonality, the Company's working capital needs are greatest in October and
early November, and late in the first quarter of each fiscal year. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

COMPETITION

The retail footwear business is intensely competitive. Most of the items
sold by the Company are sold by department stores, outdoor and sporting goods
stores, athletic footwear stores and traditional shoe stores. Some of these
stores are owned or franchised by the Company's footwear suppliers. Many of the
stores with which the Company competes are units of large national or regional
chains that have substantially greater financial and other resources than the
Company. In many cases, the Company's stores are located in shopping malls in
which one or more of its competitors also has a presence. To a lesser

10
<PAGE>
extent, the Company also competes with mail order retailers. A significant
change in price, level of promotion or other strategies by the Company's
competitors could have a material adverse effect on the Company's results of
operations. See "Business--Competition."

ACQUISITIONS

The Company's business strategy includes expanding through acquisitions, as
well as through new store openings. See "Business--Growth Strategies." No
assurance can be given that any acquisition by the Company will occur, or that
any such acquisition will enhance the Company's results of operations. Any
acquisition will involve numerous risks, including difficulties in the
assimilation of the acquired company's operations, the diversion of management's
attention, uncertainties associated with operating stores in new markets and the
potential loss of the acquired company's key employees. Acquisitions may also
result in potentially dilutive issuances of equity securities, the incurrence of
debt and contingent liabilities, potential reductions in income due to losses
incurred by the acquired business and increased amortization expense related to
intangible assets acquired, any of which could materially adversely affect the
Company's financial condition and results of operations.

CONTROL BY EXISTING STOCKHOLDERS

David L. Suechting, Jr., the Company's Chairman of the Board, Barbara
Suechting, a director of the Company, and Deborah Suechting, the Existing
Stockholders, in the aggregate will own beneficially approximately % of the
Company's outstanding shares of Common Stock after the Offering ( %, if the
Underwriters' over-allotment option is exercised in full). As a result, the
Existing Stockholders, acting together, will be able to control all matters
requiring approval by the stockholders of the Company, including the election of
the Board of Directors. See "Principal and Selling Stockholders."

FUTURE CAPITAL NEEDS

The Company expects that the net proceeds of the Offering remaining after
the repayment of indebtedness and the payment of the stockholder distribution
described under "Use of Proceeds," together with anticipated cash flow from
operations and anticipated borrowings under a new credit facility currently
under negotiations, will satisfy its cash requirements through fiscal 1998.
However, in connection with its growth strategy, the Company will incur
significant working capital requirements and capital expenditures. To the extent
that the foregoing cash resources are insufficient to fund the Company's
activities, including new store openings planned for fiscal 1997 and 1998,
additional funds will be required. There can be no assurance that additional
financing will be available on reasonable terms or at all. Failure to obtain
such financing could delay or prevent the Company's planned expansion, which
could adversely affect the Company's business, financial condition and operating
results. In addition, if additional capital is raised through the sale of
additional equity or convertible securities, dilution to the Company's
stockholders could occur. See "Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

DEPENDENCE ON KEY PERSONNEL

The Company's future success depends to a significant extent on the efforts
and abilities of its executive officers. The loss of the services of certain of
these individuals could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company does not
maintain any key man life insurance. The Company's recent growth, particularly
as a result of the acquisition of Overland, has resulted in an increase in
responsibilities for management personnel. The Company's ability to manage
growth effectively will require it to continue to train, motivate and manage its
employees, and to attract, motivate and retain additional skilled managerial and
merchandising personnel. Competition for such personnel is intense, and there
can be no assurance that the Company will be successful in attracting,
assimilating and retaining the personnel it requires to grow and operate
profitably.

11
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Future sales of Common Stock by existing stockholders under Rule 144 and
Rule 701 of the Securities Act of 1933, as amended (the "Securities Act"),
through the exercise of outstanding registration rights or otherwise could have
an adverse effect on the price of the Company's Common Stock. The shares
offered hereby will be eligible for sale in the public market following the
Offering. Additionally, 4,107,608 shares of Common Stock and 851,786 shares of
Common Stock issuable pursuant to the exercise of options that become fully
vested and immediately exercisable upon completion of the Offering will be
eligible for sale in the market 180 days after the date of this Prospectus upon
expiration of lockup agreements with the Underwriters, subject to Rule 144 or
Rule 701 under the Securities Act. The Company intends to register up to a total
of 905,735 shares of Common Stock reserved for issuance under the Stock Option
Plan as soon as practicable following the date of this Prospectus. Certain
existing stockholders and warrant holders have rights under certain
circumstances to require the Company to register their shares for future sale.
See "Shares Eligible for Future Sale" and "Description of Capital
Stock--Registration Rights."

LACK OF PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common Stock
and there can be no assurance that an active trading market will develop or be
sustained. The initial offering price for the Common Stock to be sold by the
Company and the Selling Stockholders will be determined by negotiations among
the Company, the Selling Stockholders and the representatives of the
Underwriters and may bear no relationship to the price at which the Common Stock
will trade after completion of the Offering. See "Underwriting" for factors to
be considered in determining such offering price. The market price of the Common
Stock could be subject to significant fluctuations in response to
quarter-to-quarter variations in operating results, announcements of pricing or
promotional changes by the Company or its suppliers or competitors, changes in
earnings estimates by securities analysts, disruptions in the supply of
merchandise and other events or factors. In addition, the stock market in recent
years has experienced extreme price and volume fluctuations that have
particularly affected the market prices of many retailers and that have often
been unrelated or disproportionate to the operating performance of such
companies. These fluctuations, as well as general economic and market
conditions, may adversely affect the market price of the Common Stock. See
"--Seasonality."

DILUTION AND BENEFITS TO EXISTING STOCKHOLDERS

Purchasers of shares of Common Stock in the Offering will incur immediate
and substantial dilution in net tangible book value per share. See "Dilution."
The consummation of the Offering will result in certain benefits to the
Company's stockholders other than the investors in the Offering, including the
Company's Chairman of the Board and one of its directors. The Company intends to
use a portion of the proceeds from the Offering to fund a $4.7 million
distribution by Track 'n Trail-California to the Existing Stockholders, which is
intended as a distribution of previously undistributed accumulated S corporation
retained earnings (the "Distribution"). See "S Corporation Distributions." A
portion of the net proceeds will also be used to repay indebtedness currently
guaranteed by the Existing Stockholders.

INTELLECTUAL PROPERTY

Prior to being acquired by Track 'n Trail, Overland entered into an
agreement with a third party for the exclusive use of the Overland Trading
Company trademark in nine Midwestern states. The agreement prohibits the Company
from opening Overland Trading stores in those states until the agreement is
terminated. There can be no assurance that the activities of the third party
will not detract from the Company's efforts to maintain its Overland Trading
stores as a distinct retail concept, particularly in the Midwest, or from the
Company's reputation.

12
<PAGE>
ANTITAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS

Upon completion of the Offering, the Board of Directors will have the
authority to issue up to 2,000,000 shares of Preferred Stock, and to determine
the rights, preferences and restrictions of such shares, without further
stockholder approval. The rights of holders of Common Stock will be subject to,
and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future. The issuance of Preferred Stock may have
the effect of delaying or preventing a change in control of the Company. In
addition, certain provisions of the Company's Certificate of Incorporation and
Bylaws and of Delaware law could discourage potential acquisition proposals and
could delay or prevent a change in control of the Company. Such provisions could
diminish the opportunities for a stockholder to participate in tender offers,
including tender offers at a price above the then-current market value of the
Common Stock. See "Description of Capital Stock."

13
<PAGE>
S CORPORATION DISTRIBUTIONS

From June 28, 1992 until the Reorganization, the Company has been and will
be treated for federal and certain state income tax purposes as an S corporation
under Subchapter S of the Internal Revenue Code of 1986, as amended (the
"Code"), and comparable tax laws in certain states. As a result, the Company's
earnings from June 28, 1992 through the date preceding the date of termination
of the Company's S corporation status (the "Termination Date") have been and
will be taxed, with certain exceptions, for federal and state income tax
purposes directly to the Company's stockholders rather than to the Company. On
the Termination Date, which will occur prior to the effectiveness of the
Registration Statement of which this Prospectus is a part, the Company will
become subject to state and federal income taxes. See Note 14 of Notes to
Consolidated Financial Statements.

STOCKHOLDER DISTRIBUTIONS

The Company has historically paid distributions to its stockholders to
enable them to pay their income tax liabilities as a result of the Company's
status as an S corporation and, from time to time, to distribute previously
undistributed accumulated S corporation earnings. During fiscal 1994, fiscal
1995 and fiscal 1996, the Company made S corporation distributions to
stockholders of $1.7 million, $376,000 and $3.1 million, respectively. In
addition, through February 22, 1997 the Company had made distributions of $1.4
million to stockholders in fiscal 1997.

Prior to the Reorganization, Track 'n Trail-California, the Existing
Stockholders and a predecessor in interest thereto intend to enter into an
Agreement for Distribution of Retained Earnings and Tax Indemnification (the
"Distribution and Tax Agreement"). Pursuant to the Distribution and Tax
Agreement, Track 'n Trail-California will declare to the Existing Stockholders,
as the sole stockholders of record on a date prior to the Termination Date, the
$4.7 million Distribution which is designed to constitute substantially all of
Track 'n Trail-California's remaining undistributed accumulated S corporation
earnings. The Distribution will be paid in cash from a portion of the net
proceeds to the Company of the Offering, which will be contributed to Track 'n
Trail-California upon the closing of the Offering. Purchasers of Common Stock in
the Offering will not receive any portion of the Distribution. Under certain
circumstances, the Company may make payments to the Existing Stockholders or the
predecessor in interest to satisfy certain tax liabilities with respect to
pre-Reorganization tax periods resulting from adjustments to the Company's tax
returns. In addition, under certain circumstances, the Existing Stockholders or
the predecessor in interest may make payments to the Company to satisfy any tax
liabilities (i) resulting from an unexpected pre-Reorganization loss of S
corporation status and/or (ii) with respect to post-Reorganization taxable
periods for which the Existing Stockholders or the predecessor in interest
receive a tax benefit, provided that the indemnity provided by the Existing
Stockholders will be limited to any federal and state refunds they receive as a
result of a loss of S corporation status or other tax adjustments for such
taxable periods. See "Use of Proceeds" and "Certain Transactions."

ACCOUNTING EFFECT

Upon the Termination Date, deferred income taxes representing the tax effect
of differences between the Company's financial statement and tax bases in
certain assets and liabilities will be recorded as an asset of the Company on
its consolidated balance sheet, with a corresponding non-recurring decrease in
the Company's tax expense in its consolidated statement of operations. The
amount of the non-recurring decrease in tax expense will depend on a number of
factors, including the actual date of the Reorganization and the timing and
nature of transactions with differing treatment for tax and financial statement
purposes. If the Termination Date had been December 28, 1996, the non-recurring
decrease in tax expense would have been $1.1 million. Management expects the
amount of the non-recurring decrease in tax expense at the Termination Date to
approximate this amount.

Additionally, income or loss during the period preceding the Termination
Date will be taxed to the Existing Stockholders, which may affect the Company's
effective tax rate for fiscal 1997. Management anticipates that the effective
tax rate for fiscal 1997, before considering the non-recurring reduction upon

14
<PAGE>
conversion from an S corporation to a C corporation, will be greater than the
combined federal and state statutory tax rate, due to seasonal operating losses
during the portion of the year in which income or loss will be taxed to the
Existing Stockholders.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of
Common Stock being offered by the Company are estimated to be $24.4 million,
assuming an initial public offering price of $ per share (the midpoint of the
Offering range) and after deducting estimated underwriting discounts and
commissions and offering expenses. The Company will not receive any proceeds
from the sale of
shares of Common Stock to be offered by the Selling Stockholders.

The Company intends to use its net proceeds from the Offering (i) to repay
all outstanding indebtedness under its Revolving Loan Agreement, which
aggregated approximately $4.7 million as of February 22, 1997, of which a
portion bore interest at the prime rate (8.25% per annum, as of February 22,
1997) plus one-half percent per annum and the remainder bore interest at the
fixed rate of 8.75% per annum, (ii) to repay indebtedness under a secured loan
agreement (the "Merrill Lynch Loan"), which aggregated $950,000 at February 22,
1997 and bore interest at the 30-day commercial paper rate (5.36% per annum at
February 22, 1997) plus 2.95% per annum, (iii) to repay in full approximately
$3.2 million in Seller Notes and the $3.5 million Subordinated Note, all of
which presently bear interest at 10.0% per annum, and (iv) to fund the payment
of the $4.7 million Distribution to the Existing Stockholders. See "S
Corporation Distributions." The balance will be used for general corporate
purposes, including new store expansion and possible acquisitions of businesses
that complement that of the Company. No such acquisitions are being negotiated
as of the date of this Prospectus. Pending such uses, the Company intends to
invest its net proceeds from the Offering in short-term, investment-grade,
interest-bearing instruments.

DIVIDEND POLICY

Following the Offering, the Company currently intends to retain its
earnings, if any, for the development of its business and therefore does not
anticipate paying any dividends in the foreseeable future. Historically, the
Company made certain distributions to its stockholders as a result of the
Company's status as an S corporation. See "S Corporation Distributions" and Note
1 and Note 6 of Notes to Consolidated Financial Statements.

15
<PAGE>
DILUTION

The actual net tangible book value of the Company as of December 28, 1996
was $7.4 million, or $1.81 per share. Net tangible book value per share
represents the amount of total tangible assets less total liabilities and
minority interest of the Company, divided by the number of shares of Common
Stock outstanding. After giving effect to the Distribution, the Minority
Interest Acquisition, the Reorganization and the vesting of certain stock
options upon the closing of the Offering (including the associated compensation
expense and tax effects), the pro forma net tangible book value of the Company
at December 28, 1996 would have been $509,000, or $0.12 per share. After giving
effect to the sale of the shares of Common Stock offered by the Company
hereby at an assumed initial public offering price of $ per share (the
midpoint of the Offering range) and after deduction of estimated underwriting
discounts and commissions and offering expenses, the pro forma net tangible book
value of the Company at December 28, 1996 would have been $ , or $ per
share. This represents an immediate increase in such net tangible book value of
$ per share to existing stockholders and an immediate dilution of $ per
share to new investors purchasing shares in the Offering. Net tangible book
value dilution per share represents the difference between the amount per share
paid by new investors purchasing shares of Common Stock in the Offering and the
pro forma net tangible book value per share of Common Stock immediately after
the completion of the Offering. The following table illustrates this per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price............................. $
Actual net tangible book value before the Offering.............. $
Pro forma adjustment............................................
Pro forma net tangible book value before the Offering...........
Increase attributable to new investors..........................
Pro forma net tangible book value after the Offering..............
Dilution to new investors......................................... $
---------
---------
</TABLE>

The following table summarizes, on a pro forma basis as of December 28,
1996, the differences between the Existing Stockholders and new investors with
respect to the number of shares of Common Stock purchased from the Company, the
total consideration paid to the Company, and the average consideration paid per
share, based upon an assumed initial public offering price of $ per share
(the midpoint of the Offering range), and before deduction of estimated
underwriting discounts and commissions and offering expenses payable by the
Company:

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION
----------------------- ------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders................................ 4,107,608 % $ 764,814(2) % $ 0.19
New investors........................................ % %
---------- --- ------------ ---
Total............................................ 100% $ 100%
---------- --- ------------ ---
---------- --- ------------ ---
</TABLE>

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

(1) Sales by the Selling Stockholders in the Offering would reduce the number of
shares held by the Existing Stockholders to , or approximately
% of the total number of shares of Common Stock outstanding (
shares, or %, if the Underwriters' overallotment option is exercised in
full), and would increase the number of shares held by new investors to
, or approximately %, of the total number of shares of Common
Stock outstanding after the Offering ( shares, or %, if the
Underwriters' overallotment option is exercised in full).

(2) Excludes all undistributed accumulated S corporation earnings, which are
assumed to be distributed prior to the closing of the Offering.

The foregoing table assumes no exercise of any outstanding stock options.
There are currently outstanding options to purchase an aggregate of 851,786
shares of Common Stock at a weighted average exercise price of $2.36 per share.
All of these options will become exercisable upon the consummation of the
Offering. To the extent these options are exercised, there will be further
dilution to new investors. See "Management--Stock Option Plan" and Note 5 of
Notes to Consolidated Financial Statements.

16
<PAGE>
CAPITALIZATION

The following table sets forth the short-term debt and capitalization of the
Company (i) as of December 28, 1996, (ii) on a pro forma basis after giving
effect to (a) the Minority Interest Acquisition, (b) a nonrecurring reduction in
tax expense in connection with the termination of the Company's S corporation
status, (c) $1.7 million of S corporation distributions made or to be made in
fiscal 1997, primarily in consideration of income tax payments made or to be
made by the Existing Stockholders with respect to fiscal 1996 income and (d) the
$4.7 million Distribution of previously undistributed accumulated S corporation
earnings to the Existing Stockholders, and (iii) pro forma as adjusted to give
effect to (a) the sale of the shares of Common Stock being offered by the
Company at an assumed initial public offering price of $ per share (the
midpoint of the Offering range) and the application of the estimated net
proceeds therefrom as set forth under "Use of Proceeds" and (b) the vesting of
certain stock options upon the closing of the Offering, including the associated
compensation expense of $67,000 and related tax effects.

<TABLE>
<CAPTION>
DECEMBER 28, 1996
------------------------------------------
ACQUISITION
AND
ACQUISITION AND REORGANIZATION
REORGANIZATION PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED(6)
--------- --------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revolving line of credit.............................................. $ 680 $ 7,050(3) $ 0
--------- ------- -------
--------- ------- -------
Long-term debt, current portion....................................... $ 3,061 $ 3,061 $ 161
--------- ------- -------
--------- ------- -------
Subordinated Note..................................................... $ 3,500 $ 3,500 $ 0
Seller Notes.......................................................... 2,494 3,157(4) 0
Other long-term debt.................................................. 1,031 1,031 264
--------- ------- -------
Total long-term debt, net of current portion (1)...................... 7,025 7,688 264
--------- ------- -------
Stockholders' equity:
Preferred Stock, $.01 par value; 2,000,000 shares authorized; no
shares issued and outstanding..................................... 0 0 0
Common Stock, $.01 par value; 20,000,000 shares authorized;
4,107,608 shares issued and outstanding actual and pro forma;
shares issued and outstanding pro forma as adjusted(2).... 41 41
Additional paid-in capital............................................ 724 724 25,242
Retained earnings..................................................... 9,881 4,645(3)(5) 4,605
--------- ------- -------
Total stockholders' equity............................................ 10,646 5,410 29,847
--------- ------- -------
Total capitalization.................................................. $ 17,671 $ 13,098 $ 30,111
--------- ------- -------
--------- ------- -------
</TABLE>

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

(1) See Note 4 of Notes to Consolidated Financial Statements for a description
of the Company's long-term debt.

(2) Shares issued and outstanding excludes 905,735 shares of Common Stock
reserved for issuance and available for grant or sale under the Company's
Stock Option Plan, under which there were options outstanding to purchase an
aggregate of 851,786 shares of Common Stock as of December 28, 1996. Also
excludes 123,983 shares of Common Stock issuable pursuant to the exercise of
warrants. See "Management--Stock Option Plan," "Description of Capital
Stock--Warrants" and Notes 5 and 13 of Notes to Consolidated Financial
Statements.

(3) Gives effect to $1.7 million of S corporation distributions made or to be
made subsequent to fiscal 1996 and the $4.7 million Distribution, all to
Existing Stockholders, assuming such distributions were made from borrowings
available under the Company's revolving line of credit.

17
<PAGE>
(4) Reflects an additional $663,000 of Seller Notes assumed in the Minority
Interest Acquisition as if such event had occurred on December 28, 1996.

(5) Gives effect to $1.1 million of nonrecurring deferred tax assets to be
recorded in connection with the Reorganization.

(6) Reflects assumed net proceeds of approximately $24.4 million from the sale
by the Company of shares of Common Stock in the Offering at an
assumed initial public offering price of $ per share (the midpoint of
the Offering range), net of estimated underwriting discounts and Offering
expenses and the repayment of indebtedness as described under "Use of
Proceeds." Also reflects the repayment of the revolving line of credit
assuming that approximately $1.7 million of S corporation distributions made
or to be made subsequent to fiscal 1996 and the $4.7 million Distribution
were funded by such facility.

18
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands, except per share and per square foot amounts and store
operating data)

The selected consolidated financial information set forth below under the
captions "Statement of Operations Data" and "Balance Sheet Data" has been
derived from audited financial statements. The consolidated financial statements
as of December 30, 1995 and December 28, 1996, and for the fiscal years then
ended and the independent auditors' reports of Coopers & Lybrand L.L.P. thereon,
are included elsewhere in this Prospectus. The financial statements for the
fiscal year ended December 31, 1994 and the independent auditors' report thereon
of Deloitte & Touche LLP are included elsewhere in this Prospectus. The selected
consolidated financial data set forth below under the caption "Statement of
Operations Data" as of and for the fiscal periods ended June 27, 1992, December
26, 1992, December 25, 1993 and under the caption "Balance Sheet Data" as of
December 31, 1994 are derived from audited financial statements not included
herein. The information for all periods set forth below under the captions "Pro
Forma Statement of Operations Data" and "Selected Store Operating Data" is
derived from unaudited data. The data set forth below are qualified by, and
should be read in conjunction with, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and related notes included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
26 WEEKS
ENDED FISCAL
FISCAL DECEMBER 26, ----------------------------------------------
1992(1) 1992(1) 1993 1994(2) 1995 1996
--------- ------------ --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................................... $ 38,181 $ 22,762 $ 41,858 $ 48,165 $ 50,691 $ 66,233
Cost of sales....................................... 19,906 12,027 21,902 25,079 26,192 34,062
--------- ------------ --------- --------- --------- -------------
Gross profit........................................ 18,275 10,735 19,956 23,086 24,499 32,171
Selling and marketing expense....................... 12,150 6,633 13,076 14,975 16,852 21,060
Administrative and distribution expense............. 3,636 2,104 4,656 4,935 4,826 5,508
--------- ------------ --------- --------- --------- -------------
Operating income.................................... 2,489 1,998 2,224 3,176 2,821 5,603
Interest expense.................................... 386 166 330 324 435 670
Other expense (income).............................. 76 335 56 38 (41) (24)
--------- ------------ --------- --------- --------- -------------
Income before provision for income taxes............ 2,027 1,497 1,838 2,814 2,427 4,957
Provision for income taxes.......................... 825 45 55 67 41 488
Minority interest................................... -- -- -- -- -- 105
--------- ------------ --------- --------- --------- -------------
Net income.......................................... $ 1,202 $ 1,452 $ 1,783 $ 2,747 $ 2,386 $ 4,364
--------- ------------ --------- --------- --------- -------------
--------- ------------ --------- --------- --------- -------------

PRO FORMA STATEMENT OF OPERATIONS DATA(3):
Historical income before provision for income
taxes............................................. $ 1,497 $ 1,838 $ 2,814 $ 2,427 $ 4,957
Pro forma provision for income taxes................ 599 735 1,126 971 1,983
Minority interest................................... -- -- -- -- 105
------------ --------- --------- --------- -------------
Pro forma net income................................ $ 898 $ 1,103 $ 1,688 $ 1,456 $ 2,869
------------ --------- --------- --------- -------------
------------ --------- --------- --------- -------------
Pro forma net income per share...................... $ 0.54
-------------
-------------
Common and common equivalent shares used in
computing per share amounts(4).................... 5,293,885

SELECTED STORE OPERATING DATA:
Store contribution(5)............................... $ 6,125 $ 4,102 $ 6,880 $ 8,111 $ 7,647 $ 11,111
Number of stores:
Opened or acquired during period.................. 2 1 9 9 12 51(6)
Closed during period.............................. 0 0 2 4 4 5
Open at end of period............................. 61 62 69 74 82 128
Total weighted average square feet(7)............... 110,147 110,732 114,793 130,510 144,624 168,971
Average square feet per store....................... 1,792 1,792 1,851 1,894 1,880 1,744
Weighted average net sales per square foot(8)....... $ 347 $ 206 $ 365 $ 369 $ 351 $ 392
Increase (decrease) in comparable store net
sales(9).......................................... 2.0% 2.5% 4.1% 0.6% (1.4)% 3.1%
</TABLE>

19
<PAGE>

<TABLE>
<CAPTION>
AS OF
-------------------------------------------------------------------------------
JUNE 27, DECEMBER 26, DECEMBER 25, DECEMBER 31, DECEMBER 30, DECEMBER 28,
1992(1) 1992(1) 1993 1994 1995 1996
--------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................... $ 3,182 $ 3,527 $ 5,695 $ 5,742 $ 6,710 $ 9,430
Total assets.................................. 12,478 13,537 15,409 15,630 17,050 31,858
Total debt.................................... 4,604 3,722 3,633 2,396 2,734 10,765
Stockholders' equity.......................... 4,754 5,233 5,650 6,349 7,648 10,646
</TABLE>

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

(2) Fiscal 1994 consisted of 53 weeks. All other fiscal years presented
consisted of 52 weeks. During the 53rd week of fiscal 1994, the Company
generated $1.2 million in net sales. As a result, the Company's operating
results in fiscal 1994 are not comparable to its results in any other fiscal
year presented. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

(3) Includes, for the 26 weeks ended December 26, 1992 and for fiscal 1993,
1994, 1995 and 1996, pro forma provision for income taxes using an assumed
combined federal and state tax rate of 40.0%, which the Company believes
approximates the statutory federal and state income tax rates that would
have been applied had the Company been taxed as a C corporation. Commencing
June 28, 1992, the Company has operated as an S corporation and has not been
subject to federal and certain state income taxes. The Company's earnings
during such periods have been taxed directly to the Company's stockholders,
rather than to the Company.

(4) Shares outstanding include shares issuable upon exercise of stock
options outstanding at December 28, 1996, after applying the treasury stock
method assuming an initial public offering price of $ per share (the
midpoint of the Offering range). The pro forma common and common equivalent
shares give effect to the sale by the Company of only those shares of Common
Stock necessary to fund the payment of the excess of the stockholder
distributions in fiscal 1996 and thereafter through the Reorganization over
the S corporation earnings in fiscal 1996, assuming that such shares are
sold at an initial public offering price of $ per share (the midpoint of
the Offering range), net of estimated underwriting discounts and Offering
expenses. See "Capitalization," "Management--Stock Option Plan" and "Pro
Forma Condensed Consolidated Financial Information."

(5) Store contribution refers to gross profit after deducting selling and
marketing expenses. Store contribution is presented to provide additional
information about the Company and is commonly used as a performance
measurement by retail companies. Store contribution should not be considered
in isolation or as a substitute for operating income, cash flow from
operating activities and other income or cash flow data prepared in
accordance with generally accepted accounting principles, or as a measure of
the Company's profitability or liquidity.

(6) On October 25, 1996, the Company acquired 33 Overland Trading stores. The
Company opened one additional Overland Trading store in November 1996
pursuant to a commitment previously entered into by Overland.

(7) Weighted to reflect store openings and closings during each period, assuming
that all periods presented consisted of 52 weeks.

(8) Weighted average net sales for the 26 weeks ended December 26, 1992 reflect
only sales for that 26-week period. Weighted average net sales for fiscal
1994 have been adjusted as if such year consisted of 52 weeks.

(9) Comparable store net sales include only those stores that were open both for
the full fiscal period and for the full prior fiscal period. The fiscal 1994
and 1995 increases have been calculated by comparing net sales in such years
to net sales for the prior 53 and 52 weeks, respectively. The fiscal 1996
increase excludes the Overland Trading stores acquired in October 1996. If
such stores had been included since the acquisition of Overland, the
increase in comparable store net sales for fiscal 1996 would have been 2.4%.

20
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)

The following Pro Forma Condensed Consolidated Financial Information:

(i) Reflects financial information with respect to the Company's acquisition
in (a) October 1996 of 79.0% of Overland's common stock and (b) January 1997 of
the remaining Overland common stock (the "Minority Interest") from certain of
the Company's stockholders (the "Minority Interest Acquisition" and,
collectively with the Company's acquisition of 79.0% of Overland, the
"Acquisition"), which has been accounted for under the purchase method of
accounting;

(ii) Reflects the Reorganization and the Company's resulting conversion from
S corporation status to C corporation status; and

(iii) Is adjusted for the sale of shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $ per share
(the midpoint of the Offering range), the application of the estimated net
proceeds therefrom as described in "Use of Proceeds" and certain events intended
or mandated to occur in connection with the Offering.

The Pro Forma Condensed Consolidated Statement of Operations was prepared as
if the Acquisition, the Reorganization and the Offering occurred on December 31,
1995, the first day of fiscal 1996. The Pro Forma Condensed Consolidated Balance
Sheet was prepared as if the Minority Interest Acquisition, the Reorganization
and the Offering occurred on December 28, 1996, the last day of fiscal 1996. The
Pro Forma Condensed Consolidated Financial Information should be read in
conjunction with the historical consolidated financial statements and the notes
thereto included elsewhere in this Prospectus.

The Pro Forma Condensed Consolidated Statement of Operations for fiscal 1996
does not include any potential operational cost savings other than the
elimination of consulting agreements with former Overland stockholders which
will terminate by their contractual terms upon the closing of the Offering. The
Company believes that it may be able to further reduce operational costs as it
consolidates the Overland operations into the Company. There can be no assurance
that the Company will be successful in effecting any such cost savings.

The Pro Forma Condensed Consolidated Financial Information is unaudited and
is not necessarily indicative of the consolidated financial position and results
which actually would have occurred if the Acquisition, the Reorganization and
the Offering had been consummated as of the dates presented, nor does it purport
to present the financial position or results of operations of the Company for
future periods.

21
<PAGE>
TRACK 'N TRAIL
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 28, 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MINORITY
INTEREST ACQUISITION
TRACK 'N ACQUISITION ACQUISITION REORGANIZATION AND
TRAIL PRO FORMA PRO FORMA PRO FORMA REORGANIZATION OFFERING
HISTORICAL ADJUSTMENTS COMBINED ADJUSTMENTS PRO FORMA ADJUSTMENTS
----------- -------------- ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Current assets.................. $ 22,116 $ $ 22,116 $ 530(2) $ 22,646 $ 7,036(5)
Noncurrent assets............... 9,742 558(1) 10,300 604(2) 10,904 27(6)
----------- ----- ----------- ------- ------- -------------
Total assets................ $ 31,858 $ 558 $ 32,416 $ 1,134 $ 33,550 $ 7,063
----------- ----- ----------- ------- ------- -------------
----------- ----- ----------- ------- ------- -------------

LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities............. $ 12,687 $ $ 12,687 $ 1,670(3) $ 19,057 $ (9,950)(5)
4,700(4)
Noncurrent liabilities.......... 8,420 663(1) 9,083 9,083 (7,424)(5)
----------- ----- ----------- ------- ------- -------------
Total liabilities........... 21,107 663 21,770 6,370 28,140 (17,374)
Minority interest in
consolidated subsidiary........ 105 (105)(1) 0
Stockholders' equity............ 10,646 10,646 1,134(2) 5,410 24,410(5)
(1,670)(3)
(4,700)(4) 27(6)
----------- ----- ----------- ------- ------- -------------
Total liabilities and
stockholders' equity...... $ 31,858 $ 558 $ 32,416 $ 1,134 $ 33,550 $ 7,063
----------- ----- ----------- ------- ------- -------------
----------- ----- ----------- ------- ------- -------------

<CAPTION>
ACQUISITION
AND
REORGANIZATION
PRO FORMA AS
ADJUSTED
--------------
<S> <C>
ASSETS:
Current assets.................. $ 29,682
Noncurrent assets............... 10,931
-------
Total assets................ $ 40,613
-------
-------
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities............. $ 9,107

Noncurrent liabilities.......... 1,659
-------
Total liabilities........... 10,766
Minority interest in
consolidated subsidiary........
Stockholders' equity............ 29,847

-------
Total liabilities and
stockholders' equity...... $ 40,613
-------
-------
</TABLE>

22
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 28, 1996
(UNAUDITED)

(1) To reflect the Company's acquisition of the Minority Interest from the
Existing Stockholders, by assuming $663,000 of Seller Notes issued by such
stockholders in connection with their acquisition of the Minority Interest,
as if such event had occurred on December 28, 1996. Also reflects the
corresponding elimination of the minority interest and the recording of
additional goodwill in connection with the acquisition of that interest.

(2) To give effect to $1.1 million of deferred tax assets arising from the
conversion of the Company from an S corporation to a C corporation. Such
deferred tax assets relate to temporary differences in the basis of assets
and liabilities for tax and accounting purposes.

(3) To reflect $1.7 million of S corporation distributions made or to be made in
fiscal 1997, primarily in consideration of income tax payments made or to be
made by the Existing Stockholders with respect to fiscal 1996 S corporation
income.

(4) To give effect to the $4.7 million Distribution of previously undistributed
accumulated S corporation earnings to the Existing Stockholders.

(5) To reflect assumed net proceeds from the sale by the Company of
shares of Common Stock in the Offering at an assumed initial public offering
price of $ per share (the midpoint of the Offering range), net of
estimated underwriting discounts and offering expenses of approximately $2.6
million, and the payment of the Distribution and the repayment of
indebtedness as described under "Use of Proceeds."

(6) To give effect to changes in deferred taxes, retained earnings and
additional paid-in capital with respect to stock options that will vest upon
the Offering in accordance with the terms of the Stock Option Plan. The
non-cash compensation charge of $67,000, subject to a tax effect of $27,000,
results in a net reduction in retained earnings of $40,000. This net
reduction is more than offset by a $67,000 increase in additional paid-in
capital. The tax effect of $27,000 is recorded as a deferred tax asset.

23
<PAGE>
TRACK 'N TRAIL
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 28, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
OVERLAND
TEN MONTHS ACQUISITION
ENDED ACQUISITION ACQUISITION AND OFFERING PRO
TRACK 'N OCTOBER 25, PRO FORMA PRO FORMA REORGANIZATION REORGANIZATION FORMA
TRAIL 1996 ADJUSTMENTS COMBINED ADJUSTMENTS PRO FORMA ADJUSTMENTS
--------- ----------- -------------- ----------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.............. $ 66,233 $ 17,953 $ $ 84,186 $ $ 84,186
Cost of sales.......... 34,062 10,398 44,460 44,460 $
--------- ----------- ----- ----------- ------- -------------- -------
Gross profit........... 32,171 7,555 39,726 39,726
--------- ----------- ----- ----------- ------- -------------- -------
Selling and marketing
expenses.............. 21,060 6,216 27,276 27,276
Administrative and
distribution 143(1) (358)(9)
expenses.............. 5,508 1,655 (32)(2) 7,274 7,274 67(10)
--------- ----------- ----- ----------- ------- -------------- -------
Total operating
expenses.............. 26,568 7,871 111 34,550 34,550 (291)
--------- ----------- ----- ----------- ------- -------------- -------
Operating income....... 5,603 (316) (111) 5,176 5,176 291
Other (income) expense:
Interest expense..... 670 232 552(3) 1,425 1,425 (1,367)(11)
(29)(4)
Other, net........... (24) 32 8 8
--------- ----------- ----- ----------- ------- -------------- -------
Income before provision
for income taxes and
minority interest..... 4,957 (580) (634) 3,743 3,743 1,658
Provision for income (1,134)(7)
taxes................. 488 (232) (89)(5) 167 1,330(8) 363 663(12)
--------- ----------- ----- ----------- ------- -------------- -------
Income before minority
interest.............. 4,469 (348) (545) 3,576 (196) 3,380 995
Minority interest...... 105 (105)(6) 0
--------- ----------- ----- ----------- ------- -------------- -------
Net income............. $ 4,364 $ (348) $ (440) $ 3,576 $ (196) $ 3,380 $ 995
--------- ----------- ----- ----------- ------- -------------- -------
--------- ----------- ----- ----------- ------- -------------- -------
PRO FORMA STATEMENT OF
OPERATIONS DATA(13):
Historical income
before income taxes
and minority
interest.............. $ 4,957 $ 3,743 $ 3,743
Pro forma provision for
income taxes.......... 1,983 1,497 1,497
--------- ----------- --------------
Pro forma income before
minority interest..... 2,974 2,246 2,246
Minority interest...... 105
--------- ----------- --------------
Pro forma net income... $ 2,869 $ 2,246 $ 2,246
--------- ----------- --------------
--------- ----------- --------------
Pro forma net income
per share............. $ 0.54 $ 0.42 $ 0.42
--------- ----------- --------------
--------- ----------- --------------
Pro forma weighted
average number of
common and common
equivalent
shares(14)............ 5,293,885 5,293,885 5,293,885

OFFERING,
ACQUISITION AND
REORGANIZATION
PRO FORMA
---------------
<S> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.............. $ 84,186
Cost of sales.......... 44,460
-------
Gross profit........... 39,726
-------
Selling and marketing
expenses.............. 27,276
Administrative and
distribution
expenses.............. 6,983
-------
Total operating
expenses.............. 34,259
-------
Operating income....... 5,467
Other (income) expense:
Interest expense..... 58

Other, net........... 8
-------
Income before provision
for income taxes and
minority interest..... 5,401
Provision for income
taxes................. 1,026
-------
Income before minority
interest.............. 4,375
Minority interest......
-------
Net income............. $ 4,375
-------
-------
PRO FORMA STATEMENT OF
OPERATIONS DATA(13):
Historical income
before income taxes
and minority
interest.............. $ 5,401
Pro forma provision for
income taxes.......... 2,160
-------
Pro forma income before
minority interest..... 3,241
Minority interest......
-------
Pro forma net income... $ 3,241
-------
-------
Pro forma net income
per share............. $
-------
-------
Pro forma weighted
average number of
common and common
equivalent
shares(14)............ (15)
</TABLE>

24
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 28, 1996
(UNAUDITED)

(1) To reflect the amortization of goodwill in connection with the Acquisition
as if it had occurred in its entirety on December 31, 1995, the first day
of fiscal 1996.

(2) To adjust depreciation expense to reflect the carrying value, depreciation
methods and asset lives of Overland's fixed assets as if the Acquisition
had occurred in its entirety on December 31, 1995.

(3) To give effect to the interest expense associated with the Seller Notes
and the Subordinated Note, including the Seller Notes assumed in
connection with the Minority Interest Acquisition, as if such indebtedness
had been outstanding since December 31, 1995.

(4) To reflect the mandatory refinancing of Overland's previous bank line of
credit and Small Business Administration term loan with the Company's
Revolving Loan Agreement, and the associated difference in interest rates,
as if such refinancing had occurred on December 31, 1995.

(5) To record income taxes on pro forma adjustments to depreciation expense as
described in footnote 2 above, and interest expense as described in
footnotes 3 and 4 above, with respect to Overland (a C corporation), and
state income taxes on adjustments resulting from the Minority Interest
Acquisition, as described in footnote 6 below, for Track 'n
Trail-California, which is treated as an S corporation for the period
presented prior to adjustments for the Reorganization.

(6) To reverse the elimination of the minority interest in Overland's net
income, as if the Minority Interest Acquisition had occurred on December
31, 1995.

(7) To give effect to a nonrecurring reduction in tax expense resulting from
the conversion of the Company from an S corporation to a C corporation,
associated with the recording of deferred tax assets due to temporary
differences in the basis of assets and liabilities for tax and financial
statement purposes.

(8) To reflect an effective tax rate of 40.0%, representing management's
estimate of the effective tax rate had the Company been a C corporation
for the period presented. Overland was a C corporation for the entire
period presented.

(9) To eliminate payments under consulting agreements with certain former
owners of Overland common stock that terminate upon the closing of the
Offering, as if the Offering had occurred on December 31, 1995.

(10) To record a non-cash compensation expense resulting from the vesting of
stock options as a result of the Offering, in accordance with the terms of
the Stock Option Plan.

(11) To eliminate interest expense associated with the Seller Notes, the
Subordinated Note and other indebtedness to be repaid from the net
proceeds of the Offering as described under "Use of Proceeds."

(12) To record income taxes on pro forma adjustments to administrative and
distribution expense due to the elimination of payments under consulting
agreements, the vesting of stock options and the elimination of certain
interest expense, as described in footnotes 9, 10 and 11 above.

(13) To reflect an effective tax rate of 40.0%, representing management's
estimate of the effective tax rate had the Company been a C corporation
for the period presented. Overland was a C corporation for the entire
period presented. Treats fiscal 1996 as if the Company had been a C
corporation throughout the year and accordingly, eliminates the $1.1
million nonrecurring reduction in income tax expense resulting from the
conversion of the Company from an S corporation to a C corporation.

(14) Pro forma net income per common and common equivalent share has been
computed by dividing pro forma net income by the weighted average number
of common and common equivalent shares

25
<PAGE>
outstanding using the treasury stock method and an assumed initial public
offering price of $ per share (the midpoint of the Offering range),
net of underwriting discounts and estimated Offering expenses, after
giving retroactive effect to (i) a change in the number of outstanding
shares effected by the Reorganization, (ii) those common stock options
issued during the 12 month period preceding the Offering which, under the
treasury stock method, had a dilutive effect and (iii) the number of
shares of common stock being sold in the Offering, at an assumed offering
price, the proceeds of which would be necessary to pay the excess of S
corporation distributions during fiscal 1996 and thereafter until the
Reorganization over S corporation earnings during fiscal 1996.

(15) The pro forma common and common equivalent shares give effect to the sale
by the Company, in addition to those shares described in footnote 14
above, of only that number of offered shares of Common Stock, the proceeds
(net of underwriting discounts and estimated Offering expenses) of which
would be necessary to fund the repayment of indebtedness as described in
"Use of Proceeds," assuming that such shares are sold at an initial public
offering price of $ per share (the midpoint of the Offering range).
The amount of indebtedness assumed to be outstanding for the purpose of
calculating the pro forma number of common and common equivalent shares
outstanding is equal to the weighted average indebtedness assumed to have
been outstanding had the Acquisition and the Reorganization occurred on
December 31, 1995.

26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THIS PROSPECTUS CONTAINS, IN ADDITION TO HISTORICAL INFORMATION,
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE THOSE DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE
IN THIS PROSPECTUS.

INTRODUCTION

The Company is one of the largest specialty retailers in the United States
focusing on high-quality casual, outdoor and adventure footwear. As of February
22, 1997, the Company operated 94 Track 'n Trail stores and 34 Overland Trading
stores in 23 states, concentrated in California, the Midwest and the Northeast.
All but three of these stores were located in regional or super-regional
shopping malls. Track 'n Trail stores average approximately 1,880 square feet in
size, while Overland Trading stores average approximately 1,450 square feet.

On October 25, 1996, the Company, together with the Existing Stockholders,
obtained control of 33 Overland Trading stores by acquiring the outstanding
common stock of Overland in exchange for the $3.2 million of Seller Notes and
warrants to purchase one percent of the Company's Common Stock calculated on a
fully diluted basis immediately prior to an initial public offering. In
connection with the acquisition, Overland repurchased all of its outstanding
preferred stock in exchange for the $3.5 million Subordinated Note, which the
Company guaranteed. Due to the then-existing prohibition against an S
corporation owning 80.0% or more of a subsidiary's stock, the Company initially
purchased 79.0% of Overland's common stock, while the Existing Stockholders
personally acquired the remaining 21.0%. Following legislative changes to the S
corporation rules, the Company acquired the remaining 21.0% effective at the
beginning of fiscal 1997, and assumed the Existing Stockholders' pro rata
portion of the Seller Notes. Total payments in connection with the acquisition
were approximately $9.0 million, including the Seller Notes, the Subordinated
Note, the refinancing of approximately $2.1 million in indebtedness under
Overland's credit facility through borrowings under the Revolving Loan
Agreement, and associated expenses of approximately $240,000. The Seller Notes,
the Subordinated Note and the Revolving Loan Agreement mature upon the
consummation of the Offering. Pursuant to consulting agreements entered into in
connection with the acquisition, the Company currently pays an aggregate of
approximately $23,400 per month plus related benefit expenses to certain former
Overland stockholders. The consulting agreements terminate upon the consummation
of the Offering.

Since the acquisition of Overland, the Company has reduced overhead by
closing Overland's corporate office and distribution facility, centralizing
these functions within the Company's corporate office. Additionally, the Company
converted Overland's MIS systems to the Company's MIS systems. As a result,
management is able to analyze sales and inventory by SKU on a daily basis in
order to implement its focused merchandising strategy. The Company's employee
development, incentive compensation, customer service, marketing and loss
prevention programs have also been implemented in the Overland Trading stores.

The Company's net sales have grown at a compound annual rate of 16.5% from
$41.9 million in fiscal 1993 to $66.2 million in fiscal 1996 as a result of the
Company's store expansion program, increased sales from existing stores and the
acquisition of Overland in October 1996. During that three-year period, the
number of stores increased from 69 to 128. In addition, the Company's net income
has grown at a compound annual rate of 37.5% from $1.1 million in fiscal 1993 to
$2.9 million in fiscal 1996, after giving effect to assumed C corporation income
taxes.

The Company defines comparable stores as those stores that were open for the
full fiscal period and for the full prior fiscal period. The Company's
comparable store net sales grew 4.1% and 0.6% in fiscal 1993 and 1994,
respectively, declined by 1.4% in fiscal 1995, and grew by 3.1% in fiscal 1996,
excluding the acquired Overland Trading stores. Had the Overland Trading stores
been included in the Company's store

27
<PAGE>
base since the acquisition in October 1996, comparable store net sales would
have grown 2.4% in fiscal 1996.

The Company has been treated as an S corporation for federal and certain
state income tax purposes since June 28, 1992. As a result, the Company's
earnings from June 28, 1992 through the date preceding the Termination Date have
been and will be taxed, with certain exceptions, directly to the Company's
stockholders rather than to the Company. The Company's S corporation status will
terminate as a result of the Reorganization on the Termination Date. Thereafter,
the Company will be subject to state and federal income taxes as a C
corporation, and all references to net income in this "Management's Discussion
and Analysis of Financial Condition and Results of Operations" are presented as
if the Company had been subject to income taxes at a combined state and federal
income tax rate of 40.0%.

In connection with the Company's conversion to C corporation status, the
Company will record a nonrecurring tax benefit, which would have been $1.1
million had the conversion occurred at December 28, 1996, which will be
partially offset in fiscal 1997 by the Company's inability to realize a tax
benefit for losses incurred in fiscal 1997 through the Termination Date. Such
benefit will be realized by the Existing Stockholders. The Company typically
incurs operating losses in the first quarter and expects to record a higher loss
in the first quarter of fiscal 1997 than it did in the first quarter of fiscal
1996, due primarily to the operating loss and interest expense associated with
the Overland acquisition.

ANNUAL RESULTS OF OPERATIONS

The following table sets forth certain operating data as a percentage of net
sales for the periods indicated:

<TABLE>
<CAPTION>
FISCAL
-------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Net sales......................................................................... 100.0% 100.0% 100.0%
Cost of sales..................................................................... 52.1 51.7 51.4
--------- --------- ---------
Gross profit...................................................................... 47.9 48.3 48.6
Selling and marketing expenses.................................................... 31.1 33.2 31.8
--------- --------- ---------
Store contribution(1)............................................................. 16.8 15.1 16.8
Administrative and distribution expenses.......................................... 10.2 9.5 8.3
--------- --------- ---------
Operating income.................................................................. 6.6 5.6 8.5
Interest expense.................................................................. 0.7 0.9 1.0
Other expense (income)............................................................ 0.1 (0.1) 0.0
--------- --------- ---------
Income before provision for income taxes.......................................... 5.8 4.8 7.5
Pro forma provision for income taxes(2)........................................... 2.3 1.9 3.0
Minority interest................................................................. 0.0 0.0 0.2
--------- --------- ---------
Pro forma net income(2)........................................................... 3.5% 2.9% 4.3%
--------- --------- ---------
--------- --------- ---------
</TABLE>

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

(1) Store contribution refers to gross profit after deducting selling and
marketing expenses. Store contribution is presented to provide additional
information about the Company and is commonly used as a performance
measurement by retail companies. Store contribution should not be considered
in isolation or as a substitute for operating income, cash flow from
operating activities and other income or cash flow data prepared in
accordance with generally accepted accounting principles, or as a measure of
the Company's profitability or liquidity.

(2) Reflects an assumed combined federal and state tax rate of 40.0%, which the
Company believes approximates the statutory federal and state income tax
rates that would have been applied had the Company been taxed as a C
corporation. Commencing June 28, 1992, the Company has operated as an S
corporation and has not been subject to federal and certain state income
taxes.

28
<PAGE>
FISCAL 1996 COMPARED TO FISCAL 1995

NET SALES

Net sales for fiscal 1996 were $66.2 million, an increase of $15.5 million,
or 30.7%, over fiscal 1995 net sales of $50.7 million. The 34 Overland Trading
stores accounted for $6.6 million of the increase in net sales since the
acquisition in October 1996, while the 17 Track 'n Trail stores opened during
the year accounted for an additional $6.2 million. These increases were
partially offset by a reduction in net sales of $1.6 million due to the closure
of five stores in 1996. These stores had net sales of only $131,000 in fiscal
1996 due to their closure, compared to net sales of $1.7 million in 1995. The
remaining increase in net sales of $4.3 million is primarily attributable to the
3.1% growth in comparable store net sales at Track 'n Trail stores, as well as
the full-year benefit in fiscal 1996 of the stores opened during fiscal 1995.

GROSS PROFIT

Gross profit was $32.2 million in fiscal 1996, an increase of $7.7 million,
or 31.3%, over the $24.5 million gross profit in fiscal 1995. Gross profit as a
percentage of net sales increased to 48.6% in fiscal 1996 from 48.3% in fiscal
1995. The increase as a percentage of net sales was primarily related to a
reduction in freight costs in fiscal 1996 due to shipping efficiencies. Gross
profit at the Overland Trading stores for the two months since the acquisition
was $3.2 million, or 48.3% of net sales, which had a slightly negative impact on
the consolidated gross profit as a percentage of net sales in fiscal 1996.
Nevertheless, the Overland Trading stores generated a higher gross profit as a
percentage of net sales for that two-month period, which was during the
Company's peak selling season, than they are expected to produce for a full
fiscal year.

SELLING AND MARKETING EXPENSES

Selling and marketing expenses were $21.1 million in fiscal 1996, an
increase of $4.2 million, or 25.0%, over fiscal 1995. The Overland Trading
stores accounted for $1.6 million of the increase, and $2.6 million of the
remaining increase is primarily attributable to the net increase of 12 Track 'n
Trail stores during the year. As a percentage of net sales, selling and
marketing expenses decreased to 31.8% from 33.2% in fiscal 1995. In the absence
of the Overland acquisition, selling and marketing expenses would have been
$19.4 million, or 32.5% of net sales, in fiscal 1996. This decrease in selling
and marketing expense as a percentage of net sales was primarily attributable to
the higher net sales at the Track 'n Trail stores. For the two months since the
acquisition, the Overland Trading stores recorded selling and marketing expenses
of $1.6 million, or 24.8% of net sales. This level of selling and marketing
expenses as a percentage of net sales is not indicative of Overland's
anticipated performance for a full fiscal year because the acquisition occurred
immediately prior to the Company's peak selling season.

ADMINISTRATIVE AND DISTRIBUTION EXPENSES

Administrative and distribution expenses were $5.5 million in fiscal 1996,
an increase of $682,000, or 14.1%, over fiscal 1995. Such expenses decreased as
a percentage of net sales to 8.3% in fiscal 1996 from 9.5% in fiscal 1995. The
increase in administrative and distribution expenses from fiscal 1995 to 1996
was primarily attributable to increases in the Company's corporate staff as a
result of the Company's expansion. The reduction in administrative and
distribution expenses as a percentage of net sales was the result of spreading
such expenses over a larger revenue base. In the absence of the Overland
acquisition, administrative and distribution expenses would have been $4.9
million, or 8.3% of Track 'n Trail's net sales, in fiscal 1996. The Company
incurred $653,000 in legal and accounting expenses in fiscal 1995, primarily in
defending itself and certain of its directors and executive officers in lawsuits
filed by the Company's former Chairman of the Board. These lawsuits were
subsequently resolved favorably.

INTEREST EXPENSE

Interest expense increased to $670,000, or 1.0% of net sales, in fiscal
1996, from $435,000 or 0.7% of net sales in fiscal 1995. The increase is
attributable to additional borrowings for store expansion as well as

29
<PAGE>
two months of interest on the Seller Notes and the Subordinated Note incurred in
connection with the Overland acquisition.

MINORITY INTEREST

The minority interest elimination of $105,000 represents the 21.0% interest
in Overland net income owned by the Company's Existing Stockholders in fiscal
1996. No minority interest existed in fiscal 1995.

NET INCOME

The Company's consolidated net income in fiscal 1996 would have been $2.5
million excluding the operations of Overland. This amount would have represented
a 70.0% increase over fiscal 1995. Fiscal 1996 net income also reflects $400,000
in net income attributable to the Overland Trading stores from the acquisition
of Overland in October 1996 through the end of fiscal 1996, partially offset by
the $105,000 minority interest. On a consolidated basis, the Company's net
income was $2.9 million in fiscal 1996, which represents a 97.0% increase over
the net income of $1.5 million in fiscal 1995.

FISCAL 1995 COMPARED TO FISCAL 1994

NET SALES

Net sales in fiscal 1995 were $50.7 million, an increase of $2.5 million, or
5.2%, over fiscal 1994 net sales of $48.2 million. Fiscal 1995 had 52 weeks of
net sales, whereas fiscal 1994 had 53 weeks of net sales. The additional week in
fiscal 1994 generated $1.2 million in net sales. On a comparable 52-week basis,
fiscal 1995 net sales increased $3.7 million, which was primarily attributable
to the 12 stores opened in fiscal 1995, which generated $3.3 million in net
sales, and a $1.6 million net sales increase due to a full year of sales in
fiscal 1995 by stores opened in fiscal 1994. These increases were partially
offset by the closure of four stores that had accounted for net sales of
$632,000 in fiscal 1994, and a decrease in comparable store net sales of 1.4%
which resulted in a reduction of net sales of $583,000.

GROSS PROFIT

Gross profit was $24.5 million in fiscal 1995, an increase of $1.4 million,
or 6.1%, from $23.1 million in fiscal 1994. Gross profit as a percentage of net
sales increased to 48.3% in fiscal 1995 from 47.9% in fiscal 1994. The increase
was primarily attributable to increased sales of higher-margin private label
products as a percentage of total net sales.

SELLING AND MARKETING EXPENSES

Selling and marketing expenses were $16.9 million in fiscal 1995, an
increase of $1.9 million, or 12.5%, from $15.0 million in fiscal 1994. Such
expenses represented 33.2% of net sales in fiscal 1995, compared to 31.1% in
fiscal 1994. The increase in selling and marketing expenses as a percentage of
net sales was primarily attributable to the operating expenses of the 12 new
stores opened, the four stores remodeled during the year and the impact of a
52-week year in fiscal 1995 compared to a 53-week year in fiscal 1994. In fiscal
1994, the 53rd week accounted for an additional $1.2 million in net sales, which
leveraged the Company's fixed costs over a larger sales base in comparison to
the 52 weeks in fiscal 1995. Excluding these additional net sales, selling and
marketing expenses would have been 31.9% of net sales in fiscal 1994 compared to
33.2% in fiscal 1995.

ADMINISTRATIVE AND DISTRIBUTION EXPENSES

Administrative and distribution expenses were $4.8 million in fiscal 1995, a
decrease of $108,000, or 2.2%, from fiscal 1994. Administrative and distribution
expenses were 9.5% of net sales in fiscal 1995, compared to 10.2% in fiscal
1994. Performance-based bonuses in fiscal 1995 were lower by $195,000 and the
Company achieved approximately $47,000 in cost savings at its central
distribution facility through operational efficiencies. The reduction in
administrative and distribution expenses as a percentage of net

30
<PAGE>
sales is attributable to the spreading of the Company's relatively fixed costs
over a larger sales base. The reduction in administrative and distribution
expenses was partially offset by an increase in legal expenses from $514,000 in
fiscal 1994 to $653,000 in fiscal 1995 primarily due to increased activity in
the litigation previously described.

INTEREST EXPENSE

Interest expense increased to $435,000 in fiscal 1995, an increase of
$110,000, or 34.1%, from fiscal 1994 interest expense increased to 0.9% of net
sales in fiscal 1995 from 0.7% of net sales in fiscal 1994. The change was
attributable to additional borrowings for store expansion.

NET INCOME

Net income in fiscal 1995 was $1.5 million, a decrease of $232,000, or
13.7%, from $1.7 million in fiscal 1994. The decrease was primarily attributable
to the additional week of net sales in fiscal 1994, which was a 53-week fiscal
period. The additional week in fiscal 1994 accounted for approximately $1.2
million in net sales, without a corresponding increase in certain fixed expenses
under the categories of selling and marketing expenses, administrative and
distribution expenses and interest expense.

QUARTERLY RESULTS OF OPERATIONS

The Company typically incurs losses in the first quarter, and derives a
substantial percentage of its annual net sales and operating profitability
during the "back-to-school" and year-end holiday periods. The table below sets
forth quarterly operating data of the Company, including such data as a
percentage of net sales, for fiscal 1995 and fiscal 1996. This quarterly
information is unaudited, but in management's opinion reflects all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the information for the periods presented when read in
conjunction with the audited financial statements of the Company and notes
thereto. The operating results for any quarter are not necessarily indicative of
results for any future period.

<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1996
-------------------------------------------- ------------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
----------- --------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.................. $ 9,326 $ 10,757 $ 13,963 $ 16,645 $ 10,249 $ 13,037 $ 16,580 $ 26,367
Cost of sales.............. 4,876 5,495 7,453 8,368 5,430 6,590 8,575 13,467
----------- --------- --------- --------- --------- --------- --------- ---------
Gross profit............... 4,450 5,262 6,510 8,277 4,819 6,447 8,005 12,900
Selling and marketing
expenses.................. 3,789 3,924 4,412 4,727 4,254 4,536 5,014 7,256
----------- --------- --------- --------- --------- --------- --------- ---------
Store contribution(1)...... 661 1,338 2,098 3,550 565 1,911 2,991 5,644
Administrative and
distribution expenses..... 1,162 1,186 1,236 1,240 1,173 1,130 1,150 2,055
----------- --------- --------- --------- --------- --------- --------- ---------
Operating income (loss).... $ (501) $ 152 $ 862 $ 2,310 $ (608) $ 781 $ 1,841 $ 3,589
----------- --------- --------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>

31
<PAGE>
<TABLE>
<CAPTION>
AS A PERCENTAGE OF NET SALES
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales.......................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales...................... 52.3 51.1 53.4 50.3 53.0 50.5 51.7
----- ----- ----- ----- ----- ----- -----
Gross profit....................... 47.7 48.9 46.6 49.7 47.0 49.5 48.3
Selling and marketing expenses..... 40.6 36.5 31.6 28.4 41.5 34.8 30.3
----- ----- ----- ----- ----- ----- -----
Store contribution(1).............. 7.1 12.4 15.0 21.3 5.5 14.7 18.0
Administrative and distribution
expenses.......................... 12.5 11.0 8.9 7.4 11.4 8.7 6.9
----- ----- ----- ----- ----- ----- -----
Operating income (loss)............ (5.4)% 1.4% 6.2% 13.9% (5.9)% 6.0% 11.1%
----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- -----

<S> <C>
Net sales.......................... 100.0%
Cost of sales...................... 51.1
-----
Gross profit....................... 48.9
Selling and marketing expenses..... 27.5
-----
Store contribution(1).............. 21.4
Administrative and distribution
expenses.......................... 7.8
-----
Operating income (loss)............ 13.6%
-----
-----
</TABLE>

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

The Company anticipates that operating results will fluctuate as a result of
a number of factors, including seasonality, changes in pricing or promotion
policies by the Company, its competitors or its suppliers, the availability and
cost of merchandise, consumer acceptance of the products sold by the Company,
and the number and timing of store openings and closures.

LIQUIDITY AND CAPITAL RESOURCES

The Company had $9.4 million in working capital at the end of fiscal 1996,
compared to $6.7 million at the end of fiscal 1995. The Company's capital
requirements relate primarily to working capital and the build-out of new
stores. The Company's working capital needs are somewhat seasonal and typically
peak in the second and fourth quarters. The peak in the second quarter is due to
the incurrence of operating losses in the first quarter and increased inventory
purchased for the Spring selling season. Working capital needs peak in the
fourth quarter due to increases in inventory in advance of the holiday selling
season, payments coming due for back-to-school merchandise and construction
payments on third-quarter store build-outs. In addition, the Company requires
incremental working capital to stock each new store upon opening. Although the
Company has historically opened the highest percentage of stores in its third
quarter, this pattern may change in the future. Seasonally strong holiday sales
at the end of the fourth quarter, and relatively low first-quarter inventory
levels, typically reduce working capital needs in the first quarter.

Historically, the Company has funded its cash requirements primarily through
cash flow from operations and borrowings under its Revolving Loan Agreement. Net
cash provided by operating activities was $3.7 million, $3.4 million and $5.1
million for fiscal 1994, 1995 and 1996, respectively. Net cash provided by
operating activities has historically been driven by net income levels combined
with fluctuations in inventory and accounts payable. Inventory levels have
increased throughout these periods due to an increase in the number of stores.

Capital expenditures excluding the cost of acquisitions were $1.3 million,
$1.6 million and $1.7 million in fiscal 1994, 1995 and 1996, respectively.
Expenditures in fiscal 1996 were primarily for the build-out of 14 of the 17
Track 'n Trail stores that were opened in fiscal 1996, plus the remodeling of
two existing stores. The full build-outs of the other three Track 'n Trail
stores opened in fiscal 1996 were delayed until fiscal 1997. These build-outs
are expected to be completed in the first quarter of fiscal 1997. Expenditures
in fiscal 1995 were primarily for the build-out of 12 of the new stores opened,
plus the remodeling of four existing stores. The Company estimates that capital
expenditures in fiscal 1997, excluding the cost of any acquisitions, will total
approximately $2.5 million, primarily for the construction of approximately 20
new stores and the completion of three stores opened in late 1996.

32
<PAGE>
The Company used cash of $2.9 million, $1.7 million and $2.7 million in
financing activities in fiscal 1994, 1995 and 1996, respectively. Cash was used
in financing activities primarily for advances and distributions to stockholders
and repayment of long-term debt, primarily financed by borrowings under the
Company's Revolving Loan Agreement. The Company has historically paid
distributions to its stockholders as a result of the Company's status as an S
corporation. During fiscal 1994, 1995 and 1996, the Company made S corporation
distributions to stockholders of $1.7 million, $376,000 and $3.1 million,
respectively. Subsequent to the end of fiscal 1996, the Company made or will
make an additional $1.7 million in distributions to the Existing Stockholders.
Prior to the Termination Date, Track 'n Trail-California will declare the $4.7
million Distribution to the Existing Stockholders, which will be paid from a
portion of the Company's proceeds from the Offering. Under certain
circumstances, the Company may make payments to the Existing Stockholders to
satisfy certain tax liabilities with respect to pre-Reorganization tax periods
resulting from adjustments to the Company's tax returns. In addition, under
certain circumstances, the Existing Stockholders may make payments to the
Company to satisfy any tax liabilities (i) resulting from an unexpected
pre-Reorganization loss of S corporation status and/or (ii) with respect to
post-Reorganization taxable periods for which the Existing Stockholders receive
a tax benefit, provided that the indemnity provided by the Existing Stockholders
will be limited to any federal and state refunds they receive as a result of a
loss of S corporation status or other tax adjustments for such taxable periods.
See "S Corporation Distributions."

The Company's Revolving Loan Agreement includes a revolving line of credit,
a term loan and a letter of credit facility. As of February 22, 1997, the
Company had approximately $5.0 million in available borrowing capacity under the
revolving line of credit, as well as $492,000 available in the form of
additional letters of credit. Borrowings under the Revolving Loan Agreement
aggregated approximately $4.7 million as of February 22, 1997 ($2.6 million of
which was in the form of a term loan), are collateralized by substantially all
of the Company's assets and are guaranteed by the Existing Stockholders. The
term loan bears interest at a fixed rate of 8.75% per annum, and borrowings
under the line of credit bear interest at the prime rate (8.25% per annum, at
February 22, 1997) plus one-half percent per annum. The agreement requires the
Company to meet certain financial covenants, including minimum financial ratios,
and contains limitations on loans and dividends to stockholders and on
expenditures to acquire fixed or capital assets. The Company intends to use a
portion of the net proceeds of the Offering to repay all outstanding
indebtedness under the Revolving Loan Agreement.

The Company also intends to use a portion of the net proceeds of the
Offering to repay all outstanding indebtedness under its secured Merrill Lynch
Loan, which aggregated $950,000 at February 22, 1997 and bore interest at the
30-day commercial paper rate (5.36% per annum, at February 22, 1997) plus 2.95%
per annum. The Company has outstanding indebtedness incurred in connection with
the Acquisition. In October 1996, the Company and the Existing Stockholders
together issued approximately $3.2 million in subordinated Seller Notes to the
former common stockholders of Overland in connection with the Acquisition. Also
in connection with the Acquisition, Overland repurchased all of its outstanding
preferred stock in exchange for the $3.5 million Subordinated Note, which the
Company guaranteed. The Company subsequently assumed the Existing Stockholders'
pro rata portion of the Seller Notes in exchange for the remaining 21.0% of
Overland's common stock. The Company intends to use a portion of the net
proceeds of the Offering to repay the Seller Notes and the Subordinated Note.

After the foregoing reductions in indebtedness and payment of the $4.7
million Distribution, the Company plans to use the remaining net proceeds of the
Offering for general corporate purposes, including new store expansion. See "Use
of Proceeds."

As part of its growth strategy, the Company plans to pursue opportunities to
acquire complementary businesses, although no such transactions are being
negotiated as of the date of this Prospectus. Accordingly, a portion of any
remaining proceeds of the Offering may be used to fund one or more potential
acquisitions that complement the business of the Company. To the extent that the
foregoing cash resources are insufficient to fund the purchase price of future
acquisitions, if any, or the operations of any acquired business, additional
external capital may be required. There can be no assurance that additional
financing will be available on reasonable terms or at all.

33
<PAGE>
Management believes that the net proceeds of the Offering, together with
operating cash flow and borrowings under its credit facilities, will be
sufficient to complete the Company's fiscal 1997 and fiscal 1998 store expansion
program and to satisfy the Company's other capital requirements through fiscal
1997 and fiscal 1998. The Company's capital requirements may vary significantly
from those anticipated depending upon such factors as operating results, the
number and timing of new store openings, and the number and size of any future
acquisitions.

IMPACT OF INFLATION

Management does not believe that inflation has had a material adverse effect
on the Company's results of operations. However, the Company cannot predict
accurately the effect of inflation on future operating results.

34
<PAGE>
BUSINESS

Track 'n Trail is one of the largest specialty retailers in the United
States focusing on high-quality casual, outdoor and adventure footwear. The
Company has increased its store base and net sales each year since inception. In
addition, the Company's net income has grown at a compound annual rate of 37.5%
from $1.1 million in fiscal 1993 to $2.9 million in fiscal 1996, after giving
effect to assumed C corporation income taxes.

INDUSTRY BACKGROUND

According to published industry sources, total retail footwear sales in the
United States during 1995 were approximately $32.5 billion. Of that total,
approximately $14.7 billion, or 45.2%, was derived from casual and outdoor
shoes, boots and sandals, including hiking, work, winter weather and casual
western boots. Footwear expenditures by U.S. consumers increased 4.4% in 1995
from 1994 and increased from 13.8% of total clothing and footwear purchases to
14.0%. Nevertheless, footwear expenditures as a percent of total clothing and
footwear remain low by historical standards. By comparison, footwear accounted
for as much as 16.8% of such purchases in 1970.

The footwear industry historically has been served by a variety of retail
distribution channels, including department stores, mall-based specialty
footwear retailers, traditional shoe stores, outdoor

35
<PAGE>
specialty retailers, sporting goods stores and other retailers. Family shoe
stores and specialty shoe stores accounted for approximately 39.4%, or $12.8
billion, of all footwear sold at retail in 1995. Management believes that few of
the retailers providing footwear in these formats are focused exclusively on
casual, outdoor and adventure footwear and, of those that are, even fewer carry
the depth and breadth of merchandise carried by the Company. Management believes
that this segment of the industry is very fragmented and that the Company is one
of the largest retailers dedicated to this niche.

OPERATING STRATEGIES

- BRAND NAME MERCHANDISE. Management believes that brand name identity is of
paramount importance to its target customer in making footwear purchasing
decisions. The Company focuses on carrying authentic, well-established
brand names for each product category. For example, the Company offers the
Timberland brand for quality hiking, work, performance and casual boots
and shoes. For younger buyers of "alternative" footwear, the Company
offers Dr. Martens, Vans, Simple and Airwalk shoes. The Company features
the Ecco and Rockport brands in the walking shoe and rugged walking
category and the Birkenstock brand in walking sandals. In the category of
performance, water and active sandals, the Company offers the Teva brand.
Management believes that each of the foregoing brands is recognized as one
of the originals in the primary category of footwear it represents.

- CUSTOMER SERVICE AND CONVENIENCE. The Company is committed to achieving
customer satisfaction and to building a loyal customer base by providing a
high level of knowledgeable, attentive and personalized customer service.
The Company believes that educating consumers about the features and
benefits of its product offerings is a critical component of its success,
and management considers its sales associates' knowledge of the Company's
customers and products to be essential to its marketing approach and
customer satisfaction. The Company's extensive employee training and
development programs are designed to provide its field personnel with the
knowledge and skills needed to understand and communicate the performance
characteristics of the Company's merchandise, and to better serve its
customers' needs.

- CAPITALIZE ON TWO DISTINCT DEMOGRAPHIC GROUPS. Management believes that
the Company's distinct Track 'n Trail and Overland Trading retail concepts
enable it to serve two diverse and rapidly growing demographic groups.
Track 'n Trail stores are designed and merchandised to target 15- to
40-year-olds, while Overland Trading stores target 25- to 55-year-olds.
Although the customer base of the two concepts overlaps to some extent,
the Track 'n Trail concept is intended to focus more on active and
performance-oriented lifestyles, which it believes are particularly
popular with the fast-growing 15- to 24-year-old age group. The United
States Bureau of the Census estimates that the 15- to 24-year-old age
group included 36.3 million people in 1995 and will expand 19.6% to 43.4
million people by 2010. Overland Trading stores are designed to appeal
more to the large and growing 40- to 55-year-old age group, which the U.S.
Bureau of the Census estimates will grow 28.6% from 50.2 million people in
1995 to 64.5 million people in 2010. Management plans to differentiate the
two retail concepts to a greater degree in malls in which the Company
operates both concepts, and slightly less so in malls in which the Company
operates only one store.

- FOCUSED MERCHANDISING STRATEGY. To tailor merchandise mix to individual
stores' customer profiles, increase inventory efficiency and minimize lost
sales due to out-of-stock occurrences, the Company analyzes detailed sales
and inventory data generated by the Company's advanced information and
distribution systems on a daily basis. The Company's systems, which
feature automatic replenishment, point-of-sale ("POS") data collection and
electronic data interchange ("EDI"), capture net sales and inventory data
daily on a store-by-store basis for each stock keeping unit ("SKU").

36
<PAGE>
- RECOGNIZE AND RESPOND TO CHANGING LIFESTYLE TRENDS. The Company strives to
recognize and quickly respond to lifestyle trends that affect footwear
customer preferences. Most recently, prevailing lifestyle trends that have
affected footwear sales have included (i) the growth in alternative sports
such as skate, wake and snow boarding, in-line skating and mountain biking
as well as the footwear trends these sports have inspired, (ii) the
movement to outdoor activities and to nature as evidenced by the
resurgence of walking, hiking, biking, fly fishing and camping and (iii)
the increased acceptance of casual dress for both work and social
settings.

Management believes that it has developed strong relationships with the
primary suppliers of the more than 100 brand names that the Company
carries. These relationships provide access to market information
regarding emerging merchandise trends. Management believes that the
breadth and strength of these relationships, together with the Company's
focused merchandising strategy, provide the Company with the flexibility
necessary to permit it to respond accurately and quickly to changing
customer preferences.

- ESTABLISH COMPLEMENTARY PRIVATE LABEL BRANDS. The Company's brand strategy
is complemented by its private label merchandise, which is marketed in
several product categories under brand names including Forza-TM-,
Mole-TM-, New Terrain-TM-, Nordic Trail-TM- and Coloma Trail-TM-. Private
label merchandise, which represented approximately 12.0% of total net
sales in fiscal 1996, has provided the Company with higher maintained
gross margins than branded products. The Company's private label strategy
is to offer merchandise with quality and features equal or superior to
branded products at lower prices.

GROWTH STRATEGIES

The Company's senior management team has successfully increased the store
base and net sales level each year since joining the Company, and intends to
continue to build and strengthen the Company's infrastructure. To enhance the
Company's ability to continue to grow through new store openings and
acquisitions, the Company currently plans to lease a new corporate headquarters
and distribution facility in 1998, which will be sufficient to supply at least
500 stores when expanded to its full anticipated capacity. The Company has also
made and will continue to make investments in management information systems.
Management has developed the following strategies to accelerate the Company's
growth and increase its future profitability:

- NEW STORE OPENINGS. The Company plans to strengthen its position in its
current markets by selectively opening new Track 'n Trail and Overland
Trading stores in markets with attractive demographics and in which
management believes the Company can gain economies of scale in management
and distribution. In determining new store locations, the Company
considers regional and local economic conditions, mall locations, site
locations within the mall, vacancy rates, sales per square foot, "anchor"
tenant stores, tenant mix, consumer traffic, competition and occupancy,
construction and other costs associated with opening a store. By
solidifying the Company's position in certain markets, management believes
that the Company can establish a higher degree of name recognition through
increased market representation and a correspondingly stronger market
presence. In addition, management believes that new store openings will
permit the Company to realize greater distribution efficiencies. The
Company plans to open approximately 20 stores in fiscal 1997 and
approximately 30 stores in fiscal 1998.

- COMPARABLE STORE NET SALES GROWTH. Management plans to leverage the
increased market presence and recognition gained by opening new stores to
drive comparable store net sales increases in existing markets. Management
also believes that the Company can achieve comparable store net sales
growth in its recently acquired Overland Trading stores by (i)
implementing the store-by-store sales analysis and focused merchandising
strategies employed in the Track 'n Trail stores, (ii) supplementing
existing assortments with style additions and private label merchandise,
(iii) improving inventory management to reduce lost sales due to
out-of-stock occurrences and

37
<PAGE>
(iv) emphasizing accessories sales through the sales associate training
programs currently employed at the Track 'n Trail stores.

- GROSS MARGIN IMPROVEMENT AND OPERATING EXPENSE CONTROLS. The Track 'n
Trail store contribution for fiscal 1995 and fiscal 1996 as a percentage
of net sales was approximately six percentage points higher than that of
the recently acquired Overland Trading stores for the fiscal year prior to
the Overland acquisition. The superior performance of Track 'n Trail
stores reflects a higher maintained gross margin and better management of
store-level operating expenses. Management intends to improve the
maintained gross profit levels of the Overland Trading stores, with the
goal of achieving results similar to those of the Track 'n Trail stores,
by (i) implementing the Company's MIS systems and focused merchandising
strategies, (ii) taking advantage of increased purchasing economies of
scale, (iii) selectively eliminating less profitable styles, (iv)
increasing sales associates' emphasis on accessories sales at Overland
Trading stores and (v) broadening these stores' offering of private label
footwear, which carries higher maintained gross margins than branded
products. The Company also intends to improve management controls and
accountability at the Overland Trading stores, leveraging the systems
already in place at Track 'n Trail stores, in an effort to reduce Overland
Trading store-level expenses as a percentage of net sales.

- ADDITIONAL ACQUISITIONS. Management believes that the market for
high-quality outdoor, casual and adventure footwear is large and
fragmented. Accordingly, management intends to identify opportunities to
acquire one or more regional specialty footwear retailers in this market.
Management plans to pursue such opportunities where, as in the case of the
Overland acquisition, it believes that (i) the target company's stores are
strategically well-located within their local market and regionally
well-located within the United States, (ii) the Company can bring
merchandising and operational efficiencies and improvements to the target
company's operations, (iii) the retail concept of the target company fits
or can be easily adapted to Track 'n Trail's strategic objectives and (iv)
the acquisition can be accomplished on terms advantageous to the Company.

MERCHANDISING

The Company's merchandising philosophy is to maintain a core group of basic
styles while identifying and stocking emerging brands and styles. The Company
avoids taking significant inventory risk on new items by carefully testing and
monitoring their sales. The Company generally tests and monitors numerous new
styles each year. Typically, a new style is tested initially in approximately
ten stores. Successful new styles are then tested in 20 to 30 additional stores.
After further evaluation, a new style may be rolled out to a broader segment of
stores or system-wide. New styles are rolled out selectively, with attention to
test results in particular regions or in stores known to serve a higher
percentage of a certain demographic group. Each store typically carries 250 to
300 styles.

Merchandising decisions, including merchandise mix, pricing, promotions and
markdowns, are made at the Company's corporate offices. The Company's product
purchasing is coordinated through a centralized merchandising department under
the direction of its Executive Vice President--Merchandising. The merchandising
department currently consists of 19 persons, including a merchandising manager,
five buyers for the Track 'n Trail stores and two buyers for the Overland
Trading stores. The Company's Track 'n Trail and Overland Trading buyers operate
independently, allowing them to focus on their distinct customers' merchandise
preferences and lifestyles. These buyers are supported by three stock analysts
and seven assistants, who manage the Company's computerized merchandise planning
system and other systems personnel. Management also receives input from the
Company's 17 district managers regarding local or regional factors relevant to
merchandising decisions.

38
<PAGE>
FOOTWEAR

The principal categories of footwear offered by Track 'n Trail and Overland
Trading stores, and selected vendors for each, are summarized below:

<TABLE>
<CAPTION>
SELECTED
SELECTED OVERLAND
TRACK 'N TRADING
CATEGORY DESCRIPTION TRAIL VENDORS VENDORS
<S> <C> <C> <C>
Rugged Casual Rugged footwear with technical Ecco Clarks
features designed to perform on Merrill Ecco
adverse terrain, including internal Rockport H.H. Brown
support systems, waterproof leathers Timberland Rockport
or membranes, comfort technology built Timberland
into the midsole and insole, and
technical outsoles.
Walking/Comfort Traditional walking shoes Clarks Clarks
incorporating comfort technology in Ecco Ecco
design and construction. Rockport Rockport
Joseph Seibel
Hikers Functional backpacking, lightweight Rockport Rockport
hiking and approach boots and shoes. Solomon Timberland
These products contain the technical Timberland
features and benefits necessary to Vasque
support activities ranging from heavy
backpacking to recreational day hiking
and trail running.
Work/Fashion Functional (work, field and duty) and Caterpillar Dr. Martens
fashion boots and shoes, including Dr. Martens H.H. Brown
steel toe, insulated, waterproof and Timberland Timberland
ANSI approved footwear.
Sandals Comfort footbed, sports specific, Birkenstock Birkenstock
casual and fashion sandals, as well as Born Born
clogs. Clarks Clarks
Dr. Martens Dr. Martens
Simple Rockport
Stegmann Joseph Seibel
Teva Stegmann
Teva
Sportleisure Youth-oriented and alternative Airwalk --
products designed for skateboarding, Simple
BMX biking and other "extreme" sports Vans
activities.
Lightweight Casual Lightweight footwear, including boat Born Born
shoes and opened-up casuals. Sperry Clarks
Timberland Rockport
Joseph Seibel
Sperry
Timberland
Cold Weather Seasonal products designed for foul Columbia Canada North
weather. Most products are waterproof Sorel Columbia
and temperature rated. Ugg Sorel
Ugg
</TABLE>

39
<PAGE>
Private label merchandise accounted for approximately 12.0% of the Company's
net sales in each of fiscal 1995 and fiscal 1996. The Company sells its private
label merchandise under names such as Forza-TM-, New Terrain-TM-, Mole-TM-,
Nordic Trail-TM- and Coloma Trail-TM-. The Company plans to begin to introduce
private label merchandise at Overland Trading stores in fiscal 1997.

ACCESSORIES

The Company also offers accessories, including socks and shoe care products
such as sprays and polishes. Some of these accessories carry the same brand
names as the shoes, boots and sandals sold by the Company, although most are
supplied by different manufacturers than the Company's footwear suppliers.
Accessories accounted for approximately 7.0% of net sales at Track 'n Trail
stores in fiscal 1996, and accounted for less than 2.0% of net sales at Overland
Trading stores for Overland's fiscal year ended August 3, 1996. The Company
intends to increase accessories sales at Overland Trading stores in fiscal 1997.

PURCHASING AND SOURCING

The Company believes that its ability to buy in large quantities directly
from suppliers helps it to plan merchandise flow effectively and to obtain
competitive pricing and trade terms. Although the Company deals with
approximately 100 vendors, a substantial portion of the Company's merchandise is
provided by a limited number of brand name suppliers. The Company's ten largest
suppliers accounted for approximately 66.8% and 68.0% of the Company's net sales
in fiscal 1995 and fiscal 1996, respectively, of which eight were the same in
each period. In fiscal 1996, Dr. Martens, Timberland and Birkenstock accounted
for 18.3%, 12.8% and 8.7% of the Company's total net sales, respectively.

The Company strives to build and maintain strong and interactive
relationships with its major suppliers. Buyers meet regularly with major vendors
to stay abreast of new product lines, new features and changes in styling
direction. The Company frequently shares information with its vendors about
market research, merchandising trends and the Company's goals. In addition, the
Company has established EDI programs with most of its major suppliers in order
to improve its inventory efficiency. The Company develops and transmits purchase
orders through its EDI links, and receives information about order status,
delivery times and pricing. These programs thus permit more rapid merchandise
replenishment and faster inventory turns. The Company believes that its
relationships with major suppliers improve its ability to obtain desired styles
and give the Company flexibility to adjust to shifting market demand for
different vendors' products from season to season. In an effort to secure
appropriate quantities of items in high demand, the Company advises its major
vendors of its forecasted needs approximately six to 12 months in advance.
However, the Company has no long-term purchase contracts or other contractual
assurances of continued supply or pricing with any of its suppliers.

Most private label products are sourced from the Far East (primarily China,
Taiwan and South Korea) and Europe (primarily Spain, Italy and Portugal). The
Company's Product Development Manager is responsible for identifying developing
styles for private label manufacture, arranging for product design and locating
manufacturers with the assistance of local agents. The Company actively seeks
advantageous sourcing opportunities and works with a variety of manufacturers.
During fiscal 1996, the Company relied on approximately 25 private label
manufacturers. Generally, private label products are delivered to the Company
approximately four to six months after initial order placement, with longer lead
times for products manufactured in the Far East. Upon order, the Company
typically posts an irrevocable letter of credit in the amount of the purchase
price. The Company has no long-term contracts with its manufacturing sources and
competes with other companies for production facilities. See "Risk
Factors--Dependence on Major Suppliers."

STORE OPERATIONS

The Company operated 128 stores as of February 22, 1997, all but three of
which were located in regional or super-regional shopping malls. Each store
typically carries 250 to 300 styles of footwear.

40
<PAGE>
Although all stores are integrated into the Company's inventory control,
distribution and management information systems, Track 'n Trail and Overland
Trading stores differ in format and decor because of their different targeted
customer bases.

TRACK 'N TRAIL STORE FORMAT

The Track 'n Trail storefront design typically features an all glass 20- to
30-foot front, enabling customers to view featured products on display as well
as the extensive product assortment available inside the store. The edges of the
storefront are often accented with rock fixtures that are a signature element in
the Track 'n Trail design theme. Product display fixtures at several stores are
designed to represent rock formations, which may also be incorporated into
customer seating fixtures and waterfall display pieces. The store interiors
feature natural-tone walls, accent trim, furniture and fixtures. Floor coverings
are natural wood or soft earth-tone carpeting, and often include colorful murals
depicting outdoor scenes, providing an environment that is both aesthetically
pleasing and complementary to the product displays. Each style of footwear is
displayed by category, such as hiking boots or sandals. Merchandise is typically
featured on rock displays or fixtures along the walls of the stores, with
product categories indicated by an overhead sign. Track 'n Trail stores range in
size from 921 to 2,911 square feet and average approximately 1,880 square feet
in size, of which 40% to 60% is devoted to the sales floor.

OVERLAND TRADING STORE FORMAT

Overland Trading stores generally feature interiors that are well lighted,
open and inviting. Most stores have two display windows in which a
representative collection of merchandise is presented. Store furnishings are
constructed of high-quality light woods that contrast against the rich, emerald
green floor coverings. Management believes that the Overland Trading stores'
more traditional environment conveys the high quality of merchandise and service
sought by the Overland Trading concept's more mature target consumer. The
Overland Trading merchandising approach focuses on the high-quality brands
carried. Each major brand is housed as a "collection" in a distinct wall
section, which is delineated by architectural elements and by a distinctive,
back-lit overhead sign carrying the vendor's logo. For example, men's Timberland
footwear is presented as a collection within a defined wall section, with a
back-lit Timberland sign overhead. Overland Trading stores have sales floors
similar in size to those at Track 'n Trail stores, but have smaller stockrooms.
The Company plans to incorporate larger stockrooms in future Overland Trading
stores in order to minimize missed sales opportunities due to shortages of
high-demand products. Overland Trading stores average approximately 1,450 square
feet in size.

OUTLET STORES

The Company consolidates older or slow-moving merchandise to two outlet
stores for additional or final markdown. Inventory transfers are initiated by
the merchandising department and are effected directly between the retail store
and the outlet store. The Company's Track 'n Trail outlet store, opened in
August 1996, currently features a contemporary "industrial" decor, with a moving
conveyor belt carrying merchandise along the storefront's perimeter. The Company
also operates an Overland Trading outlet store. The Company is currently
evaluating the merchandising, format and interiors of its outlet stores.

STORE MANAGEMENT AND COMPENSATION

The Company's Vice President-Stores, two regional managers and 17 district
managers visit each of the Company's stores on a regular basis to review the
implementation of Company policy, monitor operations and review inventories and
the merchandise presentation. Each store has a store manager who is responsible
for supervision and overall operations, two to three assistant managers and
approximately four to eight sales associates, most of whom work part-time.

The regional, district and store managers receive fixed salaries and are
eligible for incentive bonuses, primarily based on their achievement of the
goals stated in the Company's Management by Objective

41
<PAGE>
("MBO") program. The MBO program focuses on reviewing, managing and improving
three key objectives: net sales, selling cost and inventory shrinkage. All field
incentive compensation programs are based upon goals within these three key
objectives. To support the MBO program, the Company has developed an appraisal
system to monitor each store's performance on a monthly and quarterly basis.
Each appraisal focuses on a store's performance in a key compliance area such as
customer service, visual presentation, store operations or loss prevention, to
support performance in the three key MBO objectives. The Company also monitors
many other store-level variables from its corporate offices, including refund
levels, register variances, telephone bills and similar items.

The Company intends for store employees to focus a substantial portion of
their efforts on customer service. As a consequence, the Company has centralized
as many administrative functions as possible, including buying, development of
in-store merchandising displays, inventory allocation, human resources and
accounting functions, at its El Dorado Hills, California corporate offices.

CUSTOMER SERVICE

The Company is committed to achieving customer satisfaction and to building
a loyal customer base by providing a high level of knowledgeable, attentive and
personalized customer service. The Company believes that educating consumers
about the features and benefits of its product offerings is a critical component
of its success, and management considers its sales associates' knowledge of the
Company's customers and products to be essential to its marketing approach and
customer satisfaction.

To develop knowledgeable, responsive sales associates, the Company has
devoted significant resources to developing and implementing employee
development and incentive programs. All store employees receive extensive
training on merchandise features, benefits and technology, as well as customer
relations and selling skills. The training program focuses on "six steps" to
achieve sales and customer satisfaction: greeting the customer; assessing his or
her needs; exceeding customer expectations; overcoming objections; suggestive
selling; and closing the sale. In addition to training from the store manager,
each employee attends regional product information seminars, receives in-store
training through vendor presentations and vendor-supplied videotapes, and is
required to complete a formal, written training program. Store managers are also
required to complete a 12-week training program, during which they are
instructed in the technical aspects of footwear, management skills and employee
relations. To provide managers with hands-on training, new store and district
managers are typically required to work alongside individuals in comparable
positions for two to three weeks before they are asked to perform their duties
without direct supervision. Managers also attend a minimum of three management
training meetings per year. Supplemental product information bulletins are
distributed frequently from the Company's corporate offices to educate store
managers and sales associates about new products as they are introduced. The
Company also employs an independent agency to send unidentified "mystery
shoppers" to Company stores, and to report on the service provided to these
shoppers by store personnel. The Company also monitors the level of customer
service on an ongoing basis through various initiatives, such as customer
comment forms and telephone surveys. The Company is implementing the foregoing
employee development and incentive programs and customer service initiatives at
its Overland Trading stores, and has undertaken a review of all of the policies
and procedures for Overland Trading store operations.

STORE LOCATIONS

The Company considers its ability to obtain attractive, high-traffic store
locations to be a critical element of its business and a key factor in the
Company's future growth and profitability. In determining new store locations,
the Company considers regional and local economic conditions and household
income data, mall locations, site locations within the mall, vacancy rates,
sales per square foot, "anchor" tenant stores, tenant mix, consumer traffic,
competition and occupancy, construction and other costs associated with opening
a store. Site selection and lease negotiation are supervised by the Company's
Vice President-Real Estate and senior management.

42
<PAGE>
The Company operated 128 stores in 23 states as of February 22, 1997, and
has signed leases for an additional four stores, as set forth in the following
table.

TRACK 'N TRAIL STORES
<TABLE>
<CAPTION>
CURRENT PLANNED
STATE STORES OPENINGS(1)
- ------------------------------- ------------- -----------------
<S> <C> <C>
Alaska......................... 2
California..................... 26
Colorado....................... 6
Connecticut.................... 1
Idaho.......................... 1
Illinois....................... 6 2
Indiana........................ 5
Maine.......................... 1
Maryland....................... 1
Massachusetts.................. 3
Michigan....................... 10

<CAPTION>
CURRENT PLANNED
STATE STORES OPENINGS(1)
- ------------------------------- ------------- -----------------
<S> <C> <C>
Minnesota...................... 2
Nevada......................... 1
New Hampshire.................. 1
New York....................... 7
Ohio........................... 3 1
Oregon......................... 3
Pennsylvania................... 3
Tennessee...................... 1
Virginia....................... 1
Washington..................... 7
Wisconsin...................... 3
</TABLE>

OVERLAND TRADING STORES
<TABLE>
<CAPTION>
CURRENT PLANNED
STATE STORES OPENINGS(1)
- ------------------------------- ------------- -----------------
<S> <C> <C>
Connecticut.................... 2
Massachusetts.................. 9
New Jersey..................... 4
New York....................... 10

<CAPTION>
CURRENT PLANNED
STATE STORES OPENINGS(1)
- ------------------------------- ------------- -----------------
<S> <C> <C>
Ohio........................... 4 1
Pennsylvania................... 2
Virginia....................... 3
</TABLE>

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

(1) Stores for which leases have been signed but which had not commenced
commercial operations as of February 22, 1997.

The Company leases all of its stores. Initial lease terms of the Company's
stores generally range from eight to ten years in duration without renewal
options, ten-year leases being the most common. The leases generally provide for
a fixed minimum rental plus a percentage of store sales in excess of a specified
amount.

MARKETING

The Company's policy is to price its merchandise competitively with
department stores and specialty footwear retailers in the particular mall in
which each Company store is located. The Company is primarily a full-price
retailer, selling most merchandise at full retail prices. However, the Company
conducts promotions that generally revolve around themes such as back-to-school,
and holiday seasons. In addition, the Company promotes individual items as
needed and consolidates seasonal and slow-moving merchandise into selected
mall-based stores prior to consolidation into its two outlet format stores for
liquidation.

The Company relies primarily on mall traffic and the visual appeal of its
stores to attract customers, and on the breadth of its product offering and the
quality of its customer service to retain them. In-store promotions with
point-of-purchase materials are also an important part of the Company's
marketing strategy. The Company also takes advantage of advertising and
promotional assistance from many of its suppliers, which takes the form of
cooperative advertising programs, point-of-purchase materials, product training
for employees and other programs. The Company spends very little on advertising,
primarily contributing to mall merchant association funds which will advertise
both the mall and individual stores within the mall.

43
<PAGE>
DISTRIBUTION

The Company believes that strong distribution support for its stores is a
critical element in its strategy to maintain a low cost operating structure and
to expand in the future. The Company leases a single 24,192 square foot
distribution center in El Dorado Hills, California and manages the distribution
process centrally from its corporate offices located at the same site. The
Company also leases a 6,000 square foot staging facility in Rancho Cordova,
California. The Company receives approximately 85.0% of its merchandise at its
central distribution center, of which approximately two-thirds is distributed to
Track 'n Trail stores and one-third is distributed to the Overland Trading
stores. Other merchandise is drop-shipped from vendors directly to individual
stores. The Overland Trading stores currently receive a higher proportion of
drop-shipped merchandise than the Track 'n Trail stores. The Company intends to
process an increasing percentage of Overland Trading merchandise through its
central distribution center, as it expands the stockroom capacity of future
Overland Trading stores.

The central distribution center is operated primarily as a "cross-docking"
facility rather than as a warehouse. The Company attempts to retain minimal
inventory at this facility, although it will occasionally back-stock high-demand
items that are expected to be in short supply and inventory for peak seasonal
needs. The central distribution center has multi-access docks, enabling the
Company to receive and ship simultaneously and to pack separate trailers for
shipments to different regions of the country at the same time. The facility
includes conveyor systems designed to reduce labor costs, increase efficiency in
processing merchandise and enhance space productivity.

Upon receipt at the central distribution center, merchandise is inspected,
recorded in the Company's MIS system, allocated to stores by the system's
automatic replenishment function, price tagged and repackaged for distribution
(to the extent it was not prepared and pre-ticketed by the vendor according to
individual store). Merchandise is typically shipped via common carrier from the
central distribution center to the various stores once a week, or as needed
during peak seasonal periods.

The Company believes that its current central distribution facility will
support as many as 160 stores, which the Company believes is sufficient to
continue to service existing stores and to accommodate anticipated growth
through mid-1998. The current corporate facility's lease expires in March 1998.
The Company presently anticipates moving its distribution facility and corporate
offices to a larger, leased "build-to-suit" facility in 1998, which is expected
to have 60,000 square feet of distribution facility space initially, and could
accommodate at least 500 stores if expanded to its anticipated full capacity of
100,000 square feet.

MANAGEMENT INFORMATION SYSTEMS

The Company has a computerized management information system that includes a
network of terminals at the corporate offices to support management decision
making, along with PC-based POS computers at the stores that are connected via
modem to the computers at the corporate offices. Each store's POS system
accumulates detailed sales transaction data that is polled by the Company's main
system nightly and reviewed by management each day. The system's perpetual
inventory feature enables the Company's buyers to review and analyze daily the
inventory levels at each individual store by department, class and SKU in order
to replenish fast-selling items on a timely basis. The system also includes an
automated replenishment system for core products that orders replacement stock
of such products based on factors such as current sales trends or store
inventory levels. The minimal inventory that is maintained at the Company's
central distribution center is also managed through daily inventory management
reports. During fiscal 1996, the Company upgraded the computer hardware at its
corporate offices to accommodate its presently anticipated growth. The Company
completed the integration of the Overland Trading stores into its management
information system in January 1997.

COMPETITION

The business in which the Company is engaged is highly competitive. Most of
the items sold by the Company are sold by department stores, outdoor and
sporting goods stores, athletic footwear stores and

44
<PAGE>
traditional shoe stores. Some of these stores are owned or franchised by major
suppliers of the Company. Many of the stores with which the Company competes are
units of large national and regional chains that have substantially greater
financial and other resources than the Company. To a lesser extent, the Company
competes with mail order retailers. In many cases, the Company's stores are
located in shopping malls in which one or more of its competitors also has a
store.

The Company believes that it has been able to compete favorably with its
competitors by operating attractive, well-stocked stores in high retail traffic
areas, offering competitive prices and providing knowledgeable and courteous
customer service. The Company seeks to provide competitive pricing by
effectively mixing high profile, brand name merchandise with private label
merchandise and opportunistic purchases of other brand name merchandise, and by
controlling both store and administrative expenses.

EMPLOYEES

As of February 22, 1997, the Company had approximately 450 full-time
employees and 600 part-time employees, none of whom are represented by a labor
union. The number of part-time employees fluctuates depending on seasonal needs.
The Company considers its relationship with its employees to be good and has not
experienced any interruptions of operations due to labor disagreements.

LEGAL PROCEEDINGS

Although the Company is subject to various claims and legal actions that
arise in the ordinary course of its business, the Company is not presently a
party to any material legal proceedings.

45
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
David L. Suechting, Jr.......................... 37 Chairman of the Board
Gregory M. Kilgore.............................. 47 President, Chief Operating Officer and Director
John E. Wilkinson............................... 47 Executive Vice President-Marketing
Daniel J. Nahmens............................... 38 Vice President-Finance, Chief Financial Officer
and Treasurer
David T. Morgan................................. 54 Vice President-Real Estate
William Forsberg................................ 51 Vice President-Stores
Barbara J. Suechting............................ 55 Director
</TABLE>

DAVID L. SUECHTING, JR. has served as Chairman of the Board since the
Company's organization in March 1997. Mr. Suechting co-founded Track 'n
Trail-California and has served as Chairman of the Board since January 1993.
From January 1993 to April 1996, Mr. Suechting served as President of Track 'n
Trail-California. Prior to that time, he served Track 'n Trail-California in
various capacities, including Vice President-Stores from July 1991 to April
1996, Vice President-Operations from October 1989 to July 1991, Vice
President-Merchandise from February 1982 to October 1989 and as Store
Manager/District Manager from 1980 to February 1982.

GREGORY M. KILGORE has served as President and Chief Operating Officer of
the Company since its organization in March 1997. Mr. Kilgore has also served as
President and Chief Operating Officer of Track 'n Trail-California since April
1996. Prior to being appointed President, Mr. Kilgore served as Executive Vice
President and Chief Operating Officer from September 1991 to April 1996. From
May 1987 to September 1991, Mr. Kilgore functioned as interim President and
Chief Operating Officer of several turnaround and emerging retail operations.
From 1981 to 1987, Mr. Kilgore was Vice PresidentOperations of Berman's Leather
Experts. Mr. Kilgore has served as a director of the Company since March 1997,
and as a director of Track 'n Trail-California since July 1996.

JOHN E. WILKINSON has served Executive Vice President-Marketing of the
Company since its organization in March 1997. Mr. Wilkinson has also served as
Executive Vice President-Marketing of Track 'n Trail-California since June 1996.
From September 1991 to May 1996, he held the position of Vice
President-Marketing. From 1982 to September 1991, Mr. Wilkinson was associated
with Weinstock's Department Store, a division of Carter Hawley Hale, where he
held the positions of Senior Vice President and General Merchandise Manager from
1989 to 1991, Vice President and General Merchandise Manager from 1987 to 1989
and Divisional Vice President from 1982 to 1987.

DANIEL J. NAHMENS has served as Chief Financial Officer and Vice
President-Finance of the Company since its organization in March 1997. Mr.
Nahmens has also served as Chief Financial Officer and Vice President-Finance of
Track 'n Trail-California since November 1993, and as Treasurer since June 1996.
From August 1988 to November 1993, Mr. Nahmens served as Controller of Track 'n
Trail-California. From February 1988 to June 1988, he held the position of Chief
Financial Officer of Greenwood Development Co., a local chain of fast-food
stores. From October 1981 to February 1988, Mr. Nahmens was associated with Cal
Gas Corporation, a nationwide liquid gas retailer, where he last held the
position of Financial Accounting Manager. From 1980 to 1981, Mr. Nahmens was
employed by Peat Marwick, Mitchell & Co. (presently known as KPMG Peat Marwick
LLP) as a Certified Public Accountant.

DAVID T. MORGAN has served as Vice President-Real Estate of the Company
since its organization in March 1997. Mr. Morgan has also served as Vice
President-Real Estate of Track 'n Trail-California since June 1996, and from
August 1992 to June 1996, he served as Director of Real Estate and Development.
From May 1990 to August 1992, Mr. Morgan was a Real Estate Representative of
Payless Shoe Source, a

46
<PAGE>
national retail shoe store chain, and from April 1986 to May 1990, he was Vice
President-Real Estate of Round Table Franchise Corporation.

WILLIAM FORSBERG has served as Vice President-Stores of the Company since
its organization in March 1997, and as Vice President-Stores of Track 'n
Trail-California since June 1996. Prior to joining Track 'n Trail-California,
Mr. Forsberg was President and Chief Operating Officer of New Century Co. Inc.,
an owner and operator of a chain of video stores and a chain of tailoring and
alteration stores, from April 1994 to June 1996. From October 1983 to April
1994, Mr. Forsberg was employed by Wilsons Suede & Leather, where he last held
the position of Director of In Store Operations. From 1974 to 1983, he was
Regional Manager of Fanny Farmer Candy Shops.

BARBARA J. SUECHTING has served as a director of the Company since its
organization in March 1997. Ms. Suechting co-founded Track 'n Trail-California
and has also served as Secretary and a director since 1980.

The Company currently has authorized three directors. The Company intends to
expand the size of the Board to five directors, two of whom will be non-employee
directors, prior to the closing of the Offering. The size of the Board is
presently fixed at three, but upon expansion will be fixed at not less than
three nor more than nine members, to be divided into three approximately equal
classes serving staggered three-year terms or until their successors are duly
elected and qualified. As a result, approximately one-third of the total number
of directors will be elected each year.

The Board of Directors will also establish an Audit Committee and a
Compensation Committee prior to the closing of the Offering. The functions of
the Audit Committee will include recommending to the Board of Directors the
retention of independent auditors, reviewing the scope of the annual audit
undertaken by the Company's independent auditors and the progress and results of
their work, and reviewing the Company's financial statements, internal
accounting and auditing procedures and corporate program to ensure compliance
with applicable laws. The functions of the Compensation Committee will include
reviewing and approving executive compensation policies and practices, reviewing
salaries and bonuses for certain officers of the Company, administering the
Company's Stock Option Plan and other benefit plans, and considering such other
matters as may from time to time be referred to the committee by the Board of
Directors.

Directors of the Company who are not also employees of the Company or one of
its subsidiaries will receive $ for each Board meeting attended and
$ for each committee meeting attended. No other director will receive
cash compensation for services as a director. All directors will, however, be
reimbursed for their expenses incurred in attending meetings. Certain of the
Company's directors have received distributions and loans from the Company in
their capacity as stockholders. See "Certain Transactions."

Officers are elected at the first board of directors meeting following the
stockholders' meeting at which directors are elected and serve at the discretion
of the Board of Directors. There are no family relationships among any of the
directors or executive officers of the Company, except that David L. Suechting,
Jr., the Chairman of the Board, is the son of Barbara Suechting, who is a
director.

47
<PAGE>
EXECUTIVE COMPENSATION

The following table summarizes all compensation earned by or paid to the
Company's Chairman of the Board and to each of the Company's four most highly
compensated executive officers other than the Chairman of the Board whose total
annual salary and bonus exceeded $100,000, for services rendered in all
capacities to the Company during the fiscal year ended December 28, 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS COMPENSATION(1)
- -------------------------------------------------------- ---------- ---------- ------------- -----------------
<S> <C> <C> <C> <C>
David L. Suechting, Jr. ................................ $ 36,750 $ 0 0 $ 3,137
Chairman of the Board
Gregory M. Kilgore ..................................... 153,951 158,000 350,618 5,977
President and Chief Operating Officer
John E. Wilkinson ...................................... 117,869 102,000 200,468 5,340
Executive Vice President-Marketing
Daniel J. Nahmens ...................................... 92,350 131,000 100,234 4,947
Vice President-Finance and Chief Financial Officer
David T. Morgan ........................................ 69,692 54,000 50,117 4,161
Vice President-Real Estate
</TABLE>

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

(1) Represents Company-paid health and life insurance premiums and Company
contributions to the Company's 401(k) plan, as follows: Mr. Suechting,
$3,137 and $0; Mr. Kilgore, $2,638 and $3,339; Mr. Wilkinson, $2,638 and
$2,702; Mr. Nahmens, $2,638 and $2,309; and Mr. Morgan, $2,638 and $1,523.

The following tables set forth certain information as of December 28, 1996
and for the fiscal year then ended with respect to stock options granted to and
exercised by the individuals named in the Summary Compensation Table above.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL RATES
------------------------------------------------------------ OF STOCK PRICE
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(4)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED(#)(1)(2) FISCAL YEAR ($/SH) DATE(3) 5%($) 10%($)
- ----------------------------------------- ----------------- --------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
David L. Suechting, Jr................... 0 0 $ -- -- $ -- $ --
Gregory M. Kilgore....................... 100,234 11.8 4.00 7/1/06
250,384 29.4 0.01 7/1/06
John E. Wilkinson........................ 100,234 11.8 4.00 7/1/06
100,234 11.8 0.01 7/1/06
Daniel J. Nahmens........................ 100,234 11.8 4.00 7/1/06
David T. Morgan.......................... 50,117 5.9 4.00 7/1/06
</TABLE>

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

(1) The options listed in the table were originally granted under the 1996 Stock
Option Plan of Track 'n Trail-California, and will, upon adoption by the
Company of such stock option plan, be substituted with options to purchase
Common Stock of the Company.

48
<PAGE>
(2) The options listed in the table vest ratably on an annual basis over a
five-year period, on December 15 of each year, except that 148,238 and
29,587 options granted to Mr. Kilgore and Mr. Wilkinson, respectively,
vested immediately upon grant. Upon the closing of the Offering, all
outstanding options will vest in full. See "--Stock Option Plan."

(3) The options will expire earlier than the stated expiration date upon a sale
of the Company.

(4) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. There can be no
assurance that any of the values reflected in the table will be achieved.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)

<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT FISCAL
FISCAL YEAR-END(#) YEAR- END($)(2)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE(3) EXERCISABLE UNEXERCISABLE(3)
- ----------------------------------------------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
David L. Suechting, Jr............................... 0 0 $ $
Gregory M. Kilgore................................... 188,713 161,905
John E. Wilkinson.................................... 63,762 136,706
Daniel J. Nahmens.................................... 20,046 80,188
David T. Morgan...................................... 10,023 40,094
</TABLE>

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

(1) No stock options were exercised in fiscal 1996.

(2) Based on an assumed initial public offering price of $ per share of
Common Stock (the midpoint of the Offering range) minus the exercise price,
multiplied by the number of shares underlying the options.

(3) All stock options will vest in full upon the closing of the Offering.

STOCK OPTION PLAN

The Company intends to adopt the 1996 Stock Option Plan of Track 'n
Trail-California (the "Stock Option Plan" or the "Plan"). Upon such adoption,
all stock options previously granted under the Plan will be substituted with
options to purchase shares of the Company's Common Stock. A total of 905,735
shares of Common Stock is currently reserved for issuance pursuant to the
exercise of options granted under the Stock Option Plan. If any option granted
under the Plan expires or terminates for any reason without having been
exercised in full, then the unpurchased shares subject to that option will once
again be available for additional option grants.

Under the Stock Option Plan, all employees (including officers) of the
Company are eligible to receive grants of nonstatutory options or incentive
stock options ("ISOs") intended to qualify under Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code"). The Plan contains limitations on
the number of shares of Common Stock (expressed as a percentage of the
outstanding Common Stock on a fully diluted basis) that may be acquired by
certain members of management pursuant to the exercise of options granted
pursuant to the Plan. Pursuant to these limitations, no additional options may
be granted to such members of management under the Company's current
capitalization.

The Stock Option Plan is administered by a committee of the Board of
Directors of the Company, which, subject to the approval of the Board of
Directors, selects the persons to whom options will be granted, determines the
number of shares to be made subject to each option grant, and prescribes other
terms in connection with each option, such as the exercise price, term,
expiration and vesting. The exercise price of ISOs cannot be lower than 100% of
the fair market value of the Common Stock on the date of grant and, in the case
of ISOs granted to holders of more than 10% of the voting power of the Company,

49
<PAGE>
not less than 110% of such fair market value. The Company does not presently
intend to grant nonqualified stock options with exercise prices lower than 100%
of the fair market value of the Common Stock. The term of an option cannot
exceed 10 years, and the term of an ISO granted to a holder of more than 10% of
the voting power of the Company cannot exceed five years. Options generally
expire not later than three months following a termination of employment or six
months following the optionee's death or permanent disability. Under the Stock
Option Plan, the Committee determines on a case-by-case basis the date on which
options vest and become exercisable, which may occur in one or more
installments, upon the happening of certain events, upon the passage of a
certain period of time, upon the fulfillment of certain conditions or upon the
achievement by the Company of certain performance goals.

As of February 22, 1997, the Company had outstanding options to purchase an
aggregate of 851,786 shares of Common Stock at a weighted average per share
exercise price of $2.36. A total of 53,949 shares of Common Stock is available
for future issuance under the Stock Option Plan.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements (collectively, the
"Employment Agreements") with Gregory Kilgore, President and Chief Operating
Officer; John Wilkinson, Executive Vice President-Marketing; Daniel Nahmens,
Vice President-Finance and Chief Financial Officer; and David Morgan, Vice
President-Real Estate. Each of the Employment Agreements provides for an initial
two-year term expiring on January 3, 1996, with automatic one-year renewals upon
the expiration of the initial term and on each anniversary thereafter. Each of
the Employment Agreements may be terminated by the Company or the employee
without cause (as defined in the Employment Agreements) upon 30 days' notice, or
for cause without any notice. Under the Employment Agreements, Messrs. Kilgore,
Wilkinson, Nahmens and Morgan are entitled to minimum compensation of $130,000,
$105,000, $75,000 and $60,000, respectively. Each of the Employment Agreements
provides that if the Company breaches any portion of such Employment Agreement
or terminates it without cause, the Company must pay to the employee an amount
equal to one year of his salary, calculated at the highest salary rate paid to
such employee by the Company in the two-year period prior to the termination.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Certificate of Incorporation that
limit the liability of its directors for monetary damages for breach of their
fiduciary duty as directors, except for liability that cannot be eliminated
under the Delaware General Corporation Law ("Delaware Law"). The Delaware Law
provides that directors of a company will not be personally liable for monetary
damages for breach of their fiduciary duty as directors, except for liability
(i) for any breach of their duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for unlawful payment of dividend
or unlawful stock repurchase or redemption, as provided in Section 174 of the
Delaware Law, or (iv) for any transaction from which the director derived an
improper personal benefit. Any amendment or repeal of these provisions requires
the approval of the holders of shares representing at least 66 2/3% of the
shares of the Company entitled to vote in the election of directors, voting as
one class.

The Company's Certificate of Incorporation and By-Laws also provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by the Delaware Law. The Company intends to enter into separate
indemnification agreements with its directors and certain of its officers that
could require the Company, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors and
to advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified. The Company believes that the limitation of
liability provision in its Restated Certificate of Incorporation and the
indemnification agreements will facilitate the Company's ability to continue to
attract and retain qualified individuals to serve as directors and officers of
the Company.

50
<PAGE>
The Employment Agreements with each of Gregory Kilgore, John Wilkinson,
Daniel Nahmens and David Morgan also provide that the Company will indemnify
such individuals for any losses, costs, damages or expenses incurred as a direct
consequence of the discharge of their duties or by reason of their status as
agents of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors will consist of two
directors, neither of whom will be an officer or employee of the Company. All
matters concerning executive compensation in fiscal 1996 were addressed by the
full Board of Directors of Track 'n Trail-California, including Messrs.
Suechting and Kilgore, who were executive officers in fiscal 1996.

51
<PAGE>
CERTAIN TRANSACTIONS

As a result of the Company's status as an S corporation, the Company has
historically paid distributions to its stockholders to enable them to pay their
income tax liabilities and, from time to time, to distribute previously
undistributed S corporation earnings. During fiscal 1994, fiscal 1995 and fiscal
1996, the Company made S corporation distributions to the Existing Stockholders
of $1.7 million, $376,000 and $3.1 million, respectively. In addition, through
February 22, 1997 the Company had made distributions of $1.4 million to
stockholders in fiscal 1997. Prior to the Reorganization, Track 'n
Trail-California will declare the $4.7 Distribution to the Existing
Stockholders, which is designed to constitute substantially all of the
accumulated undistributed S corporation earnings through the Termination Date,
pursuant to the Distribution and Tax Agreement. The Distribution will be paid
out of a portion of the Company's proceeds of the Offering. See "S Corporation
Distributions."

The Company has from time to time extended loans to its stockholders and
their family members. See Note 6 to Notes to Consolidated Financial Statements.
All of the foregoing loans were repaid in March 1996, through a distribution to
the obligors of the remaining $1.7 million in notes.

In fiscal 1994 and 1995, the Company paid $514,000 and $653,000,
respectively, in legal expenses in defending lawsuits filed by the Company's
former Chairman of the Board against the Company and certain executive officers
and directors, pursuant to an indemnification arrangement with such officers and
directors.

In July 1996, the Company granted options to purchase an aggregate of
350,618 shares of Common Stock to two of its executive officers, in
consideration of such officers' cancellation of stock appreciation rights
granted in 1994. See "Management--Executive Compensation."

In October 1996, the Existing Stockholders acquired 21.0% of the outstanding
common stock of Overland in return for $663,000 of Seller Notes, which the
Company guaranteed. Effective January 1, 1997, the Existing Stockholders
assigned their Overland stock to the Company, in consideration of the Company's
assumption of their Seller Notes exclusive of accrued interest.

The Existing Stockholders have also guaranteed the Company's obligations
under the Revolving Loan Agreement and approximately $1.2 million in other
secured debt, substantially all of which will be repaid from the proceeds of the
Offering, and several equipment leases providing for aggregate annual rental
payments of $143,000.

The Company believes that the foregoing transactions were in its best
interests.

For information concerning indemnification of directors and officers, see
"Management--Limitation of Liability and Indemnification Matters."

52
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 1, 1997, and as adjusted to
reflect the sale by the Company of the shares offered hereby (assuming no
exercise of the Underwriters' over-allotment option), by: (i) each person who is
known by the Company to own beneficially more than 5% of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the Company's
officers named under "Management--Summary Compensation Table," and (iv) all
directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OF OWNED AFTER
OFFERING(2) SHARES OFFERING(2)(3)
--------------------- BEING ---------------------
NAME AND ADDRESS(1) NUMBER PERCENT OFFERED(3) NUMBER PERCENT
- -------------------------------------------------------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Barbara Suechting....................................... 1,811,470 44.1%
David L. Suechting, Jr.(4).............................. 1,390,403 33.8
Deborah Suechting....................................... 905,735 22.1
Gregory M. Kilgore(5)................................... 350,618 7.9
John E. Wilkinson(6).................................... 200,468 4.7
Daniel J. Nahmens(7).................................... 100,234 2.4
David T. Morgan(8)...................................... 50,117 1.2
All directors and executive officers as a group (7
persons)(9)............................................ 3,953,427 81.4%
</TABLE>

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

* Less than 1%.

(1) The address for each listed stockholder is c/o Track 'n Trail, 4961-A
Windplay Drive, El Dorado Hills, CA 95672. To the Company's knowledge, the
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the footnotes to this table.

(2) The percentage of beneficial ownership is calculated assuming 4,107,608
shares of Common Stock were outstanding on March 1, 1997 and
shares outstanding immediately following the completion of the Offering
(assuming the Underwriters exercise their overallotment option in full).
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares subject to options
presently exercisable or exercisable within 60 days of March 1, 1997 are
deemed to be beneficially owned by the holder but are not treated as
outstanding for the purpose of computing the beneficial ownership of any
other person.

(3) If the Underwriters exercise their overallotment option in full, the Selling
Stockholders will sell the following additional shares of Common Stock and
will beneficially own the following percentages of the Common Stock after
the offering: David L. Suechting, Jr. will sell shares and will
beneficially own %; Barbara J. Suechting will sell shares and will
beneficially own %; and Deborah Suechting will sell shares and
will beneficially own %. In such event, all directors and executive
officers as a group will sell shares of Common Stock and will
beneficially own % of the Common Stock after the offering.

(4) Includes 1,390,403 shares held by the Suechting Family Trust for which Mr.
Suechting and his wife, Jackie Suechting, serve as co-trustees and hold
joint voting and investment power.

(5) Represents shares subject to stock options exercisable on March 1, 1997 or
within 60 days thereafter.

(6) Represents shares subject to stock options exercisable on March 1, 1997 or
within 60 days thereafter.

(7) Represents shares subject to stock options exercisable on March 1, 1997 or
within 60 days thereafter.

(8) Represents shares subject to stock options exercisable on March 1, 1997 or
within 60 days thereafter.

(9) Includes 751,554 shares subject to stock options exercisable on March 1,
1997 or within 60 days thereafter.

53
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 20,000,000 shares of
Common Stock, $.01 par value, and 2,000,000 shares of Preferred Stock, $.01 par
value.

COMMON STOCK

As of February 22, 1997, there were 4,107,608 shares of Common Stock
outstanding held by three stockholders of record.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders, including the
election of directors, and do not have cumulative voting rights. Accordingly,
the holders of a majority of the shares of Common Stock entitled to vote in any
election of directors can elect all of the directors standing for election, if
they so choose. Subject to preferences that may be applicable to any then
outstanding Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared by the Board of Directors out
of funds legally available therefor. See "Dividend Policy." Upon a liquidation,
dissolution or winding up of the Company, the holders of Common Stock will be
entitled to share ratably in the net assets legally available for distribution
to stockholders after the payment of all debts and other liabilities of the
Company, subject to the prior rights of any Preferred Stock then outstanding.
Holders of Common Stock have no preemptive or conversion rights or other
subscription rights and there are no redemption or sinking funds provisions
applicable to the Common Stock. All outstanding shares of Common Stock are, and
the Common Stock to be outstanding upon completion of the Offering will be,
fully paid and nonassessable.

PREFERRED STOCK

The Company's Certificate of Incorporation authorizes 2,000,000 shares of
undesignated Preferred Stock, none of which is currently outstanding. The Board
of Directors has the authority, without further action by the stockholders, to
issue from time to time the Preferred Stock in one or more series and to fix the
number of shares, designations, preferences, powers, and relative,
participating, optional or other special rights and the qualifications or
restrictions thereof. The preferences, powers, rights and restrictions of
different series of Preferred Stock may differ with respect to dividend rates,
amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and other matters. The issuance of Preferred
Stock could reduce the amount of earnings and assets available for distribution
to holders of Common Stock or affect adversely the rights and powers, including
voting rights, of the holders of Common Stock, and may have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company has no present plan to issue any shares of Preferred Stock.

WARRANTS

The former stockholders of Overland currently hold warrants to purchase an
aggregate of 49,593 shares of Common Stock at an exercise price equal to the
initial public offering price. These warrants expire on October 25, 2001.

In consideration for financial advisory services provided to the Company in
the Overland acquisition, Ladenburg Thalmann & Co. Inc., a representative of the
Underwriters, received a warrant to purchase 74,390 shares of Common Stock at an
exercise price equal to 120% of the initial public offering price. This warrant
will become exercisable one year after the closing of the Offering, or upon a
change in control of the Company, a sale of all or substantially all of its
assets or the commencement of the liquidation or dissolution of the Company (in
which event the exercise price per share will be the par value of one share of
Common Stock). This warrant expires on the fifth anniversary of the closing of
the Offering.

REGISTRATION RIGHTS

After the Offering, the holders of warrants to purchase 123,983 shares of
Common Stock, or their permitted transferees, are, upon exercise of such
warrants, entitled to certain rights with respect to the

54
<PAGE>
registration of such shares under the Securities Act. If the Company proposes to
register any of its securities under the Securities Act either for its own
account or the account of any holders of securities exercising registration
rights, holders of shares registrable pursuant to registration rights are
entitled to notice of such registration and are entitled to include such
registrable shares therein, provided, among other conditions, that the
underwriters of any such offering have the right to limit the number of shares
included in such registration. However, such registration rights are not
triggered by a registration relating solely to an employee benefit plan or a
transaction pursuant to Rule 145 under the Securities Act, or a registration on
any registration form that does not permit secondary sales.

In connection with the Offering, the Company intends to enter into a
Registration Rights Agreement (the "Registration Rights Agreement") with the
Existing Stockholders. Pursuant to the Registration Rights Agreement, the
Existing Stockholders will have the right to require the Company to use its best
efforts to register under the Securities Act all or a portion of the issued and
outstanding Common Stock owned by the Existing Stockholders. Such demand rights
would be subject to the condition that the Company would not be required to
effect more than demand registrations. The Existing Stockholders will also
have the right to participate in equity offerings initiated by the Company,
subject to a reduction in the size of the offering on the advice of the managing
underwriter. The Existing Stockholders will pay all expenses relating to the
performance of, or compliance with, demand registration requests under the
Registration Rights Agreement, and the Company will pay all expenses relating to
the performance of, or compliance with, "piggy-back" registrations under the
Registration Rights Agreement. In either case, however, the Existing
Stockholders will be responsible for underwriters' discounts and selling
commissions with respect to the shares being sold pursuant to the agreement, and
the fees and expenses of their counsel in connection with such registration. The
Existing Stockholders' rights under the Registration Rights Agreement shall be
fully assignable.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

After the consummation of the offering, the Company will be subject to the
provisions of Section 203 of the Delaware Law, an anti-takeover law. In general,
this statute prohibits a publicly held Delaware corporation from engaging in a
business combination with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
A "business combination" includes a merger, asset sale or other transaction
resulting in financial benefit to the stockholder. An "interested stockholder"
is a person who, together with affiliates and associates, owns (or within three
years prior, did own) 15% or more of the corporation's voting stock.

The Company's Certificate of Incorporation requires that all stockholder
action be taken at a stockholders' meeting, and the Bylaws permit special
stockholders' meetings to be called only by the Board of Directors or by a
stockholder owning at least 15% of the outstanding Common Stock. The Bylaws also
provide that directors may only be removed for cause, and require advance
notification to the Company in order for a stockholder to nominate a director
for election or to propose other business at a stockholders' meeting. In
addition, the foregoing provisions of the Certificate of Incorporation may only
be amended or repealed by the holders of at least two-thirds of the voting power
of the then-outstanding shares of stock entitled to vote generally for the
election of directors voting together as a single class, and the foregoing Bylaw
provisions may only be repealed or amended by a two-thirds vote of the Board of
Directors or a two-thirds stockholder vote. The provisions described above,
together with the ability of the Board of Directors to issue Preferred Stock as
described under "--Preferred Stock," may have the effect of deterring a hostile
takeover or delaying a change in control or management of the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is .

55
<PAGE>
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 regarding the effect, if any,
that market sales of shares or the availability of shares for sale will have on
the market price prevailing from time to time. As described below, only a
limited number of shares will be available for sale shortly after the Offering
due to certain contractual and legal restrictions on resale. Nevertheless, sales
of substantial amounts of Common Stock of the Company in the public market after
the restrictions lapse could adversely affect the prevailing market price.

Upon completion of the Offering, the Company will have outstanding
shares of Common Stock. The shares of Common Stock being sold hereby will
be freely tradable (other than by an "affiliate" of the Company as such term is
defined in the Securities Act) without restriction or registration under the
Securities Act. All remaining shares were issued and sold by the Company in
private transactions ("Restricted Shares") and are eligible for public sale if
registered under the Securities Act or sold in accordance with Rule 144 or Rule
701 thereunder (as described below).

The Existing Stockholders, who collectively hold an aggregate of 4,107,608
shares of Common Stock, have agreed pursuant to certain agreements that they
will not sell any Common Stock owned by them without the prior written consent
of the Representatives of the Underwriters (the "Representatives") for a period
of 180 days from the date of this Prospectus (the "Lockup Period"). Following
the expiration of the Lockup Period, all such shares will be available for
resale, subject to compliance with Rule 144. In addition, certain of the
Company's executive officers and other employees, who hold stock options to
purchase 851,786 shares of Common Stock, have agreed that, should they exercise
such options, they will not sell any Common Stock owned by them during the
Lockup Period without the prior written consent of the Representatives.
Following the expiration of the Lockup Period, such 851,786 shares of Common
Stock issuable upon the exercise of options will be available for sale in the
public market subject to compliance with Rule 144 and Rule 701. See
"Underwriting."

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, an affiliate of the Company, or a holder of
Restricted Shares who owns beneficially shares that were not acquired from the
Company or an affiliate of the Company within the previous two years, would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the then outstanding shares of Common Stock
(approximately _____ shares immediately after the Offering, assuming no exercise
of the Underwriters' over-allotment option) or the average weekly trading volume
of the Common Stock during the four calendar weeks preceding the date on which
notice of the sale is filed with the Securities and Exchange Commission (the
"Commission"). Sales under Rule 144 are subject to certain requirements relating
to manner of sale, notice and availability of current public information about
the Company. However, a person (or persons whose shares are aggregated) who is
not deemed to have been an affiliate of the Company at any time during the 90
days immediately preceding the sale and who owns beneficially Restricted Shares
is entitled to sell such shares under Rule 144(k) without regard to the
limitations described above; provided that at least three years have elapsed
since the later of the date the shares were acquired from the Company or from an
affiliate of the Company. The foregoing is a summary of Rule 144 and is not
intended to be a complete description of it.

Subject to certain limitations on the aggregate offering price of a
transaction and other conditions, Rule 701 may be relied upon with respect to
the resale of securities originally purchased from the Company by its employees,
directors, officers, consultants or advisers prior to the closing of the
Offering, pursuant to written compensatory benefit plans or written contracts
relating to the compensation of such persons. In addition, the Commission has
indicated that Rule 701 will apply to stock options granted by the Company
before the Offering, along with the shares acquired upon exercise of such
options. Securities issued in reliance on Rule 701 are deemed to be Restricted
Shares and, beginning 90 days after the date of this Prospectus (unless subject
to the contractual restrictions described above), may be sold by persons other
than affiliates subject only to the manner of sale provisions of Rule 144 and by
affiliates under Rule 144 without compliance with its two-year minimum holding
period requirements.

56
<PAGE>
The Company intends to file one or more registration statements under the
Securities Act to register up to 905,735 shares of Common Stock reserved for
issuance pursuant to the Stock Option Plan. Each such registration statements
will become effective immediately upon filing. Accordingly, the resale in the
public market of such registered shares by non-affiliates will be permitted
without restriction under the Securities Act, unless such shares are subject to
vesting restrictions imposed by the Company or the contractual restrictions
described above.

In addition, after the Offering, the holders of warrants to purchase
approximately 123,983 shares of Common Stock will be entitled to certain rights
with respect to the registration of such shares under the Securities Act.
Registration of such shares under the Securities Act would result in such shares
becoming freely tradable without restriction under the Securities Act (except
for shares purchased by affiliates of the Company) immediately upon the
effectiveness of such registration. Pursuant to an agreement with the Company,
the Existing Stockholders will also be entitled to certain rights with respect
to the registration of shares under the Securities Act. Upon registration under
the Securities Act, such shares would become available for resale, subject to
compliance with Rule 144. See "Description of Capital Stock--Registration
Rights."

The Commission has recently adopted amendments to Rule 144 that will reduce
the initial Rule 144 holding period to one year and the Rule 144(k) holding
period to two years, effective in April 1997. These amendments to Rule 144 will
materially shorten the time before certain shares of Common Stock become
eligible for resale.

57
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, a copy of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, the Underwriters named below have, severally and not
jointly, agreed, through Ladenburg Thalmann & Co. Inc. and A.G. Edwards & Sons,
Inc. (the "Representatives"), the representatives of the Underwriters, to
purchase from the Company and the Selling Stockholders and the Company and the
Selling Stockholders have agreed to sell to the Underwriters, the aggregate
number of shares set forth opposite their respective names:

<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITERS SHARES
- ------------------------------------------------------------------------------------------- ----------
<S> <C>
Ladenburg Thalmann & Co. Inc...............................................................
A.G. Edwards & Sons, Inc...................................................................

----------
Total................................................................................
----------
----------
</TABLE>

The Underwriters are committed to take and pay for all of the shares of
Common Stock offered hereby, if any are purchased.

The Underwriters have advised the Company that they propose to offer all or
part of the Common Stock offered hereby directly to the public initially at the
price set forth on the cover page of this Prospectus, that they may offer shares
to certain dealers at such price less a concession of not more than $ per
share, and that the Underwriters may allow, and such dealers may reallow, a
concession of not more than $ per share to certain other dealers. After
commencement of the Offering, the price to the public and the concessions may be
changed.

The Selling Stockholders have granted the several Underwriters an option,
exercisable within 30 days after the date of this Prospectus, to purchase up to
an additional shares of Common Stock at the same price per share as the
initial shares to be purchased by the Underwriters. The Underwriters may
exercise this option only to cover over-allotments, if any. To the extent that
the Underwriters exercise this option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase the same percentage
thereof as the percentage of the initial shares to be purchased by that
Underwriter.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.

The Company and its officers, directors and present stockholders and
optionholders have agreed not to sell or otherwise dispose of any equity
securities of the Company or any securities convertible into or exchangeable
for, or any rights to purchase or acquire, equity securities of the Company,
subject to certain exceptions, for a period of 180 days after the date of this
Prospectus without the prior written consent of Ladenburg Thalmann & Co. Inc.,
on behalf of the Representatives.

The Representatives have informed the Company that the Underwriters do not
expect sales to discretionary accounts to exceed 5% of the total number of
shares offered hereby and the Underwriters do not intend to confirm sales of
shares to any account over which they exercise discretionary authority.

The Underwriters have reserved for sale, at the initial public offering
price, up to 5% of the Common Stock offered hereby for employees and directors
of the Company and certain other individuals who have expressed an interest in
purchasing such shares of Common Stock in the Offering. The number of shares
available for sale to the general public will be reduced to the extent such
persons purchase such reserved shares. Any reserved shares not so purchased will
be offered by the Underwriters to the general public on the same basis as other
shares offered hereby. Such consent may be given without any public notice.

58
<PAGE>
Prior to the Offering, there has been no public market for the Common Stock.
The proposed initial public offering price will be determined by negotiations
among the Representatives, the Company and the Selling Stockholders. Among the
factors to be considered in such negotiations will be the Company's results of
operations and financial condition, the prospects for the Company and for the
industry in which the Company operates, the Company's capital structure, and the
general condition of the securities markets.

The Company has issued to Ladenburg Thalmann & Co. Inc. warrants (the
"Warrants") to purchase 74,390 shares of Common Stock. The Warrants were issued
in consideration for financial advisory services provided to the Company in
connection with the Overland acquisition. The Warrants are exercisable for a
period of four years commencing one year after the closing of the Offering, at a
price equal to 120% of the initial public offering price, subject to adjustment
in certain events. The Warrants contain certain registration rights relating to
the shares issuable thereunder. For the life of the Warrants, Ladenburg Thalmann
& Co. Inc. will have the opportunity to profit from a rise in the market price
for the Common Stock. See "Description of Capital Stock-- Warrants."

In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M under the Securities Exchange Act of 1934 pursuant
to which such persons may bid for or purchase Common Stock for the purpose of
stabilizing its market price. The Underwriters also may create a short position
for the account of the Underwriters by selling more Common Stock in connection
with the Offering than they are committed to purchase from the Company and the
Selling Stockholders, and in such case may purchase Common Stock in the open
market following completion of the Offering to cover all or a portion of such
shares of Common Stock or may exercise the Underwriters' over-allotment option
referred to above. In addition, Ladenburg Thalmann & Co. Inc., on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements with the
Underwriters whereby it may reclaim from an Underwriter (or dealer participating
in the Offering), for the account of the other Underwriters, the selling
concession with respect to Common Stock that is distributed in the Offering but
subsequently purchased for the account of the Underwriters in the open market.
Any of the transactions described in this paragraph may result in the
maintenance of the price of the Common Stock at a level above that which might
otherwise prevail in the open market. None of the transactions described in this
paragraph is required, and, if they are undertaken, they may be discontinued at
any time.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Pillsbury Madison & Sutro
LLP, San Francisco, California, and for the Underwriters by Fulbright & Jaworski
L.L.P., New York, New York.

EXPERTS

The consolidated financial statements of the Company as of December 30, 1995
and December 28, 1996 and for the years then ended included in this Prospectus
have been audited by Coopers & Lybrand L.L.P., independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report of Coopers & Lybrand L.L.P. given upon the authority
of that firm as experts in accounting and auditing. The financial statements of
the Company for the year ended December 31, 1994 included in this Prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as set forth
in their report thereon appearing elsewhere herein, and are included in reliance
upon such report of Deloitte & Touche LLP given upon the authority of that firm
as experts in accounting and auditing.

The financial statements of Overland Management Corporation as of August 3,
1996 and for the year then ended included in this Prospectus have been audited
by KPMG Peat Marwick LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein, and are included in reliance upon

59
<PAGE>
such report of KPMG Peat Marwick LLP given upon the authority of that firm as
experts in accounting and auditing. The financial statements of Overland
Management Corporation as of July 29, 1995 and for each of the years in the
two-year period then ended included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein, and are included in reliance upon the report of Deloitte & Touche LLP
given upon the authority of that firm as experts in accounting and auditing.

CHANGE IN INDEPENDENT ACCOUNTANTS

Effective January 15, 1996, Coopers & Lybrand L.L.P. was engaged as the
Company's principal independent auditors, replacing Deloitte & Touche LLP
("Deloitte"). The decision to change independent accountants was approved by the
Company's Board of Directors. In the period from December 26, 1993 through
January 15, 1996, Deloitte issued no audit report which was qualified or
modified as to uncertainty, audit scope or accounting principles, or which
contained adverse opinions or disclaimers of opinion on any of the Company's
financial statements, and there were no disagreements with Deloitte on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures. Prior to January 15, 1996, the Company had not
consulted with Coopers & Lybrand L.L.P. on items which involved the Company's
accounting principles, the application of accounting principles to a specified
transaction, or the form of audit opinion to be rendered on the Company's
financial statements.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act with respect to
the Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock offered hereby, reference is hereby made to such Registration
Statement, exhibits and schedules. Statements contained in this Prospectus
regarding the contents of any contract or other document are not necessarily
complete; with respect to each such contract or document filed as an exhibit to
the Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. A copy of the Registration
Statement, including the exhibits and schedules thereto, may be inspected
without charge at the principal office of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of such material may be obtained from
such office upon payment of the fees prescribed by the Commission. Such
documents may also be accessed electronically at the Commission's home page on
the Internet at http://www.sec.gov.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by independent certified public
accountants and quarterly reports containing unaudited financial information for
the first three quarters of each fiscal year.

60
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
TRACK 'N TRAIL

Reports of Independent Auditors............................................................................ F-2

Consolidated Balance Sheets as of December 30, 1995, December 28, 1996 and Pro Forma December 28, 1996
(unaudited).............................................................................................. F-4

Consolidated Statements of Operations for the fiscal years ended December 31, 1994, December 30, 1995 and
December 28, 1996........................................................................................ F-5

Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 1994, December
30, 1995 and December 28, 1996........................................................................... F-6

Consolidated Statements of Cash Flows for the years ended December 31, 1994, December 30, 1995 and December
28, 1996................................................................................................. F-7

Notes to Consolidated Financial Statements................................................................. F-8

OVERLAND MANAGEMENT CORPORATION

Reports of Independent Auditors............................................................................ F-22

Balance Sheets as of July 29, 1995, August 3, 1996 and October 25, 1996 (unaudited)........................ F-24

Statements of Operations for the fiscal years ended July 30, 1994, July 29, 1995 and August 3, 1996 and for
the 12 week periods ended October 21, 1995 and October 25, 1996 (unaudited).............................. F-25

Statements of Changes in Stockholders' Equity for the fiscal years ended July 30, 1994, July 29, 1995 and
August 3, 1996 and for the 12 week periods ended October 21, 1995 and October 25, 1996 (unaudited)....... F-26

Statements of Cash Flows for the fiscal years ended July 30, 1994, July 29, 1995 and August 3, 1996 and for
the 12 week periods ended October 21, 1995 and October 25, 1996 (unaudited).............................. F-27

Notes to Financial Statements.............................................................................. F-28
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
Track 'n Trail
El Dorado Hills, California

We have audited the accompanying consolidated balance sheets of Track 'n
Trail and subsidiaries as of December 30, 1995 and December 28, 1996, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the fifty-two week periods 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 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 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Track 'n Trail
and subsidiaries as of December 30, 1995 and December 28, 1996, and the
consolidated results of their operations and their cash flows for each of the
fifty-two week periods then ended in conformity with generally accepted
accounting principles.

Sacramento, California
March 12, 1997

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

The accompanying financial statements give effect to changes in
stockholders' equity, including an increase of approximately 100.6 to 1 in the
number of shares outstanding, as the result of a planned Reorganization of the
Company as described in Note 14 as a newly formed holding company incorporated
in Delaware with the predecessor company and its subsidiary as separate
subsidiaries of the newly formed holding company. The above opinion is in the
form which will be signed by Coopers & Lybrand L.L.P. upon completion of such
Reorganization and assuming that from March 12, 1997 to the date of completion
of such Reorganization, no other material events have occurred that would affect
the accompanying financial statements or require disclosure therein.

COOPERS & LYBRAND L.L.P.

Sacramento, California
March 12, 1997

F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Track 'n Trail
El Dorado Hills, California

We have audited the accompanying statements of operations, changes in
stockholders' equity, and cash flows of Track 'n Trail ("the Company") for the
fifty-three week period ended December 31, 1994. 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, such 1994 financial statements present fairly, in all material
respects, the results of Track 'n Trail's operations and its cash flows for the
fifty-three week period ended December 31, 1994 in conformity with generally
accepted accounting principles.

Sacramento, California
March 13, 1995
------------------------

The accompanying financial statements of Track 'n Trail give effect to changes
in stockholders' equity, including an increase of approximately 100.6 to 1 in
the number of shares outstanding, as the result of a planned reorganization of
the Company as described in Note 14 to the financial statements. The above
opinion is in the form which will be signed by Deloitte & Touche LLP upon
completion of such Reorganization and assuming that from March 12, 1997 to the
date of completion of such Reorganization, no other material events have
occurred that would affect the accompanying 1994 financial statements of Track
'n Trail or require disclosure therein.

DELOITTE & TOUCHE LLP

Sacramento, California
March 12, 1997

F-3
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996
------------- ------------- PRO FORMA
DECEMBER 28,
1996
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS

Current assets:
Cash.............................................................. $ 489,458 $ 976,571 $ 976,571
Accounts receivable............................................... 401,960 1,010,151 1,010,151
Inventories....................................................... 11,949,237 19,867,764 19,867,764
Prepaid expenses.................................................. 126,347 212,461 212,461
Deferred income taxes............................................. 44,000 49,225 49,225
------------- ------------- -------------
Total current assets.......................................... 13,011,002 22,116,172 22,116,172

Fixed assets, net................................................. 4,039,491 6,582,102 6,582,102
Goodwill, net..................................................... -- 2,690,832 2,690,832
Deferred income taxes............................................. -- 468,890 468,890
------------- ------------- -------------
$ 17,050,493 $ 31,857,996 $ 31,857,996
------------- ------------- -------------
------------- ------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Revolving line of credit.......................................... $ 450,000 $ 680,000 $ 7,050,000
Current maturities of long-term debt.............................. 701,251 3,060,480 3,060,480
Accounts payable.................................................. 3,730,391 5,835,186 5,835,186
Accrued payroll and bonuses....................................... 377,056 1,032,221 1,032,221
Sales tax payable................................................. 540,296 751,788 751,788
Income taxes payable.............................................. -- 476,115 476,115
Accrued expenses and other liabilities............................ 501,866 850,753 850,753
------------- ------------- -------------
Total current liabilities..................................... 6,300,860 12,686,543 19,056,543

Deferred rent....................................................... 934,564 1,395,046 1,395,046
Stock appreciation rights........................................... 584,263 -- --
Long-term debt, net of current maturities........................... 1,582,799 7,025,017 7,025,017
------------- ------------- -------------
Total liabilities............................................. 9,402,486 21,106,606 27,476,606
------------- ------------- -------------
Minority interest in consolidated subsidiary........................ -- 105,151 105,151
------------- ------------- -------------
Commitments and contingencies (Notes 5, 7, 8 and 15).

Stockholders' Equity:
Preferred stock, $0.01 par value; 2,000,000 shares authorized, no
shares issued or outstanding.................................... -- -- --
Common stock, $0.01 par value; 20,000,000 shares authorized,
4,107,608 shares issued and outstanding......................... 41,076 41,076 41,076
Additional paid-in capital........................................ 23,924 723,738 723,738
Retained earnings................................................. 8,651,792 9,881,425 3,511,425
Less notes receivable from related parties........................ (1,068,785) -- --
------------- ------------- -------------
Total stockholders' equity........................................ 7,648,007 10,646,239 4,276,239
------------- ------------- -------------
$ 17,050,493 $ 31,857,996 $ 31,857,996
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
(53 WEEKS) (52 WEEKS) (52 WEEKS)
------------- ------------- -------------
<S> <C> <C> <C>
Net sales........................................................... $ 48,164,675 $ 50,691,164 $ 66,232,884
Cost of sales....................................................... 25,079,211 26,191,741 34,062,252
------------- ------------- -------------
Gross profit.................................................. 23,085,464 24,499,423 32,170,632
------------- ------------- -------------
Operating expenses:
Selling and marketing............................................. 14,975,365 16,852,124 21,059,485
Administrative and distribution................................... 4,934,682 4,826,290 5,508,333
------------- ------------- -------------
Total operating expenses...................................... 19,910,047 21,678,414 26,567,818
------------- ------------- -------------
Operating income.............................................. 3,175,417 2,821,009 5,602,814

Other (income) expense:
Interest.......................................................... 324,067 434,530 670,118
Other, net........................................................ 37,633 (40,428) (24,467)
------------- ------------- -------------
Income before provision for income taxes and minority
interest.................................................... 2,813,717 2,426,907 4,957,163
Provision for income taxes.......................................... 67,000 40,838 487,990
------------- ------------- -------------
Income before minority interests.............................. 2,746,717 2,386,069 4,469,173
Minority interest in net income of consolidated subsidiaries........ -- -- 105,151
------------- ------------- -------------
Net income.................................................... $ 2,746,717 $ 2,386,069 $ 4,364,022
------------- ------------- -------------
------------- ------------- -------------
Pro Forma Income Data (unaudited):
Historical income before taxes and minority interest.............. $ 2,813,717 $ 2,426,907 $ 4,957,163
Pro forma provision for income taxes (Note 9)..................... 1,125,487 970,763 1,982,865
------------- ------------- -------------
Pro forma net income before minority interest..................... 1,688,230 1,456,144 2,974,298
Minority interest................................................. -- -- 105,151
------------- ------------- -------------
Pro forma net income.............................................. $ 1,688,230 $ 1,456,144 $ 2,869,147
------------- ------------- -------------
------------- ------------- -------------
Pro forma net income per common and common equivalent share....... $ 0.54
-------------
-------------
Pro forma weighted average number of shares of common stock and
common stock equivalents........................................ 5,293,885
-------------
-------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
NOTES
COMMON STOCK ADDITIONAL RECEIVABLE
--------------------- PAID-IN FROM RELATED RETAINED
NUMBER AMOUNT CAPITAL PARTIES EARNINGS TOTAL
---------- --------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 26, 1993.................... 4,107,608 $ 41,076 $ 23,924 $ (29,437) $ 5,585,259 $ 5,620,822
Cash advances to stockholders and related
party..................................... -- -- -- (328,749) -- (328,749)
Distributions to stockholders............... -- -- -- -- (1,689,854) (1,689,854)
Net income.................................. -- -- -- -- 2,746,717 2,746,717
---------- --------- ----------- ------------ ------------ ------------
Balance, December 31, 1994.................... 4,107,608 41,076 23,924 (358,186) 6,642,122 6,348,936
Cash advances to stockholders and related
party..................................... -- -- -- (710,599) -- (710,599)
Distributions to stockholders............... -- -- -- -- (376,399) (376,399)
Net income.................................. -- -- -- -- 2,386,069 2,386,069
---------- --------- ----------- ------------ ------------ ------------
Balance, December 30, 1995.................... 4,107,608 41,076 23,924 (1,068,785) 8,651,792 7,648,007
Cash advances to stockholders............... -- -- -- (591,215) -- (591,215)
Distribution of notes to stockholders....... -- -- -- 1,660,000 (1,660,000) --
Distributions to stockholders............... -- -- -- -- (1,474,389) (1,474,389)
Exchange of stock appreciation rights for
stock option grants....................... -- -- 596,424 -- -- 596,424
Compensation recorded under stock option
plans..................................... -- -- 103,390 -- -- 103,390
Net income.................................. -- -- -- -- 4,364,022 4,364,022
---------- --------- ----------- ------------ ------------ ------------
Balance, December 28, 1996.................... 4,107,608 $ 41,076 $ 723,738 $ -- $ 9,881,425 $ 10,646,239
---------- --------- ----------- ------------ ------------ ------------
---------- --------- ----------- ------------ ------------ ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
(53 WEEKS) (52 WEEKS) (52 WEEKS)
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income..................................................... $ 2,746,717 $ 2,386,069 $ 4,364,022
Adjustments to reconcile to cash provided by operating
activities:
Depreciation and amortization................................ 763,398 915,956 1,120,867
Minority interest............................................ -- -- 105,151
Loss on disposal of fixed assets............................. 24,744 3,490 --
Compensation recorded in connection with stock options
plans...................................................... -- -- 103,390
Deferred income taxes........................................ (33,000) 22,000 81,454
Cash provided by (used in) changes in operating assets and
liabilities, net of effects of business combination:
Accounts receivable........................................ 269,623 (72,762) (375,313)
Inventories................................................ (495,621) (612,478) (1,007,933)
Prepaid expenses........................................... (30,938) (10,304) 87,480
Other assets............................................... 87,212 -- --
Accounts payable and other accrued liabilities............. (73,509) 452,784 280,868
Income taxes payable....................................... -- -- 290,964
Stock appreciation rights.................................. 307,908 195,797 12,161
Deferred rent.............................................. 128,973 86,448 41,761
-------------- -------------- --------------
Cash provided by operating activities...................... 3,695,507 3,367,000 5,104,872
-------------- -------------- --------------
Cash flows from investing activities:
Purchases of fixed assets...................................... (1,320,114) (1,604,299) (1,721,599)
Cash paid for business combination............................. -- -- (239,599)
-------------- -------------- --------------
Cash used for investing activities......................... (1,320,114) (1,604,299) (1,961,198)
-------------- -------------- --------------
Cash flows from financing activities:
Bank line of credit:
Borrowings................................................... 15,035,000 20,906,000 31,154,000
Repayments................................................... (15,465,000) (20,626,000) (33,483,961)
Long-term debt:
Borrowings................................................... 16,000 766,674 2,486,605
Repayments................................................... (823,281) (708,569) (747,601)
Advances to related parties under notes receivable............. (328,749) (710,599) (591,215)
Payment of distributions to stockholders....................... (1,293,354) (1,328,399) (1,474,389)
-------------- -------------- --------------
Cash used for financing activities......................... (2,859,384) (1,700,893) (2,656,561)
-------------- -------------- --------------
Increase (decrease) in cash................................ (483,991) 61,808 487,113

Cash, beginning of year.......................................... 911,641 427,650 489,458
-------------- -------------- --------------
Cash, end of year................................................ $ 427,650 $ 489,458 $ 976,571
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-7
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES:

BACKGROUND

Track 'n Trail, a Delaware corporation (Company), is the successor to
businesses formerly conducted by Track 'n Trail, a California corporation (Old
Track 'n Trail), and its subsidiary, Overland Management Corporation (Overland).
As described in Note 14, Old Track 'n Trail's Board of Directors intends to
approve a reorganization of Old Track 'n Trail (the Reorganization) in which the
Old Track 'n Trail stockholders will exchange 100% of their Old Track 'N Trail
common stock for 100% of the stock of the Company. The Reorganization, which
will be accounted for in a manner similar to a pooling-of-interests, will be
accomplished in an exchange of one share of Old Track 'n Trail common stock for
approximately 100.6 shares of the Company's common stock. In connection with the
Reorganization, all of the common stock of Overland will be transferred to the
Company in the form of a dividend resulting in the predecessor businesses being
wholly owned subsidiaries of the Company. The accompanying financial statements
reflect, for all periods presented, the capital structure and number of shares
that will be outstanding as a result of the Reorganization.

The Company is a retailer of footwear and related accessories. As of
December 28, 1996, the Company operated 128 stores in 23 states under the Track
'n Trail and Overland Trading names concentrated in California, the Midwest and
the Northeast. Each store offers a wide range of rugged walking and fashion
casual shoes, sandals and boots. The Company ends its fiscal year on the last
Saturday in December.

The Company operates in a single business segment of retailing footwear and
related accessories. The Company acquires its shoes from a number of
manufacturers; however, during the fiscal year ended December 28, 1996, 39.7% of
the Company's net sales was of products purchased from three manufacturers.

PRINCIPLES OF CONSOLIDATION

The financial statements include the consolidated accounts of the Company
and its two subsidiaries, Old Track 'n Trail and Overland, which became a 79.0%
owned subsidiary on October 25, 1996. All intercompany transactions and balances
have been eliminated in consolidation. Effective January 1, 1997, the Company
acquired the remaining 21.0% interest in Overland (Note 13).

INVENTORIES

Inventories are stated at lower of average cost or market using the retail
inventory method.

FIXED ASSETS

Fixed assets are stated at cost and depreciated on the straight-line basis
over estimated useful lives ranging from three to ten years; the cost of
leasehold improvements are amortized over the shorter of the lease term or
useful life of the related assets. When assets are retired or otherwise disposed
of, the cost and related accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in income for the period. The cost
of maintenance and repairs is charged to income as incurred; significant
renewals and betterments are capitalized.

GOODWILL

Goodwill represents the excess of the purchase price over the fair value of
the net assets of acquired companies and is being amortized using the
straight-line method over 20 years.

F-8
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
MINORITY INTEREST

Minority interest represents the minority stockholders' proportionate share
of the equity of Overland, including their share of Overland's net income during
the period from October 25, 1996 to December 28, 1996. At December 28, 1996, the
Company owned 79.0% of the common stock of Overland and the Company's
stockholders owned the 21.0% minority interest. Effective January 1, 1997, the
Company acquired the remaining 21.0% interest in Overland (Note 13).

INCOME TAXES

Commencing June 28, 1992 and until the Reorganization, Old Track 'n Trail
had elected S corporation status for federal and state income taxes. Its 79.0%
owned subsidiary, Overland, was a C corporation for federal and state income tax
purposes. Under S corporation status, Old Track 'n Trail's income, other than
that of Overland, was taxable to the stockholders personally, with only minimal
state income taxes charged to Old Track 'n Trail.

The Company accounts for the federal and state income taxes of Overland and
the state income taxes of the Company, under the provisions of Statement of
Financial Accounting Standard (SFAS) No. 109, ACCOUNTING FOR INCOME TAXES, using
the liability method. The estimated future tax effect of differences between the
Company's basis in assets and liabilities for tax and accounting purposes is
accounted for as deferred taxes. In accordance with the provisions of SFAS No.
109, a valuation allowance would be established to reduce deferred tax assets if
it is more likely than not that all, or some portion, of such deferred tax
assets will not be realized. No allowance against deferred tax assets was
provided by the Company as of December 28, 1996.

STOCKHOLDER DISTRIBUTIONS

Old Track 'n Trail has historically provided distributions of a portion of
its earnings to the stockholders, as necessary, to satisfy their income tax
requirements as well as for other purposes.

STOCK OPTIONS

As permitted by SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, the
Company has elected to measure and record compensation costs relative to stock
option plans in accordance with the provisions of Accounting Principles Board
(APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and make pro
forma disclosure of net income and net income per common and common equivalent
share as if the fair value based method of valuing stock options had been
applied.

RENT EXPENSE

Rent expense is generally recognized on the straight-line basis over the
respective lease term. Rents accrued but not contractually due are reported as
deferred rent. Contingent rental expense, based on store sales, is recognized
when incurred.

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

F-9
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates

RECLASSIFICATIONS

Certain reclassifications were made to the 1994 and 1995 financial
statements to conform to the 1996 presentation.

PRO FORMA INFORMATION (UNAUDITED)

The pro forma balance sheet reflects, as of December 28, 1996, adjustments
for distributions to stockholders that management expects will be paid or
declared between December 28, 1996 and the date of the Offering assuming such
distributions were made from borrowings available under the Company's revolving
line of credit (Note 14).

Pro forma net income (unaudited) has been computed to include a provision
for income taxes at an effective tax rate of 40.0% representing management's
estimate of the effective tax rate as if the Reorganization had been in effect
and the Company had been a C corporation for all periods presented.

Pro forma net income per common and common equivalent share (unaudited) has
been computed by dividing pro forma net income by the weighted average number of
common and common equivalent shares outstanding (using the treasury stock method
and an assumed initial public offering price) after giving retroactive effect to
(i) a change in the number of outstanding shares effected by the Reorganization
(Note 14), (ii) those common stock options issued during the twelve month period
preceding the Company's planned initial public offering (the Offering) which,
under the treasury stock method, had a dilutive effect and (iii) the number of
shares of common stock to be sold in the Offering, at an assumed offering price,
the proceeds of which would be necessary to pay the excess of S corporation
distributions during fiscal 1996 and thereafter until the Reorganization over
earnings during fiscal 1996. Warrants, which were issued during fiscal 1996,
were not dilutive.

Historical net income per share information is not presented on the face of
the consolidated statement of operations as such information is not meaningful.
Historical primary and fully diluted net income per common and common equivalent
share were $0.58, $0.50 and $0.92 for the 1994, 1995 and 1996 fiscal years,
respectively, with 4,768,848 as the weighted average common and common
equivalent shares outstanding for each period.

2. CONCENTRATION OF CREDIT RISK:

The Company deposits its excess cash with major financial institutions. As
of December 28, 1996, the Company had $2,614,000 on deposit (inclusive of
outstanding checks) in excess of the federally insured level.

F-10
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. FIXED ASSETS:

Fixed assets consist of:

<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996
------------- -------------
<S> <C> <C>
Leasehold improvements.......................................... $ 4,952,835 $ 7,236,478
Furniture, fixtures and equipment............................... 2,805,688 3,671,082
Vehicles........................................................ 8,055 16,000
------------- -------------
7,766,578 10,923,560
Less accumulated depreciation................................... (3,727,087) (4,341,458)
------------- -------------
Fixed assets, net............................................... $ 4,039,491 $ 6,582,102
------------- -------------
------------- -------------
</TABLE>

Depreciation expense for fiscal years 1994, 1995 and 1996 was $763,000,
$916,000 and $1,098,000, respectively.

4. REVOLVING LINE OF CREDIT AND LONG-TERM DEBT:

The Company has a revolving loan agreement (Revolving Loan Agreement) with a
bank which includes a $7,100,000 revolving line of credit, a term loan of which
$2,700,000 is outstanding at December 28, 1996, and a letter of credit facility
for up to an additional $800,000. Maximum aggregate borrowings under the
Revolving Loan Agreement, including outstanding letters of credit (of which
$389,000 were issued at December 28, 1996) and the term loan are limited to a
percentage of eligible inventory held by the Company. Available additional
borrowings under the Revolving Loan Agreement amounted to approximately
$6,319,000 at December 28, 1996. Borrowings under the Revolving Loan Agreement
are collateralized by substantially all the Company's assets and are guaranteed
by the Company's stockholders.

Interest accrues on the revolving line of credit at the bank's prime rate
(8.25% at December 28, 1996) plus 0.5%. Interest is payable monthly, and the
outstanding principal is due on the earlier of June 30, 1997, or the closing of
the Offering. The weighted average interest rates for fiscal years 1994, 1995
and 1996 were 8.05%, 9.40% and 8.77%, respectively.

The Revolving Loan Agreement requires the Company to meet certain financial
covenants including minimum financial ratios and limits on loans to stockholders
and expenditures to acquire fixed or capital assets. At December 28, 1996, the
Company had complied with such covenants.

F-11
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. REVOLVING LINE OF CREDIT AND LONG-TERM DEBT: (CONTINUED)
Long-term debt consists of:

<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996
------------ ------------
<S> <C> <C>
Bank term loan under Revolving Loan Agreement, interest at 8.75%, due in monthly
installments of $50,000 plus interest, balance due the earlier of June 1997 or or an
initial public offering............................................................. $1,933,333 $2,700,000
Subordinated promissory note, interest at 10% until October 25, 1997 and 12%
thereafter, without collateral due the earlier of June 30, 1998 or an initial public
offering............................................................................ -- 3,500,000
Subordinated promissory notes, interest at 10% until October 25, 1997, 12% on October
25, 1997 and thereafter, without collateral, due the earlier of June 30, 1998 or an
initial public offering............................................................. -- 2,493,673
Term note, interest at 30 day commercial paper rate (5.55% at December 28, 1996) plus
2.95% collateralized by leasehold improvements, due the earlier of 2001 or
acceleration of any other indebtedness.............................................. -- 966,667
Auto loan, interest at 12.36%, collateralized by a vehicle, maturing February 2000... -- 9,719
Auto loan, interest at 10.5%, collateralized by a vehicle, maturing June 2001........ -- 10,578
Construction notes to store lessors, interest at 12%, without collateral, maturing at
various dates throughout 1998....................................................... -- 33,027
Bank notes, interest at 10.59%, collateralized by leasehold improvements, due 1996... 16,281 --
Construction notes to store lessors, interest ranging from 10% to 12%, without
collateral, maturing at various dates through 2000.................................. 262,050 111,174
Construction note to store lessor, federal funds rate plus 3.30% (not to be less than
6%), collateralized by leasehold improvements, due 1998............................. 50,511 27,198
Promissory note, interest at 9.36%, collateralized by leasehold improvements, due
2000................................................................................ -- 219,086
Construction note to store lessor, prime plus 1% (not to exceed 11%), collateralized
by leasehold improvements, due 1998................................................. 21,875 14,375
------------ ------------
Total............................................................................ 2,284,050 10,085,497
Less current portion............................................................. (701,251) (3,060,480)
------------ ------------
Long-term portion................................................................ $1,582,799 $7,025,017
------------ ------------
------------ ------------
</TABLE>

Scheduled maturities of long-term debt at December 28, 1996, without giving
effect to acceleration upon the Offering, are as follows:

<TABLE>
<S> <C>
1997........................................................... $3,060,480
1998........................................................... 6,327,618
1999........................................................... 290,124
2000........................................................... 238,958
2001........................................................... 168,317
----------
Total...................................................... $10,085,497
----------
----------
</TABLE>

F-12
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. STOCK INCENTIVE PLANS:

STOCK APPRECIATION RIGHTS

Until canceled on July 1, 1996, the Company had granted stock appreciation
rights to certain key employees, which were measured and were vesting over the
period from 1992 to 1997. Under the agreements, the employees were to receive
certain percentages of appreciation of the Company's capital stock during the
measurement period based on agreed-upon appreciation measurement methodologies.
Payment was to be made in five equal annual installments following the earlier
of June 1, 2007, sale of 50% or more of the Company's outstanding stock or the
employees' death, retirement, disability or termination of employment with the
Company. Compensation expense was accrued over the term of the agreements for
the cost of the stock appreciation rights.

The stock appreciation rights were canceled on July 1, 1996, in exchange for
grants of nonqualified options under the Company's 1996 Stock Option Plan, as
described below. The accrued liability at the date of cancellation in connection
with compensation previously recognized under the stock appreciation rights was
offset against total compensation inherent in the nonqualified stock options
granted.

STOCK OPTION PLAN

In June 1996, the Company's stockholders approved the adoption of the 1996
Stock Option Plan (Plan) which provides for the granting of up to 905,735
options to purchase common shares to employees. Options granted under the Plan
may be incentive stock options or nonqualified stock options. The exercise price
and vesting term of the options is to be determined by a committee of the Board
of Directors at the time of grant. The vesting term for incentive and
nonqualified options cannot exceed ten years (five years for options granted to
stockholders who own 10% or more of the total voting power of all classes of the
Company's common stock at the date of the grant). The exercise price of
incentive stock options cannot be less than fair market value of a share of
common stock (110% of fair market value for options granted to stockholders who
own 10% or more of the total voting power of all classes of the Company's common
stock at the date of the grant).

The following is a summary of the activity in stock options granted during
the fiscal year ended December 28, 1996:

<TABLE>
<CAPTION>
INCENTIVE STOCK NONQUALIFIED STOCK
OPTIONS OPTIONS
---------------------- ----------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Balance as of December 31, 1995............... -- $ -- -- $ --
Granted....................................... 501,168 4.00 350,618 0.01
--------- ----- --------- -----
Balance as of December 28, 1996............... 501,168 4.00 350,618 $ 0.01
--------- ----- --------- -----
--------- ----- --------- -----
Options exercisable as of December 28, 1996... 100,228 $ 4.00 212,383 $ 0.01
--------- ----- --------- -----
--------- ----- --------- -----
</TABLE>

The incentive stock options vest pro rata on December 15 of each of five
years commencing December 15, 1996, and have an exercise term of ten years after
the date of grant. In the event of a public offering or sale of the Company, the
incentive stock options fully vest and are exercisable. No compensation resulted
from the grant of incentive stock options in fiscal 1996.

F-13
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. STOCK INCENTIVE PLANS: (CONTINUED)
The nonqualified stock options partially vested upon grant (177,825 shares)
and the balance vest pro rata on each December 15 for the five years commencing
December 15, 1996, and have an exercise term of ten years after the date of
grant. In the event of a public offering or sale of the Company, the
nonqualified stock options vest and become exercisable in full. The excess of
the fair value of common stock at the date of the grant (determined by
appraisal) over the exercise price of the nonqualified stock options, net of the
liability recorded in connection with stock appreciation rights canceled in
exchange for the nonqualified stock options (a net amount of 170,830),
represents the per share compensation of the nonqualified stock options that is
being recorded as compensation and as an increase in additional paid-in capital
when the stock options vest. An increase in additional paid-in capital at the
date of grant was recorded for the liability under the stock appreciation rights
that were eliminated upon exchange for the nonqualified stock options.

The weighted-average, grant-date fair value, computed in accordance with
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, of all options granted
during 1996, net of the liability recorded in connection with stock appreciation
rights canceled in exchange for the nonqualified stock options, was $170,830.
The weighted-average, grant-date fair value was estimated assuming a risk-free
interest rate of 6.49%, an expected life of five years, no expected volatility
as the Company has no trading record and no expected dividends in excess of
those necessary to provide Old Track 'n Trail's stockholders funds with which to
pay their income taxes on S corporation income of the Company.

Compensation expense recognized for stock compensation awards, including
stock appreciation rights, amounted to $308,000, $196,000 and $116,000 during
the 1994, 1995 and 1996 fiscal years, respectively.

Pro forma results of operations, computed to assume the provisions of SFAS
No. 123 had been adopted, for fiscal year 1996 would have been the same as the
historical results of operations, as presented.:

6. NOTES RECEIVABLE FROM RELATED PARTIES:

Notes receivable from related parties at December 30, 1995, consisted of:

<TABLE>
<S> <C>
Stockholder notes, interest at prime (8.5% at December 30, 1995)
plus 1.75%, principal and interest due on demand............... $1,036,322

Related party note, interest at prime (8.5% at December 30,
1995) plus 1.25%, principal and interest due on demand......... 32,463
---------
$1,068,785
---------
---------
</TABLE>

The balance outstanding at December 30, 1995 of both the stockholder notes
and the note from a related party (who became a stockholder in October 1995)
were distributed to the stockholders in 1996 along with additional notes of
$591,215 related to advances made to such parties in 1996.

7. LEASE COMMITMENTS:

The Company operates its stores, main office and warehouse from facilities
under operating lease agreements which expire at various dates through 2006. The
store leases require minimum annual rentals plus, in some cases, periodic
increases stipulated in the lease agreements (fixed amounts or percentages, in
some cases, and increases indexed to consumer price increases, in other cases).
Some leases also provide

F-14
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. LEASE COMMITMENTS: (CONTINUED)
for contingent rentals based on sales. The Company is generally responsible for
maintenance, insurance and property taxes. Minimum lease payments under all
noncancelable leases are as follows:

<TABLE>
<S> <C>
1997........................................................... $8,613,000
1998........................................................... 7,697,000
1999........................................................... 6,493,000
2000........................................................... 5,751,000
2001........................................................... 5,545,000
Thereafter..................................................... 17,587,000
----------
Total...................................................... $51,686,000
----------
----------
</TABLE>

Rent expense was $4,351,000, $4,964,000 and $6,160,000 during fiscal years
1994, 1995 and 1996, including contingent rentals of $141,000, $130,000 and
$123,000, respectively.

8. EMPLOYEE BENEFIT PLAN:

The Company has a 401(k) profit-sharing plan for the benefit of employees
who meet certain eligibility requirements. Participants may make tax deferred
contributions of up to 15% of earned income, limited to $9,240 annually in
fiscal year 1996. Employer contributions match at least 50% of participant
contributions to a maximum of 4% of earned income. Employee contributions vest
immediately. Employer contributions vest based on years of employment with the
Company, with full vesting in five years. The employer contribution was $53,000,
$58,000 and $50,000 in fiscal years 1994, 1995 and 1996, respectively.

9. INCOME TAXES:

The provision for income taxes consists of:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Income taxes:
Current......................................... $ 100,000 $ 18,838 $ 406,536
Deferred........................................ (33,000) 22,000 81,454
------------ ------------ ------------
$ 67,000 $ 40,838 $ 487,990
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

F-15
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES: (CONTINUED)
The components of deferred tax assets are:

<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 28,
1995 1996
------------ ------------
<S> <C> <C>
Depreciation..................................................... $ 16,930 $ 269,009
Inventory--Uniform Capitalization................................ 10,620 116,095
Stock compensation programs...................................... 10,520 --
Deferred rent.................................................... 3,200 199,881
Accrued liabilities.............................................. 2,070 34,049
Other............................................................ 660 --
Basis differences of assets acquired in business combination..... -- (58,319)
Federal effect of deferred state taxes........................... -- (42,600)
------------ ------------
$ 44,000 $ 518,115
------------ ------------
------------ ------------
</TABLE>

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
taxes will not be realized. Based upon the availability of management's
projections for future taxable income over the periods in which the deferred tax
assets are deductible, management believes the existing net deductible temporary
differences will reverse during periods in which carrybacks are available and/or
in which the Company generates net taxable income.

Differences between the Company's provision for income taxes and the federal
statutory tax rate are:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Federal statutory rate............................ 34.0% 34.0% 34.0%
Benefit due to Subchapter S status................ (34.0) (34.0) (28.3)
State income taxes................................ 2.4 1.7 3.9
Permanent differences............................. -- -- 0.2
------ ------ ------
2.4% 1.7% 9.8%
------ ------ ------
------ ------ ------
</TABLE>

10. FORWARD FOREIGN CURRENCY CONTRACTS:

The Company enters into forward foreign contracts with the objective of
minimizing the short-term impact of foreign currency fluctuations on commitments
to purchase products from foreign manufacturers in foreign currencies. A forward
foreign currency contract, which is individually negotiated and privately traded
by currency traders, is a commitment to purchase or sell a specific currency for
an agreed-upon price at a future date. As of December 28, 1996, all contracts
were held for hedging purposes. The gain or loss on these contracts is reported
in the financial statements based upon the fair value of the contracts obtained
from published market prices and quotations from major investment firms and
offsets the corresponding gain or loss recognized on the commitments to purchase
products in foreign currencies. The Company could be exposed to risk if the
counterparties to the contracts are unable to meet the terms of their contracts.
The Company seeks to minimize risk from counterparties by establishing minimum
credit quality standards and maximum credit limits.

F-16
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. FORWARD FOREIGN CURRENCY CONTRACTS: (CONTINUED)
The contracts outstanding as of December 28, 1996, consisted of the
following:

<TABLE>
<CAPTION>
CONTRACT TO BUY
ITALIAN LIRA IN EXCHANGE FOR SETTLEMENT DATE GAIN (LOSS)
- --------------- --------------- --------------- -----------
<S> <C> <C> <C>
54,329,640 U.S. $36,107 1/31/97 $ (185)
139,327,820 U.S. $92,480 2/28/97 (591)
76,882,761 U.S. $50,979 3/31/97 (378)
-----------
$ (1,154)
-----------
-----------
</TABLE>

11. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The following methods and assumptions were used by the Company in estimating
the fair value of its significant financial instruments:

CASH, ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE, ACCRUED PAYROLL AND BONUSES
PAYABLE AND ACCRUED EXPENSES AND OTHER LIABILITIES: The carrying amount
reported in the consolidated balance sheet approximates its fair value
because of the immediate or short-term maturity of those financial
instruments.

BANK LINE OF CREDIT: The carrying amount approximates fair value due to
the floating interest rate and short maturity nature of this financial
instrument.

LONG-TERM DEBT: The carrying amount approximates fair value due to
floating rates or recent issuance of the fixed rate notes.

NOTES RECEIVABLE FROM RELATED PARTIES: The fair value cannot be
determined.

F-17
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. SUPPLEMENTAL CASH FLOW INFORMATION:

Supplemental cash flow information is as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Interest paid..................................... $ 342,013 $ 401,433 $ 615,412
------------ ------------ ------------
------------ ------------ ------------
Income taxes paid................................. $ 65,045 $ 77,540 $ 72,706
------------ ------------ ------------
------------ ------------ ------------
Noncash investing and financing transactions:
Acquisition of Overland:
Assets and liabilities acquired............... $ -- $ -- $2,733,272
Less debt issued in connection with the
acquisition................................. -- -- (2,493,673)
------------ ------------ ------------
Cash paid for acquisition................... $ -- $ -- $ 239,599
------------ ------------ ------------
------------ ------------ ------------
Increase in liability for distributions payable
to stockholders............................... $ 396,500 $ -- $ --
------------ ------------ ------------
------------ ------------ ------------
Distribution of notes receivable to
stockholders.................................. $ -- $ -- $1,660,000
------------ ------------ ------------
------------ ------------ ------------
Cancellation of stock appreciation rights....... $ -- $ -- $ 596,424
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

13. BUSINESS COMBINATION:

On October 25, 1996, Old Track 'n Trail, together with its stockholders,
obtained 33 Overland Trading stores by acquiring the outstanding common stock of
Overland (Note 1, Principles of Consolidation; Minority Interest). Old Track 'n
Trail purchased the 79.0% interest for $2,733,000 consisting of promissory notes
to the sellers of $2,493,673 and warrants issued to the sellers, plus
acquisition costs. In the event of an initial public offering of the Company's
common stock, the warrants give the sellers the right to purchase up to 1.0% of
the shares of the Company's stock, on a fully diluted basis, outstanding
immediately prior to an initial public offering, at the initial public offering
price until October 25, 2001. In the absence of such initial public offering,
the warrants require that the Company purchase the warrants from the sellers for
cash on October 25, 2001, in an amount equal to one percent of the then fair
value of the Company.

The remaining 21.0% interest in Overland was purchased by Old Track 'n
Trail's stockholders for $662,875 of promissory notes which the Company
guaranteed. Total promissory notes issued by Old Track 'n Trail and its
stockholders in exchange for the common stock of Overland was $3,156,548 (the
Seller Notes).

The Seller Notes are not collateralized and bear interest at 10.0% per year
through October 25, 1997, and 12.0% thereafter. The Seller Notes are due on June
30, 1998, or earlier upon a firm underwritten initial public offering of the
Company's common stock. Interest payments are due quarterly through October
1997, and monthly thereafter.

Also, in connection with the acquisition, Overland repurchased all of its
outstanding preferred stock in exchange for a $3,500,000 subordinated promissory
note (the Subordinated Note) and borrowed $2,559,000 under a line of credit
arranged by Old Track 'n Trail, which was used to repay Overland's

F-18
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. BUSINESS COMBINATION: (CONTINUED)
outstanding line of credit, retire a note payable, pay accumulated dividends to
its preferred stockholders and provide additional working capital, all of which
were recorded by Overland in connection with the acquisition. Old Track 'n Trail
guaranteed the Subordinated Note.

Additionally, the Company issued warrants to an investment bank in
consideration of financial advisory services rendered in connection with the
acquisition of Overland. The warrants allow the investment bank to purchase up
to 1.5% of the shares of the Company's common stock, on a fully diluted basis,
outstanding immediately prior to an initial public offering, at a price equal to
120% of the initial public offering price for four years commencing upon the
first anniversary of the initial public offering. In the absence of such initial
public offering, the warrants require that the Company pay cash to the
investment bank on October 25, 2001, in an amount equal to 1.5% of the then fair
value of the Company. The warrants held by both the Overland sellers and the
investment bank were assigned only a nominal value because of the restrictive
terms of the warrants.

Effective on January 1, 1997, Old Track 'n Trail purchased the 21.0%
interest in Overland from its stockholders at the price they paid for the
interest by assuming the $662,875 Seller Notes issued by Old Track 'n Trail's
stockholders.

The acquisition of the 79.0% interest in Overland was recorded using the
purchase method of accounting. The 21.0% equity interest in Overland not
acquired by Old Track 'n Trail in 1996 is shown as minority interest in the 1996
consolidated balance sheet and statement of operations. In connection with the
acquisition of the 79.0% interest, the Company recorded approximately $2,725,000
of goodwill, which is being amortized on a straight line basis over 20 years.
Additional goodwill of $566,000 was recorded effective January 1, 1997, under
the purchase method of accounting, to account for the acquisition, effective
January 1, 1997, of the remaining 21.0% minority interest from the Company's
stockholders. Results of operations of Overland are included in the consolidated
financial statements from the date of acquisition with the portion attributable
to the 21.0% minority interest held by Old Track 'n Trail's stockholders shown
as minority interest in 1996.

If the Company had purchased 100% of Overland's common stock as of the
beginning of fiscal year 1995, condensed consolidated results of operations
would have been (unaudited):

<TABLE>
<CAPTION>
1995 1996
------------- -------------
<S> <C> <C>
Net sales...................................................... $ 70,660,000 $ 84,186,000
Gross profit................................................... 33,275,000 39,726,000
Operating income............................................... 2,763,195 5,176,000
Net income..................................................... $ 1,467,000 $ 3,576,000

Pro forma net income (unaudited)............................... $ 728,000 $ 2,246,000

Pro forma net income per share (unaudited)..................... $ 0.42
</TABLE>

Pro forma net income (unaudited) in the above table is computed after
deducting a pro forma provision for income taxes at the effective rate estimated
to have been in effect had the Company been a C corporation. Pro forma net
income per share (unaudited) has been computed by dividing pro forma net income
by the weighted average number of common and common equivalent shares
outstanding (using the treasury stock method and an assumed initial public
offering price) after giving retroactive effect to (i) a change in the number of
outstanding shares effected by the Reorganization (Note 14), (ii) those common
stock options issued during the twelve month period preceding the Offering
which, under the treasury stock method, had a dilutive effect and (iii) the
number of shares of common stock to be sold in the

F-19
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. BUSINESS COMBINATION: (CONTINUED)
Offering, at an assumed offering price, the proceeds of which would be necessary
to pay the excess of S corporation distributions during fiscal 1996 and
thereafter until the Reorganization over earnings during fiscal 1996.

14. SUBSEQUENT EVENTS:

REORGANIZATION

The Company is the successor to businesses formerly conducted by Old Track
'n Trail and its subsidiary, Overland. On March 12, 1997, the Board of Directors
approved, subject to the execution of definitive agreements, the Reorganization
of Old Track 'n Trail which will be effective prior to completion of the
Offering (Note 1, Background). In connection with the Reorganization, the Old
Track 'n Trail stockholders will exchange 100% of their common stock for 100% of
the common stock of the Company, a newly formed holding company incorporated in
Delaware. Also, all of the common stock of Overland will be transferred to the
Company in the form of a dividend. As a result of the Reorganization, the
predecessor businesses will become wholly owned subsidiaries of the Company. The
Reorganization will result in an increase of approximately 100.6 to one in the
shares of common stock outstanding immediately before the Reorganization. Upon
the effective date of the Reorganization, the Company will have 4,107,608 shares
of common stock outstanding. The Reorganization will be accounted for in a
manner similar to a pooling of interests. All references to the number of common
and common equivalent shares and to per share information in the consolidated
financial statements have been adjusted to reflect the capital structure
resulting from the Reorganization on a retroactive basis to all periods
presented.

Upon completion of the Reorganization, Old Track 'n Trail will convert from
an S corporation to a C corporation under provisions of the Internal Revenue
Code and, accordingly, will become subject to federal and state income tax on
all of its income. Upon termination of the S corporation election, deferred
income taxes representing the net tax effect of differences between the
Company's financial statement and tax bases in certain assets and liabilities as
of the date of the conversion to a C corporation will become a net asset of the
Company and will be included in the consolidated balance sheet with a
corresponding non-recurring decrease in tax expense in the consolidated
statement of income as of the date of the Reorganization. Had Old Track 'n Trail
converted from an S corporation to a C corporation at December 28, 1996,
deferred tax assets, net, of $1,134,000 and a corresponding reduction of income
tax expense would have been recorded. Such deferred tax assets relate primarily
to differences in the financial statement and tax bases of fixed assets and
inventory and the effect of stock compensation plan deductions for accounting,
but not tax, purposes. In 1997, income or loss during the period preceding the
Reorganization while still an S corporation will continue to be taxed to Old
Track 'n Trail's stockholders which will affect the Company's effective tax rate
for that year.

PLANNED INITIAL PUBLIC OFFERING

On March 12, 1997, the Board of Directors approved the filing of a
registration statement with the Securities and Exchange Commission to sell
shares of the Company's common stock to the public. If the Offering is
consummated in 1997 under the proposed terms, the Company's nonqualified and
incentive stock options will vest resulting in a non-cash compensation charge
reducing net income by approximately $40,000, after netting the related income
tax effect of $27,000.

Upon completion of the Offering, certain notes payable, which have an
aggregate balance of $11,004,000 at December 28, 1996, will become due and
payable. Management intends to use a portion of

F-20
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SUBSEQUENT EVENTS: (CONTINUED)
the proceeds to the Company of the Offering to retire these obligations. The
weighted average interest rate on the balance of such notes outstanding at
December 28, 1996, was 9.48%.

Between December 28, 1996 and the date of the Offering, Old Track 'n Trail
intends to pay or declare distributions aggregating $6,370,000, representing
management's estimate of substantially all of previously undistributed
accumulated S corporation earnings remaining at the date of the Reorganization.
Management expects to pay approximately $4,700,000 of such distributions from a
portion of the Company's proceeds of the Offering. The balance will have been
paid prior to the Offering.

15. CONTINGENCIES:

Old Track 'n Trail has filed a request for a private letter ruling from the
Internal Revenue Service to confirm that its status as an S corporation has not
been inadvertently terminated as the result of certain events occurring during
the period from June 28, 1992 through January 1997. Management believes that
each of the events that could be interpreted as potentially terminating the
Subchapter S status is not of the nature that would result in termination of the
status but, nevertheless, has requested the private letter ruling, without the
matter being raised by the Internal Revenue Service, to resolve any questions
about retention of the Subchapter S status. If the status as a Subchapter S
corporation is found to have been terminated, the Company would be liable for
income taxes as a Subchapter C corporation for the periods it would have been
found to have been a Subchapter C corporation. The maximum aggregate exposure is
that tax liabilities of approximately $5,300,000 could be assessed against the
Company and the accumulated S corporation earnings would be completely
eliminated.

The Company is also involved in various claims arising out of the normal
course of the conduct of business. Management believes, after reviewing such
matters with legal counsel, that the outcome of pending claims will not have a
material adverse effect on the Company's results of operations or financial
position.

F-21
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Overland Management Corporation:

We have audited the accompanying balance sheet of Overland Management
Corporation as of August 3, 1996, and the related statements of operations,
changes in stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion, the 1996 financial statements referred to above present fairly,
in all material respects, the financial position of Overland Management
Corporation as of August 3, 1996, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

KPMG PEAT MARWICK LLP

September 27, 1996

F-22
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors
Overland Management Corporation:

We have audited the accompanying balance sheet of Overland Management
Corporation at July 29, 1995, and the related statements of operations, changes
in stockholders' equity, and cash flows for the years ended July 30, 1994 and
July 29, 1995. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Overland Management Corporation at July 29,
1995 and the results of its operations and its cash flows for the years ended
July 30, 1994 and July 29, 1995, in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
September 25, 1995

F-23
<PAGE>
OVERLAND MANAGEMENT CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
JULY 29, AUGUST 3, OCTOBER 25,
1995 1996 1996
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 40,072 $ 285,377 $ --
Inventory..................................................... 5,367,121 6,389,101 7,130,968
Prepaid expenses and other assets............................. 232,001 292,515 147,031
Other receivables............................................. 29,260 298,751 232,878
Refundable income taxes....................................... 12,537 56,349 --
Deferred income tax asset..................................... -- 10,592 93,128
---------- ---------- -----------
Total current assets........................................ 5,680,991 7,332,685 7,604,005
---------- ---------- -----------
Property and equipment:
Leasehold improvements........................................ 1,539,422 1,889,366 1,935,474
Motor vehicles................................................ 107,083 124,096 124,087
Machinery and equipment....................................... 845,564 1,086,803 1,117,184
Furniture and fixtures........................................ 14,417 14,417 14,417
---------- ---------- -----------
Total property and equipment................................ 2,506,486 3,114,682 3,191,162
Less accumulated depreciation................................. (543,656) (979,213) (1,094,497)
---------- ---------- -----------
Net property and equipment................................ 1,962,830 2,135,469 2,096,665
---------- ---------- -----------
Other assets:
Deferred income tax asset..................................... 313,500 269,837 298,814
Prepaid expenses and other assets............................. 30,037 23,622 23,622
---------- ---------- -----------
Total other assets........................................ 343,537 293,459 322,436
---------- ---------- -----------
$7,987,358 $9,761,613 $10,023,106
---------- ---------- -----------
---------- ---------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft................................................ $ -- $ -- $ 355,449
Note payable--line of credit.................................. 3,700,000 1,900,000 1,600,000
Current portion of long-term debt............................. 129,840 134,354 135,172
Accounts payable and accrued expenses......................... 946,949 2,838,331 2,882,765
Income taxes payable.......................................... -- -- 149,743
Deferred income tax liability................................. 97,300 -- --
---------- ---------- -----------
Total current liabilities................................. 4,874,089 4,872,685 5,123,129
Long-term debt, less current portion............................ 523,693 400,647 375,452
Deferred rent................................................... 364,747 411,247 423,247
---------- ---------- -----------
Total liabilities......................................... 5,762,529 5,684,579 5,921,828
---------- ---------- -----------
Commitments (Note 6).
Redeemable preferred stock:
Redeemable Series A preferred stock, $.01 par value; 368,850
shares authorized, issued and outstanding; $4.07 per share
liquidation preference...................................... 1,498,953 1,675,524 1,720,812
Redeemable Series B preferred stock, $.01 par value; 2,000,000
shares authorized, issued and outstanding; $1.00 per share
liquidation preference...................................... -- 2,000,000 2,000,000
---------- ---------- -----------
Total redeemable preferred stock.......................... 1,498,953 3,675,524 3,720,812
---------- ---------- -----------
Stockholders' equity:
Common stock, $.01 par value, 3,000,000 voting shares
authorized; 1,500,000 shares issued and outstanding......... 15,000 15,000 15,000
Additional paid-in-capital.................................... 35,000 35,000 35,000
Retained earnings............................................. 675,876 351,510 330,466
---------- ---------- -----------
Total stockholders' equity................................ 725,876 401,510 380,466
---------- ---------- -----------
$7,987,358 $9,761,613 $10,023,106
---------- ---------- -----------
---------- ---------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-24
<PAGE>
OVERLAND MANAGEMENT CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
--------------------
FOR THE YEAR ENDED OCTOBER
---------------------------------- 25,
JULY 30, JULY 29, AUGUST 3, 1996
1994 1995 1996 (12
(52 WEEKS) (52 WEEKS) (53 WEEKS) WEEKS)
---------- ---------- ---------- ---------
OCTOBER
21,
1995
(12
WEEKS)
---------
(UNAUDITED)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales....................... $13,898,519 $18,041,403 $22,659,979 $4,668,254 $5,865,505
Cost of sales................... 7,622,825 9,846,341 12,953,906 2,595,178 3,399,568
---------- ---------- ---------- --------- ---------
Gross profit................ 6,275,694 8,195,062 9,706,073 2,073,076 2,465,937
---------- ---------- ---------- --------- ---------
Operating expenses:
Selling and marketing......... 3,815,710 6,022,821 7,347,075 1,573,461 1,874,924
Administrative and
distribution................ 1,784,175 1,948,253 2,012,404 449,179 419,801
---------- ---------- ---------- --------- ---------
Total operating expenses.... 5,599,885 7,971,074 9,359,479 2,022,640 2,294,725
---------- ---------- ---------- --------- ---------
Operating income............ 675,809 223,988 346,594 50,436 171,212

Other (income) expense:
Interest...................... 105,899 211,571 357,852 40,100 54,543
Other, net.................... 526 4,419 114,833 12,192 15,154
---------- ---------- ---------- --------- ---------
Income (loss) before
provision for income
taxes..................... 569,384 7,998 (126,091) (1,856) 101,515
Income tax expense (benefit).... 239,362 3,200 (53,500) (742) 40,605
---------- ---------- ---------- --------- ---------
Net income (loss)........... $ 330,022 $ 4,798 $ (72,591) $ (1,114) $ 60,910
---------- ---------- ---------- --------- ---------
---------- ---------- ---------- --------- ---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-25
<PAGE>
OVERLAND MANAGEMENT CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Balance, August 1, 1993....................................... $ 150 $ 49,850 $ 521,700 $ 571,700
One hundred for one stock split (1,500,000 shares)............ 14,850 (14,850) -- --
Accretion of preferred stock to stock redemption value........ (18,814) (18,814)
Net income.................................................... -- -- 330,022 330,022
--------- ------------ ---------- ------------
Balance, July 30, 1994........................................ 15,000 35,000 832,908 882,908
Accretion of preferred stock to stock redemption value........ (161,830) (161,830)
Net income.................................................... -- -- 4,798 4,798
--------- ------------ ---------- ------------
Balance, July 29, 1995........................................ 15,000 35,000 675,876 725,876
Accretion of preferred stock to stock redemption value........ (176,571) (176,571)
Net loss...................................................... -- -- (72,591) (72,591)
Issuance of redeemable preferred stock........................
Issuance of 656,592 warrants to purchase common stock at $0.25
per share................................................... -- -- -- --
Dividends paid................................................ -- -- (75,204) (75,204)
--------- ------------ ---------- ------------
Balance, August 3, 1996....................................... 15,000 35,000 351,510 401,510
Accretion of preferred stock to stock redemption value........ (45,288) (45,288)
Net income (unaudited)........................................ -- -- 60,910 60,910
Dividends paid (unaudited).................................... -- -- (36,666) (36,666)
--------- ------------ ---------- ------------
Balance, October 25, 1996 (unaudited)......................... $ 15,000 $ 35,000 $ 330,466 $ 380,466
--------- ------------ ---------- ------------
--------- ------------ ---------- ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-26
<PAGE>
OVERLAND MANAGEMENT CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
---------------------
FOR THE FISCAL YEAR ENDED OCTOBER
---------------------------------- 25,
JULY 30, JULY 29, AUGUST 3, 1996
1994 1995 1996 (12
(52 WEEKS) (52 WEEKS) (53 WEEKS) WEEKS)
---------- ---------- ---------- ---------
OCTOBER
21,
1995
(12 WEEKS)
----------
(UNAUDITED)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss)............. $ 330,022 $ 4,798 $ (72,591) $ (1,114) $ 60,910
Adjustments to reconcile net
income (loss) to cash
provided by operating
activities:
Depreciation and
amortization.............. 144,986 266,435 435,557 110,565 115,284
Loss on disposal of property
and equipment............. -- 4,380 2,620 -- --
Effect of changes in:
Employee receivables........ 4,054 -- -- -- --
Inventory................... (914,805) (1,755,501) (1,021,980) (1,307,186) (741,867)
Prepaid expenses and other
assets.................... (30,973) (103,384) (54,099) (24,529) 145,484
Other receivables........... -- (29,260) (269,491) (293,097) 65,873
Refundable income taxes..... -- (12,537) (43,812) -- 56,349
Deferred income tax asset... (38,000) (236,500) 33,071 -- (111,513)
Other assets................ (24,311) -- -- -- --
Accounts payable and accrued
expenses.................. 122,054 (422,894) 1,891,382 1,966,009 44,434
Deferred rent............... 82,010 195,027 46,500 -- 12,000
Income taxes payable........ 26,590 (182,540) -- -- 149,743
Deferred income tax
liability................. -- 97,300 (97,300) -- --
---------- ---------- ---------- ---------- ---------
Cash provided by operating
activities.............. (298,373) (2,174,676) 849,857 450,648 (203,303)
---------- ---------- ---------- ---------- ---------
Cash flows from investing
activities:
Purchases of property and
equipment................... (458,089) (1,428,423) (612,816) (244,878) (76,480)
Proceeds from sale of property
and equipment............... -- 7,000 2,000 -- --
---------- ---------- ---------- ---------- ---------
Cash used for investing
activities.............. (458,089) (1,421,423) (610,816) (244,878) (76,480)
---------- ---------- ---------- ---------- ---------
Cash flows from financing
activities:
Proceeds from issuance of
preferred stock............. 1,318,309 -- 2,000,000 -- --
Borrowings from line of
credit...................... 1,150,000 4,500,000 2,000,000 -- 355,449
Principal payments on line of
credit...................... (2,420,000) (800,000) (3,800,000) (200,000) (300,000)
Dividends paid................ -- -- (75,204) -- (36,666)
Proceeds from long-term
debt........................ 750,000 -- -- -- --
Payments on long-term debt.... (89,036) (135,966) (118,532) (28,201) (24,377)
---------- ---------- ---------- ---------- ---------
Cash provided by financing
activities.............. 709,273 3,564,034 6,264 (228,201) (5,594)
---------- ---------- ---------- ---------- ---------
Increase (decrease) in
cash and cash
equivalents............. (47,189) (32,065) 245,305 (22,431) (285,377)
Cash, beginning of period....... 119,326 72,137 40,072 40,072 285,377
---------- ---------- ---------- ---------- ---------
Cash, end of period............. $ 72,137 $ 40,072 $ 285,377 $ 17,641 $ --
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-27
<PAGE>
OVERLAND MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED WITH RESPECT TO THE TWELVE WEEKS ENDED
OCTOBER 21, 1995 AND OCTOBER 25, 1996)

1. BUSINESS OF CORPORATION:

As of August 3, 1996, Overland Management Corporation (the Corporation)
operated 32 retail shoe stores under the name of Overland Trading Company. One
additional store was opened in August 1996.

The Corporation operates in a single segment of retailing footwear and
related accessories. The Corporation acquires shoes from a number of
manufacturers; however, during the fiscal year ended August 3, 1996, 47.0% of
the Corporation's net sales was of products purchased from three manufacturers.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

FISCAL YEAR

The Corporation's fiscal year ends on the Saturday closest to July 31 in
each year.

CASH AND CASH EQUIVALENTS

The Corporation considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

INVENTORY

Inventory, which consists mainly of goods for resale, is stated at the lower
of cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for maintenance
and repairs are charged to income as incurred. Depreciation is provided on the
double-declining balance basis over the following estimated useful lives:

<TABLE>
<CAPTION>
YEARS
---------
<S> <C>
Motor vehicles......................................................................... 5
Machinery and equipment................................................................ 7
Furniture and fixtures................................................................. 7
Leasehold improvements................................................................. 2-15
</TABLE>

Leasehold improvements are depreciated over the terms of the lease or the
useful lives of the improvement, whichever is shorter.

INCOME TAXES

The Corporation accounts for income taxes using the asset and liability
method. Under the asset and liability method, deferred income taxes are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred taxes of a change in tax rate is recognized in income in the
period that includes the enactment date.

F-28
<PAGE>
OVERLAND MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE TWELVE WEEKS ENDED
OCTOBER 21, 1995 AND OCTOBER 25, 1996)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
DEFERRED RENT AND RENTAL EXPENSE

The Corporation accounts for rental expense on stores, including leases with
scheduled base rent escalations, on a straight-line basis over the noncancelable
lease term.

RECLASSIFICATION

Certain amounts in 1995 have been reclassified to conform with the 1996
presentation.

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

During 1995, additional long-term debt of $29,024 was recognized as a result
of the acquisition of certain fixed assets.

USE OF ESTIMATES

Management of the Corporation has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, other receivables, accounts
payable and accrued expenses and short and long term debt is a reasonable
estimate of its fair value based on instruments with similar terms and
maturities.

STOCK OPTIONS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION. SFAS No. 123 establishes fair value-based accounting and reporting
standards for stock-based employee compensation plans. The statement defines a
fair value based method of accounting for an employee stock option or similar
equity instrument and allows parties to elect to continue to measure
compensation costs using the intrinsic value method of accounting prescribed in
Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES. SFAS No. 123 requires, for those electing to remain with the APB
Opinion No. 25 accounting, pro forma disclosure of net income as if the fair
value-based method had been applied.

3. STOCK TRANSACTIONS:

On June 13, 1994, the Corporation amended the Articles of Organization in
order to provide for one class of Common Stock, par value $.01 per share,
increase the number of authorized shares of Common Stock to 3,000,000 and
establish a class of Convertible Preferred Stock consisting of 368,850 shares,
par value $.01 per share. In addition, each share of Class A and B Common Stock
issued and outstanding as of June 13, 1994, was reclassified and exchanged into
100 shares of Common Stock, $.01 par value, of the Corporation.

On June 15, 1994, the Corporation issued and sold 368,850 shares of
Convertible Preferred Stock, $.01 par value, at $4.0667 per share. Each share of
Preferred Stock is convertible into approximately one share

F-29
<PAGE>
OVERLAND MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE TWELVE WEEKS ENDED
OCTOBER 21, 1995 AND OCTOBER 25, 1996)

3. STOCK TRANSACTIONS: (CONTINUED)
of the Corporation's Common Stock for approximately $4.07 per share, and is
entitled upon liquidation to receive approximately $4.07 per share, plus any
unpaid dividends. Holders of Preferred Stock share ratably with holders of
Common Stock in all common stock dividends payable in cash (not in dividends
payable in any Capital Stock or in any other property) declared by the Board of
Directors of the Corporation computed as if the Preferred Stock had been
converted into Common Stock at the Conversion Ratio in effect at the date of
declaration of the cash dividend. Dividends on each share of Preferred Stock
accumulate at an annual rate of 9% on the liquidation value of each such share
of Preferred Stock. Certain events, including the sale of the Corporation, would
cause the accumulated dividends to become declared and payable immediately. At
August 3, 1996 and October 25, 1996, there were approximately $285,000 and
$350,000, respectively, of accumulated but undeclared Preferred Stock dividends.

On September 6, 1994, the stockholders approved a nonqualified stock option
plan with a maximum aggregate of 93,400 shares reserved for grant to key
personnel. Also, on that date, employees of the Corporation were granted fully
vested options to buy 32,888 Common Stock shares, $.01 par value, at an exercise
price of $3.50 per share with an expiration date of September 6, 2004. During
fiscal year 1996, 2,010 options were terminated. As of July 29, 1995, August 3,
1996 and October 25, 1996, 32,888, 30,878 and 30,878 options remained
outstanding. None of the options granted under the stock option plan have been
exercised.

On March 28, 1996, the Corporation amended the Articles of Organization in
order to convert the 368,850 authorized shares of Preferred Stock, $.01 par
value, into 368,850 authorized shares of Series A Preferred Stock, and to
authorize 2,000,000 shares of Series B Preferred Stock, $.01 par value. Any of
the Preferred Stock may be redeemed by the Corporation at any time. Series A
Preferred Stock is scheduled to be redeemed on June 23, 2000 and Series B is
scheduled to be redeemed on June 23, 2001.

On March 29, 1996, the Corporation issued and sold 2,000,000 shares of
Series B Preferred Stock, $.01 par value, at $1.00 per share. On the last day of
each calendar month, holders of Series B Preferred Stock are entitled to receive
any funds legally available for Series B preferred stock cumulative cash
dividends which have been declared by the Board of Directors.

Dividends on each share of Series B Preferred Stock shall accumulate and
accrue from day to day at the annual rate of eleven percent (11%) on the
liquidation value of each share of Series B Preferred Stock. Provisions in the
Preferred Stock Agreement call for the Series B Preferred shareholders to
receive additional amounts in the event the dividends accumulate. There are no
accumulated dividends on the Series B Preferred Stock at August 3, 1996 and
October 25, 1996. In the event of liquidation of the Corporation, the holders of
outstanding Series B Preferred Stock shall be entitled to receive $1.00 per
share plus all accumulated and unpaid dividends.

4. STOCK WARRANTS:

As of July 29, 1995, the Corporation was in default of several covenants on
its loan agreements with Fleet Bank (formerly Shawmut Bank, N.A.). The balance
outstanding as of this date was $571,400. The debt covenants for these loans
were amended on August 25, 1995, which enabled the Corporation to be in
compliance with all covenants. On August 25, 1995, the Corporation entered into
a guarantee agreement with a stockholder (the Guarantor) to guarantee a portion
of the Corporation's loan agreement with the bank. As consideration for this
agreement, the Guarantor paid to the Corporation the amount of $2.00, and the
Corporation issued the Guarantor two series of warrants to purchase certain
shares of Common

F-30
<PAGE>
OVERLAND MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE TWELVE WEEKS ENDED
OCTOBER 21, 1995 AND OCTOBER 25, 1996)

4. STOCK WARRANTS: (CONTINUED)
stock of the Corporation. The first warrant entitled the holder to purchase
30,000 shares of the Corporation's Common Stock at a purchase price of $0.25 per
share. The second warrants entitled the holder to purchase 200,000 shares of the
Corporation's Common Stock at a purchase price of $0.25 per share. Both warrants
were canceled under the terms of the Securities Purchase Agreement (Agreement)
dated March 29, 1996.

On March 29, 1996, the Corporation entered into an Agreement with a
stockholder to sell three series of warrants, at a price of $1.00 each, to
purchase certain shares of Common Stock of the Corporation. The first warrant
(Warrant 1996-1), entitles the holder to purchase nineteen percent (19%) of the
"Fully Diluted Shares of Common Stock of the Corporation" (as such term is
defined in the Agreement) at a purchase price of $0.25 per share. Warrant 1996-1
will expire on the earlier of the sixth anniversary of the redemption of the
Series B Preferred Stock or March 28, 2006. The second warrant (Warrant 1996-2)
entitles the holder to purchase nine percent (9%) of the "Fully Diluted Shares
of Common Stock of the Corporation" (as such term is defined in the Agreement)
at a purchase price of $0.25 per share. The third warrant (Warrant 1996-3) is
not exercisable until the earlier of June 24, 2000 or in the event of a default
to the stockholder (as defined in the Agreement). Warrant 1996-3 entitles the
holder to purchase two percent (2%) of the "Fully Diluted Shares of Common Stock
of the Corporation" (as such term is defined in the Agreement) at a purchase
price of $0.25 per share. Warrants 1996-2 and 1996-3 will expire on the earlier
of the sixth anniversary of the redemption of the Series A Preferred Stock or
June 23, 2004. As of August 3, 1996, the Corporation has reserved 656,592 shares
of the Common Stock for issuance upon exercise of Warrant 1996-1, Warrant 1996-2
and Warrant 1996-3.

F-31
<PAGE>
OVERLAND MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE TWELVE WEEKS ENDED
OCTOBER 21, 1995 AND OCTOBER 25, 1996)

5. DEBT:

LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
JULY 29, AUGUST 3,
1995 1996
----------- ----------- OCTOBER 25,
1996
-----------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to Fleet Bank, 11.99%, payable in monthly
installments of principal and interest of $317 from
February 16, 1995 through January 16, 2000........... $ 13,081 $ 10,768 $ 10,146

Note payable to Fleet Bank, 7.90%, payable in monthly
installments of principal and interest of $364 from
August 29, 1994 through July 29, 1998................ 11,595 8,038 7,103

Note payable to IRA Olds/Toyota Corp., payable in
monthly installments of principal and interest of
$244 from August 29, 1996 through July 29, 2001...... -- 11,308 10,874

Promissory note to PCM Development Corporation for
Middletown store leasehold improvements, 12%, payable
in monthly installments of principal and interest of
$883 from April 1, 1992 through February 1, 1998..... 23,390 15,156 12,939

Promissory note to Pyramid Company of Buffalo for
Buffalo store leasehold improvements, 12%, payable in
monthly installments of principal and interest of
$1,017 from January 1, 1992 through December 1,
1998................................................. 34,067 25,490 23,182

Notes payable to Fleet Bank, 80%, guaranteed by the
Small Business Administration, 10.75%, payable in
monthly installments of principal and interest of
$8,930 from December 6, 1993 through October 25,
2000................................................. 571,400 464,241 446,380
----------- ----------- -----------

Total.............................................. 653,533 535,001 510,624

Less current portion................................... (129,840) (134,354) (135,172)
----------- ----------- -----------

$ 523,693 $ 400,647 $ 375,452
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

On December 6, 1993, the Corporation entered into a Term Loan Agreement (the
Agreement) guaranteed by the Small Business Administration. Under the terms of
the Agreement and the line-of-credit agreement, substantially all of the assets
of the Corporation were pledged as collateral. The Agreement places limitations
on the payment of dividends and the incurrence of additional debt and also

F-32
<PAGE>
OVERLAND MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE TWELVE WEEKS ENDED
OCTOBER 21, 1995 AND OCTOBER 25, 1996)

5. DEBT: (CONTINUED)
contains certain other financial and operational covenants. The Corporation was
in default of certain covenants as of July 29, 1995. The debt covenants for
these loans were amended on August 25, 1995, which enabled the Corporation to be
in compliance with all covenants (see Note 4). The interest rate of the loan is
based on the bank's Corporate Base Rate plus 2% (10.25%, 10.75% and 10.25% at
July 29, 1995, August 3, 1996 and October 25, 1996, respectively).

REVOLVING LINE OF CREDIT

The Corporation has a line-of-credit agreement with Fleet Bank (the Bank)
for $4,000,000. Interest is payable monthly at the Bank's prime rate plus 1.0%
(9.25% as of August 3, 1996). The line of credit is collateralized by inventory,
furniture, fixtures and the personal guarantees of the stockholders. There was
$1,900,000 outstanding at August 3, 1996. The weighted average interest rate for
the fiscal years ended July 29, 1995 and August 3, 1996, were 9.43% and 10.55%,
respectively. The weighted average interest rate for the periods ended October
21, 1995 and October 25, 1996, were 10.51% and 9.25%, respectively. The
Corporation has been notified by the Bank that the line of credit will not be
renewed upon its termination on December 31, 1996.

6. COMMITMENTS:

As of August 3, 1996, the Corporation leased its principal office and 32
retail shoe stores under noncancelable operating leases expiring on various
dates through January 2009. The Corporation opened an additional store in August
1996. The leases provide for base rental and, in some instances, for the payment
of percentage rents based on sales volume, real estate taxes and common area
maintenance charges. At August 3, 1996, future minimum lease payments under
these noncancelable leases were approximately as follows:

<TABLE>
<S> <C>
1997........................................................... $2,050,000
1998........................................................... 2,053,000
1999........................................................... 1,839,000
2000........................................................... 1,529,000
2001........................................................... 1,318,000
Thereafter..................................................... 5,391,000
----------
$14,180,000
----------
----------
</TABLE>

Rent expense was approximately $1,063,000, $1,756,000 and $1,992,000 for the
years ended July 31, 1994, July 29, 1995 and August 3, 1996, respectively. Rent
expense was approximately $486,000 and $551,000 for the twelve week periods
ended October 21, 1995 and October 25, 1996, respectively.

F-33
<PAGE>
OVERLAND MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE TWELVE WEEKS ENDED
OCTOBER 21, 1995 AND OCTOBER 25, 1996)

7. INCOME TAXES:

The components of income tax expense (benefit) are approximately as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
JULY 30, JULY 29, AUGUST 31,
1994 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal................................................ $ 249,362 $ 121,000 $ 8,200
State.................................................. 28,000 21,400 13,500

Deferred:
Federal................................................ (34,000) (118,400) (62,400)
State.................................................. (4,000) (20,800) (12,800)
---------- ----------- -----------
Total................................................ $ 239,362 $ 3,200 $ (53,500)
---------- ----------- -----------
---------- ----------- -----------
</TABLE>

The deferred income tax balance at July 29, 1995, August 3, 1996 and October
25, 1996, represents income taxes at enacted statutory rates on temporary
differences which result primarily from the differences in the treatment for
financial accounting and tax purposes of depreciation, inventory and leases.
There is no valuation allowance with respect to the deferred income tax asset as
of July 29, 1995, August 3, 1996 and October 25, 1996. The effective rate varied
from the statutory rate of 34.0% primarily as a result of state income taxes.

8. LICENSE AGREEMENT:

The Corporation has acquired the rights to use the trademarks "Overland" and
"Overland Trading Co." under a license agreement. The terms of the agreement
commenced on January 28, 1989 and continued through January 27, 1996, at which
time the licensor transferred and assigned to the Corporation its entire right,
title, and interest in the trademarks for no additional consideration. During
the term of the agreement, the Corporation paid to the licensor a royalty equal
to 3.0% of the gross sales of all products for six stores with royalties payable
every six months in February and August. At July 29, 1995, accrued royalties
amounted to $68,915 and were included in accounts payable and accrued expenses.
All obligations under the license agreement have been fulfilled as of August 3,
1996.

9. SALE OF THE COMPANY:

On October 25, 1996, Track 'n Trail and its stockholders purchased 79.0% and
21.0%, respectively, of the outstanding common stock of the Corporation for an
aggregate price of $3,156,548, paid with promissory notes plus warrants. The
notes issued by the Track 'n Trail stockholders have been guaranteed by Track 'n
Trail. In the event of an initial public offering of Track 'n Trail's common
stock, the warrants give the previous stockholders of the Corporation the right
to purchase up to 1.0% of the outstanding shares of Track 'n Trail's stock, on a
fully diluted basis, outstanding immediately prior to an initial public
offering, at the initial public offering price. In the absence of such an
initial public offering, the warrants require that Track 'n Trail purchase the
warrants from the Corporation's stockholders for cash on October 25, 2001, in an
amount equal to one percent of the then fair value of Track 'n Trail.

In connection with this acquisition, the Corporation redeemed all of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock in
exchange for a subordinated promissory note without collateral in the principal
amount of $3,500,000 due on June 30, 1998, or immediately upon a firm

F-34
<PAGE>
OVERLAND MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE TWELVE WEEKS ENDED
OCTOBER 21, 1995 AND OCTOBER 25, 1996)

9. SALE OF THE COMPANY: (CONTINUED)
underwritten initial public offering of Track 'n Trail. The note is guaranteed
by Track 'n Trail and bears interest at a rate of 10.0% through October 25,
1997, and 12.0% thereafter, with payments of interest due quarterly through
October 25, 1997, and monthly thereafter.

Under a line of credit arranged by Track 'n Trail, the Corporation borrowed
$2,559,000 and (i) repaid the outstanding line of credit of $1,600,000, (ii)
retired a note payable for $446,380, (iii) paid accumulated dividends to its
preferred stockholders of $350,000 and (iv) paid certain fees and expenses
associated with the acquisition. Additionally, the warrants (discussed in Note
4) were exercised for 597,288 shares of common stock, for total consideration of
$149,322 in connection with the acquisition.

F-35
<PAGE>
[INSIDE BACK COVER OF PROSPECTUS]

[OVERLAND TRADING COMPANY LOGO]

[PICTURE OF UNITED STATES MAP INDICATING OVERLAND TRADING COMPANY STORE
LOCATIONS]

34 Eastern Locations
<PAGE>
[INSIDER BACK COVER GATEFOLD OF PROSPECTUS]

[PHOTOGRAPH SHOWS INTERIOR PANEL WALL OF OVERLAND TRADING COMPANY STORE WITH
DISPLAY OF WOMEN'S SHOES]

[PHOTOGRAPH SHOWS EXTERIOR OF OVERLAND TRADING COMPANY STORE]

Quality, Comfort and Tradition Always in Style

[PHOTOGRAPH SHOWS PANORAMIC VIEW OF LEGS AND FEET]

[PHOTOGRAPH SHOWS INTERIOR PANEL WALL OF OVERLAND TRADING COMPANY STORE WITH
DISPLAY OF MEN'S SHOES]
<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY
OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION 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............................. 3
The Company.................................... 8
Risk Factors................................... 9
S Corporation Distributions.................... 14
Use of Proceeds................................ 15
Dividend Policy................................ 15
Dilution....................................... 16
Capitalization................................. 17
Selected Consolidated Financial Information.... 19
Pro Forma Condensed Consolidated Financial
Information.................................. 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 27
Business....................................... 35
Management..................................... 46
Certain Transactions........................... 52
Principal and Selling Stockholders............. 53
Description of Capital Stock................... 54
Shares Eligible for Future Sale................ 56
Underwriting................................... 58
Legal Matters.................................. 59
Experts........................................ 59
Change in Independent Accountants.............. 60
Additional Information......................... 60
Financial Statements........................... F-1
</TABLE>

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

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

[TRACK 'N TRAIL LOGO]

COMMON STOCK

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

PROSPECTUS
---------------------

LADENBURG THALMANN & CO. INC.

A.G. EDWARDS & SONS, INC.

, 1997

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses expected to be incurred
by the Registrant in connection with the sale and distribution of the securities
being registered hereby, other than underwriting discounts and commissions. All
amounts are estimated except the Securities and Exchange Commission registration
fee and the National Association of Securities Dealers, Inc. filing fee.

<TABLE>
<CAPTION>
PAYABLE BY
REGISTRANT
----------
<S> <C>
SEC registration fee.............................................................. $ 10,637
National Association of Securities Dealers, Inc. filing fee....................... 4,010
Nasdaq National Market listing fee................................................ *
Blue Sky fees and expenses........................................................ 5,000
Accounting fees and expenses...................................................... 175,000
Legal fees and expenses........................................................... 350,000
Printing and engraving expenses................................................... 130,000
Registrar and Transfer Agent's fees............................................... 3,000
Miscellaneous fees and expenses................................................... 22,353
----------
Total......................................................................... $ 700,000
----------
----------
</TABLE>

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

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). Article VIII of the Registrant's
Certificate of Incorporation (Exhibit 3.1 hereto) and Article VIII of the
Registrant's Bylaws (Exhibit 3.2 hereto) provide for indemnification of the
Registrant's directors, officers, employees and other agents to the extent and
under the circumstances permitted by the Delaware General Corporation Law. The
Registrant also intends to enter into agreements with its directors and certain
of its officers that would require the Registrant, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors or officers to the fullest extent not prohibited
by law.

The Underwriting Agreement (Exhibit 1.1) provides for indemnification by the
Underwriters of the Registrant, its directors and its officers, and by the
Registrant of the Underwriters, for certain liabilities, including liabilities
arising under the Act, and affords certain rights of contribution with respect
thereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In March 1997, in order to effect the reorganization of the Registrant in
Delaware, the Registrant issued an aggregate of 4,107,608 shares of Common Stock
to the three former stockholders of its predecessor, Track 'n Trail, a
California corporation, in exchange for all outstanding shares of such
corporation. The Registrant relied on the exemption provided by Section 4(2) of
the Act.

The recipients of the above-described securities represented their intention
to acquire the securities for investment only and not with a view to
distribution thereof. Appropriate legends were affixed to the stock certificates
and warrants issued in such transactions. All recipients had adequate access,
through employment or other relationships, to information about the Registrant.

II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ------------------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement.

3.1 Certificate of Incorporation of the Registrant.

3.2* Bylaws of the Registrant.

4.1* Form of Common Stock Certificate.

4.2* Form of Registration Rights Agreement among the Registrant and certain stockholders
to be executed prior to the effective date of this Registration Statement.

5.1* Opinion of Pillsbury Madison & Sutro LLP.

10.1 Employment Agreement dated January 3, 1994 between the Registrant and Gregory M.
Kilgore.

10.2 Employment Agreement dated January 3, 1994 between the Registrant and John E.
Wilkinson.

10.3 Employment Agreement dated January 3, 1994 between the Registrant and Daniel J.
Nahmens.

10.4 Employment Agreement dated January 3, 1994 between the Registrant and David T.
Morgan.

10.5* 1996 Stock Option Plan of Track 'n Trail-California.

10.6* Form of Incentive Stock Option and Stock Option Agreement.

10.7* Form of Nonqualified Stock Option and Stock Option Agreement.

10.8* Agreement for Distribution of Retained Earnings and Tax Indemnification.

10.9* Warrant to Purchase Common Stock issued to Ladenburg Thalmann & Co. Inc.

10.10* Form of Warrant to Purchase Common Stock issued to stockholders of Overland
Management Corporation.

11.1 Statement of computation of earnings per share.

16.1 Letter from former independent accountant.

21.1 List of Subsidiaries of the Registrant.

23.1 Consent of Coopers & Lybrand L.L.P.

23.2 Consent of Deloitte & Touche LLP.

23.3 Consent of Deloitte & Touche LLP.

23.4 Consent of KPMG Peat Marwick LLP.

23.5* Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).

24.1 Power of Attorney (see Page II-4).

27.1 Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

(B) FINANCIAL STATEMENT SCHEDULES

Not applicable.

II-2
<PAGE>
ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "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 Act and will
be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus 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) It will provide to the underwriters at the closing(s) specified in
the underwriting agreement certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of El Dorado Hills, State of
California, on the 12th day of March, 1997.

<TABLE>
<S> <C> <C>
TRACK 'N TRAIL, INC.

By: /s/ DAVID L. SUECHTING, JR.
-----------------------------------------
David L. Suechting, Jr.
CHAIRMAN OF THE BOARD
</TABLE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Daniel J. Nahmens and Gregory M. Kilgore, and
each of them, his true and lawful attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments, including
post-effective amendments, to this Registration Statement, and any registration
statement relating to the offering covered by this Registration Statement and
filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that each of said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

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

<C> <S> <C>
/s/ DAVID L. SUECHTING, JR. Chairman of the Board
- ------------------------------ (Principal Executive March 12, 1997
David L. Suechting, Jr. Officer) and Director

Vice President-Finance and
/s/ DANIEL J. NAHMENS Chief Financial Officer
- ------------------------------ and Treasurer (Principal March 12, 1997
Daniel J. Nahmens Financial Officer and
Accounting Officer)

/s/ GREGORY M. KILGORE
- ------------------------------ Director March 12, 1997
Gregory M. Kilgore

/s/ BARBARA J. SUECHTING
- ------------------------------ Director March 12, 1997
Barbara J. Suechting
</TABLE>

II-4

<PAGE>
Exhibit 3.1

CERTIFICATE OF INCORPORATION
OF
TRACK 'N TRAIL, INC.

FIRST: The name of the corporation is:

Track 'n Trail, Inc.

SECOND: The address of its registered office in the State of Delaware is
1013 Centre Road, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is:

The Prentice-Hall Corporation System, Inc.
1013 Centre Road
Wilmington, DE 19901

THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.

FOURTH: A. The corporation is authorized to issue two classes of capital
stock, to be designated respectively Preferred stock ("Preferred Stock") and
Common Stock ("Common Stock"). The total number of shares of capital stock that
the corporation is authorized to issue is 22,000,000, of which 2,000,000 shall
be Preferred Stock and 20,000,000 shall be Common Stock. Both the Preferred
Stock and Common Stock shall have a par value of $.01 per share.

B. The Preferred Stock may be issued from time to time in one
or more series. The Board of Directors of the corporation (the "Board of
Directors") is expressly authorized to provide for the issue of all or any of
the Preferred Stock in one or more series, and to fix the designation and
number of shares and to determine or alter for each such series, such voting
powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions adopted by the Board of
Directors providing for the issue of such stock (a "Preferred Stock
Designation") and as may be permitted by the General Corporation Law of the
State of Delaware. The Board of Directors is also expressly authorized to
increase or decrease (but not below the number of shares of such series then
outstanding, plus the number of shares of such series issuable upon exercise
of outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the corporation) the number of shares of any such
series. If the number of shares of any such series shall be so decreased,
the shares constituting such decrease shall resume the status that they had
prior to the adoption of the resolution originally fixing the number of
shares of such series. The number of authorized shares of Preferred Stock
may be increased or decreased (but not below the number of shares thereof
then outstanding) by the affirmative vote of the holders

-1-

<PAGE>

of a majority of the voting power of all of the then outstanding shares of the
capital stock of the corporation entitled to vote generally in the election of
directors, voting together as a single class, without a separate vote of the
holders of the Preferred Stock, or any series thereof, unless a vote of any such
holders is required pursuant to any Preferred Stock Designation.

FIFTH: A. The authorized number of directors of the corporation shall
be fixed from time to time by resolution of the Board of Directors.

B. Effective upon the registration of the corporation with the
Securities and Exchange Commission under Section 12(b) of the Securities
Exchange Act of 1934, as amended (the "Section 12(b) Registration"), the Board
of Directors shall be divided into three classes, designated Class I, Class II
and Class III, and the term of office of directors of one class shall expire at
each annual meeting of stockholders, and in all cases as to each director until
such director's successor shall be elected and shall qualify or until such
director's earlier resignation, removal from office, death or incapacity.
Additional directorships resulting from an increase in number of directors shall
be apportioned among the classes. The initial terms of office shall be
determined by resolution duly adopted by the Board of Directors. At each annual
meeting of stockholders after the Section 12(b) Registration, the number of
directors equal to the number of directors of the class whose term expires at
the time of such meeting (or, if less, the number of directors properly
nominated and qualified for election) shall be elected to hold office until the
third succeeding annual meeting of stockholders after their election.

C. Except as otherwise provided for or fixed pursuant to the
provisions of Article FOURTH of this Certificate of Incorporation relating to
the rights of the holders of any series of Preferred Stock to elect additional
directors, and subject to the provisions hereof, newly created directorships
resulting from any increase in the authorized number of directors, and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal, or other cause, may be filled only by the affirmative
vote of a majority of the remaining directors then in office, even though less
than a quorum of the Board of Directors. Any director elected in accordance
with the preceding sentence shall hold office for the remainder of the full term
of the class of directors in which the new directorship was created or in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified, subject to his earlier death, disqualification,
resignation or removal. Subject to the provisions of this Certificate of
Incorporation, no decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.

SIXTH: The name and mailing address of the incorporator is:

Michelle Rowe Hallsten
Pillsbury Madison & Sutro LLP
400 Capitol Mall, 17th Floor
Sacramento, California 95814

SEVENTH: No stockholder may cumulate votes in the election of directors.

-2-

<PAGE>

EIGHTH: A. The corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director or officer of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans (an "Indemnitee"),
against all liability and loss suffered and expenses (including attorneys' fees)
reasonably incurred by such person. The corporation shall be required to
indemnify a person in connection with a Proceeding (or part thereof) initiated
by such person only if the Proceeding (or part thereof) was authorized by the
Board of Directors of the corporation.

B. The right to indemnification conferred by this Article EIGHTH
shall be presumed to have been relied by the Indemnitee and shall be enforceable
as a contract right. The corporation may enter into contracts to provide
individual Indemnitees with specific rights of indemnification to the fullest
extent permitted by applicable law and may create trust funds, grant security
interests, obtain letters of credit or use other means to ensure the payment of
such amounts as may be necessary to effect the rights provided in this Article
EIGHTH or in any such contract.

C. Upon making a request for indemnification, the Indemnitee
shall be presumed to be entitled to indemnification under this Article EIGHTH
and the corporation shall have the burden of proof to overcome that presumption
in reaching any contrary determination. Such indemnification shall include the
right to receive payment in advance of any expenses incurred by the Indemnitee
in connection with any Proceeding, consistent with the provisions of applicable
law.

D. Any repeal or modification of the foregoing provisions of
this Article EIGHTH shall not adversely affect any right or protection of any
Indemnitee existing at the time of such repeal or modification.

NINTH: A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any repeal or
modification of the foregoing sentence shall not adversely affect any right or
protection of a director of the corporation existing hereunder with respect to
any act or omission occurring prior to such repeal or modification.

TENTH: Effective upon the Section 12(b) Registration (i) any action
required or permitted to be taken by stockholders of the corporation must be
taken at a duly called annual or special meeting of stockholders of the
corporation, and (ii) no action may be taken by the written consent of the
stockholders.

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<PAGE>

ELEVENTH: The Board of Directors is expressly authorized to make, amend
or repeal the bylaws of the corporation, without any action on the part of
the stockholders, solely by the affirmative vote of at least 66-2/3% of the
directors of the corporation then in office. In addition to any other vote
required by law, the bylaws may be amended or repealed by the stockholders by
the affirmative vote of the holders of shares representing at least 66-2/3%
of the combined voting power of the outstanding shares of capital stock of
the corporation entitled to vote generally in the election of the directors,
voting together as a single class.

TWELFTH: In addition to any other vote required by law, the amendment or
repeal of Articles FIFTH, SEVENTH, EIGHTH, NINTH, TENTH, ELEVENTH and TWELFTH
shall require the approval of the holders of shares representing at least
66-3/2% of the combined voting power of the outstanding shares of capital stock
of the corporation entitled to vote generally in the election of directors,
voting together as a single class.

I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 28th day of February, 1997.

/s/ MICHELLE ROWE HALLSTEN
-----------------------------------
Incorporator
Michelle Rowe Hallsten

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<PAGE>

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of this 3rd day of January,
1994, by and between GREG KILGORE (hereinafter referred to as "Employee"), and
Track 'N Trail, a California corporation (hereinafter referred to as "Track 'N
Trail").

IN CONSIDERATION of the mutual promises set forth below, Employee and Track
'N Trail hereby agree as follows:

1. EMPLOYMENT. Track 'N Trail hereby agrees to employ Employee, and
Employee agrees to provide services to Track 'N Trail in the position of
Executive Vice President/COO on an "at-will" basis, subject to the terms and
conditions hereinafter set forth.

2. DUTIES. Subject to the control of Track 'N Trail's Board of Directors
and/or Track 'N Trail management personnel with authority over Employee,
Employee shall perform the duties and responsibilities set forth in Attachment A
and such other duties and responsibilities assigned from time-to-time which are
commensurate with Employee's role as Track 'N Trail's Executive Vice
President/COO. Throughout the term of this Agreement, Employee shall devote all
of his or her energies, interest, abilities and productive time to the
performance of his or her duties and responsibilities under this Agreement, and
shall not, without Track 'N Trail's prior written consent, render services to
any other person or entity or otherwise engage in any other activity that would
materially interfere with the performance of such duties and responsibilities
under this Agreement.

3. TERM. The term of this Agreement shall be two (2) year(s) from the
effective date of this Agreement and shall extend and renew for a one-year
period each anniversary date thereafter, unless terminated as set forth herein.
Employee or Track 'N Trail may terminate Employee's employment and this
Agreement with or without "cause" (including by reason of Employee's disability
for more than four months or death) upon thirty (30) days' written notice to the
other party. Additionally, Track 'N Trail may terminate this Agreement and

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<PAGE>

Employee's employment for "cause" immediately without notice. "Cause" shall be
defined as follows:

(a) Employee being convicted of, pleading guilty or nolo
contendere to, or confessing to any act of fraud, misappropriation or
embezzlement, or to any felony;

(b) Employee engaging in dishonest acts to the detriment of
Track 'N Trail;

(c) Employee otherwise failing to comply with the terms of this
Agreement and/or engaging in misconduct in violation of Track 'N Trail
policies.

4. PAY ON TERMINATION. Should Track 'N Trail terminate this Agreement
and Employee's employment without cause as defined above and/or materially
breach any portion of this Agreement, Track 'N Trail shall tender to Employee an
amount equal to one (1) year of pay, to be calculated at the highest rate of pay
Employee has received from Track 'N Trail in the two-year period prior to
Employee's termination. Payments of said sum shall be made on Employee's last
day of employment, or on terms mutually agreeable to Employee and Track 'N
Trail.

5. WORKING CONDITIONS. Track 'N Trail agrees that during the term of
this Agreement Track 'N Trail:

(a) Shall provide, establish and maintain reasonable working
conditions for Employee and abide by all state, federal and local
employment regulations and law;

(b) Shall not, without the written consent of Employee,
materially alter or reduce the duties and responsibilities assigned to
Employee as set forth in Attachment A to this Agreement; or

(c) Shall not, without written consent of Employee, require
Employee to relocate to any office in excess of thirty (30) miles from
El Dorado Hills, California.

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<PAGE>

Notwithstanding anything to the contrary in this paragraph 5 or this
Agreement overall, Track 'N Trail's failure to meet any of its obligations under
this paragraph 5 shall constitute a termination of Employee without cause
entitling Employee to the sole remedy of electing to continue his or her
employment notwithstanding such failure or to leave Track 'N Trail's employ and
receive compensation from Track 'N Trail pursuant to the provisions of paragraph
4.

6. COMPENSATION. Employee agrees to accept and Track 'N Trail agrees to
pay for Employee's services at the rate of $130,000 per year. Employee shall be
eligible to receive bonuses on the same terms and conditions as other similarly
situated employees. Track 'N Trail reserves the right to increase Employee's
compensation rate prospectively at any time.

7. CONFIDENTIAL INFORMATION. Employee will, in the course of Employee's
duties on behalf of Track 'N Trail, be advised of certain business matters and
affairs of Track 'N Trail regarding its clients and the management of its
business. The duties performed by Employee for Track 'N Trail place Employee in
a position of trust and confidence with respect to certain trade secrets and
other proprietary information relating to the business of Track 'N Trail and not
generally known to the public. These trade secrets include, but are not limited
to, Track 'N Trail's price lists, advertising and promotional ideas and
strategies, customer lists, and formulas, patterns, devices, processes,
compilations of information, records, and specifications which are owned by
Track 'N Trail and which are regularly used in the operation of Track 'N Trail
(hereinafter "confidential information"). Employee will not, either during the
term of Employee's employment or any time in the future, directly or indirectly:

(a) Disclose or furnish, directly or indirectly, to any other
person, firm, agency, corporation, client, business, or enterprise,
any confidential information acquired by Employee during the term of
this Agreement;

(b) Individually or in conjunction with any other person, firm,
agency, company, client, business or corporation, employ or cause to
be employed any confidential information in any manner whatsoever,

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<PAGE>

except in furtherance of the business of Track 'N Trail;

(c) Without the written consent of Track 'N Trail, publish,
deliver, or commit to being published or delivered, any copies,
abstracts, or summaries of any files, records, documents, drawings,
specifications, lists, equipment, and similar items relating to the
business of Track 'N Trail, whether prepared by the Employee or
otherwise coming into the Employee's possession, except to the extent
required in the ordinary course of Track 'N Trail's business;

(d) Attempt to encourage, induce, or otherwise solicit, directly
or indirectly, any other employee of Track 'N Trail to breach an
employment agreement with Track 'N Trail or to otherwise interfere
with the advantageous business relationship of Track 'N Trail with its
employees.

All files, records, documents, drawings, specifications, lists, equipment
and similar items relating to the business of Track 'N Trail, whether prepared
by Employee or otherwise coming into the Employee's possession, shall remain the
exclusive property of Track 'N Trail and shall not be removed from the premises
of Track 'N Trail under any circumstances whatsoever without the prior written
consent of an officer of Track 'N Trail.

Upon termination of Employee's employment, Employee agrees to immediately
return to Track 'N Trail all property of Track 'N Trail in as good condition as
when received by Employee (normal wear and tear excepted) including, but not
limited to, all files, records, documents, drawings, specifications, lists,
equipment and supplies, promotional materials and similar items relating to the
business of Track 'N Trail.

8. REPAYMENTS. Employee hereby expressly agrees to repay to Track 'N
Trail any and all sums owed by Employee to Track 'N Trail immediately upon
termination of Employee's employment.

S /GK/
________
Employee
Initials

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<PAGE>

9. ARBITRATION. In the event Employee's employment and this Agreement
are terminated, and Employee believes the termination was wrongful and/or
violated any of Employee's rights, Employee and Track 'N Trail agree to submit
any dispute arising out of the termination of Employee's employment, including,
but not limited to, claims of termination allegedly resulting from
discrimination on the basis of race, sex, age, national origin, ancestry, color,
religion, marital status, status as a veteran of the Vietnam era, physical or
mental disability, medical condition, or any other basis prohibited by law,
exclusively to final and binding arbitration before a neutral arbitrator.

If Employee and Track 'N Trail are unable to agree upon a neutral
arbitrator, Track 'N Trail will obtain a list of arbitrators from a state or
federal arbitration service. Employee (first) and then Track 'N Trail will
alternately strike names from the list until one name remains; the remaining
person shall be the arbitrator. The arbitrator shall be bound by the
qualifications and disclosure provisions and the procedures set forth in the
1989 Model Employment Arbitration Procedures of the American Arbitration
Association and shall order such discovery as is appropriate to the nature of
the claim and necessary to the adjudication thereof.

Arbitration proceedings shall be held in the city or town where Employee's
employment services were performed, at Track 'N Trail headquarters or at any
other location mutually agreed upon by Employee and Track 'N Trail. The
arbitrator shall determine the prevailing party in the arbitration and the costs
of the arbitration shall be paid by the nonprevailing party.

Employee and Track 'N Trail agree that this arbitration shall be the
exclusive means of resolving any dispute arising out of Employee's termination
and that no other action will be brought by Employee in any court or other
forum. ONLY THE ARBITRATOR, NOT A JUDGE OR JURY, WILL DECIDE THE DISPUTE.

If Employee decides to dispute Employee's termination, Employee agrees to
deliver a written request for arbitration to Track 'N Trail within one year of
the date of Employee's termination and to respond within 14 calendar days to
each communication regarding the selection of an arbitrator and the scheduling
of a hearing and other matters related to arbitration proceedings. If Track 'N
Trail does not receive a written

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<PAGE>

request for arbitration from Employee within one year from the date of
Employee's termination or if Employee does not respond to any communication from
Track 'N Trail about the arbitration proceedings within 14 calendar days,
Employee agrees Employee will have waived any right to raise any claims arising
out of the termination of Employee's employment with Track 'N Trail in
arbitration or in any court or other forum. The limitations set forth in this
paragraph shall not be subject to tolling, equitable or otherwise.

The arbitrator shall be permitted to award only those remedies in law or
equity which are requested by the parties and supported by credible, relevant
evidence. The provisions of this arbitration provision shall survive the
termination of this Agreement and Employee's employment, and shall remain in
full force and effect thereafter.

Employee and Track 'N Trail agree that if any court of competent
jurisdiction declares that any part of this arbitration provision is illegal,
invalid or unenforceable, such a declaration will not affect the legality,
validity or enforceability of the remaining parts of the arbitration provision
and the illegal, invalid or unenforceable part will no longer be part of this
arbitration provision.

S /GK/
________
Employee
Initials

10. POLICIES. Employee shall be bound by all the policies, rules and
regulations of Track 'N Trail now in force, and by all such other policies,
rules and regulations as may be hereafter implemented and called to his/her
notice, and will faithfully observe and abide by the same.

11. OTHER TERMS AND CONDITIONS OF EMPLOYMENT.

See Attachment B - Bonus Program
See Attachment C - Stock Appreciation Rights Agreement
(If none, Employee initial here. ______).

12. INDEMNIFICATION. Track 'N Trail agrees that Track 'N Trail shall
indemnify and hold Employee harmless for any and all losses, costs, damages,
expenses, including attorneys' fees,

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<PAGE>

incurred by Employee as a direct consequence of the discharge of his/her duties
as such and/or by reason of the fact that Employee is or was an agent of Track
'N Trail. Track 'N Trail further agrees to indemnify and hold Employee harmless
for any and all losses, costs, damages, expenses, including attorneys' fees,
incurred by Employee arising out of Track 'N Trail's breach of this Agreement or
any part thereof, regardless of the judgment or decisions arising therefrom.

13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and upon their heirs, administrators, representatives, executors,
successors and assigns and shall inure to the benefit of said parties and each
of them and their heirs, administrators, representatives, executors, successors
and assigns provided, however, that in no event may Employee assign his or her
rights or delegate his or her duties under this Agreement to any other party
without the prior written consent of Track 'N Trail.

14. SEVERABILITY. Track 'N Trail and Employee agree that should any
provision of this Agreement be declared or be determined by any court of
competent jurisdiction to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining parts, terms and provisions shall
not be affected thereby, and said illegal, unenforceable or invalid part, term
or provision will be deemed not to be part of this Agreement.

15. ENTIRE UNDERSTANDING. This Agreement contains all the understandings
and agreements between the parties concerning Employee's employment and Employee
acknowledges that no person who is either an agent or employee of Track 'N Trail
may orally or by conduct modify, delete, vary, or contradict, the terms and
conditions set forth herein. This Agreement replaces any and all prior
agreements between Employee and Track 'N Trail related

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<PAGE>

to Employee's employment and any and all such prior Agreements are hereby
canceled.

IN WITNESS WHEREOF, the parties have executed this Agreement at El Dorado
Hills, California to be effective as of the date first written above.

EMPLOYEE:

/S/ GREGORY M. KILGORE
-----------------------------------------

TRACK 'N TRAIL, a California corporation

By: /S/ DAVE SUECHTING, JR.
------------------------------------
Name: DAVE SUECHTING, JR.
Title: President

Copy Delivered to Employee
on 1/3/94
-------------------------------------

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<PAGE>

JOB DESCRIPTION - EXECUTIVE VICE PRESIDENT/C.O.O.

1.0 INTRODUCTION:

1.1 The purpose of this procedure is to establish and define the
position of Executive Vice President/C.O.O.

1.2 The basic function of the Executive Vice President/C.O.O. is to
provide the necessary leadership to direct Track 'N Trail's
business management, executing the plans and policies established
by the President. The Executive Vice President/C.O.O. will manage
and control Track 'N Trail's daily activities.

2.0 AUTHORITY:

2.1 As an officer of Track 'N Trail, the Executive Vice President/
C.O.O. is appointed at will by the Board of Directors and reports
directly to the President.

2.2 The following positions report directly to the Executive Vice
President/C.O.O.:

2.21 Vice President of Marketing

2.22 Vice President of Stores

2.23 Vice President of Finance/C.F.O.

2.24 Director of Real Estate and Construction

2.3 The Executive Vice President/C.O.O. has the authority to implement
Track 'N Trail's financial plan as long as sales and income levels
are at or ahead of schedule. If sales or income levels are
behind, approved spending levels must be re-approved by the
President.

2.4 The Executive Vice President/C.O.O. has the authority to
re-allocate departmental budgets within the overall approved
budget plan providing sales goals and net profit goals are within
plan or better and he/she has the support of the V.P. of
Finance/C.F.O.

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<PAGE>

2.5 The Executive Vice President/C.O.O. exercises hiring, promoting,
commending, and terminating authority over personnel reporting
directly to the Executive Vice President/C.O.O. This authority
requires the approval of the Board of Directors in any case
involving Officers of Track 'N Trail.

2.6 The Executive Vice President/C.O.O. has the authority to conduct
compensation reviews for those positions directly reporting the
him/her and recommend changes as part of the budget process.

3.0 RESPONSIBILITIES:

The Executive Vice President/C.O.O. is responsible for the following:

3.1 As the Chief Operating Officer, providing the necessary leadership
and management to execute the plans and policies of the President.

3.2 Managing the overall operations of Track 'N Trail in the most
efficient manner in order to achieve the profitability and growth
goals as established by the President.

3.3 Advising and supporting the President on all matters.

3.4 Developing and coordinating the budget process and its submission
to the President for approval.

3.5 Monitoring the overall operations of Track 'N Trail to ensure full
compliance with all Federal, State, and local regulations.

3.6 Advising the President on other business opportunities and/or
acquisitions.

3.7 Coordinating all outside professional services deemed appropriate
by the President.

3.8 Executing and directing the implementation of all personnel
policies established by the President.

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<PAGE>

3.9 Implementing and enforcing a corporate management training and
development plan to increase the expertise of the management team.

3.10 Directing the execution of Track 'N Trail's public relations
policy.

3.11 Directing the establishment of personnel policies to ensure
company-wide standardization and compliance.

3.12 Directing the implementation of established marketing guidelines.

4.0 DUTIES:

The duties of the Executive Vice President/C.O.O. include the following:

4.1 Supervise and direct the activities of the Managers of each
department to enforce the execution of Track 'N Trail's plans and
policies.

4.2 Resolve problems crossing departmental lines of responsibility.

4.3 Chair the Executive Advisory Committee and direct its activities.

4.4 Monitor the development and standardization of company-wide policy
procedures.

4.5 Receives reports to monitor business operations in an accurate and
timely manner in order to direct appropriate corrective action.

4.8 Brief the President on a regular basis regarding financial,
personnel, and field management problems, actions initiated and
attainment of goals to date.

4.9 Annually evaluates those personnel who report directly to the
Executive Vice President/C.O.O.

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<PAGE>

4.10 Coordinates staffing/manning requirements as needs change and
incorporates those recommendations into the budget process for
Track 'N Trail.

4.11 At least annually, review those job descriptions of the positions
reporting directly to the Executive Vice President C.O.O. for
content and accuracy in describing the functional authority,
responsibilities, and duties.

5.0 MEASURES OF PERFORMANCE:

The Executive Vice President/C.O.O. is deemed to be performing in a
satisfactory manner when the following are met:

5.1 The management of Track 'N Tail has resulted in consistently
achieving at least 90% of the profit goal and budget expense goals
are maintained within 4% of budget.

5.2 The activities of Track 'N Trail and the Executive Vice President/
C.O.O. are consistent with the directives of the President in
supporting field units to sell products.

5.3 The company budget was properly developed in an accurate,
realistic, achievable, and timely manner.

5.4 Leadership was applied in a fair, effective, and consistent manner
resulting in positive morale throughout the company.

5.5 The plans and policies of the President were executed in a
satisfactory manner conforming to established standards.

5.6 Proper performance evaluations have been accomplished for
personnel reporting directly to the Executive Vice President/
C.O.O. in an accurate and timely manner.

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<PAGE>

TRACK 'N TRAIL AGREEMENT FOR
STOCK APPRECIATION RIGHTS

TRACK 'N TRAIL, INC., a California corporation (the "Company"), agrees with
GREGORY M. KILGORE ("Kilgore") as follows:

1. PURPOSE OF AGREEMENT. The purpose of this Agreement is to further the
long-term growth and earnings of the Company by offering long-term incentives in
addition to current compensation to Kilgore for the performance of his duties as
Executive Vice President and Chief Operating Officer of the Company. The Track
'n Trail Agreement for Stock Appreciation Rights between the Company and Kilgore
dated May 26, 1992, is hereby terminated and shall be of no further force and
effect, and this Agreement shall be the only Stock Appreciation Rights Agreement
between the Company and Kilgore.

2. DEFINITIONS.

(a) STOCK APPRECIATION RIGHTS. The Vested Percentage of the value of the
Company's issued and outstanding capital stock on the Valuation Date in excess
of $3,551,845, which is the book value of the Company on June 29, 1991.

(b) VESTED PERCENTAGE. Vested Percentage is defined by the following
schedule showing the Vested Percentage on the first day of the Company's fiscal
year beginning in each of the years set forth in the schedule.

Fiscal Year Beginning In Vested Percentage

1993 0.4%
1994 0.8%
1995 1.2%
1996 1.6%
1997 2.0%

(i) The date that Kilgore's employment is terminated, whether
by the Company, by Kilgore, or by his death or his retirement;

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<PAGE>

(ii) The date that Kilgore becomes permanently totally
disabled, as evidenced by a physician's written determination;

(iii) The date June 1, 2007; or

(iv) The date that ownership of more than 50% of the Company's
issued and outstanding capital stock is acquired by any entity or entities
other than members of the family of David L. Suechting, Sr.

3. VALUATION METHOD. For purposes of determining "the value of the
Company's issued and outstanding capital stock on the Valuation Date" within the
meaning of the definition of Stock Appreciation Rights, the following valuation
method shall be used:

(a) If the Valuation Date is the date referred to in subparagraph
3(c)(i), (ii) or (iii), then "the value of the company's issued and
outstanding capital stock on the Valuation Date" shall be the book value of
the Company at its immediately preceding fiscal year end. Book value is
defined as the sum of the Company's retained earnings, its capital stock
and its paid-in capital.

(b) If the Valuation Date is the date referred to in subparagraph
3(c)(iv), then "the value of the Company's issued and outstanding capital
stock on the Valuation Date" shall be a sum determined by multiplying the
fair market value of the consideration paid for each share of stock
acquired by the new outside controlling entity or entities by the total
number of shares of issued and outstanding capital stock of the Company on
the Valuation Date.

4. PAYMENT FOR STOCK APPRECIATION RIGHTS. The dollar value of the Stock
Appreciation Rights shall be paid without interest to Kilgore in five (5) equal
annual installments, the first of which shall be paid within thirty (30) days of
the Valuation Date, the second on the first anniversary of the Valuation Date,
the third on the second anniversary of the Valuation Date, the fourth on the
third anniversary of the

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<PAGE>

Valuation Date and the last on the fourth anniversary of the Valuation Date.

5. KILGORE'S RIGHTS UNSECURED. Kilgore's right to receive payment
pursuant to this Agreement shall be an unsecured claim against the general
assets of the Company.

6. KILGORE'S RIGHTS NON-TRANSFERABLE. Kilgore's rights are personal to
him and to any person or persons who may become entitled by reason of Kilgore's
death, and Kilgore's rights or the rights of any such successors shall not be
subject to voluntary or involuntary alienation, assignment or transfer by
Kilgore or any such successors.

7. BINDING UPON SUCCESSORS. The obligations of the Company under this
Agreement shall be binding upon any successor corporation or organization which
shall succeed to substantially all of the assets and business of the Company and
the terms "Company" whenever used in this Agreement shall mean and include any
such corporation or organization after such succession. If the business
conducted by the Company shall be discontinued, any unpaid installment under
this Agreement shall become payable in a lump sum to the person or persons
entitled thereto.

8. DESIGNATION OF BENEFICIARY TO RECEIVE PAYMENTS IN THE EVENT OF
KILGORE'S DEATH. If Kilgore should die before receipt of all payments to which
he is entitled hereunder, payments of the amounts to which he is further
entitled shall be made to such beneficiary as Kilgore shall have designated by
an instrument in writing filed with the Secretary of the Company, or, in the
absence of such designation, to his personal representative. Such payments
shall be made in the same manner and at the same intervals as they would have
been made to Kilgore had he continued to live.

9. NO EMPLOYMENT RIGHTS. Kilgore shall have no right to be retained in
the employ of the Company by virtue of this Agreement.

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<PAGE>

10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

EXECUTED this 8th day of October, 1992 in El Dorado, Hills, California.

TRACK 'N TRAIL, INC.

By: /S/ DAVID L. SUECHTING, SR.
------------------------------------
David L. Suechting, Sr.
President

/S/ GREGORY M. KILGORE
-----------------------------------------
Gregory M. Kilgore

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<PAGE>

TRACK 'N TRAIL AGREEMENT FOR
STOCK APPRECIATION RIGHTS

TRACK 'N TRAIL, INC., a California corporation (the "Company"), agrees with
GREGORY M. KILGORE ("Kilgore") as follows:

1. PURPOSE OF AGREEMENT. The purpose of this Agreement is to further the
long-term growth and earnings of the Company by offering long-term incentives in
addition to current compensation to Kilgore for the performance of his duties as
Executive Vice President and Chief Operating Officer of the Company. The Track
'N Trail Agreements for Stock Appreciation Rights between the Company and
Kilgore dated May 26, 1992 and October 8, 1992, are hereby terminated and shall
be of no further force and effect, and this Agreement shall be the only
Agreement for Stock Appreciation Rights between the Company and Kilgore.

2. DEFINITIONS.

(a) STOCK APPRECIATION RIGHTS. The Vested Percentage of the value of the
Company is issued and outstanding capital stock on the Valuation Date in excess
of $7.5 million.

Fiscal Year Beginning In Vested Percentage
------------------------ ------------------
1993 1%
1994 2%
1995 3%
1996 4%
1997 5%

(i) The date that Kilgore's employment is terminated whether
by the Company, by Kilgore, or by his death or his retirement;

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<PAGE>

(ii) The date that Kilgore becomes permanently totally
disabled, as evidenced by a physician's written determination;

(iii) The date June 1, 2007; or

(iv) The date that ownership of more than 50% of the Company's
issued and outstanding capital stock is acquired by any entity or entities
other than members of the family of David L. Suechting, Sr.

(a) If the Valuation Date is the date referred to in
subparagraph 2(c)(i), (ii) or (iii), then "the value of the Company's
issued and outstanding capital stock on the Valuation Date" shall be
7.6 times the Company's average annual pre-tax earnings for the three
fiscal years immediately preceding the Valuation Date.

(b) If the Valuation Date is the date referred to in
subparagraph 2(c)(iv), then "the value of the Company's issued and
outstanding capital stock on the Valuation Date" shall be a sum
determined by multiplying the fair market value of the consideration
paid for each share of stock acquired by the new outside controlling
entity or entities by the total number of shares of issued and
outstanding capital stock of the Company on the Valuation Date.

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<PAGE>

5. KILGORE'S RIGHTS UNSECURED. Kilgore's right to receive payment
pursuant to this Agreement shall be an unsecured claim against the general
assets of the Company.

7. BINDING UPON SUCCESSORS. The obligations of the Company under this
Agreement shall be binding upon any successor corporation or organization which
shall succeed to substantially all of the assets and business of the Company and
the term "Company" whenever used in this Agreement shall mean and include any
such corporation or organization after such succession. If the business
conducted by the Company shall be discontinued, any unpaid installment under
this Agreement shall become payable in a lump sum to the person or persons
entitled thereto.

8. DESIGNATION OF BENEFICIARY TO RECEIVE PAYMENTS IN THE EVENT OF
KILGORE'S DEATH. If Kilgore should die before receipt of all payments to which
he is entitled hereunder, payments of the amounts to which he is further
entitled shall be made to such beneficiary as Kilgore shall have designated by
any instrument in writing filed with the Secretary of the Company, or, in the
absence of such designation, to his personal representative. Such payments
shall be made in the same manner and at the same intervals as they would have
been made to Kilgore had he continued to live.

9. NO EMPLOYMENT RIGHTS. Kilgore shall have no right to be retained in
the employ of the Company by virtue of this Agreement.

10. NO GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.

EXECUTED this ____ day of __________, 1994 in El Dorado Hills, California.

TRACK 'N TRAIL, INC.

By: ----------------------------------
David L. Suechting, Sr.
President

---------------------------------------
Gregory M. Kilgore

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<PAGE>

DATE: JANUARY 3, 1994

TO: GREG KILGORE
FROM: DAVE SUECHTING JR.

SUBJECT: 1994 EXECUTIVE BONUS PROGRAM

****************************PERSONAL AND CONFIDENTIAL*************************

I AM PLEASED TO ANNOUNCE THE 1994 BONUS PLAN FOR YOU, FOR THE PERIOD ENDING
12/31/94. THE DETAILS AND AN EXAMPLE OF THE PLAN ARE ON THE ENCLOSED
ATTACHMENT. YOUR BONUS EARNINGS WILL BE BASED UPON FIVE AREAS OF RESPONSIBILITY
AS FOLLOWS:

PROFITABILITY - 6% EARNINGS ON PRE-TAX INCOME ABOVE THE BENCHMARK EARNINGS OF
$2,499,000.
STORE WAGE CONTROL - $50 FOR EACH .01% SAVINGS BELOW THE 10.79% PLAN.
COMP STORE SALES GAIN - $50 FOR EACH .01% ABOVE THE 3.0% PLAN.
INVENTORY CONTROL - $50 FOR EACH .01% UNDER THE .60% PLAN SHRINK
MODIFIED MAINTAINED MARGIN - $50 FOR EACH .01% OVER THE 48.06% PLAN.

IT IS UNDERSTOOD THAT IF CERTAIN MINIMUM PERFORMANCE IS NOT ATTAINED AS DEFINED
ON THE ATTACHMENT, THAT THE EMPLOYEE WILL NOT PARTICIPATE IN THE BONUS PROGRAM
FOR 1994.

THE PRE-TAX PROFITS WILL NOT BE PENALIZED (REDUCED) FOR ITEMS WHICH ARE NOT
NORMAL OPERATING ITEMS, INCLUDING:

- LEGAL BILLS INCURRED IN DEFENDING THE COMPANY FROM SHAREHOLDERS
- LEGAL/ACCOUNTING/APPRAISAL/INVESTMENT BANKING OR ANY OTHER BILLS
RELATED TO THE SALE OR POTENTIAL SALE OF THE COMPANY
- ANY PAYMENTS/FEES PAID TO OR ON BEHALF OF DAVE SUECHTING SR./BARBARA
SUECHTING.
- ANY DISTRIBUTIONS TO THE SHAREHOLDERS.
- ANY COURT ORDERED EXPENSE DUE TO THE SHAREHOLDERS INCLUDING PAYMENT
FOR BOARD MEMBERS, OR NEUTRAL "EMPLOYEES".
- ANY MANAGEMENT FEE SALARY OR SIMILAR EXPENSE FROM NEW OWNERS
- ANY EXPENSE PAID TO TERMINATE A LEASE ON A NON-PRODUCTIVE STORE, NET
OF ANY SAVINGS IN THE CURRENT YEAR FROM EARLY TERMINATION.
- EXPENSES INCURRED DUE TO STOCK APPRECIATION RIGHTS.
- ANY OTHER EXPENSES NOT IN THE NORMAL COURSE OF BUSINESS

IT IS UNDERSTOOD THAT THIS BONUS AGREEMENT SHALL BE BINDING UPON ANY SUCCESSORS,
SHOULD THE COMPANY BE SOLD IN PART OR IN WHOLE.

<PAGE>

THE BONUS PAYOUT FOR CALENDAR 1994 WILL OCCUR ON OR BEFORE 3/15/95, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/31/94.

THIS BONUS PLAN IS EFFECTIVE FOR THE CALENDAR YEAR 1994 ONLY, AND THE COMPANY
RESERVES THE RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.

<PAGE>

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of this 3rd day of January,
1994, by and between John Wilkinson (hereinafter referred to as "Employee"), and
Track 'N Trail, a California corporation (hereinafter referred to as "Track 'N
Trail").

IN CONSIDERATION of the mutual promises set forth below, Employee and Track
'N Trail hereby agree as follows:

1. EMPLOYMENT. Track 'N Trail hereby agrees to employ Employee, and
Employee agrees to provide services to Track 'N Trail in the position of
V.P.-Marketing on an "at-will" basis, subject to the terms and conditions
hereinafter set forth.

2. DUTIES. Subject to the control of Track 'N Trail's Board of Directors
and/or Track 'N Trail management personnel with authority over Employee,
Employee shall perform the duties and responsibilities set forth in Attachment A
and such other duties and responsibilities assigned from time-to-time which are
commensurate with Employee's role as Track 'N Trail's V.P.-Marketing.
Throughout the term of this Agreement, Employee shall devote all of his or her
energies, interest, abilities and productive time to the performance of his or
her duties and responsibilities under this Agreement, and shall not, without
Track 'N Trail's prior written consent, render services to any other person or
entity or otherwise engage in any other activity that would materially interfere
with the performance of such duties and responsibilities under this Agreement.

a. Employee being convicted of, pleading guilty or NOLO CONTENDERE
to, or confessing to any act of fraud, misappropriation or embezzlement, or to
any felony;

b. Employee engaging in dishonest acts to the detriment of Track 'N
Trail;

c. Employee otherwise failing to comply with the terms of this
Agreement and/or engaging in misconduct in violation of Track 'N Trail policies.

-1-

<PAGE>

4. PAY ON TERMINATION. Should Track 'N Trail terminate this Agreement
and Employee's employment without cause as defined above and/or materially
breach any portion of this Agreement, Track 'N Trail shall tender to Employee an
amount equal to one (1 ) year of pay, to be calculated at the highest rate of
pay Employee has received from Track 'N Trail in the two-year period prior to
Employee's termination. Payments of said sum shall be made on Employee's last
day of employment, or on terms mutually agreeable to Employee and Track 'N
Trail.

5. WORKING CONDITIONS. Track 'N Trail agrees that during the term of
this Agreement Track 'N Trail:

a. Shall provide, establish and maintain reasonable working
conditions for Employee and abide by all state, federal and local employment
regulations and law;

b. Shall not, without the written consent of Employee, materially
alter or reduce the duties and responsibilities assigned to Employee as set
forth in Attachment A to this Agreement; or

c. Shall not, without written consent of Employee, require Employee
to relocate to any office in excess of thirty (30) miles from El Dorado Hills,
California.

6. COMPENSATION. Employee agrees to accept and Track 'N Trail agrees to
pay for Employee's services at the rate of $105,000 per year. Employee shall be
eligible to receive bonuses on the same terms and conditions as other similarly
situated employees. Track 'N Trail reserves the right to increase Employee's
compensation rate prospectively at any time.

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<PAGE>

tions which are owned by Track 'N Trail and which are regularly used in the
operation of Track 'N Trail (hereinafter "confidential information"). Employee
will not, either during the term of Employee's employment or any time in the
future, directly or indirectly:

a. Disclose or furnish, directly or indirectly, to any other person,
firm, agency, corporation, client, business, or enterprise, any confidential
information acquired by Employee during the term of this Agreement;

b. Individually or in conjunction with any other person, firm,
agency, company, client, business or corporation, employ or cause to be employed
any confidential information in any manner whatsoever, except in furtherance of
the business of Track 'N Trail;

c. Without the written consent of Track 'N Trail, publish, deliver,
or commit to being published or delivered, any copies, abstracts, or summaries
of any files, records, documents, drawings, specifications, lists, equipment,
and similar items relating to the business of Track 'N Trail, whether prepared
by the Employee or otherwise coming into the Employee's possession, except to
the extent required in the ordinary course of Track 'N Trail's business;

d. Attempt to encourage, induce, or otherwise solicit, directly or
indirectly, any other employee of Track 'N Trail to breach an employment
agreement with Track 'N Trail or to otherwise interfere with the advantageous
business relationship of Track 'N Trail with its employees.

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<PAGE>

8. REPAYMENTS. Employee hereby expressly agrees to repay to Track 'N
Trail any and all sums owed by Employee to Track 'N Trail immediately upon
termination of Employee's employment.

S/JW/
________
Employee
Initials

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<PAGE>

proceedings. If Track 'N Trail does not receive a written request for
arbitration from Employee within one year from the date of Employee's
termination or if Employee does not respond to any communication from Track 'N
Trail about the arbitration proceedings within 14 calendar days, Employee agrees
Employee will have waived any right to raise any claims arising out of the
termination of Employee's employment with Track 'N Trail in arbitration or in
any court or other forum. The limitations set forth in this paragraph shall not
be subject to tolling, equitable or otherwise.

S/JW/
________
Employee
Initials

11. OTHER TERMS AND CONDITIONS OF EMPLOYMENT. See Attachment B - Bonus
Program. See Attachment C - Stock Appreciation Rights Agreement (If none,
Employee initial here. _____).

12. INDEMNIFICATION. Track 'N Trail agrees that Track 'N Trail shall
indemnify and hold Employee harmless for any and all losses, costs, damages,
expenses, including attorneys' fees, incurred by Employee as a direct
consequence of the discharge of his/her duties as such and/or by reason of the
fact that Employee is or was an agent of Track 'N Trail. Track 'N Trail further
agrees to indemnify and hold Employee harmless for any and all losses, costs,
damages, expenses, including attorneys' fees, incurred by Employee arising out
of Track 'N Trail's breach of this Agreement or any part thereof, regardless of
the judgment or decisions arising therefrom.

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<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement at El Dorado
Hills, California to be effective as of the date first written above.

EMPLOYEE:

/s/ JOHN WILKINSON
-------------------------------------------------

TRACK 'N TRAIL, a California corporation

By: /s/ DAVE SUECHTING, JR.
--------------------------------------------
Name: Dave Suechting, Jr.
Title: President

Copy Delivered to Employee
on 1/3/94
---------------------

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<PAGE>

JOB DESCRIPTION - VICE PRESIDENT OF MARKETING

1.0 INTRODUCTION:

1.1 The purpose of this procedure is to define and establish the job
description of Vice President of Marketing.

1.2 The basic function of the Vice President of Marketing is to create
the demand for Track 'N Trail products through the effective
management of advertising, merchandising and distributing of shoe
products.

2.0 AUTHORITY:

2.1 As an officer of Track 'N Trail the Vice President of Marketing is
appointed at will by Track 'N Trail and reports directly to the
Executive Vice President/C.O.O.

2.2 The following positions report directly to the Vice President of
Marketing:

2.21 Advertising Director
2.22 Merchandising Manager
2.23 Director of Planning and Distribution.

2.3 The Vice President of Marketing has the authority to execute the
approved marketing budget providing sales and income levels are at
plan or better. All spending level adjustments will be in the
form of recommendations to the Executive Vice President if sales
and income are below planned budget.

2.4 The Vice President of Marketing has the authority to hire,
commend, promote, and terminate those personnel reporting directly
to him/her.

2.5 The Vice President of Marketing has the authority to conduct
compensation reviews for those personnel reporting to him/her.
Any changes will be in the form of recommendations and as part of
the budget process.

3.0 RESPONSIBILITIES:

The Vice President of Marketing is responsible for the following:

3.1 Directing, managing and controlling the marketing functions in the
most efficient manner to achieve sales and growth goals within the
planned budget of the Marketing Director.

3.2 Developing, recommending, directing and monitoring the necessary
advertising, merchandising and distributing

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<PAGE>

strategies to create the demand in Track 'N Trail retail stores.

3.3 Coordinating with the Vice President of Stores those field inputs
to enhance the merchandising functions necessary to support retail
stores in achieving their sales goals.

3.4 Directing the required coordination between Buyers and
distribution to ensure the inventory levels of Track 'N Trail
stores are within the budget plan and consistent with sales
activity.

3.5 Execute grand openings, promotions and special events as directed
by the Executive Vice President/C.O.O.

3.6 Plan and direct the marketing activities of Track 'N Trail to
ensure products and services are consistent with the established
marketing image.

3.7 Execute and enforce established Track 'N Trail policies and
personnel practices to ensure compliance and conformity throughout
the Marketing Department.

3.8 Advises and supports the Executive Vice President/C.O.O. on all
marketing functions.

3.9 Developing, directing and coordinating the implementation of all
marketing aspects of Track 'N Trail's private label products
including promoting, purchasing, distributing and pricing/costing
of such products.

3.10 Maintain proper allocations of mark up and mark down consistent
with the planned budget.

3.11 Achieving proper contribution margins by ensuring the established
pricing strategies are executed and reflect competitive market
prices and not promotional pricing.

3.12 Ensuring that the Marketing Department is fully receptive and
responsive in supporting field requests for customer's needs.

3.13 Dissemination to field personnel of information for new products
and features and promotions for significant financial investment
programs.

4.0 DUTIES:

The duties of the Vice President of Marketing include the following:

4.1 Supervise and direct the activities of the Advertising Director,
Merchandising Manager and the Director of

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<PAGE>

Planning and Distribution to maximize the contribution margins to
Track 'N Trail's profits and support the retail stores in
achieving their sales goals.

4.2 Recognize and encourage effective communications and marketing
ideas among the managers.

4.3 Is a member of the Executive Advisory Committee and actively
supports its activities.

4.4 Develops the marketing budget for submission to the Executive Vice
President/C.O.O.

4.5 Advises the Executive Vice President/C.O.O. on marketing matters
pertaining to the efficient employment of personnel operations and
facilities of Track 'N Trail.

4.6 Annually evaluates those personnel who report directly to the Vice
President of Marketing.

4.7 Interact with the Vice President of Stores to ensure sales
contests and field trends are properly prioritized to increase
effective merchandising and support to the retail stores.

4.8 Schedule and conduct periodic departmental meetings to enhance and
coordinate the communication and effectiveness of the Marketing
Department.

4.9 Monitor and maintain departmental expenses within planned budget
and consistent with sales levels.

4.10 Direct and monitor the execution of the public relations program
to ensure compliance and consistency with the established Track 'N
Trail policy.

4.11 Monitor and maintain mark downs to a minimum by avoiding frequent
changes in product lines and/or the purchase of unreasonable
quantities.

4.12 Any other duties pertaining to marketing as the Executive Vice
President/C.O.O. should direct.

5.0 MEASURES OF PERFORMANCE:

The Vice President of Marketing will be deemed to be performing in a
satisfactory manner when the following are met:

5.1 The management of the Marketing Department has resulted in
consistently achieving planned budget goals. Specifically:

- within 95% of annual sales goals;

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<PAGE>

- within 98% of inventory turn;
- maintained margin is achieved.

5.2 The activities of the Marketing Department are consistent with the
directives of the Executive Vice President/C.O.O.

5.3 The Marketing Department budget was properly developed in an
accurate, realistic, achievable and timely manner.

5.4 Leadership was applied in a fair, effective, and consistent manner
resulting in positive morale throughout the Marketing Department.

5.5 The plans and policies of Track 'N Trail were executed within the
Marketing Department in a satisfactory manner conforming to
established standards.

5.6 Proper performance evaluations have been accomplished for
personnel reporting directly to the Vice President of Marketing.

5.7 Housekeeping at Distribution Center will provide a clean and safe
environment.

5.8 All Distribution Center personnel are properly trained to work
safely and take full use of provided safety equipment.

5.9 The Distribution Center operates within 4% of the planned expense
(adjusted for sales variances).

5.10 The Distribution Center functions at peak performance relative to
moving goods in and out on time.

5.11 Loss prevention and security measures keep shrinkage at the
Distribution Center under .10% of goods shipped.

5.12 All shipments leaving the Distribution Center are invoiced and
shipped 99% accurate as to contents, value, weight, style, size
and width.

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<PAGE>

TRACK 'N TRAIL AGREEMENT FOR
STOCK APPRECIATION RIGHTS

TRACK 'N TRAIL, INC., a California corporation (the "Company"), agrees with
JOHN WILKINSON ("Wilkinson") as follows:

1. PURPOSE OF AGREEMENT. The purpose of this Agreement is to further
the long-term growth and earnings of the Company by offering long-term
incentives in addition to current compensation to Wilkinson for the performance
of his duties as Vice-President of Marketing and Merchandise of the Company.
The Track 'N Trail Agreement for Stock Appreciation Rights between the Company
and Wilkinson dated 5/26/ 1992, is hereby terminated and shall be of no further
force and effect, and this Agreement shall be the only Stock Appreciation Rights
Agreement between the Company and Wilkinson.

2. DEFINITIONS.

(a) STOCK APPRECIATION RIGHTS: The Vested Percentage of the value of
the Company's issued and outstanding capital stock on that Valuation Date in
excess of $3,551,845, which is the book value of the Company on June 29, 1991.

(b) VESTED PERCENTAGE: Vested Percentage is defined by the following
schedule showing the Vested Percentage on the first day of the Company's fiscal
year beginning in each of the years set forth in the schedule

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<PAGE>

Fiscal Year Beginning In: Vested Percentage
------------------------- -----------------------
1993 0.4%
1994 0.8%
1995 1.2%
1996 1.6%
1997 2.0%

(i) The date that Wilkinson's employment is terminated, whether
by the Company, by Wilkinson, or by his death or his retirement;

(ii) The date that Wilkinson becomes permanently totally
disabled, as evidenced by a physician's written determination;

(iii) The date June 1, 2007; or

(iv) The date that ownership of more than 50% of the Company's
issued and outstanding capital stock is acquired by any entity or entities
other than members of the family of David L. Suechting, Sr.

(a) If the Valuation Date is the date referred to in subparagraph
3(c)(i), (ii) or (iii), then "the value of the Company's issued and outstanding
capital stock on the Valuation Date" shall be the book value of the Company at
its immediately preceding fiscal year end. Book value is defined as the sum of

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<PAGE>

the Company's retained earnings, its capital stock and its paid in capital.

(b) If the Valuation Date is the date referred to in subparagraph
3(c)(iv), then "the value of the Company's issued and outstanding capital stock
on the Valuation Date" shall be a sum determined by multiplying the fair market
value of the consideration paid for each share of stock acquired by the new
outside controlling entity or entities by the total number of shares of issued
and outstanding capital stock of the Company on the Valuation Date.

4. PAYMENT FOR STOCK APPRECIATION RIGHTS. The dollar value of the
Stock Appreciation Rights shall be paid without interest to Wilkinson in five
(5) equal annual installments, the first of which shall be paid within thirty
(30) days of the Valuation Date, the second on the first anniversary of the
Valuation Date, the third on the second anniversary of the Valuation Date, the
fourth on the third anniversary of the Valuation Date and the last on the fourth
anniversary of the Valuation Date.

5. WILKINSON'S RIGHTS UNSECURED. Wilkinson's right to receive
payment pursuant to this Agreement shall be an unsecured claim against the
general assets of the Company.

6. WILKINSON'S RIGHTS NON-TRANSFERABLE. Wilkinson's rights are
personal to him and to any person or persons who may

-3-
<PAGE>

become entitled by reason of Wilkinson's death, and Wilkinson's rights or the
rights of any such successors shall not be subject to voluntary or involuntary
alienation, assignment or transfer by Wilkinson or any such successors.

7. BINDING UPON SUCCESSORS. The obligations of the Company under
this Agreement shall be binding upon any successor corporation or organization
which shall succeed to substantially all of the assets and business of the
Company and the terms "Company" whenever used in this Agreement shall mean and
include any such corporation or organization after such succession. If the
business conducted by the Company shall be discontinued, any unpaid installment
under this Agreement shall become payable in a lump sum to the person or persons
entitled thereto.

8. DESIGNATION OF BENEFICIARY TO RECEIVE PAYMENTS IN THE EVENT OF
WILKINSON'S DEATH. If Wilkinson should die before receipt of all payments to
which he is entitled hereunder, payments of the amounts to which he is further
entitled shall be made to such beneficiary as Wilkinson shall have designated by
an instrument in writing filed with the Secretary of the Company, or, in the
absence of such designation, to his personal representative. Such payments
shall be made in the same manner and at the same intervals as they would have
been made to Wilkinson had he continued to live.

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<PAGE>

9. NO EMPLOYMENT RIGHTS. Wilkinson shall have no right to be
retained in the employ of the Company by virtue of this Agreement.

10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.

EXECUTED this 8th day of October, 1992 in El Dorado Hills, California.

TRACK 'N TRAIL, INC.

By /s/ DAVID L. SUECHTING, SR.
--------------------------------
David L. Suechting, Sr.,
President

/s/ JOHN WILKINSON
-----------------------------------
John Wilkinson

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<PAGE>

DATE: JANUARY 3, 1994

TO: JOHN WILKINSON
FROM: DAVE SUECHTING JR.

SUBJECT: 1994 EXECUTIVE BONUS PROGRAM

PERSONAL AND CONFIDENTIAL

1) PROFITABILITY - 3.0% EARNINGS ON PRE-TAX INCOME ABOVE THE BENCHMARK
EARNINGS OF $2,499,000.

2) INVENTORY TURN - $3,500 FOR ATTAINING TURN OF 1.86 AND $1000 FOR EACH .01
IMPROVEMENT.

3) MODIFIED MAINTAINED MARGIN - $125 FOR EACH .01% IMPROVEMENT OVER PLAN.

4) COMP STORE SALES GAIN - $225 FOR EACH .1% ABOVE THE 3.0% PLAN.

IT IS UNDERSTOOD THAT IF CERTAIN MINIMUM PERFORMANCE IS NOT ATTAINED AS DEFINED
ON THE ATTACHMENT, THAT THE EMPLOYEE WILL NOT PARTICIPATE IN THE BONUS PROGRAM
FOR 1994.

THE PRE-TAX PROFITS WILL NOT BE PENALIZED (REDUCED) FOR ITEMS WHICH ARE NOT
NORMAL OPERATING ITEMS, INCLUDING:

- LEGAL BILLS INCURRED IN DEFENDING THE COMPANY FROM SHAREHOLDERS.

- LEGAL/ACCOUNTING/APPRAISAL/INVESTMENT BANKING OR ANY OTHER BILLS
RELATED TO THE SALE OR POTENTIAL SALE OF THE COMPANY.

- ANY PAYMENTS/FEES PAID TO OR ON BEHALF OF DAVE SUECHTING SR/BARBARA
SUECHTING.

- ANY DISTRIBUTIONS TO THE SHAREHOLDERS.

- ANY COURT ORDERED EXPENSE DUE TO THE SHAREHOLDERS INCLUDING PAYMENT
FOR BOARD MEMBERS, OR NEUTRAL "EMPLOYEES."

- ANY MANAGEMENT FEE SALARY OR SIMILAR EXPENSE FROM NEW OWNERS.

- ANY EXPENSE PAID TO THE TERMINATE A LEASE ON A NON-PRODUCTIVE STORE,
NET OF ANY SAVINGS IN THE CURRENT YEAR FROM EARLY TERMINATION.

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<PAGE>

- EXPENSES INCURRED DUE TO STOCK APPRECIATION RIGHTS.

- ANY OTHER EXPENSES NOT IN THE NORMAL COURSE OF BUSINESS.

IT IS UNDERSTOOD THAT THIS BONUS AGREEMENT SHALL BE BINDING UPON ANY SUCCESSORS,
SHOULD THE COMPANY BE SOLD IN PART OR IN WHOLE.

THE BONUS PAYOUT FOR CALENDAR 1994 WILL OCCUR ON OR BEFORE 3/15/95, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/31/94.

THIS BONUS PLAN IS EFFECTIVE FOR THE CALENDAR YEAR 1994 ONLY, AND THE COMPANY
RESERVES THE RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.

<PAGE>

Exhibit 10.3

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of this 3rd day of January,
1994, by and between DANIEL J. NAHMENS (hereinafter referred to as "Employee"),
and TRACK 'N TRAIL, a California corporation (hereinafter referred to as
"Track 'N Trail").

IN CONSIDERATION of the mutual promises set forth below, Employee and
Track 'N Trail hereby agree as follows:

1. EMPLOYMENT. Track 'N Trail hereby agrees to employ Employee, and
Employee agrees to provide services to Track 'N Trail in the position of V.P.
Finance/CEO on an "at-will" basis, subject to the terms and conditions
hereinafter set forth.

2. DUTIES. Subject to the control of Track 'N Trail's Board of Directors
and/or Track 'N Trail management personnel with authority over Employee,
Employee shall perform the duties and responsibilities set forth in Attachment A
and such other duties and responsibilities assigned from time-to-time which are
commensurate with Employee's role as Track 'N Trail's V.P. Finance/CEO.
Throughout the term of this Agreement, Employee shall devote all of his or her
energies, interest, abilities and productive time to the performance of his or
her duties and responsibilities under this Agreement, and shall not, without
Track 'N Trail's prior written consent, render services to any other person or
entity or otherwise engage in any other activity that would materially interfere
with the performance of such duties and responsibilities under this Agreement.

(a) Employee being convicted of, pleading guilty or NOLO CONTENDERE to, or
confessing to any act of fraud, misappropriation or embezzlement, or to any
felony;

(b) Employee engaging in dishonest acts to the detriment of Track 'N
Trail;

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<PAGE>

(c) Employee otherwise failing to comply with the terms of this Agreement
and/or engaging in misconduct in violation of Track 'N Trail policies.

4. PAY ON TERMINATION. Should Track 'N Trail terminate this Agreement
and Employee's employment without cause as defined above and/or materially
breach any portion of this Agreement, Track 'N Trail shall tender to Employee an
amount equal to one (1 ) year of pay, to be calculated at the highest rate of
pay Employee has received from Track 'N Trail in the two-year period prior to
Employee's termination. Payments of said sum shall be made on Employee's last
day of employment, or on terms mutually agreeable to Employee and Track 'N
Trail.

5. WORKING CONDITIONS. Track 'N Trail agrees that during the term of
this Agreement Track 'N Trail:

(a) Shall provide, establish and maintain reasonable working conditions
for Employee and abide by all state, federal and local employment regulations
and law;

(b) Shall not, without the written consent of Employee, materially alter
or reduce the duties and responsibilities assigned to Employee as set forth in
Attachment A to this Agreement; or

(c) Shall not, without written consent of Employee, require Employee to
relocate to any office in excess of thirty (30) miles from El Dorado Hills,
California.

6. COMPENSATION. Employee agrees to accept and Track 'N Trail agrees to
pay for Employee's services at the rate of $75,000.00 per year. Employee shall
be eligible to receive bonuses on the same terms and conditions as other
similarly situated employees. Track 'N Trail reserves the right to increase
Employee's compensation rate prospectively at any time.

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<PAGE>

public. These trade secrets include, but are not limited to, Track 'N Trail's
price lists, advertising and promotional ideas and strategies, customer lists
and formulas, patterns, devices, processes, compilations of information, records
and specifications which are owned by Track 'N Trail and which are regularly
used in the operation of Track 'N Trail (hereinafter "confidential
information"). Employee will not, either during the term of Employee's
employment or any time in the future, directly or indirectly:

(a) Disclose or furnish, directly or indirectly, to any other person,
firm, agency, corporation, client, business or enterprise, any confidential
information acquired by Employee during the term of this Agreement;

(b) Individually or in conjunction with any other person, firm, agency,
company, client, business or corporation, employ or cause to be employed any
confidential information in any manner whatsoever, except in furtherance of the
business of Track 'N Trail;

(c) Without the written consent of Track 'N Trail, publish, deliver or
commit to being published or delivered, any copies, abstracts or summaries of
any files, records, documents, drawings, specifications, lists, equipment and
similar items relating to the business of Track 'N Trail, whether prepared by
the Employee or otherwise coming into the Employee's possession, except to the
extent required in the ordinary course of Track 'N Trail's business;

(d) Attempt to encourage, induce or otherwise solicit, directly or
indirectly, any other employee of Track 'N Trail to breach an employment
agreement with Track 'N Trail or to otherwise interfere with the advantageous
business relationship of Track 'N Trail with its employees.

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<PAGE>

8. REPAYMENTS. Employee hereby expressly agrees to repay to Track 'N
Trail any and all sums owed by Employee to Track 'N Trail immediately upon
termination of Employee's employment.

/s/ DJN
__________
Employee
Initials

9. ARBITRATION. In the event Employee's employment and this Agreement
are terminated, and Employee believes the termination was wrongful and/or
violated any of Employee's rights, Employee and Track 'N Trail agree to submit
any dispute arising out of the termination of Employee's employment, including,
but not limited to, claims of termination allegedly resulting from
discrimination on the basis of race, sex, age, national origin, ancestry, color,
religion, marital status, status as a veteran of the Vietnam era, physical or
mental disability, medical condition or any other basis prohibited by law,
exclusively to final and binding arbitration before a neutral arbitrator.

-4-
<PAGE>

/s/ DJN
__________
Employee
Initials

11. OTHER TERMS AND CONDITIONS OF EMPLOYMENT. See Attachment B-Bonus
Program. (If none, Employee initial here. ____).

13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and upon their heirs, administrators, representatives, executors,
successors and assigns and

-5-
<PAGE>

shall inure to the benefit of said parties and each of them and their heirs,
administrators, representatives, executors, successors and assigns provided,
however, that in no event may Employee assign his or her rights or delegate his
or her duties under this Agreement to any other party without the prior written
consent of Track 'N Trail.

15. ENTIRE UNDERSTANDING. This Agreement contains all the understandings
and agreements between the parties concerning Employee's employment and Employee
acknowledges that no person who is either an agent or employee of Track 'N Trail
may orally or by conduct modify, delete, vary or contradict, the terms and
conditions set forth herein. This Agreement replaces any and all prior
agreements between Employee and Track 'N Trail related to Employee's employment
and any and all such prior Agreements are hereby canceled.

IN WITNESS WHEREOF, the parties have executed this Agreement at El Dorado
Hills, California to be effective as of the date first written above.

EMPLOYEE:

/s/ DANIEL J. NAHMENS
----------------------------------------

TRACK 'N TRAIL, a California corporation

By /s/ DAVE SUECHTING, JR.
-------------------------------------
Name: DAVE SUECHTING, JR.
Title: President

Copy Delivered to Employee on
1/3/94

-6-
<PAGE>

JOB DESCRIPTION - VICE PRESIDENT FINANCE, CFO

1.0 INTRODUCTION:

The purpose of this procedure is to establish and define the
position of Vice President Finance, Chief Financial Officer at
Track 'n Trail and to describe the authority, responsibilities, and
duties of the position.

2.0 AUTHORITY:

2.1 The CFO is appointed at will by Track 'n Trail and receives his/her
authority from and reports directly to the Executive Vice
President/C.O.O.

2.2 The following positions report directly to the CFO.

2.21 Assistant Controller
2.22 MIS Manager
2.23 Human Resources Manager

2.3 The CFO has the authority to accomplish the following:

2.31 Manage the various functions of Finance, Accounting, MIS, and
Human Resources.

2.32 Incur and manage the expenses for the efficient and effective
operation of Finance, Accounting, MIS, and Human Resources
department.

2.33 Assure adequate controls exist over the authorization and
payment for all invoices.

2.34 Oversee the Shortage Control Effort within Track 'n Trail to
assure an acceptable performance.

2.35 Review and approve all policies and operating procedures to
assure that they have adequate controls, are easy to
understand, and perform their intended purpose.

2.36 Responsibility for the preparation of the annual financial
operating plan.

2.37 Joint responsibility with the Senior Management of Track 'n
Trail for the preparation and implementation of the Long
Range Strategic Plan.

2.38 Jointly responsible with the C.O.O. for the negation of
contracts and liabilities with outside agencies.

-1-
<PAGE>

2.39 Responsibilities and accountability to review all expense
areas of the business to develop proposals for profit
improvements by working with the head of each functional
area.

2.40 Determine the long range MIS system needs for Stores,
Merchandising, Warehouse, Finance and Human Resources and
then take the necessary steps to implement these changes.

2.41 Act as primary interface with the banks and outside auditors.
Also interface with other potential investors in the
business.

2.24 Jointly responsible for C.O.O. on legal matters related to
both general business and personnel matters.

2.43 Hire, train, commend, promote, discipline, and terminate
those personnel reporting directly to him/her.

2.44 To change the rate of compensation for personnel reporting
directly to the Chief Financial Officer. Any change in
compensation is contingent upon sales and income levels being
at or ahead of plan. Also critical in their evaluation is
their individual performance in their specific function in
regard to their job responsibilities and performance on any
special projects.

3.0 RESPONSIBILITIES:

The Vice President of Finance, CFO is primarily responsible for the
effective management of Track 'n Trail's financial affairs. Specific
responsibilities include the following:

3.1 Administer all functions within the Finance, Accounting, MIS and
Human Resources departments to ensure legal, financial, and support
objectives are met.

3.2 Administer the timely and accurate production of financial
statements.

3.3 Adequate controls over Inventory Shortage.

3.4 Performance to overall company expense plan.

3.5 Development of annual financial operating plan.

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<PAGE>

3.6 Developing, revising, and maintaining the forms necessary to provide
Track 'N Trail with essential management information.

4.0 DUTIES:

The Vice President of Finance's principal duties include the following:

4.1 Oversee the development and management of budgets, financial
statements, and other financial reports needed to provide management
with the information required to run the business.

4.2 Work with the Senior Management Committee to develop overall
guidelines and parameters for the annual operating plan.

4.3 Manage the preparation of monthly and annual financial statements,
budget variance and other operating reports.

4.4 Work with Department Heads that he/she directly supervises, and
executive management to prepare, manage, and achieve expense
budgets.

4.5 Supervise Finance, Accounting, MIS and Human Resources departments.

4.6 Keep informed on any changes to governmental regulations,
requirements and laws that effect Track 'n Trail, and make sure that
all financial reports meet GAAP and legal requirements.

4.7 Review payment terms for expense and merchandise to assure maximum
benefit to Track 'n Trail. Also work with the V.P. of Marketing to
improve terms whenever possible.

4.8 Manage the check and credit authorization process to maximize
customer service and minimize operating costs.

4.9 Negotiate and interface with banks in relationship to loans, cash
management and checking accounts.

4.10 Assure the adequate maintenance of insurance coverage for
properties, equipment, liability, and employee benefits.

4.11 Interview, hire, train, commend, promote, counsel, and terminate
immediate subordinates within Company policy and budget guidelines.

-3-
<PAGE>

4.12 Oversee the preparation and update of all personnel within the CFO
areas of responsibility including preparation of procedures and
training manuals.

4.13 Review all contracts and make appropriate recommendations to the
Senior Management Committee.

4.14 Complete performance evaluations for all personnel who report
directly to the CFO in a timely and accurate manner.

4.15 Work with the Executive Management Committee on the development and
update of the Five Year Strategic Plan each year.

4.16 Serve as Chairman of the Inventory Shortage Prevention Committee.

4.17 Perform periodic store visits with District Managers, Auditors, and
Security personnel.

4.18 Responsible for the management of the year-end audit.

4.19 Continuously review automated systems and how well they meet the
changing needs of the business. Develop and implement the changes
necessary to meet business needs.

4.20 Attend and actively participate in all required company meetings.

4.21 Coordinate the update of all procedure and training policies and
procedures that pertain to areas he/she is responsible.

4.22 Coordinate the Employee of the Month/Year program and any other
corporate awards programs.

4.23 Coordinate the functions of the mail room, including report
distribution and other correspondence distribution.

4.24 Supervise the maintenance of employee personnel files, assuring that
all required documents are obtained, correctly completed, and filed
in accordance with government and company requirements.

4.25 Maintain the safety and confidentiality of company records and
restrict employee access to company records to a need-to-know basis.

4.26 Perform any other duties as required and necessary.

-4-
<PAGE>

4.27 All positive/negative trends in Track 'n Trail's financial condition
will be identified and reported to the President and Executive Vice
President/C.O.O. in a timely manner.

4.28 Evaluate the total organization to determine needs to meet growth
plans. Develop strategies to meet those needs organizationally,
financially, systems, accounting, loss prevention, security,
communications, investors, banking, training, and Human Resource
operations.

4.29 Evaluate detail gross margin performance to determine points where
enhancement is possible. Develop or enhance reporting systems to
make gross margin tracking and inventory control more effective.

4.30 Working with the Senior Management Committee, explore the
alternative available for financing the growth in stores and volume
over the next five years.

4.31 Work with Vice President of Marketing to develop marketing concepts
using company and other name files.

4.32 Interface with contracted Security Consultant to assure adequate
protection of assets.

4.33 Keep President and Executive Vice President/C.O.O. promptly updated
on progress in key assignments and special projects.

5.0 MEASURES OF PERFORMANCE:

The Vice President of Finance/CFO's performance will be evaluated based
upon the following criteria:

5.1 The Total Company Expenses are maintained within 4% of approved
budget.

5.2 The Total Company Inventory shortage is not greater than .60% of
total sales.

5.3 Total Company Operating profit is over 5% of sales pretax.

5.4 The expense performance for the year in Finance, Accounting, MIS and
Human Resources are within 4% of budget (adjusted for sales
variances).

5.5 Tax returns are prepared and payments made timely and accurately.

-5-
<PAGE>

5.6 All job description responsibilities and duties are performed in a
satisfactory manner and on a timely basis.

5.7 The plans and policies of Track 'N Trail were consistently executed
within the Finance Department in a satisfactory manner conforming to
established standards.

5.8 Proper performance evaluations have been accomplished for personnel
reporting directly to the Vice President Finance/CFO.

5.9 Leadership was applied in a fair, effective and consistent manner
resulting in positive morale throughout the department.

-6-
<PAGE>

DATE: JANUARY 3, 1994

TO: DANIEL J. NAHMENS
FROM: DAVE SUECHTING JR.

SUBJECT: 1994 EXECUTIVE BONUS PROGRAM

PERSONAL AND CONFIDENTIAL

PROFITABILITY - 5% EARNINGS ON PRE-TAX INCOME ABOVE THE BENCHMARK EARNINGS
OF $2,499,000.

STORE WAGE CONTROL - $50 FOR EACH .01% SAVINGS BELOW THE 10.79% PLAN.

COMP STORE SALES GAIN - $50 FOR EACH .1% ABOVE THE 3.0% PLAN.

INVENTORY CONTROL - $50 FOR EACH .01% UNDER THE .60% PLAN SHRINK

MODIFIED MAINTAINED MARGIN - $50 FOR EACH .01% OVER THE 48.06% PLAN.

IT IS UNDERSTOOD THAT IF CERTAIN MINIMUM PERFORMANCE IS NOT ATTAINED AS DEFINED
ON THE ATTACHMENT, THAT THE EMPLOYEE WILL NOT PARTICIPATE IN THE BONUS PROGRAM
FOR 1994.

THE PRE-TAX PROFITS WILL NOT BE PENALIZED (REDUCED) FOR ITEMS WHICH ARE NOT
NORMAL OPERATING ITEMS, INCLUDING:

- LEGAL BILLS INCURRED IN DEFENDING THE COMPANY FROM SHAREHOLDERS

- LEGAL/ACCOUNTING/APPRAISAL/INVESTMENT BANKING OR ANY OTHER BILLS
RELATED TO THE SALE OR POTENTIAL SALE OF THE COMPANY

- ANY PAYMENTS/FEES PAID TO OR ON BEHALF OF DAVE SUECHTING SR/BARBARA
SUECHTING

- ANY DISTRIBUTIONS TO THE SHAREHOLDERS.

- ANY COURT ORDERED EXPENSE DUE TO THE SHAREHOLDERS INCLUDING PAYMENT
FOR BOARD MEMBERS, OR NEUTRAL "EMPLOYEES."

- ANY MANAGEMENT FEE SALARY OR SIMILAR EXPENSE FROM NEW OWNERS

-1-

<PAGE>

- ANY EXPENSE PAID TO THE TERMINATE A LEASE ON A NON-PRODUCTIVE STORE,
NET OF ANY SAVINGS IN THE CURRENT YEAR FROM EARLY TERMINATION

- EXPENSES INCURRED DUE TO STOCK APPRECIATION RIGHTS.

- ANY OTHER EXPENSES NOT IN THE NORMAL COURSE OF BUSINESS.

IT IS UNDERSTOOD THAT THIS BONUS AGREEMENT SHALL BE BINDING UPON ANY SUCCESSORS,
SHOULD THE COMPANY BE SOLD IN PART OR IN WHOLE.

THE BONUS PAYOUT FOR CALENDAR 1994 WILL OCCUR ON OR BEFORE 3/15/95, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/31/94.

THIS BONUS PLAN IS EFFECTIVE FOR THE CALENDAR YEAR 1994 ONLY, AND THE COMPANY
RESERVES THE RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.

-2-
<PAGE>

MANAGEMENT BONUS PROGRAMS
1994

COO/CFO

COO-RATE OF 6% OVER BENCHMARK
CFO-RATE OF 5% OVER BENCHMARK

BENCHMARK:
1994 PLAN $2,305,000
S/H PLANNED EXP $ 144,000
S/H PLANNED LEGAL $ 50,000
----------
BENCHMARK EARNINGS $2,499,000
----------
----------

BONUS EARNED ON PRE-TAX INCOME OVER THE $2,499,000 BENCHMARK STORE WAGES
-$50 FOR EACH .01% BELOW THE 10.79% PLAN
COMP STORE SALES
-$50 FOR EACH .1% OVER 3%
INVENTORY CONTROL
-$50 FOR EACH .01% UNDER .60% RETAIL SHRINK
MODIFIED MAINTAINED MARGIN
-$50 FOR EACH .01% OVER PLAN

EMPLOYEE WILL NOT PARTICIPATE IN THE BONUS PROGRAM SHOULD PRE-TAX EARNINGS FALL
BELOW THE $2,499,000 BENCHMARK EARNINGS.

PRE-TAX PROFITS NOT REDUCED FOR
- LEGAL BILLS INCURRED IN DEFENDING THE COMPANY FROM SHAREHOLDERS
- LEGAL/ACCOUNTING/APPRAISAL/INVESTMENT BANKING OR ANY OTHER BILLS
RELATED TO THE SALE OR POTENTIAL SALE OF THE COMPANY
- ANY PAYMENTS/FEES PAID TO OR ON BEHALF OF DAVE SUECHTING SR/BARBARA
SUECHTING.
- ANY DISTRIBUTIONS TO THE SHAREHOLDERS.
- ANY COURT ORDERED EXPENSE DUE TO THE SHAREHOLDERS INCLUDING PAYMENT
FOR BOARD MEMBERS, OR NEUTRAL "EMPLOYEES".
- ANY MANAGEMENT FEE OR SIMILAR EXPENSE FROM NEW OWNERS
- ANY EXPENSE PAID TO TERMINATE A LEASE ON A NON-PRODUCTIVE STORE, NET
OF ANY SAVINGS IN THE CURRENT YEAR FROM EARLY TERMINATION.
- EXPENSES INCURRED DUE TO STOCK APPRECIATION RIGHTS.
- ANY OTHER EXPENSES NOT IN THE NORMAL COURSE OF BUSINESS

-1-
<PAGE>

EXAMPLE:

PRE-TAX EARNINGS 3,000,000
BENCHMARK EARNINGS 2,499,000
---------

INCREMENTAL EARNINGS 501,000
---------
COO CFO
--- ---
1) COO % @ 6%/CFO @ 5% 30,060 25,050
2) STORE WAGES @ .10% IMPROVEMENT 500 500
3) COMP STORE SALES @ 3.0% IMPROVEMENT 1,500 1,500
4) INVENTORY CONTROL @ .15% IMPROVEMENT 2,500 2,500
5) MOD. MAINTAINED MARGIN (50 BASIS POINTS) 2,500 2,500
------ -------

37,060 32,050
------ -------
------ -------

-2-

<PAGE>

Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of this 3rd day of January,
1994, by and between DAVE MORGAN (hereinafter referred to as "Employee"), and
TRACK 'N TRAIL, a California corporation (hereinafter referred to as "Track 'N
Trail").

IN CONSIDERATION of the mutual promises set forth below, Employee and Track
'N Trail hereby agree as follows:

1. EMPLOYMENT. Track 'N Trail hereby agrees to employ Employee, and
Employee agrees to provide services to Track 'N Trail in the position of
Director-Real Estate on an "at-will" basis, subject to the terms and conditions
hereinafter set forth.

2. DUTIES. Subject to the control of Track 'N Trail's Board of Directors
and/or Track 'N Trail management personnel with authority over Employee,
Employee shall perform the duties and responsibilities set forth in Attachment A
and such other duties and responsibilities assigned from time-to-time which are
commensurate with Employee's role as Track 'N Trail's Director-Real Estate.
Throughout the term of this Agreement, Employee shall devote all of his or her
energies, interest, abilities and productive time to the performance of his or
her duties and responsibilities under this Agreement, and shall not, without
Track 'N Trail's prior written consent, render services to any other person or
entity or otherwise engage in any other activity that would materially interfere
with the performance of such duties and responsibilities under this Agreement.

3. TERM. The term of this Agreement shall be two (2) year(s) from the
effective date of this Agreement and shall extend and renew for a one-year
period each anniversary date thereafter, unless terminated as set forth herein.
Employee or Track 'N Trail may terminate Employee's employment and this
Agreement with or without "cause" (including by reason of Employee's disability
for more than Four months or death) upon thirty (30) days' written notice to the
other party. Additionally, Track 'N Trail may terminate this Agreement and
Employee's employment for "cause" immediately without notice. "Cause" shall be
defined as follows:

(a) Employee being convicted of, pleading guilty or NOLO CONTENDERE to, or
confessing to any act of fraud, misappropriation or embezzlement, or to any
felony;

(b) Employee engaging in dishonest acts to the detriment of Track 'N
Trail;

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<PAGE>

(c) Employee otherwise failing to comply with the terms of this Agreement
and/or engaging in misconduct in violation of Track 'N Trail policies.

4. PAY ON TERMINATION. Should Track 'N Trail terminate this Agreement
and Employee's employment without cause as defined above and/or materially
breach any portion of this Agreement, Track 'N Trail shall tender to Employee an
amount equal to one (1 ) year of pay, to be calculated at the highest rate of
pay Employee has received from Track 'N Trail in the two-year period prior to
Employee's termination. Payments of said sum shall be made on Employee's last
day of employment, or on terms mutually agreeable to Employee and Track 'N
Trail.

5. WORKING CONDITIONS. Track 'N Trail agrees that during the term of
this Agreement Track 'N Trail:

(a) Shall provide, establish and maintain reasonable working conditions
for Employee and abide by all state, federal and local employment regulations
and law;

(b) Shall not, without the written consent of Employee, materially alter
or reduce the duties and responsibilities assigned to Employee as set forth in
Attachment A to this Agreement; or

(c) Shall not, without written consent of Employee, require Employee to
relocate to any office in excess of thirty (30) miles from El Dorado Hills,
California.

6. COMPENSATION. Employee agrees to accept and Track 'N Trail agrees to
pay for Employee's services at the rate of $60,000.00 per year. Employee shall
be eligible to receive bonuses on the same terms and conditions as other
similarly situated employees. Track 'N Trail reserves the right to increase
Employee's compensation rate prospectively at any time.

-2-
<PAGE>

public. These trade secrets include, but are not limited to, Track 'N Trail's
price lists, advertising and promotional ideas and strategies, customer lists,
and formulas, patterns, devices, processes, compilations of information,
records, and specifications which are owned by Track 'N Trail and which are
regularly used in the operation of Track 'N Trail (hereinafter "confidential
information"). Employee will not, either during the term of Employee's
employment or any time in the future, directly or indirectly:

(a) Disclose or furnish, directly or indirectly, to any other person,
firm, agency, corporation, client, business, or enterprise, any confidential
information acquired by Employee during the term of this Agreement;

(c) Without the written consent of Track 'N Trail, publish, deliver, or
commit to being published or delivered, any copies, abstracts, or summaries of
any files, records, documents, drawings, specifications, lists, equipment, and
similar items relating to the business of Track 'N Trail, whether prepared by
the Employee or otherwise coming into the Employee's possession, except to the
extent required in the ordinary course of Track 'N Trail's business;

(d) Attempt to encourage, induce, or otherwise solicit, directly or
indirectly, any other employee of Track 'N Trail to breach an employment
agreement with Track 'N Trail or to otherwise interfere with the advantageous
business relationship of Track 'N Trail with its employees.

Upon termination of Employee's employment, Employee agrees to immediately
return to Track 'N Trail all property of Track 'N Trail in as good condition
as when received by Employee (normal wear and tear excepted) including, but
not limited to, all files, records, documents, drawings, specifications,
lists, equipment and supplies, promotional materials and similar items
relating to the business of Track 'N Trail.

-3-
<PAGE>

8. REPAYMENTS. Employee hereby expressly agrees to repay to Track 'N
Trail any and all sums owed by Employee to Track 'N Trail immediately upon
termination of Employee's employment.

/s/ DTM
___________
Employee
Initials

-4-
<PAGE>

The arbitrator shall be permitted to award only those remedies in law or
equity which are requested by the parties and supported by credible, relevant
evidence. The provisions of this arbitration provision, shall survive the
termination of this Agreement and Employee's employment and shall remain in full
force and effect thereafter.

/s/ DTM
_________
Employee
Initials

11. OTHER TERMS AND CONDITIONS OF EMPLOYMENT. See Attachment B-Bonus
Program. (If none, Employee initial here. ____).

13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and upon their heirs,

-5-
<PAGE>

administrators, representatives, executors, successors and assigns and shall
inure to the benefit of said parties and each of them and their heirs,
administrators, representatives, executors, successors and assigns provided,
however, that in no event may Employee assign his or her rights or delegate his
or her duties under this Agreement to any other party without the prior written
consent of Track 'N Trail.

IN WITNESS WHEREOF, the parties have executed this Agreement at El Dorado
Hills, California to be effective as of the date first written above.

EMPLOYEE:

/s/ DAVE T. MORGAN
---------------------------------------

TRACK 'N TRAIL, a California corporation

By /s/ DAVE SUECHTING, JR.
------------------------------------
Name: DAVE SUECHTING, JR.
Title: President

Copy Delivered to Employee on
1/3/94

-6-
<PAGE>

JOB DESCRIPTION - DIRECTOR OF REAL ESTATE

1.0 INTRODUCTION:

1.1 The purpose of this procedure is to establish and define the
position of Director of Real Estate.

1.2 The basic function of the Director of Real Estate is to direct the
real estate operations in order to meet corporate expansion and
financial goals.

2.0 AUTHORITY:

2.1 The Director of Real Estate is appointed at will by Track 'n Trail
and is a member of the Corporate Executive Committee.

2.2 The Director of Real Estate reports directly to the Executive Vice
President/C.O.O.

2.3 The Project Manager and the Real Estate Administrative Assistant
report directly to the Director of Real Estate.

2.4 The Director of Real Estate exercises hiring, firing, promoting and
commending authority over those personnel reporting directly to
him/her.

2.5 The Director of Real Estate has the authority to conduct
compensation reviews for those personnel reporting directly to
him/her. Any changes will be in the form of recommendations and as
part of the budget process.

2.6 The Director of Real Estate has the authority to approve store
construction, repair, and maintenance expenditures.

3.0 RESPONSIBILITIES:

The Director of Real Estate is responsible for the following:

3.1 Management of all real estate personnel.

3.2 Work with Senior Management to develop corporate strategic growth
plans.

3.3 Establish and maintain standards for site selection, leases,
construction, property management and repair and maintenance.

3.4 Establish and maintain site approval procedures for Executive
Committee.

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<PAGE>

3.5 Establish and maintain documentation system sufficient to support
the real estate function.

3.6 Manage corporate facilities and capital assets.

3.7 Attend and actively participate in all required company meetings.

4.0 MEASURES OF PERFORMANCE:

4.1 Maintain an inventory of potential new sites in order to satisfy
corporate growth.

4.2 Insure timely new store openings to meet corporate financial goals.

4.3 Perform all construction projects in concert with lease contract
obligations.

4.4 Construct new facilities and remodels within projected cost budget.

4.5 Evaluate and maintain effective cost basis for all store components.

4.6 Interview and approve contractors, architects and suppliers for all
facilities projects.

4.7 Establish and maintain an accountability system for HVAC maintenance
and repair.

4.8 Establish and maintain positive relationships with the development
community.

4.9 Provide Senior Management with technical support for all development
projects on an as-needed basis.

4.10 Report real estate department progress and status to Senior
Management on a periodic basis.

4.11 Meet real estate department expense budget commitments.

4.12 Provide job descriptions and performance evaluations for all real
estate personnel.

4.13 Establish and maintain a secure filing system for corporate leases
and legal documents.

4.14 Establish and maintain cost effective system for lease legal review.

-2-
<PAGE>

DATE: JANUARY 3, 1994

TO: DAVE MORGAN
FROM: DAVE SUECHTING JR.

SUBJECT: 1994 EXECUTIVE BONUS PROGRAM

- - - - - - - - - - - - - - - PERSONAL AND CONFIDENTIAL - - - - - - - - - - - - -

1) PROFITABILITY - 1.5% EARNINGS ON PRE-TAX INCOME ABOVE THE BENCHMARK
EARNINGS OF $2,499,000.

2) PROJECT COMPLETION - $500 PER PROJECT COMPLETED ON TIME AND ON BUDGET.

3) PROJECT SAVINGS - 20% OF THE SAVINGS UNDER BUDGET FOR EACH PROJECT
COMPLETED ON TIME AND ON BUDGET.

IT IS UNDERSTOOD THAT IF CERTAIN MINIMUM PERFORMANCE IS NOT ATTAINED AS DEFINED
ON THE ATTACHMENT, THAT THE EMPLOYEE WILL NOT PARTICIPATE IN CERTAIN PORTIONS OF
THE BONUS PROGRAM FOR 1994.

THE PRE-TAX PROFITS WILL NOT BE PENALIZED (REDUCED) FOR ITEMS WHICH ARE NOT
NORMAL OPERATING ITEMS, INCLUDING:

- LEGAL BILLS INCURRED IN DEFENDING THE COMPANY FROM SHAREHOLDERS.

- LEGAL/ACCOUNTING/APPRAISAL/INVESTMENT BANKING OR ANY OTHER BILLS
RELATED TO THE SALE OR POTENTIAL SALE OF THE COMPANY.

- ANY PAYMENTS/FEES PAID TO OR ON BEHALF OF DAVE SUECHTING SR/BARBARA
SUECHTING.

- ANY DISTRIBUTIONS TO THE SHAREHOLDERS.

- ANY COURT ORDERED EXPENSE DUE TO THE SHAREHOLDERS INCLUDING PAYMENT
FOR BOARD MEMBERS, OR NEUTRAL "EMPLOYEES."

- ANY MANAGEMENT FEE SALARY OR SIMILAR EXPENSE FROM NEW OWNERS.

- ANY EXPENSE PAID TO THE TERMINATE A LEASE ON A NON-PRODUCTIVE STORE,
NET OF ANY SAVINGS IN THE CURRENT YEAR FROM EARLY TERMINATION.

- EXPENSES INCURRED DUE TO STOCK APPRECIATION RIGHTS.

-1-

<PAGE>

- ANY OTHER EXPENSES NOT IN THE NORMAL COURSE OF BUSINESS.

IT IS UNDERSTOOD THAT THIS BONUS AGREEMENT SHALL BE BINDING UPON ANY SUCCESSORS,
SHOULD THE COMPANY BE SOLD IN PART OR IN WHOLE.

THE BONUS PAYOUT FOR CALENDAR 1994 WILL OCCUR ON OR BEFORE 3/15/95, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/31/94.

THIS BONUS PLAN IS EFFECTIVE FOR THE CALENDAR YEAR 1994 ONLY, AND THE COMPANY
RESERVES THE RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.

DIRECTOR OF REAL ESTATE

1.5% OF EARNINGS OVER BENCHMARK EARNINGS

PROJECTS COMPLETED ON SCHEDULE (STORE IS OPEN FOR BUSINESS) & ON BUDGET BEFORE
12/31/94
- $500 PER PROJECT

EMPLOYEE WILL EARN 20% OF THE SAVINGS FROM EACH PROJECT WHICH IS COMPLETED UNDER
BUDGET & ON-TIME. THE SAVINGS IS COMPUTED AS THE DIFFERENCE BETWEEN THE
BUDGETED AMOUNT AND THE FINAL AMOUNT OF THE CONSTRUCTION COSTS.
- MAXIMUM AMOUNT PER PROJECT $2,500.

IN THE EVENT IT IS DETERMINED THAT IT IS IN THE COMPANY'S BEST INTERESTS TO
DELAY A PROJECT, THE CEO OR COO HAS THE AUTHORITY TO CHANGE THE DEADLINE ON THE
ATTACHED PAGE, IN WRITING, BEFORE THE DEADLINE EXPIRES.

IN ORDER TO PARTICIPATE IN THE PROJECTS BONUSES, THE TOTAL OF THE INDIVIDUAL
COMPLETED PROJECTS MUST BE AT OR BELOW BUDGETED COSTS AS A WHOLE. AS A
CLARIFICATION, IF A STORE IS INTENTIONALLY SHIFTED TO A LATER YEAR, THE STORE'S
CONSTRUCTION BUDGET WOULD BE EXCLUDED FROM THE TOTAL.

SEE ATTACHED LISTING OF PROJECT BUDGETS/DEADLINES

THE COMPANY RESERVES THE RIGHT TO ADD ADDITIONAL PROJECTS AND CORRESPONDING
BUDGETS TO THE LIST. THE EMPLOYEE WILL THEN EARN AN ADDITIONAL $500 PER PROJECT
WHICH IS COMPLETED ON TIME AND ON BUDGET, AND WILL PARTICIPATE IN EARNING A
BONUS ON 20% OF THE SAVINGS.

NOTE:
8 REMODELS
5 NEW STORES

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<PAGE>

BONUS
-----
1) BENCHMARK EARNINGS @ 1.5% 7,515

2) 11 PROJECTS COMPLETED ON TIME/BUDGET 5,500

3) PROJECT SAVINGS OF $45,000 9,000
------

BONUS PAYOUT 22,015
------
------

REAL ESTATE BUDGET DEADLINES

BUDGET DEADLINE
------ --------

STORE #03 REMODEL 40,000 03/29/94
STORE #06 REMODEL 40,000 03/18/94
STORE #11 REMODEL 40,000 03/29/94
STORE #16 REMODEL 40,000 03/29/94
STORE #40 REMODEL 65,000 05/30/94
STORE #41 REMODEL 75,000 05/30/94
STORE #42 REMODEL 80,000 02/26/94
STORE #44 REMODEL 80,000 02/26/95

REPLACEMENT STORE #01 80,500 05/01/94
REPLACEMENT STORE #02 80,500 05/01/94
REPLACEMENT STORE #03 80,500 05/01/94
REPLACEMENT STORE #04 80,500 05/01/94
REPLACEMENT STORE #05 80,500 05/01/94
------

862,500
------
------

-3-

<PAGE>
Exhibit 11.1

TRACK'N TRAIL AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE

<TABLE>
<CAPTION>
PERIOD ENDED
----------------------------------------
12/31/94 12/30/95 12/28/96
------------ ------------ ------------
<S> <C> <C> <C>
HISTORICAL EARNINGS PER SHARE

Weighted average common shares outstanding.............................. 4,107,608 4,107,608 4,107,608

Shares, warrants and options treated as common share equivalent pursuant
to SEC Staff Accounting Bulletin Topic 4d............................. 669,240 669,240 669,240
------------ ------------ ------------

Total common and common equivalent shares............................... 4,776,848 4,776,848 4,776,848
------------ ------------ ------------

Net income.............................................................. $ 2,746,717 $ 2,386,069 $ 4,364,022
------------ ------------ ------------

Earnings per common and common equivalent shares........................ $ 0.58 $ 0.50 $ 0.91
------------ ------------ ------------
------------ ------------ ------------

PRO FORMA EARNINGS PER SHARE

Weighted average common shares outstanding.............................. 4,107,608

Shares, warrants and options treated as common share equivalent pursuant
to SEC Staff Accounting Bulletin
Topic 4d.............................................................. 669,240

Shares, warrants and options treated as common share equivalent pursuant
to SEC Staff Accounting Bulletin Topic 1b3............................ 517,037
------------

Pro forma weighted average number of shares of common stock and common
stock equivalents..................................................... 5,293,885
------------

Pro forma net income.................................................... $ 2,869,147
------------

Pro forma net income per common and common equivalent share............. $ 0.54
------------
------------
</TABLE>

<PAGE>

Exhibit 16.1

March 12, 1997

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Re: Track 'n Trail - Registration Statement on Form S-1

Ladies and Gentlemen:

With respect to the above-referenced Registration Statement filed by Track 'n
Trail on or about March 12, 1997 under the Securities Act of 1933, we have
read and agree with the comments regarding Deloitte & Touche LLP set forth
under the caption "Change in Independent Accountants" in such Registration
Statement.

Very truly yours,

/s/ DELOITTE & TOUCHE LLP

<PAGE>

Exhibit 21.1

LIST OF SUBSIDIARIES

1. Track 'n Trail (Incorporated in the State of California).

2. Overland Management Corporation (Incorporated in the State of Massachusetts
and doing business as Overland Trading Company).

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the inclusion in this registration statement on Form S-1 of
our report dated March 12, 1997, on our audits of the financial statements of
Track 'n Trail. We also consent to the reference to our firm under the caption
"Selected Consolidated Financial Information" and "Experts."

/s/ COOPERS & LYBRAND L.L.P.

COOPERS & LYBRAND L.L.P.

Sacramento, California
March 12, 1997

<PAGE>

Exhibit 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Track 'n Trail on Form
S-1 of our report dated March 13, 1995, appearing in the Prospectus, which is
part of this Registration Statement, and to the references to us under the
headings "Selected Consolidated Financial Information" and "Experts" in such
Prospectus.

Sacramento, California
, 1997
- ----- --

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

The financial statements of Track 'n Trail appearing elsewhere in this
Prospectus give effect to changes in stockholders' equity, including an
increase of approximately 100.6 to 1 in the number of shares outstanding, as
the result of a planned reorganization of the Company as described in Note 14
to the financial statements. The above consent is in the form which will be
signed by Deloitte & Touche LLP upon completion of such Reorganization and
assuming that from March 12, 1997 to the date of completion of such
Reorganization, no other material events have occurred that would affect the
accompanying 1994 financial statements of Track 'n Trail or require disclosure
therein.

DELOITTE & TOUCHE LLP

Sacramento, California
March 12, 1997

<PAGE>

Exhibit 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Track 'n Trail on Form
S-1 of our report dated September 25, 1995 on the financial statements of
Overland Management Corporation at July 29, 1995 and for each of the years in
the two-year period then ended, appearing in the Prospectus, which is part of
this Registration Statement, and to the reference to us under the heading
"Experts" in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

Boston, Massachusetts
March 12, 1997
---

<PAGE>

Exhibit 23.4

The Board of Directors
Track 'n Trail:

We consent to the use of our report included herein (or incorporated herein by
reference) and to the reference to our firm under the heading "Experts" in the
prospectus.

/s/ KPMG PEAT MARWICK LLP

March 12, 1997

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FILED AS PART OF
THE COMPANY'S REGISTRATION STATEMENT ON FORM S-1 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 976,571
<SECURITIES> 0
<RECEIVABLES> 1,010,151
<ALLOWANCES> 0
<INVENTORY> 19,867,764
<CURRENT-ASSETS> 22,116,172
<PP&E> 10,923,560
<DEPRECIATION> 4,341,458
<TOTAL-ASSETS> 31,857,996
<CURRENT-LIABILITIES> 12,686,543
<BONDS> 7,025,017
0
0
<COMMON> 41,076
<OTHER-SE> 10,605,163
<TOTAL-LIABILITY-AND-EQUITY> 31,857,996
<SALES> 66,232,884
<TOTAL-REVENUES> 66,232,884
<CGS> 34,062,252
<TOTAL-COSTS> 26,567,818
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 670,118
<INCOME-PRETAX> 4,957,163
<INCOME-TAX> 487,990
<INCOME-CONTINUING> 4,469,173
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,364,022
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.54

</TABLE>